(As filed with the Securities and Exchange Commission on March 10, 2000)
SECURITIES ACT FILE NO. 333-
INVESTMENT COMPANY ACT FILE NO. 811-
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. [_]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. [_]
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SELIGMAN NEW TECHNOLOGIES FUND II, INC.
(Exact Name of Registrant as Specified in its Charter)
C/O J. & W. SELIGMAN & CO. INCORPORATED
100 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 850-1864 or
toll-free (800) 221-2450
THOMAS G. ROSE, TREASURER
100 PARK AVENUE
NEW YORK, NEW YORK 10017
(Name and Address of Agent for Service)
COPIES TO:
Donald R. Crawshaw, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Thomas A. DeCapo, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street, 31st Floor
Boston, Massachusetts 02108
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933, other
than securities offered in connection with a dividend reinvestment plan, check
the following box. [_]
It is proposed that this filing will become effective when declared effective
pursuant to section 8(c).
If appropriate, check the following box:
[_] This [post-effective] amendment designates a new effective date for
a previously filed [post-effective amendment] [registration statement].
[_] This form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act and the Securities Act
registration statement number of the earlier effective registration statement
or the same offering is - ______.
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CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
================================================================================
TITLE OF SECURITIES PROPOSED MAXIMUM AMOUNT OF
BEING REGISTERED AGGREGATE OFFERING PRICE REGISTRATION FEE
- --------------------------------------------------------------------------------
Common Stock, par value $125,000,000 $33,000
$0.01 per share
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
PARTS A AND B OF PROSPECTUS
ITEM
NO. CAPTION LOCATION IN PROSPECTUS
- --- ------- ----------------------
<S> <C> <C>
1. Outside Front Cover Page...................... Outside Front Cover Page
2. Inside Front and Outside
Back Cover Page............................... Inside Front and Outside Back Cover Page
3. Fee Table and Synopsis........................ Summary of Fund Expenses
4. Financial Highlights.......................... Not Applicable
5. Plan of Distribution.......................... Outside Front Cover Page; How to Purchase Fund
Shares
6. Selling Shareholders.......................... Not Applicable
7. Use of Proceeds............................... Use of Proceeds
8. General Description of the Registrant......... Outside Front Cover Page; Investment Objective
and Principal Strategies; Risk Factors; General
Information
9. Management.................................... Management of the Fund; Use of Proceeds
10. Capital Stock, Long-Term Debt, and
Other Securities.............................. Capital Stock; Distribution Policy; Taxes
11. Defaults and Arrears on Senior Securities Not Applicable
12. Legal Proceedings............................. Not Applicable
13. Table of Contents of the Statement of Table of Contents of Statement of Additional
Additional Information........................ Information
14. Cover Page of SAI............................. Cover Page (SAI)
15. Table of Contents of SAI...................... Table of Contents (SAI)
16. General Information and History............... Appendix A (SAI)
17. Investment Objective and Policies............. Additional Investment Policies (SAI)
18. Management.................................... Directors and Officers (SAI); Investment Advisory
and Other Services (SAI)
19. Control Persons and
Principal Holders of Securities............... Not Applicable
20. Investment Advisory and Other Services........ Investment Advisory and Other Services (SAI)
21. Brokerage Allocation and Other Practices...... Brokerage Commissions (SAI)
22. Tax Status.................................... Not Applicable
23. Financial Statements.......................... Financial Statements (SAI)
</TABLE>
<PAGE>
RED HERRING TEXT
- ----------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. NO PERSON
MAY SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS 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.
<PAGE>
Subject to Completion, Dated March 10, 2000
PROSPECTUS
|X| SHARES
SELIGMAN NEW TECHNOLOGIES FUND II, INC.
COMMON STOCK
$25.00 PER SHARE
-----------
Investment Objective. The Fund is a newly organized, non-diversified,
closed-end management investment company. The Fund's investment objective is to
seek long-term capital appreciation.
Investment Portfolio. The Fund will invest primarily in equity
securities of public and private 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 will invest at least 80%
of its total assets in equity securities of U.S. and non-U.S. companies. The
Fund seeks to identify and invest in companies that will provide tomorrow's
technology, such as Internet and new media; broadband and fiber optics; digital
consumer electronics; biometric technology; and wireless communications and
computing. The Fund may invest in companies of any size, but generally expects
to invest at least 80% of its assets in small and medium-sized companies. The
Fund will seek to invest 50% of the proceeds of the offering in equity
securities of privately owned technology companies that plan to conduct an
initial public offering, or IPO. These are referred to as venture capital
companies. Securities of venture capital companies are expected to constitute a
significant portion of the Fund's total assets over time. 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.
Manager. The Fund's investment manager is J. & W. Seligman & Co.
Incorporated.
Lack of Trading Market. The Fund's shares will not be listed on any
securities exchange, and there is no assurance that any secondary market will
develop for the Fund's shares. In addition, the Fund's shares will be subject to
transfer restrictions that permit transfers only to persons who satisfy certain
net worth requirements
(continued on following page)
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INVESTING IN THE FUND'S SHARES INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------
Per Share Total
--------- -----
Offering Price(1)........................ $25.00 $
Sales Load(1)............................ $ 1.25 $
Proceeds to the Fund..................... $23.75 $
- -------------
(1) Offering Price and Sales Load will be reduced for purchases of [10,000]
shares or more.
The underwriters are offering the shares subject to various conditions.
The underwriters expect to deliver the shares to the purchasers on or about |X|
, 2000. Seligman Advisors, Inc., an affiliate of Seligman, will pay from its own
resources additional sales compensation to the underwriters of $0.125 per share
for each share sold by them. The Fund will pay a shareholder servicing fee to
each broker or dealer that is not affiliated with the Fund or Seligman and that
has entered into a shareholder servicing agreement with the Fund at the annual
rate of 0.25% of the net asset value of the outstanding shares owned by
customers of such brokers or dealers. Seligman Advisors will make a payment in
the same amount to such brokers or dealers from its own resources. The Fund will
pay organizational and offering expenses estimated at $ |X| from the proceeds of
the offering.
-----------
[UNDERWRITERS]
|X| , 2000
<PAGE>
(continued from previous page)
and who agree in writing to comply with the transfer restrictions. You may not
be able to sell your shares. Shares may be held only through brokers and dealers
that have entered into shareholder servicing agreements with the Fund.
Repurchase Offers. 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. Tendering shareholders may not have
all of their tendered shares repurchased by the Fund. The Fund intends to
complete its first quarterly repurchase offer in October 2000. See "Repurchase
Offers."
Management and Incentive Fee. The Fund will pay Seligman a management
fee at an annual rate of 1.5% of the Fund's average daily net assets and an
annual incentive fee generally equal to 15% of the Fund's realized gains less
realized and unrealized losses for the year, subject to reduction for prior
realized and unrealized losses that have not previously been offset against
realized gains. The incentive fee structure presents risks that are not present
in funds without an incentive fee. The overall fees payable by the Fund and its
shareholders will be much higher than those paid by most other funds.
Investor Qualifications. Shares are offered only to investors who have
a net worth of more than $1,500,000 or who have at least $750,000 under
Seligman's management, including any amount invested in the Fund. The minimum
investment is $25,000.
-----------
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 |X| , 2000, 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 |X| of this prospectus. The SAI, and other information about
the Fund, is also available on the SEC's website (http://www.sec.gov).
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.
ii
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
THE FUND HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
THE FUND IS NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER
IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY THIS
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS
PROSPECTUS.
TABLE OF CONTENTS
PAGE
----
Prospectus Summary...................................................... v
Summary of Fund Expenses ............................................... 1
Risk Factors............................................................ 2
Use of Proceeds ........................................................ 7
Investment Objective and Principal Strategies .......................... 7
Management of the Fund ................................................. 12
Repurchase Offers ...................................................... 15
Calculation of Net Asset Value ......................................... 17
Capital Stock .......................................................... 18
Distribution Policy .................................................... 19
Proposal to Liquidate if Fund Underperforms S&P 500 Index .............. 20
Taxes .................................................................. 21
Underwriting ........................................................... 21
Subscription Documentation.............................................. 23
General Information .................................................... 23
Table of Contents of SAI ............................................... 23
Appendix A: Seligman's venture capital investments
Appendix B: Form of investor certification
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Until |X| , 2000 (90 calendar days after the commencement of the
offering), all dealers that buy, sell or trade the shares, whether or not
participating in the offering, may be required to deliver a prospectus. This is
in addition to the dealers' obligation to deliver a prospectus when acting as
underwriter and with respect to their unsold allotments or subscriptions.
iii
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[This page intentionally left blank]
iv
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PROSPECTUS SUMMARY
This is only a summary. This summary may not contain all of the
information that you should consider before investing in the Fund. You should
review the more detailed information contained in this prospectus and in the
statement of additional information.
THE FUND . . . . . . . . . . . Seligman New Technologies Fund II, Inc. (the
"Fund") is a newly organized, non-diversified,
closed-end management investment company
registered under the Investment Company Act of
1940 (the "Investment Company Act"). The
Fund's investment manager is J. & W. Seligman
& Co. Incorporated ("Seligman"). See "General
Information."
INVESTMENT OBJECTIVE AND
PRINCIPAL STRATEGIES . . . . The Fund's investment objective is to seek long-
term capital appreciation. The Fund proposes
to achieve its objective by investing at least
80% 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 80%
of its total assets in small and medium-sized
companies. The Fund will seek to invest 50% of
the proceeds of the offering in equity
securities of privately owned technology
companies that plan to conduct an IPO. 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 expects that its venture
capital investments will be primarily in
companies that it determines to be in the
"late-stage" (also referred to as "mezzanine")
or "pre-IPO" stage of development, although
from time to time the Fund may invest in
companies that are in the early ("seed") or
expansion stage of development. After the
proceeds from the offering are invested, the
Fund expects to continue to invest a
substantial portion of its assets in venture
capital companies. It is possible, however,
that the Fund will invest only a small portion
of its assets, or none at all, in venture
capital companies, as a result of market
conditions, available opportunities and other
factors. The Fund will not make new venture
capital investments at any time when its
existing venture capital investments exceed
50% of its total assets, except that the Fund
may, at such times, make additional
investments in venture capital companies
already represented in its portfolio. A
company will not be considered a venture
capital company after it has completed its
IPO.
As part of its investment in venture capital
companies, the Fund may also invest up to 5%
of its total assets in securities of private
investment funds that invest primarily in
venture capital companies. With respect to the
portion of the Fund's assets invested in such
private funds, shareholders of the Fund will
pay management and incentive fees both to
Seligman and, indirectly, to the manager of
the private fund. See "Investment Objective
and Principal
v
<PAGE>
Strategies" and "Risk Factors - Investments in
Venture Capital Funds."
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 for many years to come.
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.
Seligman will seek to identify and invest in
companies that will provide tomorrow's
technology. Seligman currently believes the
greatest growth potential is found in five
areas of technology: Internet and new media;
broadband and fiber optics; digital consumer
electronics; biometric technology; and
wireless communications and computing. See
"Investment Objective and Principal Strategies
- Investment Rationale."
THE MANAGER . . . . . . . . . Seligman, the manager of the Fund, has
substantial experience in technology
investing.
The Fund will be co-managed by Paul H. Wick,
leader of Seligman's Global Technology Team,
Storm Boswick and Michael J. Guthrie. Messrs.
Wick and Boswick are Managing Directors of
Seligman, and Mr. Guthrie is a Senior Vice
President of Seligman. As of February 29,
2000, Seligman's Global Technology Team
managed approximately $ |X| billion of public
and $ |X| million of private securities of
technology and related companies. Seligman's
Global Technology Team also manages Seligman
Communications and Information Fund, Inc., one
of the world's largest technology funds;
Seligman Global Technology Fund, one of the
world's largest global technology funds;
Seligman New Technologies Fund, Inc., which
commenced operations in July 1999 and has an
investment objective and strategies similar to
the Fund's; and two recently organized funds
offered outside the United States that make
significant investments in venture capital
companies. See "Management of the Fund."
With over 70 years of combined technology
investment experience and with offices in both
Palo Alto and New York, Seligman's Global
Technology Team effectively covers 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
companies. Seligman believes that its
vi
<PAGE>
presence in the public market, as well as its
strong relationships with venture capital
firms, investment banks, and the companies it
has selected for investment, provide it with
valuable sources of information on a large
number of investment opportunities. Seligman
also believes that its presence and reputation
in the public arena are recognized among
venture capital companies.
Information about Seligman's investments in
venture capital companies is included in
Appendix A to this prospectus.
