(As filed with the Securities and Exchange Commission on May 2, 2000)
SECURITIES ACT FILE NO. 333-32222
INVESTMENT COMPANY ACT FILE NO. 811-9849
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|
Pre-Effective Amendment No. 3 |X|
Post-Effective Amendment No. |_|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_|
Amendment No. 3 |X|
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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. Thomas A. DeCapo, Esq.
Sullivan & Cromwell Skadden, Arps, Slate, Meagher & Flom LLP
125 Broad Street One Beacon Street, 31st Floor
New York, New York 10004 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
for the same offering is - ______.
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<PAGE>
CROSS REFERENCE SHEET
PARTS A AND B OF PROSPECTUS
<TABLE>
<CAPTION>
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
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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 May 2, 2000
PROSPECTUS
5,000,000 Shares
Seligman New Technologies Fund II, Inc.
Common Stock
$25.00 per share
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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.
Restrictions on Transfer. The Fund's shares will be subject to transfer
restrictions that permit transfers only to persons who satisfy certain net worth
requirements and hold their shares through brokers and dealers that
(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.
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Per Share Total
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Offering Price(1).................................... $25.00 $
Sales Load(1)........................................ $ 1.30 $
Proceeds to the Fund................................. $23.70 $
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(1) The Offering Price per share for purchases of $500,000 or more, but less
than $1.0 million, will be $24.75, which includes a Sales Load per share of
$1.05. The Offering Price per share for purchases of $1.0 million or more
will be $24.50, which includes a Sales Load per share of $0.80.
The underwriters are offering the shares subject to various conditions. The
Fund is not obligated to sell to the underwriters any shares that have not been
placed with Qualified Investors (as defined herein). The underwriters expect to
deliver the shares to the purchasers on or about June , 2000. 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 initial annual rate of 0.50% of the net asset
value of the outstanding shares owned by customers of such brokers or dealers.
The Fund will pay organizational and offering expenses estimated at $
|_________| from the proceeds of the offering. Seligman or its affiliate
Seligman Advisors, Inc. will pay from its own resources additional compensation
in connection with the sale and distribution of the shares. See "Underwriting."
----------
Salomon Smith Barney
PaineWebber Incorporated
Advest, Inc.
CIBC World Markets
A.G. Edwards & Sons, Inc.
McDonald Investments Inc.
Raymond James & Associates, Inc.
June , 2000
<PAGE>
(continued from previous page)
have entered into shareholder servicing agreements with the Fund. Investors may
not be able to sell their shares. If a shareholder attempts to transfer shares
to someone who does not have the requisite net worth or to an account with a
broker or dealer that has not entered into an agreement with the Fund, the
transfer will not be permitted. See "Investor Qualifications and Transfer
Restrictions."
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."
Additional Sales of Shares. The Fund intends at some time in the future to
conduct additional sales of its shares at their net asset value to investors who
are shareholders of the Fund at the time of sale. The number of shares available
for sale will be approximately the same as the number of shares repurchased by
the Fund in its prior quarterly repurchase offers that have not since been sold.
It is expected that such sales will be conducted once each quarter. Such sales
will not commence until the Fund has committed to invest a substantial portion
of the proceeds from this offering.
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. See "Management of the
Fund--Incentive Fee."
Investor Qualifications. Shares are offered only to investors who have a
net worth of more than $1,500,000, including any amount invested in the Fund, or
who otherwise meet the standard for a Qualified Investor. The minimum investment
is $25,000. Investors must hold their shares through brokers and dealers that
have entered into shareholder servicing agreements with the Fund. See "Investor
Qualifications and Transfer Restrictions."
-----------
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 June , 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 24 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 ........................... 8
Management of the Fund .................................................. 13
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
Investor Qualifications and Transfer Restrictions ....................... 23
General Information ..................................................... 23
Table of Contents of SAI ................................................ 24
Appendix A: Seligman's venture capital investments
Appendix B: Form of investor certification
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, depending upon the
availability of investment opportunities that
are deemed attractive by Seligman. 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
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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 Technology Group, 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 March 31, 2000, Seligman's
Technology Group managed approximately $16
billion of public and $580 million of private
securities of technology and related companies.
Seligman's Technology Group also manages
Seligman Communications and Information Fund,
Inc., one of the world's largest public
technology funds; Seligman Global Technology
Fund, one of the world's largest public 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 100 years of combined technology
investment experience and with offices in both
Palo Alto and New York, Seligman's Technology
Group covers the broad scope of both public and
private technology companies. The group
conducts first-hand research on all companies
considered for inclusion in the Fund. The
group'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
presence in the
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vi
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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 sum of the
Fund's net realized capital gains or losses and
net investment income or loss for the year,
reduced by the Fund's net unrealized
depreciation from securities, 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. If the Fund
borrows to finance repurchases of its shares,
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.