INVESTMENT ADVISER FEES . . . The Fund will pay to Seligman (i) a management
fee at an annual rate of 1.5% of the Fund's
average daily net assets and (ii) an annual
incentive fee generally equal to 15% of the
Fund's realized gains less realized and
unrealized losses for the year, subject to
reduction for prior realized and unrealized
losses that have not previously been offset
against realized gains. The incentive fee
structure presents certain risks that are not
present in funds without an incentive fee. The
management fee and the incentive fee are
materially higher than the advisory fees paid
by most U.S. investment companies. See "Risk
Factors - Incentive Fee" and "Management of
the Fund - Incentive Fee."
BORROWING . . . . . . . . . . . The Fund is authorized to borrow money to fund
the purchase of portfolio securities
(including additional investments in venture
capital companies in its portfolio), to meet
repurchase requests and for cash management
purposes. The use of borrowings for financial
leverage involves a high degree of risk. The
Fund generally intends to borrow money only in
limited circumstances when attractive
investment opportunities are available that
would further the Fund's investment objective
and sufficient cash or other liquid resources
are not otherwise available, or where Seligman
believes it would not be prudent to sell
existing portfolio holdings. The Fund will
not, in any event, borrow money until the
proceeds of the offering are substantially
invested in furtherance of the Fund's
investment objective. The Fund is not
permitted to borrow to make additional
investments at any time that borrowings exceed
20% of its total assets, and it is not
permitted to borrow for any purpose if,
immediately after such borrowing, it would
have an asset coverage (as defined in the
Investment Company Act) of less than 300%. The
Fund will seek to repay borrowings used to
meet repurchase requests and for cash
management purposes within one year of their
incurrence. See "Risk Factors - Leverage;
Borrowing" and "Investment Objective and
Principal Strategies - Borrowing; Use of
Leverage."
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 returns on its
investments.
INVESTOR QUALIFICATIONS . . . Shares are offered only to investors who have a
net worth of more than $1,500,000 or who have
at least $750,000 under Seligman's management
(including any amount invested in the Fund)
("Qualified Investors"). Before you may invest
in the Fund, your financial advisor or sales
representative must obtain a certification
vii
<PAGE>
from you that you are a Qualified Investor,
and you must agree that you will not transfer
your shares except to a person who is a
Qualified Investor and who provides a similar
certification and agreement. You must also
agree that you will hold your shares only
through a broker or dealer that has entered
into a shareholder servicing agreement with
the Fund. The form of investor certification
is attached to this Prospectus as Appendix B.
The Fund may also offer shares to certain
experienced employees who participate in
Seligman's investment activities. See
"Underwriting."
INVESTOR SUITABILITY . . . . An investment in the Fund involves a
considerable amount of risk. Because it is
possible that you may lose some or all of your
investment, you should not invest in the Fund
unless you can afford a total loss of your
investment. Prior to making your investment
decision, you should (i) consider the
suitability of this investment with respect to
your investment objectives and personal
situation, (ii) consider factors such as your
personal net worth, income, age, risk
tolerance and liquidity needs, and (iii)
consult your broker and financial advisor to
determine whether your risk profile is
suitable for this investment.
THE OFFERING . . . . . . . . The Fund is offering [X] shares of common
stock at $25.00 per share (subject to
reduction as set forth below) through a group
of underwriters led by |X| . You must purchase
at least 1,000 shares ($25,000). The per share
purchase price and sales charge will be
reduced for purchases of [10,000] shares or
more. See "Underwriting." Seligman Advisors,
Inc., an affiliate of Seligman, will pay from
its own resources additional sales
compensation to the underwriters of $0.125 per
share for each share sold by them. The Fund
will pay each broker or dealer of record that
enters into a shareholder servicing agreement
with the Fund a shareholder servicing fee at
the annual rate of 0.25% of the net asset
value of the outstanding shares beneficially
owned by customers of the brokers or dealers.
Seligman Advisors will make a payment to those
brokers or dealers in the same amount from its
own resources.
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 net
investment income to pay dividends.
The Fund will pay substantially all of any
taxable net capital gain realized on
investments to shareholders at least annually.
Under the Fund's automatic reinvestment plan,
dividends and/or capital gain distributions
paid by the Fund will be reinvested in
additional shares of the Fund unless a
shareholder "opts out" (elects not to
participate). 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. The Fund
reserves the right to suspend or limit the
automatic reinvestment plan at any time.
viii
<PAGE>
UNLISTED CLOSED-END STRUCTURE;
LIMITED LIQUIDITY . . . . . The Fund has been organized as a closed-end
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 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 illiquid investments is limited. For this
reason, the Fund is organized as a closed-end
fund.
The Fund will not list its shares on any
securities exchange, and there is no assurance
that any secondary market will develop for the
Fund's shares. YOU WILL NOT BE ABLE TO REDEEM
YOUR SHARES ON A DAILY BASIS BECAUSE THE FUND
IS A CLOSED-END FUND. IN ADDITION, THE FUND'S
SHARES ARE SUBJECT TO TRANSFER RESTRICTIONS
THAT PERMIT TRANSFERS ONLY TO PERSONS WHO
CERTIFY THAT THEY ARE QUALIFIED INVESTORS AND
WHO AGREE IN WRITING TO COMPLY WITH THE FUND'S
TRANSFER RESTRICTIONS. Shares may be held only
through a broker or dealer that has entered
into a shareholder servicing agreement with
the 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 and should be viewed
as a long-term investment.
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 September 2000 and to complete it in
October 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."
PROPOSAL TO LIQUIDATE IF FUND
UNDERPERFORMS S&P 500 INDEX . If the total return on an investment in the Fund
from inception to June 30, 2007 is less than
the total return on a hypothetical investment
in the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index"), with
dividends reinvested, during the same period,
the directors of the Fund intend to submit to
the shareholders, within six months after June
30, 2007, a proposal to liquidate the Fund and
distribute its net assets to shareholders. The
Fund's total return for this purpose will be
calculated assuming that the investor paid the
maximum public offering price per share and
reinvested all dividends and distributions to
the maximum extent permitted. If a
ix
<PAGE>
proposal to liquidate is approved by
shareholders, a lengthy period may be required
to complete the liquidation because the Fund
may have difficulty selling its venture
capital investments and will not be able to
distribute them in-kind.
RISK FACTORS . . . . . . . . . An investment in the Fund involves a high degree
of risk. These include the risks of:
o investing in venture capital companies and
venture capital funds
o investing in securities that are illiquid
and volatile
o investing in illiquid shares of an unlisted
closed-end fund
o investing in a fund that may employ
substantial leverage
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 securities of non-U.S. issuers
o investing in a fund that will pay an
incentive fee
Accordingly, the Fund should be considered a
speculative investment, and you should invest
in the Fund only if you can sustain a complete
loss of your investment.
See "Risk Factors."
x
<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
Maximum sales load (as a percentage of offering price)......... 5.00%
Automatic reinvestment plan fees............................... none
Maximum redemption fee ........................................ none
ANNUAL EXPENSES (except for incentive fee and any interest expense,
as a percentage of net assets attributable to common shares)
Management fee................................................ 1.50%
Incentive fee accrual... 15% of the increase in the Fund's net
assets due to investment operations (1)
Shareholder servicing fees.................................... 0.25%
Other expenses................................................ 0.50%
----
Total annual expenses (other than incentive fee and interest
expense).................................................... 2.25%
====
(1) The incentive fee accrual will be reduced to the extent there have been
declines in net assets due to investment operations that have not
already been recovered. The annual incentive fee payable to Seligman
will usually be less than the amount of the incentive fee accrual
because Seligman will not be paid for unrealized gains. See "Management
of the Fund - Incentive Fee."
Seligman has undertaken through December 31, 2001 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 (before payment of the incentive fee,
interest expense on any borrowings and any extraordinary expenses) in any fiscal
year would otherwise exceed an annual rate of 2.25% of its average daily net
assets for such year.
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 $[X] million. The Fund will also pay
organizational and offering expenses estimated to be $ |X| , which will be
charged to the Fund's capital at commencement of operations and are not included
in "Total annual expenses" above. For a more complete description of the various
costs and expenses of the Fund, see "Management of the Fund."
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
You would pay the
following expenses on
a $1,000 investment,
assuming a 5% annual
return: $76 $128 $184 $334
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. The Fund's
organizational and offering expenses are not reflected in the example.
THE EXAMPLE INCLUDES AN ACCRUAL FOR THE INCENTIVE FEE. THE INCENTIVE
FEE ACCRUAL IS CALCULATED AS A PERCENTAGE OF THE INCREASE IN THE FUND'S NET
ASSETS DUE TO INVESTMENT OPERATIONS, NOT AS A PERCENTAGE OF ITS AVERAGE DAILY
NET ASSETS. AS A RESULT, THE DOLLAR AMOUNTS IN THE EXAMPLE COULD BE
SIGNIFICANTLY HIGHER IF THE FUND'S ACTUAL RATE OF RETURN EXCEEDS 5%.
<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. That investment
environment is influenced by, among other things, interest rates, inflation,
politics, fiscal policy, current events, competition, productivity and
technological and regulatory change. Therefore, as with any fund that invests in
stocks, the Fund's net asset value will fluctuate. You may experience a
significant decline in the value of your investment and could lose your entire
investment. The Fund should be considered a speculative investment, and you
should invest in the Fund only if you can sustain a complete loss of your
investment.
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.
UNLISTED CLOSED-END FUND; LIMITED LIQUIDITY
The Fund is a closed-end investment company designed primarily for
long-term investors and is not intended to be a trading vehicle. The Fund does
not intend to list its shares for trading on any national securities exchange.
There is no secondary trading market for Fund shares, and there is no assurance
that a secondary market will 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 significantly 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.
You may not be able to sell all the shares that you wish to sell in a
repurchase offer. In extreme cases, the Fund may not be able to complete
repurchases due to its holding of illiquid investments. In that event, you may
be able to sell your shares only if you are able to find a Qualified Investor
willing to purchase your shares. Any such sale may have to be negotiated at
unfavorable prices.
LEVERAGE; BORROWING
The Fund is authorized to borrow money to fund the purchase of
portfolio securities, to meet repurchase requests and for cash management
purposes. The Fund may not borrow for the purpose of purchasing additional
portfolio securities at any time that borrowings exceed 20% of its total assets.
The Fund will seek to repay borrowings used to meet repurchase requests and for
cash management purposes within one year of their incurrence. The use of
borrowings for financial leverage involves a high degree of risk.
To the extent that the Fund uses leverage, the value of its net assets
will tend to increase or decrease at a greater rate than if no leverage were
employed. If the Fund's investments decline in value, your loss will be
magnified if the Fund has borrowed money to make its investments.
If the Fund does not generate sufficient cash flow from operations, it
may not be able to repay borrowings within one year of their incurrence, or it
may be forced to sell investments at disadvantageous times in order to repay
borrowings. The Fund's performance may be adversely affected if it is not able
to repay borrowings (because of the continuing interest expense) or if it is
forced to sell investments at disadvantageous times in order to repay
borrowings.
The Investment Company Act provides that the Fund may not declare
dividends or distributions, or purchase its stock (including in repurchase
offers) unless, immediately after doing so, it will have an "asset coverage" of
at least 300%. This could prevent the Fund from completing its repurchase
offers. For this purpose, an "asset coverage" of 300% means that the Fund's
total assets equal 300% of the total outstanding principal balance of
indebtedness. Lenders may require the Fund to agree to more restrictive asset
coverage requirements as a condition to providing credit to the Fund, and may
also limit the extent to which the Fund
2
<PAGE>
may hold illiquid securities, reducing the Fund's investment flexibility. If the
Fund is unable to make distributions as a result of these requirements, it may
no longer qualify as a regulated investment company and could be required to pay
additional taxes. The Fund may also be forced to sell investments on unfavorable
terms if market fluctuations or other factors reduce its asset level below what
is required by the Investment Company Act or the Fund's loan agreements.
Successful use of borrowing for financial leverage purposes (that is,
to acquire portfolio securities) will depend on Seligman's ability to predict
correctly interest rates and market movements, and there is no assurance that a
borrowing strategy will be successful during any period in which it is employed.
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 under certain circumstances. 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. The Fund's obligation to make interest or principal payments on
borrowings may prevent the Fund from taking advantage of attractive investment
opportunities.
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 in any particular repurchase offer. 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.
The Fund's repurchase policy will have the effect of decreasing the
size of the Fund over time from what it otherwise would have been. It may
therefore 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. In addition, because of the limited market for the Fund's
venture capital investments, the Fund may be forced to sell its publicly traded
securities in order to meet cash requirements for repurchases. This may have the
effect of substantially increasing the Fund's ratio of illiquid venture capital
investments to liquid investments for the remaining investors.
INVESTMENT IN COMPANIES DEPENDENT UPON NEW TECHNOLOGIES
The Fund plans to invest primarily in the stock of companies that rely
significantly on technological events or advances in their product development,
production or operations. 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 and
intellectual property
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:
3
<PAGE>
o poor corporate performance due to less experienced management,
limited product lines, undeveloped markets and/or limited financial
resources
o less predictable returns 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 capitalizations and
absence of exchange listings 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 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 risks
associated with investing in companies in the "seed" or "expansion" stages of
development are greater than those of companies in the "late" or "pre-IPO" stage
(these terms are explained under "Investment Objectives and Principal Strategies
- - Investment in equity securities of technology companies"), because the
concepts generally are unproven, the companies have little or no track record,
and the prospect of an initial public offering is highly contingent upon factors
that are often not in the companies' control. For example, since venture capital
companies do not file periodic reports with the Securities and Exchange
Commission, there is less publicly available information about them than there
is for other small companies, if there is any at all. The Fund must therefore
rely solely on Seligman to obtain adequate information to evaluate the potential
returns from investing in these companies. In addition, venture capital
companies tend to rely even more heavily on the abilities of their key personnel
than more mature companies do. Competition for qualified personnel and high
turnover of personnel are particularly prevalent in venture capital technology
companies. The loss of one or a few key managers can substantially hinder or
delay a venture capital company's implementation of its business plan. In
addition, venture capital companies may not be able to attract and retain
qualified managers and personnel.
The Fund's ability to realize value from an investment in a venture
capital company is to a large degree dependent upon the successful completion of
the company's IPO 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. Conversely, there can be no assurance that the
Fund will be able to identify a sufficient number of desirable venture capital
investments. This could cause the Fund to invest substantially less than 50% of
its assets, and possibly none of its assets, in venture capital companies.
Some companies may depend upon managerial assistance or financing
provided by their investors. The Fund does not intend to provide any such
managerial assistance. However, the Fund may provide additional financing to the
companies in which it invests, and at times may be contractually obligated to do
so (that is, its investment agreement may require follow-on investments in
certain circumstances) or may determine that it is necessary to do so to protect
its economic interests. 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.
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 IPO or a sale to or merger with a public company, there may
never be a public market benchmark for valuing the investment and it may be very
difficult for the Fund to dispose of its investment, or it may be possible to
dispose of the investment only at a substantial loss. 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.
4
<PAGE>
INVESTMENTS IN VENTURE CAPITAL FUNDS
Venture capital funds involve all the risks of investing in small
companies and venture capital 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 will also require the Fund to pay management fees and/or
performance fees or allocations to its general partner or manager, which can
reduce the return to investors, including the Fund and its shareholders. These
fees are in addition to the management fee and incentive fee paid by the Fund. A
venture capital fund may also incur certain costs associated with the evaluation
of venture capital investments, 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 substantial loss.
RELIANCE ON KEY PERSONNEL OF SELIGMAN
The Fund's ability to identify and invest in attractive opportunities
is dependent upon a relatively small group of individuals who make up Seligman's
Global Technology Team. If one or more of these individuals leaves Seligman,
Seligman may not be able to hire qualified replacements at all, or may require
an extended time to do so. This could prevent the Fund from achieving its
investment objective.
INCENTIVE FEE
The right to the incentive fee may give Seligman reason to select
investments for the Fund that are riskier or more speculative than it would
select if it were paid only the management fee. In addition, since the incentive
fee accrual (although not the amount of the incentive fee payable to Seligman)
is calculated based on unrealized as well as realized appreciation of the assets
of the Fund, the amount of the accrual will normally be greater in any period
than if it were based solely on realized gains.
The amount of the incentive fee accrual will be based in part on the
valuation of the Fund's venture capital investments. Until a venture capital
company completes an IPO or is acquired by a public company, the value of an
investment in that company must be estimated by Seligman using fair value
techniques following procedures approved by the Fund's board of directors. (See
"Calculation of Net Asset Value.") The incentive fee structure could give
Seligman an incentive to select a higher fair value for the Fund's venture
capital investments than it otherwise would.
The incentive fee is accrued as a liability of the Fund each day and so
reduces the net asset value of all shares. The repurchase price received by an
investor whose shares are repurchased in a quarterly repurchase offer will
reflect an incentive fee accrual if the Fund has experienced an increase in net
assets due to investment operations through the date of repurchase. However, the
incentive fee accrual may subsequently be reversed if the Fund's performance
declines. In that case, some or all of the incentive fee accrual borne by the
investor will be retained by the Fund. No adjustment to a repurchase price will
be made after it has been paid.
The Fund will not accrue an incentive fee for any year unless it has
fully recovered any Cumulative Loss (as defined under "Management of the Fund -
Incentive Fee." However, the total amount of Cumulative Loss will be shared
equally by all outstanding shares of the Fund. If some shareholders reinvest
distributions by the Fund in additional shares, then the number of outstanding
shares will increase, and the per-share amount of Cumulative Loss (if any) will
be reduced. As a result, if you do not reinvest your distributions, the benefit
you receive from a Cumulative Loss (if any) will be diluted. This means that you
may bear a higher percentage incentive fee than you otherwise would.
In addition, whenever shares are repurchased in a repurchase offer, the
amount of any Cumulative Loss will be reduced in proportion to the number of
shares repurchased. (For example, if the Fund has a Cumulative Loss of $5
million, and 5% of the Fund's shares are repurchased in a repurchase offer, then
the amount of the Cumulative Loss will be reduced by 5% (or $250,000) to
$4,750,000.) It is possible that the
5
<PAGE>
Fund may experience a net loss from investment operations for a full year, but
you will have a positive return on your investment and an incentive fee will be
accrued for that year. (In the preceding example, if, after the repurchase, the
Fund experiences an increase in assets due to investment operations of
$4,850,000, then the net loss from investment operations for the period would be
$150,000, but the Fund would accrue an incentive fee equal to 15% of $100,000,
or $15,000.)
CONCENTRATION; NON-DIVERSIFIED STATUS
The assets of the Fund will consist almost entirely of companies within
or related to various sectors of the technology industry. Since the Fund's
portfolio will be concentrated in securities of a small number of companies or
in securities of companies in single industry, the risk of any investment
decision is increased. Seligman will seek to reduce the company-specific risk,
as opposed to sector-specific risk, of the Fund's portfolio by investing in more
than one company in a particular sector, but this may not always be practicable.
The Fund is classified as a "non-diversified" management investment
company under the Investment Company Act. 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 50% of the proceeds of the offering, and a
substantial portion of its assets on an ongoing basis, 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 can not be sold at the time desired by the Fund or at prices
approximating the value the Fund has determined. Difficulty in selling illiquid
investments could impair the Fund's ability to meet repurchase requests or to
pay its fees and expenses (including the management fee and incentive fee).
INVESTMENTS IN FOREIGN SECURITIES
The Fund plans to invest in the securities of foreign technology
companies. Investments in foreign securities face specific risks, which include:
o unfavorable changes in currency rates and exchange control
regulations
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
o an increased potential for corrupt business practices in certain
foreign countries
6
<PAGE>
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:
o the underlying investment or security might not perform in the
manner that Seligman expects it to perform, which 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.
USE OF PROCEEDS
The Fund will invest the net proceeds of the offering in accordance
with the Fund's investment objective and policies and principal strategies as
soon as practicable after the closing of the offering. Based on current market
conditions, Seligman expects the Fund will be fully invested within one year.
Seligman believes that, under current market conditions, it would be able to
invest up to approximately $1.5 billion in accordance with the Fund's
objectives, policies and strategies in this time frame. Although the Fund
expects to invest at least 80% of its total assets in securities of small and
medium-sized technology companies within one year, it may take substantially
longer to reach the Fund's target of investing 50% of the proceeds of the
offering in venture capital companies. 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 and venture
capital companies which may have limited amounts of 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 total 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 $ |X| from the proceeds of the offering.
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.
THE FUND MAY CHANGE ITS INVESTMENT STRATEGIES
The Fund's investment objective is a fundamental policy and may not be
changed without the approval of shareholders. Please see the SAI for additional
fundamental policies of the Fund. The Fund's principal investment policies and
strategies are listed below. The Fund may change any of these non-fundamental
investment policies and strategies, and may change the definition of small and
medium-sized companies, if the Fund's board of directors believes doing so would
be consistent with the Fund's investment objective of long-term capital
appreciation.
INVESTMENT IN EQUITY SECURITIES OF TECHNOLOGY COMPANIES
The Fund proposes to achieve its objective by investing at least 80% 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
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<PAGE>
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 80% 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,
although a substantial portion of the Fund's venture capital investments may be
in the form of non-dividend-paying preferred stocks. The Fund may also invest in
securities convertible into or exchangeable for common stocks, rights and
warrants to purchase common stocks and depository receipts representing an
ownership interest in equity securities. The Fund considers all of these
securities equity securities for purposes of its investment strategies. The Fund
may also invest in non-convertible debt securities or preferred stocks believed
to provide opportunities for capital gain.
The Fund will seek to invest 50% of the proceeds of the offering in
equity securities of privately owned technology companies that plan to conduct
an IPO. 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 primarily in venture capital companies
that it determines to be in the "late-stage" (also referred to as "mezzanine")
or "pre-IPO" stage of development, although from time to time the Fund may
invest in companies that are in the early ("seed") or expansion stage of
development. These terms are explained below. After the proceeds from the
offering are invested, the Fund expects to continue to invest a substantial
portion of its assets in venture capital companies. It is possible, however,
that the Fund will invest only a small portion of its assets, or none at all, in
venture capital companies, as a result of market conditions, available
opportunities and other factors. The Fund will not make new venture capital
investments at any time when its existing venture capital investments exceed 50%
of its total assets, but the Fund may, at such times, make additional
investments in venture capital companies already represented in its portfolio.
Seed financing is typically a relatively small amount of capital used
to test a concept so that start-up capital can be obtained; the term may also
extend to companies completing product development and initial marketing.
Typically, a company at the seed financing stage has not yet sold its product
commercially. Expansion financing is sought by companies that have expended
their initial capital (often in developing and market-testing a prototype) and
that require funds to initiate full-scale manufacturing and sales. Expansion
capital may also provide working capital for the initial expansion of a company
that is manufacturing and shipping its product, but that does not yet show a
profit. The Fund will participate in seed and/or expansion financing for a
company only if it has an established management team with proven track record
of building business and, in Seligman's judgment, an innovative product idea
with a sustainable competitive advantage. The Fund expects that companies in the
early and expansion stages will not conduct an IPO for up to five years, and
possibly substantially longer, from the time of initial investment.
The Fund considers a venture capital 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 IPO within a period of one
to three years. A pre-IPO company is somewhat more developed than a late-stage
company. The Fund generally would expect to acquire equity securities of pre-IPO
companies in private placements within a year prior to their planned IPOs. The
Fund will seek late-stage and pre-IPO companies that offer reasonable
valuations, especially relative to public companies. Late-stage and pre-IPO
companies will typically have small capitalizations and limited or no liquidity;
even after an IPO, liquidity may be limited and the Fund generally will be
subject to contractual limitations on its ability to sell shares.
All venture capital investments involve substantial risks. The risks
associated with investing in companies in the seed or expansion stages of
development are greater than those of companies in the late or pre-IPO stage,
because the concepts generally are unproven, the companies have little or no
track record, and the prospect of an IPO is highly contingent upon factors that
are often not in the companies' control. See "Risk Factors - Investments in
venture capital companies."
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
8
<PAGE>
involve relatively high fees, including incentive fees (the Fund will be
indirectly paying fees to the manager of such investment funds and their other
service providers and to Seligman and the Fund's other service providers on the
same assets), and a high degree of risk. See "Risk Factors - Venture Capital
Funds."
The Fund will also invest in small and medium-sized public companies.
The common stock of these companies may trade over-the-counter, on the Nasdaq
SmallCap Market, the Nasdaq National Market, the New York Stock Exchange, the
American Stock Exchange or on other markets. Many of these companies may have
only recently become public companies, and may have a relatively small
proportion of their outstanding common stock publicly traded.
During the first part of the first year of the Fund's operation,
Seligman expects that a majority of the Fund's assets will be invested in
publicly traded companies. Seligman expects to sell many of these within the
first year and reinvest the proceeds in venture capital companies in accordance
with our principal investment strategies, subject to Seligman's determination of
market conditions, available opportunities and other factors. Seligman also
expects the Fund's turnover rate for public company investments to be high, as
much as two hundred percent or more per year. As the Fund's venture capital
company investments mature, they may undertake IPOs and become public companies.
In these cases, the Fund may be subject to contractual and regulatory
limitations that prevent it from selling part or all of these investments for an
extended period.
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 in addition to
the fees and expenses borne by the Fund directly.