The Fund will not 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.
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vii
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Investor Qualifications .... Shares are offered only to investors who have a
net worth of more than $1,500,000 or who
otherwise meet the requirements for a
"qualified client" as defined in Rule 205-3
under the Investment Advisers Act of 1940, as
amended ("Qualified Investors"). You may hold
your shares only through a broker or dealer
that has entered into a shareholder servicing
agreement with the Fund. Before you may invest
in the Fund, your financial advisor or sales
representative may require a certification from
you that you are a Qualified Investor and that
you will not transfer your shares except to a
person who is a Qualified Investor and who will
hold the shares through a broker or dealer that
has entered into a shareholder servicing
agreement with the Fund. (The form of investor
certification that you may be asked to sign is
attached to this Prospectus as Appendix B.) If
you attempt to transfer your shares to someone
who is not a Qualified Investor or to an
account with a broker or dealer that has not
entered into such an agreement with the Fund,
the transfer will not be permitted and will be
void. See "Investor Qualifications and Transfer
Restrictions." 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 |_________| shares of common
stock at $25.00 per share (subject to reduction
as set forth below) through a group of
underwriters led by Salomon Smith Barney Inc.
You must purchase at least 1,000 shares
($25,000). The per share purchase price and
sales charge will be reduced for purchases of
$500,000 or more. See "Underwriting." Seligman
or its affiliate Seligman Advisors, Inc. will
pay from its own resources to the
representatives additional compensation in
connection with the sale and distribution of
the shares. 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 0.50% of
the net asset value of the outstanding shares
beneficially owned by customers of such broker
or dealer, subject to reduction over time to
the extent required by applicable regulations
or the requirements of the National Association
of Securities Dealers, Inc. (the "NASD").
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.
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viii
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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.
Unlisted Closed-End Structure;
Limited Liquidity and
Transfer Restrictions ... 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. Shares may be held only through
a broker or dealer that has entered into a
shareholder servicing agreement with the Fund.
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 are Qualified
Investors and who hold their shares through
brokers or dealers that have entered into
shareholder servicing agreements with the Fund.
Brokers, dealers or the Fund may require
substantial documentation in connection with a
requested transfer of shares, and you should
not expect that you will be able to transfer
shares at all. Attempted transfers may require
a substantial amount of time to effect. 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
intends to offer to repurchase 5% of its
outstanding shares at their net asset value.
The Fund may offer to repurchase more than 5%
(but not more than 25%) 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."
To the extent the Fund finances the payment of
repurchase proceeds by selling Fund investments
that are liquid, the Fund will hold a
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ix
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larger proportion of its total assets in
illiquid securities. Also, the sale of
portfolio securities to finance the repurchase
of shares could reduce the market price of
those securities, which would in turn reduce
the Fund's net asset value. See "Risk Factors -
Repurchase Offers."
Additional Sales of Shares . The Fund intends at some time in the future to
conduct additional sales of its shares at their
net asset value to investors who are
shareholders of the Fund at the time of sale.
The number of shares available for sale will be
approximately the same as the number of shares
repurchased by the Fund in its prior quarterly
repurchase offers that have not since been
sold, subject to a minimum offering size of 1%
of the outstanding shares of the Fund on the
date of sale. It is expected that such sales
will be conducted once each quarter. Such sales
will not commence until the Fund has committed
to invest a substantial portion of the proceeds
from this offering. Seligman or Seligman
Advisors intends to make payments out of its
own resources to the brokers or dealers who
participate in the offerings. See "Underwriting
- Additional Sales to Existing Shareholders."
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 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 shares that are subject to
substantial transfer restrictions
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.
<TABLE>
<S> <C>
Shareholder Transaction Expenses
Maximum sales load (as a percentage of offering price)....................................... 5.20%
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................................................................... 0.50%
Other expenses............................................................................... 0.50%
----
Total annual expenses (other than incentive fee and interest expense)........................ 2.50%
====
</TABLE>
(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 2.50% 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 $500 million. The Fund will also pay
organizational and offering expenses estimated to be $ |_________| , 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."
<TABLE>
<CAPTION>
Example 1 Year 3 Years 5 Years 10 Years
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return: $80 $136 $196 $355
</TABLE>
The example does not present actual expenses and should not be considered a
representation of future expenses. Actual expenses may be greater or less than
those shown. Moreover, the Fund's actual rate of return may be greater or less
than the hypothetical 5% return shown in the example. 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.