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 that are listed
or quoted in the United States.
The limitations on the percentage of the Fund's total assets that may
be invested in securities of venture capital companies, venture capital funds,
exchange traded 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 or repurchases of the Fund's
shares. 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, except that it may make additional investments in venture capital
companies already in its portfolio.
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 for
many years to come.
Developments in the computer industry illustrate this trend. In the
1960s and 1970s, mainframe computers were the dominant technology, but personal
computers superseded them in the 1980s and 1990s. This shift in the dominant
technology resulted in significant changes in industry leaders. Seligman
believes that the continuing trend towards a "network economy" may cause new
companies to emerge as 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 in a
deeper penetration of digital products in the marketplace.
o BIOMETRIC TECHNOLOGY. Seligman believes that the ability for the
human body to interact with a computer or a communications device
has far-reaching implications. Heightened security may be made
possible as fingerprints and cornea scans can be used as
identification. Doctors may be able to use this technology to
interact with and monitor patients from remote locations.
o WIRELESS COMMUNICATIONS AND COMPUTING. Hand-held devices and
cellular phones enable workers to remain effective when they are
away from their desk-top computers. Wireless communications and
computing has the potential for productivity enhancement for
businesses and lifestyle enhancement for consumers.
BORROWING; USE OF LEVERAGE
The Fund is authorized to borrow money to fund the purchase of
portfolio securities (including additional investments in venture capital
companies in its portfolio), to meet repurchase requests and for cash management
purposes. The use of borrowings involves a high degree of risk. See "Risk
Factors -- Leverage; Borrowing." The Fund generally intends to borrow money only
in limited circumstances when attractive investment opportunities are available
that would further the Fund's investment objective and sufficient liquid
resources are not otherwise available, or where Seligman believes it would not
be prudent to sell existing portfolio holdings. The Fund will not, in any event,
borrow money until the proceeds of the offering are substantially invested in
furtherance of the Fund's investment objective. The Fund will seek to repay
borrowings used to meet repurchase requests and for cash management purposes
within one year of their incurrence. The Fund may not borrow money to pay Fund
expenses, including the incentive fee.
The Fund will not be permitted to borrow for the purpose of purchasing
additional portfolio securities at any time that borrowings exceed 20% of its
total assets. In addition, the Investment Company Act prohibits the Fund from
borrowing for any purpose if, immediately after such borrowing, it will have an
"asset coverage" of less than 300%. The Investment Company Act also provides
that the Fund may not declare dividends or distributions, or purchase its stock
(including in repurchase offers) if, immediately after doing so, it will have an
"asset coverage" of less than 300%. For this purpose, an "asset coverage" of
300% means that the Fund's total assets equal 300% of the total outstanding
principal balance of indebtedness. Lenders may require the Fund to agree to more
restrictive asset coverage requirements as a condition to providing credit to
the Fund, and may also limit the extent to which the Fund may hold illiquid
securities, reducing the Fund's investment flexibility. If the Fund is unable to
make distributions as a result of these requirements, it may no longer qualify
as a regulated investment company and could be required to pay additional taxes.
The Fund may also be forced to sell investments on unfavorable terms if market
fluctuations or other factors reduce the asset level below what is required by
the Investment Company Act or the Fund's loan agreements. If the Fund is unable
to make distributions as a result of these requirements, it may no longer
qualify as a regulated investment company and could be required to pay
additional taxes. The Fund may also be forced to sell investments on unfavorable
terms if market fluctuations or other factors reduce the asset level below what
is required.
The Fund's willingness to borrow money, and the amount it will borrow,
will depend on many factors, the most important of which are investment outlook,
market conditions and interest rates. Successful use of borrowing for financial
leverage purposes (that is, to acquire portfolio securities) will depend on
Seligman's ability to predict correctly interest rates and market movements, and
there is no assurance that a borrowing strategy will be successful during any
period in which it is employed.
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HEDGING
The Fund may seek to hedge portfolio risk through the use of financial
instruments known as derivatives. A derivative is generally defined as an
instrument whose value is derived from, or based upon, some underlying index,
reference rate (such as interest rates or currency exchange rates), security,
commodity or other asset. The Fund will use a specific type of derivative only
after consideration of, among other things, how the derivative instrument serves
the Fund's investment objective and the risk associated with the instrument. The
Fund may use derivatives only for the purposes of hedging portfolio risk and
cash management.
The Fund may buy or sell put or call options on transferable securities
or indices of securities to hedge against adverse movements in the prices of
securities held in the Fund's portfolio. The Fund's options strategies may
include the purchase of puts and the simultaneous writing of calls having
different strike prices to place a "collar" on a portion of the Fund's asset
value (this strategy, which involves the sale of call options to help reduce the
price of the put options, is viewed as a hedge even though the writing of a call
without the purchase of a put would not be considered hedging). The Fund may buy
or sell these options if they are traded on options exchanges or
over-the-counter markets. However, the Fund will only enter into transactions
with broker-dealers that are reputable financial institutions which (i)
specialize in these types of transactions, (ii) make markets in these options,
or (iii) 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 of 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.
INVESTMENT CONCENTRATION
As a non-diversified investment company, the Fund faces few regulatory
restrictions on the proportion of its total assets it may invest in the
securities of any one company, or on the proportion of its total assets it
allocates to control interests in companies. However, the Fund does not intend
to invest more than 25% of its total assets in the securities of any one
company. The Fund may own a controlling interest in one or more companies, and
it (or it and other funds managed by Seligman) may own up to 100% of certain
companies. However, 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.
INVESTMENT DECISIONS BASED UPON EXTENSIVE 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 revenue-producing technological innovations
o high profit margins or return on capital
o attractive valuations relative to expected earnings or cash flow
o strong current or future cash flow
o large installed base or distribution franchise
o quality management
o favorable new product cycles
o unique competitive advantages, including intellectual property
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CIRCUMSTANCES IN WHICH THE FUND WILL SELL A SECURITY
While it is the policy of the Fund to hold securities for investment,
the Fund will consider selling securities of a company if Seligman's target
price for the security has been reached or if Seligman believes that:
o the company's earnings are disappointing
o the company's revenue growth has slowed
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. Alternatively, it may
have to sell such securities at disadvantageous prices in order to raise cash.
See "Risk Factors - Restricted and Illiquid Securities."
DEFENSIVE MEASURES
The Fund may, from time to time, take temporary defensive positions in
cash or short-term debt securities that are inconsistent with its principal
strategies in an attempt to moderate extreme volatility caused by adverse
market, economic, or other conditions. This could prevent the Fund from
achieving its investment objective.
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. Subject to the authority of the Fund's
board of directors, 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 20 U.S. registered investment companies, which
offer more than 50 investment portfolios with approximately $ |X| billion in
aggregate assets as of February 29, 2000. Seligman also provides investment
management or advice to institutional or other accounts having an aggregate
value at February 29, 2000 of approximately $ |X| billion. Mr. William C.
Morris, Chairman of Seligman and Chairman of the board of directors of the Fund,
owns a majority of the outstanding voting securities of Seligman.
MANAGEMENT FEE
The Fund will pay a fee to Seligman for its management services at an
annual rate of 1.50% of the Fund's average daily net assets. The fee is
calculated daily and payable monthly. This management fee is materially higher
than the advisory fees paid by most U.S. investment companies. In addition, the
Fund will pay an incentive fee to Seligman as described below. Very few
registered investment companies pay an incentive fee similar to that paid by the
Fund.
INCENTIVE FEE
In addition to the management fee, the Fund will pay an annual
incentive fee to Seligman, calculated as described below. The Fund will accrue a
liability for the incentive fee that may be greater than the amount payable by
the Fund to Seligman as a result of using a different calculation for
determining the accrual. The amount of incentive fees paid to Seligman will not
exceed the incentive fees accrued by the Fund.
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The incentive fee that will be paid to Seligman 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 Seligman in previous years. The
cumulative incentive fee base is equal to the sum of the Fund's: (i) net
realized capital gains or losses; (ii) net investment income or loss; and (iii)
net unrealized depreciation of securities. All amounts referred to in clauses
(i) and (ii) are determined on a cumulative basis and, therefore, include
amounts for all periods since the inception of the Fund. Amounts referred to in
clause (iii) are determined as of the end of the calendar year for which the
incentive fee calculation is being made. The cumulative incentive fee base is
subject to adjustment as described in the last paragraph of this section. The
incentive fee payable (if any) will be determined as of the last day of the
fiscal year. The initial incentive fee payable (if any) will be for the period
from commencement of the Fund's operations through December 31, 2000, and
subsequent incentive fees (if any) will be payable for each subsequent calendar
year (and, if the Fund is liquidated during a calendar year, for the period from
January 1 of that year to the date of liquidation). Seligman 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
<PAGE>
be reduced (but not below zero) on any day by 15% of the net decrease in the
Fund's net assets from investment operations. The increase or decrease in the
Fund's net assets from investment operations for any day is equal to the sum of
the Fund's: (i) net realized capital gains or losses; (ii) net investment income
or loss; and (iii) net change in unrealized appreciation or depreciation of
securities for that day. The Fund's net asset value will be reduced or increased
by the amount of the change in the accrual each day. At the end of each calendar
year, if an incentive fee is paid to Seligman, the amount of the incentive fee
accrual will be reduced by the amount paid to Seligman. The incentive fee
accrual will be calculated on a "high water mark" basis. This means 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,
subject to adjustment as described in the last paragraph of this section.
The incentive fee accrual will be based in part on unrealized capital
appreciation in order to ensure that investors whose shares are repurchased in a
quarterly repurchase offer bear an appropriate share of the annual incentive fee
attributable to any subsequent realization of such unrealized appreciation. For
example, if shares are repurchased at a time when one or more of the Fund's
investments has appreciated significantly in value, but has not yet been sold,
the repurchase price will reflect an incentive fee accrual that includes the
unrealized appreciation of those investments. When the investments are later
sold, that portion of the accrual will become payable to Seligman at the end of
the year (subject to the performance of the Fund's other investments). If the
incentive fee accrual did not take into account unrealized capital appreciation,
the accrued incentive fee reflected in the repurchase price in the example would
not include the appreciation of unsold assets. As a result, when the assets were
later sold, the entire incentive fee attributable to the realized gain would be
paid by shareholders who remain in the Fund, and none of it would have been
borne by the investor whose shares were repurchased. Of course, it is possible
that the incentive fee accrual in the example could subsequently be reversed
because of a decline in the value of the appreciated assets or in the Fund's
performance generally. In that case, some or all of the incentive fee accrual
borne by the investor whose shares were repurchased would be retained by the
Fund. No adjustment to a repurchase price will be made after it has been paid.
If, at the time the Fund completes any quarterly repurchase of its
shares, the sum of the Fund's cumulative realized losses, net investment losses
and net unrealized depreciation exceeds the sum of the Fund's cumulative net
realized capital gains, net unrealized appreciation and net investment income,
then the amount of the excess (which is referred to in this prospectus as the
"Cumulative Loss") will, for purposes of calculating the incentive fee accrual,
be reduced in proportion to the percentage of shares repurchased. If at that
time 15% of the cumulative incentive fee base less the cumulative amount of
incentive fees paid to Seligman in previous years is less than zero, a similar
proportional adjustment will be made to that amount for purposes of calculating
the incentive fee, if any, actually payable to Seligman at the end of the year.
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All incentive fee computations take into account the cumulative amount of
adjustments previously made under the Cumulative Loss provision and, except as
otherwise noted, exclude the effect of any incentive fees previously accrued or
paid.
PORTFOLIO MANAGEMENT
The Fund will be co-managed by Mr. Paul H. Wick, leader of Seligman's
Global Technology Team, Mr. Storm Boswick and Mr. Michael J. Guthrie. Seligman's
Global Technology Team has substantial experience in technology investing. As of
February 29, 2000, Seligman's Global Technology Team managed approximately $ |X|
billion of public and $ |X| million of private securities of technology and
related companies. Seligman's Global Technology Team also manages Seligman
Communications and Information Fund, Inc., one of the world's largest technology
funds; Seligman Global Technology Fund, one of the world's largest global
technology funds; Seligman New Technologies Fund, Inc., which commenced
operations in July 1999 and has an investment objective and strategies similar
to the Fund's; and two recently organized funds offered outside the United
States that make significant investments in venture capital companies.
With over 70 years of combined technology investment experience and
with offices in both Palo Alto and New York, Seligman's Global 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 in the United States and internationally to assess the quality,
prospects and direction of companies. Seligman believes that its presence in the
public market, as well as its strong relationships with venture capital firms,
investment banks, and the companies it has selected for investment, provide it
with valuable sources of information on a large number of investment
opportunities. Seligman also believes that its presence and reputation in the
public arena are recognized among venture capital companies. In addition,
Seligman believes that, as one of the largest and most experienced long-term
investors in technology industries, it has established a reputation as a
"life-cycle investor," which means that Seligman will maintain, and in some
cases increase, its investment in companies throughout the development of their
businesses.
Information about Seligman's investments in venture capital companies
is included in Appendix A to this prospectus.
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 Global
Fund Series, Inc., for which he has acted as Co-Portfolio Manager of the Global
Technology Fund since May 1994, and a Vice President of Seligman New
Technologies Fund, Inc., for which he has acted as Co-Portfolio Manager since
July 1999. 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 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.
He is a Vice President of Seligman New Technologies Fund, Inc., for which he has
acted as Co-Portfolio Manager since July 1999. Prior to joining Seligman, Mr.
Boswick was a Financial Analyst, Investment Research, with Goldman, Sachs & Co.
from February 1994 to May 1996.
Mr. Guthrie is also a Vice President of the Fund and has been a Senior
Vice President, Investment Officer of Seligman since September 1999. He was
formerly a Vice President in the Technology Investment Banking Group at Credit
Suisse First Boston from June 1998 to September 1999, where he led the
semiconductor group. Prior to that, Mr. Guthrie served as Vice President in the
Technology Investment Banking Group of Deutsche Morgan Grenfell from September
1997 through June 1998. Mr. Guthrie also
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served in the Technology Investment Banking Group at Montgomery Securities from
September 1994 through September 1997.
EXPENSES OF THE FUND
The Fund pays a management fee and an incentive 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 (including notices relating to the quarterly repurchase offers)
and proxy materials, 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.
Seligman Data Corp. ("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.
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 will not charge a repurchase fee.
The Fund intends to commence the first quarterly repurchase offer in September
2000 and to complete it in October 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
September 2000 and to complete it in October 2000. Thereafter, quarterly
repurchase offers will commence each December, March, June and September 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 no more than
seven days prior to the date of the notification.
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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 Investment Company
Act, as it may be amended from time to time, commencing September
2000
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)
o there will be a maximum 14 day period between the due date for each
repurchase request and the date on which the Fund's net asset value
for that repurchase is determined
PRO RATA PURCHASES OF SHARES IN THE EVENT OF AN OVERSUBSCRIBED REPURCHASE OFFER
There is no minimum number of shares that must be tendered before the
Fund will honor repurchase requests. However, the percentage determined by the
board of directors for each repurchase offer will set a maximum number of shares
that may be purchased by the Fund. In the event a repurchase offer by the Fund
is oversubscribed, the Fund may, but is not required to, repurchase additional
shares, but only up to a maximum amount of two percent of the outstanding shares
of the Fund. If the Fund determines not to repurchase additional shares beyond
the repurchase offer amount, or if shareholders tender an amount of shares
greater than that which the Fund is entitled to purchase, the Fund will
repurchase the shares tendered on a pro rata basis.
If pro-ration is necessary, the Fund will send a notice of pro-ration
to selected brokers and dealers on the business day following the due date. The
number of shares each investor asked to have repurchased will be reduced by the
same percentage. If any shares that you wish to have repurchased by the Fund are
not repurchased because of pro-ration, you will have to wait until the next
repurchase offer, and your repurchase request will not be given any priority
over other investors' requests at this later date. 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.
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
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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. The Fund will not make in-kind payments with securities of venture
capital companies or with securities of private funds that invest in venture
capital companies.
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 negatively affect shareholders who
do not tender their shares into a repurchase offer by increasing the Fund's
expenses and reducing 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 illiquid securities. Also, the sale of
securities to fund repurchases could reduce the market price of those
securities, which would in turn reduce the Fund's net asset value.
Repurchase offers provide shareholders with the opportunity to dispose
of shares at net asset value. There is no assurance that any secondary market
for the Fund's shares will develop, and in the event that a secondary market
does 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, 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. In such
situations, the Fund's investment will be revalued in a
17
<PAGE>
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. Fair values assigned to the Fund's investments will
also affect the amount of the incentive fee. See "Risk Factors - Incentive Fee."
All fair value determinations by Seligman are subject to ratification by the
board of directors.
Seligman and the board of directors will consider numerous factors in
establishing a fair value for venture capital investments. Factors that relate
to the securities of a venture capital company will include the cost of the
security; the last available quoted price or traded price, if any, for the
security; fundamental analytical data relating to transactions in comparable
securities; relationships among various securities and industry-specific indices
and evaluation of the forces which influence the market in which the security is
purchased and sold; the size of the Fund's position and the liquidity of the
market for the security; recent purchases and sales (including new issuances) of
the company's securities; pricing by dealers in similar securities; reported
prices and the extent of public trading in similar financial instruments of the
issuer or comparable securities; pending public offerings by the company; and
contractual and regulatory restrictions on the Fund's disposition of the
security. Factors that relate to a venture capital company itself will include
its financial position and results of operations, including their variance from
projections; the company's business and financial plan; its ability to obtain
needed financing; changes in economic conditions affecting the company; pending
reorganization activity; changes in management; changes in contracts with major
customers and distributors; and changes in technology affecting the company's
products and services. Certain developments, such as changes in senior
management of a company or its capital structure, or removal of legal or
contractual restrictions on sale, will cause Seligman to review the valuation of
a company's securities immediately. In addition, a combination of developments
that are individually less significant may also cause a review of valuation.
Expenses of the Fund, including Seligman's management fee, the
incentive fee accrual and the costs of any borrowings, are accrued daily and
taken into account for the purpose of determining net asset value. The
repurchase price received by an investor whose shares are repurchased in a
quarterly repurchase offer will reflect an incentive fee accrual if the fund has
experienced an increase in net assets due to investment operations through the
date of repurchase. However, the incentive fee accrual may subsequently be
reversed if the Fund's performance declines. In that case, some or all of the
incentive fee accrual borne by the investor will be retained by the Fund. No
adjustment to a repurchase price will be made after it has been paid. See "Risk
Factors - Incentive Fee."
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 |X| or by visiting
Seligman's Internet website (http://www.jwseligman.com). A listing of the
securities in the Fund's portfolio will also be posted monthly on Seligman's
website. 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 redemption of such shares. The board of directors is also
authorized to increase or decrease the number of shares the Fund is authorized
to issue.
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<PAGE>
The common stock is entitled to one vote per share at all meetings of
shareholders. The Fund does not intend to hold annual meetings of shareholders.
Common shareholders do not have preemptive, subscription or conversion rights,
and are not liable for further calls or assessments. Common shareholders are
entitled to receive dividends only if and to the extent declared by the board of
directors and only after the board has made provision for working capital and
reserves as it in its sole discretion deems advisable. Common stock is not
available in certificated form, and shares must be held through a selected
broker or dealer.
In general, any action requiring a vote of the holders of the common
stock of the Fund shall be effective if taken or authorized by the affirmative
vote of a majority of the aggregate number of the votes entitled to vote
thereon. Any change in the Fund's fundamental policies may also be authorized by
the vote of 67% 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 67% 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.
In addition, depending upon the performance of the Fund's investments,
the related growth of the Fund's net assets, and the availability of attractive
investment opportunities, the Fund may from time to time make a distribution
that constitutes a return of capital for federal income tax purposes. See
"Taxes."
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 100% of both dividends and capital gain distributions;
o receive dividends in cash and reinvest capital gain distributions;
or
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<PAGE>
o receive both dividends and capital gain distributions in cash.
Your dividends and capital gain distributions will be automatically reinvested
if you do not instruct your broker or dealer otherwise. The Fund may limit the
extent to which any distributions that are returns of capital may be reinvested
in the Fund.
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.
The Fund reserves the right to suspend the automatic reinvestment plan
at any time and require shareholders to receive all distributions in cash. The
Fund may also limit the maximum amount that may be reinvested, either as a
dollar amount or as a percentage of distributions. The Fund does not currently
expect to suspend or limit the reinvestment plan, but it may determine to do so
if the amount being reinvested by shareholders exceeds the available investment
opportunities that Seligman considers suitable for the Fund.
DISTRIBUTIONS IN-KIND
The Fund reserves the right to make any distributions in-kind (that is,
to distribute securities from its portfolio instead of cash). However, the Fund
does not currently intend to make any in-kind distributions, and only securities
that are freely transferable will be distributed in-kind.
PROPOSAL TO LIQUIDATE IF FUND UNDERPERFORMS S&P 500 INDEX
If the total return on an investment in the Fund from inception of
investment operations to June 30, 2007 is less than the total return on a
hypothetical investment in the S&P 500 Index, with dividends reinvested, during
the same period, the directors of the Fund intend, within six months after June
30, 2007, to adopt a resolution declaring that dissolution of the Fund is
advisable and to submit to the shareholders a proposal to liquidate the Fund and
distribute its net assets to shareholders. The Fund's total return for this
purpose will be calculated assuming that the investor paid the maximum public
offering price per share, which includes an underwriting discount of $1.25 per
share.
The Fund will compare the performance of four shares of the Fund
purchased for $25.00 each (for a total of $100.00) with the performance of the
S&P 500 Index, adjusted to 100 on the date the Fund commences operations. The
value of the four shares of the Fund will immediately be reduced by the
aggregate underwriting discount ($5.00) and by their proportional share of the
Fund's organizational and offering expenses. To avoid a proposal for
dissolution, the Fund will, over the measuring period of approximately seven
years, have to earn back the underwriting discount and its organizational and
offering expenses, and then match the performance of the S&P 500 Index. The
value of the four shares over time will be calculated on the basis that all
dividends and distributions are reinvested and no shares are repurchased in
quarterly repurchase offers.
The S&P 500 Index measures the performance of the largest U.S.
companies and thus its performance is likely to differ substantially from the
performance of the Fund, which will invest primarily in small and medium-sized
technology companies both within and outside the United States. The S&P 500
Index is an unmanaged index which reflects no payment of management or incentive
fees, brokerage commissions or other expenses. The S&P 500 Index is calculated
on the basis that all dividends paid by component companies are reinvested. You
may not invest directly in the S&P 500 Index.
The affirmative vote of a majority of all votes entitled to be cast
will be required to approve a proposal to liquidate the Fund. (If the proposal
is recommended by fewer than two-thirds of the directors, then the affirmative
vote of two-thirds of all votes entitled to be cast will be required to approve
it.) If a proposal to liquidate is approved by shareholders, a lengthy period
may be required to complete the liquidation because the Fund may have difficulty
selling its venture capital investments and will not be able to distribute them
in-kind.
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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 gain 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 held your shares for more than one year, or as a short-term
capital gain or loss if you held your shares for one year or less. However, if
you sell Fund shares on which a long-term capital gain distribution has been
received and you held the shares for six months or less, any loss you realize
will be treated as a long-term capital loss to the extent that it offsets the
long-term capital gain distribution.
The Fund does not intend to operate so as to be permitted to
"pass-through" to its shareholders credit for foreign taxes, if any, payable by
the Fund.
Each January, you will be sent information on the tax status of any
distribution made during the previous calendar year. Because each shareholder's
situation is unique, you should always consult your tax advisor concerning the
effect income taxes may have on your individual investment.
UNDERWRITING
Subject to the terms of conditions stated in the underwriting agreement
dated the date hereof, each underwriter named below has severally agreed to
purchase, and the Fund has agreed to sell to each underwriter, the number of
shares set forth opposite its name.
NUMBER
NAME OF SHARES
---- ---------
The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in the offering are subject to
delivery of specified legal opinions by counsel and to certain other conditions.
The underwriters are obligated to purchase all the shares if they purchase any
of the shares.
The underwriters, for whom |X| are acting as representatives, propose
to offer some of the shares directly to Qualified Investors at the offering
price of $25.00 per share, subject to adjustment in the event of purchases of
[10,000] shares or more, and to offer some of the shares to certain dealers at
the offering price less a concession not in excess of $ |X| per share. The
offering price for purchases of [10,000] shares or greater, but less than
[20,000] shares, will be $ |X| per share. [Breakpoint schedule to be
determined.] The underwriters may allow, and such dealers may reallow, a
concession not in excess of $ |X| per share on sales to certain other dealers.
If all of the shares are not sold at the prices set forth above, the
representatives may change the offering prices and other selling terms. The
representatives have advised the Fund that the underwriters do not intend to
confirm any sales to any accounts over which they exercise discretionary
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authority. The minium investment requirement is 1,000 shares ($25,000).
Investors must pay for any shares purchased on or before |X| , 2000.
Up to |X| shares have been reserved for sale [directly by the Fund],
without the imposition of any sales load or payment of any selling compensation
to any underwriter, broker or dealer, to the following persons and entities:
present and retired directors, trustees and employees, and their respective
spouses, of Seligman and its subsidiaries, the Fund, other funds in the Seligman
group, and SDC, and such persons' family members, including lineal descendants
and ancestors, siblings (and their spouses and children) and any company or
organization controlled by an any of the foregoing; 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; and employees of selected brokers and dealers that offer the Fund.
[The Fund and Seligman have each agreed that, for a period of 120 days
from the date of this prospectus, they will not, without the prior written
consent of |X| , on behalf of the underwriters, dispose of or hedge any shares
of the Fund or securities convertible into or exchangeable for the shares. |X|
in its sole discretion may release any of the securities subject to this
agreement at any time without notice.]
Prior to this offering, there has been no public or private market for
the shares. Consequently, the offering prices for the shares were determined by
negotiation among the Fund, Seligman and the representatives. There can be no
assurance, however, that the price at which the shares will sell after this
offering will not be lower than the price at which they are sold by the
underwriters. Seligman Advisors, Inc. will not make a market in the Fund's
shares. No underwriter is obligated to make a market in the shares and there can
be no assurance that any trading market in the shares will develop and continue
after this offering.
Seligman Advisors, Inc. will pay additional sales compensation from its
own resources to each underwriter equal to $0.125 for each share sold by the
underwriter. In addition, the Fund will pay a shareholder servicing fee to each
broker or dealer not affiliated with the Fund or Seligman at the annual rate of
0.25% of the net asset value of the outstanding shares owned by customers of
such brokers or dealers. Seligman Advisors will make a payment to such brokers
or dealers from its own resources at the annual rate of 0.25% of the net asset
value of the outstanding shares owned by customers of such brokers or dealers.
The Fund and Seligman have each agreed to indemnify the several
underwriters or contribute to losses arising out of certain liabilities under
the Securities Act.
Seligman has agreed to pay |X| a structuring fee for investment banking
services of approximately $ |X| million in connection with the establishment of
the terms and structure of the Fund.
The underwriting agreement provides that it may be terminated in the
absolute discretion of the representatives without liability on the part of any
underwriter to the Fund or Seligman by notice to the Fund or Seligman if, prior
to delivery of and payment for the shares, any of the following occur: trading
in securities generally on the New York Stock Exchange, American Stock Exchange,
Nasdaq National Market, Nasdaq SmallCap Market or the Nasdaq Stock Market shall
have been suspended or limited; additional governmental restrictions not in
force on the date of the underwriting agreement have been imposed upon trading
in securities generally or a general moratorium on commercial banking activities
shall have been declared by federal or any state's authorities; or any outbreak
or material escalation of hostilities or other international or domestic
calamity, crisis or change in political, financial or economic conditions
occurs, the effect of which is such as to make it, in the judgment of the
representatives, impracticable or inadvisable to commence or continue the
offering of the shares at the offering prices set forth above.
The Fund anticipates that from time to time the representatives and
certain other underwriters may act as brokers or dealers in connection with the
execution of the Fund's portfolio transactions after they have ceased to be
underwriters.
The Fund may in the future offer additional shares to Qualified
Investors depending upon market conditions, available investment opportunities
and other factors, but the Fund has no current plans for any future offerings.
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FUTURE OFFERINGS
The Fund may from time to time in the future offer additional shares to
Qualified Investors, depending upon market conditions, available investment
opportunities and other factors, but the Fund has no current plans for any
future offerings. If the Fund offers additional shares in any year during which
a Cumulative Loss would reduce the incentive fee payable by the Fund, the
offering will be structured in such a way that existing shareholders are not
disadvantaged by a dilution of the Cumulative Loss. Seligman may sponsor other
funds that are similar to the Fund in the future.
SHAREHOLDER SERVICING FEE
The Fund intends to pay selected brokers and dealers that are not
affiliates of the Fund or Seligman and that have entered into a shareholder
servicing agreement with the Fund a shareholder servicing fee to compensate them
for providing shareholder services and the maintenance of accounts. These
services include ensuring that all investors who purchase shares in the
secondary market through the broker or dealer are Qualified Investors,
monitoring compliance with transfer restrictions and obtaining required
certifications and agreements (as described under "Subscription Documentation")
and providing information and responding to shareholder questions about the
structure of the Fund, the availability of shares in any continuous offering,
and repurchase offers. The shareholder service fee is payable at an annual rate
of 0.25% 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.
SUBSCRIPTION DOCUMENTATION
Shares of the Fund are offered only to investors who are "qualified
clients" as such term is defined in Rule 205-3 under the Investment Advisers Act
of 1940. Such investors include persons who have a net worth (together, in the
case of a natural person, with assets held jointly with a spouse) of more than
$1,500,000 or who have at least $750,000 under Seligman's management, including
any amount invested in the Fund ("Qualified Investors"). Except for sales to
certain knowledgeable employees who participate in Seligman's investment
activities, no shares will be sold to any person unless that person has
certified that he or she is a Qualified Investor, has agreed to hold his or her
shares only through a broker or dealer that is a party to a shareholder
servicing agreement with the Fund, and has agreed not to transfer shares except
to a person who is also a Qualified Investor and who has provided a similar
certification and agreement.
Subscription documentation must be executed and delivered to your
financial advisor or sales representative before you may place an order for the
purchase of shares. A form of investor certification is included as Appendix B
to this prospectus.
GENERAL INFORMATION
The Fund is registered under the Investment Company Act as a
closed-end, non-diversified management investment company. The Fund was
incorporated under the laws of the State of Maryland on March 8, 2000 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-13
Custodian, Stockholder Service Agent and Dividend Paying Agent............ B-13
Brokerage Commissions..................................................... B-13
Financial Statements...................................................... B-14
Appendix A
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APPENDIX A
SELIGMAN'S VENTURE CAPITAL INVESTMENTS
The following table lists, in chronological order, each venture capital
company in which Seligman has invested through the date of this prospectus,
along with Seligman's classification of each company's principal area of
business. These investments were made for the accounts of one or more of
Seligman's clients, including registered investment companies, private funds and
institutional accounts. There can be no assurance that the Fund will have the
opportunity to invest in any of the companies shown below.
COMPANY Classification
------- --------------
Diamond Lane Communications .......................Other - Semiconductor
UniSite ...........................................Broadband and fiber optics
CrossWorlds Software ..............................Internet and new media
Tut Systems .......................................Broadband and fiber optics
Transmeta .........................................Digital consumer electronics
XTRA On-Line ......................................Internet and new media
Inktomi ...........................................Broadband and fiber optics
Mail.com .........................................Internet and new media
iVillage ..........................................Internet and new media
Ambit Design Systems ..............................Other - Semiconductor
Stamps.com .......................................Internet and new media
Juno Online ......................................Internet and new media
Verisity Ltd. .....................................Internet and new media
SynQuest, Inc. ....................................Internet and new media
Ziff-Davis ........................................Other - Magazines
WorldRes.com ......................................Internet and new media
eMusic (formerly GoodNoise) .......................Internet and new media
Applied Science Fiction ...........................Digital consumer electronics
Centillium Technology Corp. .......................Broadband and fiber optics
Cobalt Networks, Inc. ............................Broadband and fiber optics
Mobility Electronics, Inc. ........................Digital consumer electronics
ReleaseNow.com ....................................Internet and new media
Rx.com ...........................................Intenet and new media
Asyst Technologies ................................Other - Semiconductor
Bluestone Software ................................Internet and new media
APB Online, Inc ...................................Internet and new media
net.Genesis .......................................Internet and new media
Interwoven .......................................Broadband and fiber optics
ThirdAge Media ....................................Internet and new media
Preview Systems ...................................Internet and new media
Kozmo.com, Inc. ...................................Internet and new media
E-Stamp Corporation ..............................Internet and new media
RealNames Corporation .............................Internet and new media
MaMaMedia, Inc. ...................................Internet and new media
SourcingLink.net, Inc. ............................Internet and new media
A - 1
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CrossRoads Systems, Inc. .........................Broadband and fiber optics
Vuent, Inc ( formerly Adaptive Media, Inc.) .......Digital consumer electronics
YouthStream Media Networks, Inc. ..................Internet and new media
Pointshare Corporation ............................Internet and new media
FlashPoint Technology, Inc. .......................Digital consumer electronics
MarketFirst Software, Inc. ........................Internet and new media
Global Medical Products, Inc. .....................Biometric software
Microcast Incorporated ............................Digital consumer electronics
AllAdvantage.com ..................................Internet and new media
PointOne Telecommunications, Inc. .................Broadband and fiber optics
Screaming Media.Net, Inc. .........................Internet and new media
RealEstate.com ....................................Internet and new media
Aeneid Corporation ................................Internet and new media
Microtune, Inc. ...................................Broadband and fiber optics
Edison Venture Fund IV, L.P. ......................Venture Capital Fund
HomePage.com, Inc. ................................Internet and new media
More.com ..........................................Internet and new media
CollegeClub.com, Inc. .............................Internet and new media
Buildnet, Inc. ....................................Internet and new media
V-Store, Inc. .....................................Internet and new media
Yupi Internet, Inc. ...............................Internet and new media
Bernard Technologies, Inc. ........................Internet and new media
Wine.com, Inc. ....................................Internet and new media
Chorum Technologies, Inc. .........................Broadband and fiber optics
Universal Access, Inc. ............................Broadband and fiber optics
Reciprocal, Inc. ..................................Internet and new media
UGO Networks, Inc. ................................Internet and new media
Impresse Corporation ..............................Internet and new media
Cielo Communications, Inc. .......................Broadband and fiber optics
Compass Venture Partners, L.P. ....................Venture Capital Fund
Mainspring Communications, Inc. ...................Internet and new media
Younology, Inc. ...................................Internet and new media
ART Advanced Recognition Technologies, Inc. .......Biometric software
Silicon Wave, Inc. ................................Wireless communications
and computing
RC Networks .......................................Broadband and fiber optics
Firetalk Communications, Inc. .....................Internet and new media
Colo.com ..........................................Broadband and fiber optics
Corvis Corporation ................................Broadband and fiber optics
Shopfast Pty Limited ..............................Internet and new media
Snowball.com, Inc. ................................Internet and new media
Bill Gross' idealab! ..............................Venture Capital Fund
LetsBuyIt.com N.V. ................................Internet and new media
New Focus, Inc. ...................................Broadband and fiber optics
Softcom, Inc. .....................................Broadband and fiber optics
Geographic Network Affiliates International, Inc...Broadband and fiber optics
A - 2
<PAGE>
Homegain.com, Inc. ...............................Internet and new media
Enterworks, Inc. ..................................Internet and new media
Optical Networks, Incorporated ....................Broadband and fiber optics
Blaze Software, Inc. ..............................Internet and new media
etang.com, Inc. ...................................Internet and new media
HomePoint Corporation .............................Internet and new media
Industry Standard Communications, Inc. ............Internet and new media
P-Com, Inc. .......................................Wireless communications
and computing
USA Digital Radio, Inc. ...........................Digital consumer electronics
Internet Appliance Network, Inc. ..................Digital consumer electronics
Neuvis, Inc. ......................................Internet and new media
Kestrel Solutions, Inc. ...........................Broadband and fiber optics
Moai Technologies, Inc. ...........................Internet and new media
A - 3
<PAGE>
APPENDIX B
[FORM OF INVESTOR CERTIFICATION]
SELIGMAN NEW TECHNOLOGIES FUND II, INC.
INVESTOR CERTIFICATION
To: [Name of broker or dealer making sale]
In connection with my intended purchase of ______________________
shares (the "Shares") of Seligman New Technologies Fund II, Inc. (the "Fund")
for a total purchase price of $_______________, I hereby certify that I am a
"qualified client", as such term is defined in Rule 205-3(d)(1) of the
Investment Advisers Act of 1940, meaning that (please initial applicable item):
___ at the time I sign this certification, I have at least $750,000
under the management of J. & W. Seligman & Co. Incorporated
("Seligman"), including any amount that I propose to invest in
the Fund; or
___ I have a net worth (together with assets held jointly with my
spouse) of more than $1,500,000 at the time of entering into
the agreement to purchase the Shares;
I will produce evidence to support the foregoing certification upon request.
In addition, I hereby confirm that I understand and agree to the
following conditions to my ownership and transfer of the Shares:
(a) my Shares may be held only through a broker or dealer that has
entered into a Shareholder Servicing Agreement with the Fund; and
(b) I may not transfer the Shares except to a person who is a
qualified client as defined above, who agrees to hold his or her
Shares through a broker or dealer that has entered into a
Shareholder Servicing Agreement with the Fund, and who agrees not
transfer the Shares except to another person who is a qualified
client and provides a similar Investor Certification.
I confirm that I have received, read and understand the Prospectus of
the Fund, and I understand the risks associated with this investment.
Dated: _______________, 2000
------------------------------
Name:
<PAGE>
S E L I G M A N
NEW TECHNOLOGIES FUND II, INC.
100 Park Avenue o New York, New York 10017
A Management Type
Non-Diversified, Closed-End
Investment Company
----------------
COMMON STOCK
($0.01 PAR VALUE)
----------------
PROSPECTUS
|X| , 2000
INVESTMENT MANAGER SHAREHOLDER SERVICE AGENT
J. & W. Seligman & Co. Incorporated Seligman Data Corp.
100 Park Avenue 100 Park Avenue
New York, New York 10017 New York, New York 10017
PORTFOLIO SECURITIES CUSTODIAN GENERAL COUNSEL
State Street - Kansas City Sullivan & Cromwell
801 Pennsylvania 125 Broad Street
Kansas City, Missouri 64105 New York, New York 10004
<PAGE>
RED HERRING TEXT
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. A REGISTRATION STATEMENT RELATING TO THE SECURITIES HAS BEEN
FILED WITH THE SECURITIES EXCHANGE COMMISSION. THE FUND MAY NOT SELL THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT IS EFFECTIVE. NEITHER THE PROSPECTUS
NOR THE STATEMENT OF ADDITIONAL INFORMATION IS AN OFFER TO SELL THESE
SECURITIES, NOR ARE THEY SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER, SOLICITATION OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 10, 2000
SELIGMAN NEW TECHNOLOGIES FUND II, INC.
[X] , 2000
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 II, INC. (THE "FUND"), DATED [o], 2000. A COPY OF
THE PROSPECTUS MAY BE OBTAINED BY CONTACTING THE FUND AT THE TELEPHONE NUMBERS
OR ADDRESS SET FORTH ABOVE.
THE INFORMATION IN THIS SAI IS NOT COMPLETE AND MAY BE CHANGED. THE
FUND MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") IS EFFECTIVE. THIS SAI
IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
TABLE OF CONTENTS
Additional Investment Policies............................................. B-2
Directors and Officers..................................................... B-6
Investment Advisory and Other Services..................................... B-9
Experts.................................................................... B-9
Custodian, Stockholder Service Agent and Dividend Paying Agent............. B-10
Brokerage Commissions...................................................... B-10
Financial Statements....................................................... B-10
Appendix A................................................................. B-11
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 only be changed by
the affirmative vote of a majority of the outstanding voting securities of the
Fund, are listed below. Within the limits of these fundamental policies, the
Fund's management has reserved freedom of action. For the purposes of this SAI,
"majority of the outstanding voting securities of the Fund" means the vote, at
an annual or special meeting of securityholders duly called, (a) of 67 percent
or more of the voting securities present at such meeting, if the holders of more
than 50 percent of the outstanding voting securities of the Fund are present or
represented by proxy; or (b) of more than 50 percent of the outstanding voting
securities of the Fund, whichever is the less. 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 September 2000, 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 65% 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 shall pay 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.
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.
Derivatives. 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 and call options if they are traded on
options exchanges or over-the- counter markets. However, the Fund will only
enter into transactions with broker-dealers that are reputable
B - 3
<PAGE>
financial institutions which (i) specialize in these types of transactions, (ii)
make markets in these options, or (iii) are participants in over-the-counter
markets.
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. Purchasing a call option gives the Fund the right to
buy, and obligates the writer of the call option to sell, the underlying
security at a stated exercise price at any time prior to the expiration of the
option. Because an option gives the purchaser a right and not an obligation, the
purchaser is not required to exercise the option. The option right is available
during the life of the option.
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.
The Fund's maximum financial exposure will be limited to these costs. 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. Conversely, a call option will be profitable if the market
price of the underlying security rises sufficiently above the exercise price to
cover the premium and transaction costs. If an 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 Fund may purchase both listed and over-the-counter options. The
Fund will be exposed to the risk of counterparty nonperformance in the case of
over-the-counter options.
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.
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.
Where the Fund believes that a foreign currency may experience a
substantial movement against the U.S. dollar, the Fund may enter into a forward
contract to sell or buy an appropriate amount of that foreign currency. 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
B - 4
<PAGE>
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 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 total assets would be so
invested.
B - 5
<PAGE>
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. The Fund's
investments in venture capital companies will generally be illiquid, although a
venture capital investment may become liquid if the company completes an IPO and
any contractual restrictions on the Fund's ability to sell its shares terminate.
There is no limit to the percentage of the Fund's total assets that may be
invested in illiquid securities, but Seligman does not expect that illiquid
securities will ordinarily exceed 50% of the Fund's total assets. The Fund will
not make new venture capital investments at any time when its existing venture
capital investments exceed 50% of its total assets, but the Fund may, at such
times, make additional investments in venture capital companies already
represented in its portfolio.
Debt Securities. The Fund does not plan to invest more than 10% of its
total 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 total 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;
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.
B - 6
<PAGE>
<TABLE>
<CAPTION>
Name, (Age) and Position(s) Held
Address with Fund Principal Occupation(s) During the Past 5 Years
------- --------- -----------------------------------------------
<S> <C> <C>
William C. Morris* Director, Chairman, J. & W. Seligman & Co. Incorporated;
([o]) Chairman of the Chairman and Chief Executive Officer, the Seligman
Board and Chief Group of investment companies; Chairman, Seligman
Executive Officer Advisors, Inc., Seligman Services, Inc., and Carbo
Ceramics Inc., ceramic proppants for oil and gas industry;
and Director, Seligman Data Corp. and Kerr-McGee
Corporation, diversified energy company. Formerly:
Director, Daniel Industries Inc., manufacturer of oil and
gas metering equipment.
Brian T. Zino* Director and Director and President, J. & W. Seligman & Co.
([o]) 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 Investments,
([o]) 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.
Paul H. Wick Vice President Director and Managing Director, J. & W. Seligman & Co.
([o]) and Portfolio Incorporated since January 1995 and November 1997,
Manager respectively; Vice President and Portfolio Manager, three
open-end companies in the Seligman Group of investment
companies; Portfolio Manager, Henderson Investment
Management Limited; Portfolio Manager, Seligman New
Technologies Fund, Inc. 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. Incorporated
([o]) and Portfolio since January 1999; Portfolio Manager, Seligman New
Manager Technologies Fund, Inc. Mr. Boswick joined J. & W.
Seligman & Co. Incorporated in June 1996 as an
Associate, Investment Research. Formerly, Vice
President, Investment Officer of J. & W. Seligman & Co.
Incorporated from January 1997 to December 1998; and
Financial Analyst, Investment Research, Goldman, Sachs
& Co. from February 1994 to May 1996.
</TABLE>
B - 7
<PAGE>
<TABLE>
<CAPTION>
Name, (Age) and Position(s) Held
Address with Fund Principal Occupation(s) During the Past 5 Years
------- --------- -----------------------------------------------
<S> <C> <C>
Michael J. Guthrie Vice President Vice President of the Fund and Senior Vice President,
([o]) Investment Officer of Seligman since September 1999;
formerly, Vice President in the Technology Investment
Banking Group at Credit Suisse First Boston from June 1998
to September 1999; Vice President in the Technology
Investment Banking Group of Deutsche Morgan Grenfell from
September 1997 to June 1998; Technology Investment Banking
Group at Montgomery Securities from September 1994 to
September 1997.
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman & Co.
([o]) 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
([o]) 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 companies
([o]) and Seligman Data Corp.
</TABLE>
COMPENSATION
<TABLE>
<CAPTION>
NAME AND POSITION WITH AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION
FUND COMPENSATION FROM BENEFITS ACCRUED AS RECEIVED FROM FUND
FUND (1) PART OF FUND EXPENSES AND FUND COMPLEX
(1)(2)
<S> <C> <C> <C>
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
<FN>
- ---------------------
(1) Based on remuneration expected to be paid to the Directors of the Fund for the fiscal
year ended December 31, 2000.
(2) The Seligman Group of Investment Companies consists of twenty-one 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 given 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
B - 8
<PAGE>
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.
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 twenty 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 will pay to Seligman (i) a management fee at an annual rate of
1.5% of the Fund's average daily net assets and (ii) an incentive fee as
described in the prospectus. Taken together, these fees are materially 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
[o] 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 - 9
<PAGE>
CUSTODIAN, STOCKHOLDER SERVICE AGENT AND
DIVIDEND PAYING AGENT
State Street - Kansas City, 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.
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.
FINANCIAL STATEMENTS
The financial statements of the Fund will be filed in a pre-effective
amendment to the Registration Statement of which this SAI forms a part.
B - 10
<PAGE>
APPENDIX A
Established in 1864, J. & W. Seligman's more than 130 years of
providing financial services have been marked not by fanfare, but rather by a
quiet and firm adherence to managing investments and giving prudent financial
advice. Seligman is proud of its distinctive past and traditional values, which
continue to shape its business decisions and investment judgment.
Seligman's beginnings date back to 1837, when Joseph Seligman, the
oldest of eight brothers, arrived in the United States from Germany. Nearly 30
years later, in 1864, after achieving success as international bankers, the
Seligmans established the investment firm of J. & W. Seligman & Co.
In the years that followed, Seligman played a major role in the
geographical expansion and industrial development of the United States. It
helped finance the westward path of the railroads and the building of the Panama
Canal. In the late 1800s, and early 1900s, the firm was instrumental in
financing the fledgling American automobile and steel industries.
Throughout the first quarter of this century, Seligman participated in
hundreds of successful underwritings, including those for some of the country's
most important companies: United Artists Theatre Circuit, Dodge Brothers,
General Motors, Victor Talking Machine, Minneapolis-Honeywell Regulator and
Maytag, to name just a few. In 1929, Seligman organized its first investment
company, Tri-Continental Corporation, today the nation's largest diversified
publicly traded closed-end investment company, with more than $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.
B - 11
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
1. Financial Statements:
Part A: Financial Highlights (not applicable).
Part B: Independent Auditors' Report
Statement of Assets and Liabilities
Statement of Operations
Notes to Financial Statements
2. Exhibits:
a. Charter of Registrant.
b. Bylaws of Registrant.
e. Registrant's Automatic Reinvestment Plan (included in prospectus).
g. Management Agreement between Registrant and J. & W. Seligman & Co.
Incorporated.
h(1). Underwriting Agreement between Registrant and [o].
h(2). Form of Shareholder Servicing Agreement.
i. Deferred Compensation Plan for Directors.
j. Custody and Investment Accounting Agreement between Registrant and
Investors Fiduciary Trust Company.
l. Opinion and Consent of Counsel.
n. Consent of Independent Auditors.
p. Agreement with respect to Seed Capital.
q. Traditional/Roth IRA Set-up Kit of Registrant.
Item 25. Marketing Arrangements: Not Applicable.
Item 26. Other Expenses of Issuance and Distribution:
Registration fees $
Legal fees
Accounting fees
Miscellaneous (mailing, etc.) -
Total.......................................$
=
Item 27. Persons Controlled by or Under Common Control with Registrant: None.
Item 28. Number of Holders of Securities as of [o], 2000:
Title of Class Number of Recordholders
Common Stock 1
C - 1
<PAGE>
Item 29. Indemnification:
Reference is made to the provisions of Article VIII of the
Registrant's Charter, Article VII of the Registrant's Bylaws and
Section [o] of the Underwriting Agreement between the Registrant and
[o], each filed as an exhibit to this Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised by the
Securities and Exchange Commission that such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 30. Business and Other Connections of Investment Adviser:
J. & W. Seligman & Co. Incorporated, a Delaware corporation, is the
Registrant's investment manager. Seligman also serves as investment
manager to twenty associated investment companies. They are Seligman
Capital Fund, Inc., Seligman Cash Management Fund, Inc., Seligman
Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Frontier Fund, Inc., Seligman Global Fund Series, Inc.,
Seligman Growth Fund, Inc., Seligman High Income Fund Series, Inc.,
Seligman Income Fund, Inc., Seligman Municipal Fund Series, Inc.,
Seligman Municipal Series Trust, Seligman New Jersey Municipal Fund,
Inc., Seligman New Technologies Fund, Inc., Seligman Pennsylvania
Municipal Fund Series, Inc., Seligman Portfolios, Inc., Seligman
Quality Municipal Fund, Inc., Seligman Select Municipal Fund, Inc.,
Seligman Time Horizon/Harvester Series, Inc., Seligman Value Fund
Series, Inc. and Tri-Continental Corporation.
Seligman has an advisory service division which provides investment
management or advice to private clients. The list required by this
Item 30 of officers and directors of Seligman, together with
information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and
directors during the past two years, is incorporated by reference to
Schedules A and D of Form ADV, filed by Seligman, pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-15798) which was
filed on [o].
C - 2
<PAGE>
Item 31. Location of Accounts and Records:
Custodian: State Street - Kansas City
801 Pennsylvania
Kansas City, Missouri 64105
AND
Seligman New Technologies Fund II, Inc.
100 Park Avenue
New York, New York 10017
Item 32. Management Services: Not Applicable.
Item 33. Undertakings:
I. The Registrant undertakes to suspend the offering of shares until
the prospectus is amended if (1) subsequent to the effective date
of its registration statement, the net asset value declines more
than ten percent from its net asset value as of the effective
date of the registration statement.
II. The Registrant undertakes that:
(a) For purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the
time it was declared effective.
(b) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains
a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
III. The Registrant undertakes to send by first class mail or other
means designed to ensure equally prompt delivery within two
business days of receipt of a written or oral request, the
Registrant's Statement of Additional Information.
C - 3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
the registration statement to be signed on its behalf by the undersigned, its
duly authorized representative, in the City of New York, State of New York, on
the 10th day of March, 2000.
SELIGMAN NEW TECHNOLOGIES FUND II, INC.
By: /s/ William C. Morris
------------------------------------
William C. Morris
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed below by the following
persons, in the capacities indicated, on March 10, 2000.
NAME TITLE
---- -----
/s/ William C. Morris
- ------------------------------- Chairman of the Board
(William C. Morris) (Principal executive officer and Director
/s/ Brian T. Zino
- ------------------------------- President and Director
(Brian T. Zino)
/s/ Richard R. Schmaltz
- ------------------------------- Director
(Richard R. Schmaltz)
/s/ Thomas G. Rose
- ------------------------------- Treasurer
(Thomas G. Rose) (Principal financial and accounting officer)
C - 4
<PAGE>
EXHIBIT INDEX
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------ ----------- ------
a. Certificate of Incorporation
b. By-laws*
c. Not Applicable
d. Not Applicable
e. Included in Prospectus
f. Not Applicable
g. Management Agreement between Registrant and J. & W.
Seligman & Co. Incorporated*
h(1). Underwriting Agreement between Registrant and [o]*
h(2). Form of Shareholder Servicing Agreement*
i. Deferred Compensation Plan for Directors*
j. Custody and Investment Accounting Agreement between
Registrant and Investors Fiduciary Trust Company*
k. Not Applicable
l. Opinion and Consent of Counsel*
m. Not Applicable
n. Consent of Independent Auditors*
o. Not Applicable
p. Agreement with respect to Seed Capital*
q. Not Applicable
r. Not Applicable
- ----------------
* to be filed subsequently by amendment
C - 5
ARTICLES OF INCORPORATION
OF
SELIGMAN NEW TECHNOLOGIES FUND II, INC.
ARTICLE I
INCORPORATOR
------------
I, the incorporator, Sachin A. Dave, whose post office address is 125
Broad Street, New York, New York 10004, being at least eighteen years of age,
hereby, under and by virtue of the general laws of the State of Maryland
authorizing the formation of corporations, form a corporation.
ARTICLE II
NAME
----
The name of the corporation (hereinafter, the "Corporation") is
Seligman New Technologies Fund II, Inc.
ARTICLE III
PURPOSES AND POWERS
-------------------
The purpose for which the Corporation is formed is to act as an
investment company of the management type registered as such with the Securities
and Exchange Commission pursuant to the Investment Company Act of 1940 (the
"1940 Act") and to exercise and generally to enjoy all of the powers, rights and
privileges granted to, or conferred upon, corporations by the general laws of
the State of Maryland now or hereafter in force.
<PAGE>
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
-----------------------------------
Section 1. The post office address of the principal office of the
Corporation in the State of Maryland is c/o The Corporation Trust Incorporated,
300 East Lombard Street, Baltimore, Maryland 21202.
Section 2. The name of the Corporation's resident agent is The
Corporation Trust Incorporated, and its post office address is 300 East Lombard
Street, Baltimore, Maryland 21202. Said resident agent is a corporation of the
State of Maryland.
ARTICLE V
CAPITAL STOCK
-------------
Section 1. The total number of shares of capital stock that the
Corporation has authority to issue is 100,000,000 shares, all of one class
called Common Stock, having a par value of $0.01 per share and an aggregate par
value of $1,000,000.
Section 2. The Board of Directors of the Corporation may classify or
reclassify any unissued shares of capital stock from time to time by setting or
changing the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, or qualifications of such shares of
stock.
Section 3. The Board of Directors of the Corporation, without any
action by the stockholders of the Corporation, may amend these Articles of
Incorporation from time to time to increase or decrease the aggregate number of
shares of stock or the number of shares of stock of any class or series that the
Corporation has authority to issue.
Section 4. The Board of Directors of the Corporation is hereby
empowered to authorize the issuance from time to time of shares of any class of
the Corporation's capital stock, whether now or hereafter authorized, or
securities convertible into shares of any class or classes of its capital stock,
whether now or hereafter authorized.
Section 5. The Board of Directors of the Corporation is hereby
empowered to authorize the repurchase by the Corporation from time to time of
shares of any class of its
2
<PAGE>
capital stock, whether now or hereafter authorized, or securities convertible
into shares of any class or classes of its capital stock, whether now or
hereafter authorized, upon such terms, at such prices (which may be determined
by formula) and subject to such conditions (which may include proration of
shares tendered for repurchase) as the Board of Directors of the Corporation may
determine.
Section 6. Unless otherwise expressly provided in these Articles of
Incorporation, including any Articles Supplementary creating any class of
capital stock, the holders of each class of capital stock shall be entitled to
dividends and distributions in such amounts, at such times and to such
stockholders of record as may be determined by the Board of Directors of the
Corporation, and the dividends and distributions paid with respect to the
various classes of capital stock may vary among such classes.
Section 7. Unless otherwise expressly provided in these Articles of
Incorporation, including any Articles Supplementary creating any class of
capital stock, on each matter submitted to a vote of stockholders, each holder
of a share of capital stock of the Corporation shall be entitled to one vote for
each share held in such holder's name on the books of the Corporation,
irrespective of the class thereof, and all shares of all classes of capital
stock shall vote together as a single class; provided, however, that as to any
matter with respect to which a separate vote of any class is required by the
1940 Act or any rules, regulations or orders issued thereunder, or the Maryland
General Corporation Law, such requirement as to a separate vote by that class
shall apply in lieu of a vote of all classes voting together as a single class
as described above.
Section 8. The presence in person or by proxy of stockholders holding
of record one-third of the shares of the capital stock of the Corporation
issued, outstanding and entitled to vote thereat shall constitute a quorum for
the transaction of any business at all meetings of the stockholders except as
otherwise provided by law or in these Articles of Incorporation or in the Bylaws
of the Corporation, provided that the Bylaws shall not provide for a quorum of
less than the holders of record of one-third of all shares of the capital stock
of the Corporation issued, outstanding and entitled to vote.
Section 9. Notwithstanding any provision of the general laws of the
State of Maryland requiring action to be taken or authorized by the affirmative
vote of the holders
3
<PAGE>
of a designated proportion greater than a majority of the votes of all classes
of capital stock of the Corporation (or of any class entitled to vote thereon as
a separate class), such action shall, except as otherwise provided in Section 10
of this Article V, be valid and effective if taken or authorized by the
affirmative vote of the holders of a majority of the aggregate number of shares
of capital stock of the Corporation outstanding and entitled to vote thereon (or
a majority of the aggregate number of shares of a class entitled to vote thereon
as a separate class).
Section 10. Unless otherwise indicated below, the affirmative vote of
at least 662/3% of the shares of capital stock of the Corporation outstanding
and entitled to vote thereon shall be necessary to authorize any of the
following actions:
(a) a merger or consolidation or statutory stock exchange of the
Corporation with or into another corporation;
(b) a sale of all or substantially all of the Corporation's assets
(other than in the regular course of the Corporation's investment
activities or in connection with the repurchase of the
Corporation's shares in the open market);
(c) a liquidation or dissolution of the Corporation, unless such
action has been approved, adopted or authorized by the
affirmative vote of 66 2/3% of the total number of directors
fixed in accordance with the Bylaws, in which case the
affirmative vote of only a majority of the outstanding voting
securities is required;
(d) the conversion of the Corporation to an "open-end company" (as
defined in the 1940 Act);
(e) the removal of a director; or
(f) any amendment of these Articles of Incorporation to reduce the
66 2/3% vote requirement to authorize any of the actions in this
Section 10.
Section 11. No holder of shares of the capital stock of the Corporation
shall, as such holder, have any preemptive right to purchase or subscribe for
any part of any new or additional issue of stock of any class, or of rights or
options to purchase any stock, or of
4
<PAGE>
securities convertible into, or carrying rights or options to purchase, stock of
any class, whether now or hereafter authorized or whether issued for money, for
a consideration other than money or by way of a dividend or otherwise, and all
such rights are hereby waived by each holder of capital stock and of any other
class of stock or securities of the Corporation that may hereafter be created.
Section 12. All persons who shall acquire capital stock in the
Corporation shall acquire the same subject to the provisions of these Articles
of Incorporation.
ARTICLE VI
DIRECTORS
---------
Section 1. The initial number of directors of the Corporation shall be
three, and the names of those persons who shall act as such until the first
annual meeting and until their successors are elected and qualified are as
follows: William C. Morris, Brian T. Zino and Richard R. Schmaltz. The Bylaws of
the Corporation may fix the number of directors at a certain number and may
authorize the Board of Directors of the Corporation, by the vote of a majority
of the entire Board of Directors of the Corporation, to increase or decrease the
number of directors provided that in no case shall the number of directors be
less than three, and to fill the vacancies created by any such increase in the
number of directors. Unless otherwise provided by the Bylaws of the Corporation,
the directors of the Corporation need not be stockholders.
Section 2. A director may be removed only with cause, and any such
removal may be made only by the stockholders of the Corporation in accordance
with the requirements of Section 10 of Article V hereof.
ARTICLE VII
MANAGEMENT OF THE AFFAIRS OF THE CORPORATION
--------------------------------------------
Section 1. All corporate powers and authority of the
Corporation (except as at the time otherwise provided by statute, by these
Articles of Incorporation or by the Bylaws) shall be vested in and exercised by
the Board of Directors of the Corporation.
5
<PAGE>
Section 2. The Board of Directors of the Corporation shall have the
power to adopt, alter or repeal the Bylaws of the Corporation except to the
extent that the Bylaws otherwise provide.
Section 3. The Board of Directors of the Corporation shall have the
power from time to time to determine whether and to what extent, and at what
times and places and under what conditions and regulations, the accounts and
books of the Corporation or any of them shall be open to the inspection of
stockholders, and no stockholder shall have any right to inspect any account,
book or document of the Corporation except to the extent required by statute or
permitted by the Bylaws.
Section 4. The Board of Directors of the Corporation shall have the
power to determine, as provided in these Articles of Incorporation, or if
provision is not made herein, in accordance with generally accepted accounting
principles, what constitutes net income, total assets and the net asset value of
the shares of capital stock of the Corporation.
ARTICLE VIII
LIABILITY
---------
Section 1. A director or officer of the Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director or officer, except to the extent such exemption
from liability or limitation thereof is not permitted by law (including the 1940
Act) as currently in effect or as the same may hereafter be amended.
Section 2. No amendment, modification or repeal of this Article VIII
shall adversely affect any right or protection of a director or officer that
exists at the time of such amendment, modification or repeal.
ARTICLE IX
PERPETUAL EXISTENCE
-------------------
The duration of the Corporation shall be perpetual.
6
<PAGE>
ARTICLE X
AMENDMENTS
----------
From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed, and other provisions that
may, under the statutes of the State of Maryland at the time in force, be
lawfully contained in articles of incorporation may be added or inserted, except
as otherwise provided in Section 10 of Article V of these Articles of
Incorporation, upon the vote of the holders of a majority of the shares of
capital stock of the Corporation outstanding and entitled to vote thereon. All
rights at any time conferred upon the stockholders of the Corporation by these
Articles of Incorporation are subject to the provisions of this Article X.
------------------------
7
<PAGE>
The term "Articles of Incorporation" as used herein and in the Bylaws
of the Corporation shall be deemed to mean these Articles of Incorporation as
from time to time amended, amended and restated, or supplemented.
The undersigned incorporator of Seligman New Technologies Fund II, Inc.
hereby executes the foregoing Articles of Incorporation and acknowledges the
same to be his or her act and further acknowledges that, to the best of his or
her knowledge, the matters and facts set forth herein are true in all material
respects under the penalties of perjury.
March 7, 2000
/s/ Sachin A. Dave
------------------------------------
INCORPORATOR
8