Transfer restrictions
The Fund's shares will be subject to transfer restrictions that permit
transfers only to persons who satisfy certain net worth requirements or who
otherwise meet the standard for a Qualified Investor. Shares may be held only
through a broker or dealer that is a party to a shareholder servicing agreement
with the Fund. The existence of transfer restrictions will be indicated on
customer confirmations by the brokers and dealers through which shares are held.
These brokers and dealers will be required to implement procedures designed to
ensure that all subsequent purchasers of the shares that are clients of the
brokers and dealers are Qualified Investors. Your ability to sell your shares
will be limited even if a secondary trading market for the shares develops. If
you attempt to transfer your shares to someone who is not a Qualified Investor
or to an account with a broker or dealer that has not entered into a shareholder
servicing agreement with the Fund, the transfer will not be permitted and will
be void. Brokers, dealers or the Fund may require substantial documentation in
connection with a requested transter of shares, and you should not expect that
you will be able to transfer shares at all. Attempted transfers may require a
substantial amount of time to effect.
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
2
<PAGE>
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 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
3
<PAGE>
o changing investor sentiments and preferences with regard to
technology sector investments (which are generally perceived as
risky)
Investments in small companies
The Fund plans to invest primarily in the stock of small and medium-sized
companies. These investments may present greater opportunity for growth, but
there are specific risks associated with investments in small companies, which
include:
o poor corporate performance due to less experienced management, limited
product lines, undeveloped markets and/or limited financial resources
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
- - Concentration 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 generally does not intend to provide 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.
4
<PAGE>
The Fund may invest in venture capital companies that have already received
funding from other sources. These companies may involve special risks, and the
economic terms that the Fund obtains from them may be less favorable than if the
Fund had invested earlier. For example, preferred stock acquired in later rounds
of financing may have less favorable conversion ratios than preferred stock
issued to earlier investors. A lower ratio will tend to reduce the Fund's
economic interest upon completion of an IPO.
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.
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 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
Technology Group. 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 gain, 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
5
<PAGE>
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 losses from prior periods. 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 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.)
For an explanation of the incentive fee calculation, see the section in
this Prospectus entitled "Management of the Fund - Incentive Fee" and the Fund's
SAI.
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 a 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
6
<PAGE>
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
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 $ |_________| from the proceeds of the offering.
7
<PAGE>
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.
Concentration 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 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, depending upon the availability of investment opportunities that are
deemed attractive by Seligman. 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 generally will participate in seed and/or expansion financing
for a company only if it has an established management team with a proven track
record of building a business and, in Seligman's judgment, an innovative product
idea with a sustainable competitive advantage.
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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 and, at times, regulatory 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 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 - Investments in 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 the Fund's
principal investment strategies, subject to the availability of investment
opportunities that are deemed attractive by Seligman. The Fund may incur losses
in such short-term investments. Short-term investing involves timing risk in
addition to other investing risk, and may be considered speculative. 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.
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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.
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
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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.
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.
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.
Potential for large positions and controlling interests
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.
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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
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 $30 billion in aggregate assets
as of March 31, 2000. Seligman also provides investment management or advice to
institutional or other accounts having an aggregate value at March 31, 2000 of
approximately $12 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.
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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
The following discussion of the incentive fee is only a summary, and is
qualified in its entirety by reference to the more complete description
contained in the SAI under "Investment Advisory and Other Services - Incentive
Fee." The calculation of the incentive fee involves complex accounting concepts.
The Fund encourages you to consult with you financial adviser regarding this
calculation.
In addition to the management fee, the Fund may pay an incentive fee to
Seligman at the end of each year. The incentive fee will generally equal 15% of
the sum of the Fund's net realized capital gains or losses and net investment
income or loss for the year, reduced by the Fund's net unrealized depreciation
of securities. No incentive fee will be payable on unrealized gains (that is, on
investments that have appreciated in value but have not yet been sold by the
Fund.) No incentive fee will be payable for any year unless losses and
depreciation from prior periods have been recovered by the Fund. This is
sometimes known as a "high water mark" calculation. Seligman will be under no
obligation to repay any incentive fees previously paid by the Fund.
The incentive fee is paid annually, but shareholders may have their shares
repurchased by the Fund quarterly. The Fund believes it is appropriate for
investors whose shares are repurchased to bear their share of the incentive fee
for those shares for the period between the last incentive fee payment to
Seligman and the date of repurchase. Otherwise, the remaining shares, and thus
their shareholders, could pay a disproportionate share of the incentive fee. For
this reason, the Fund will calculate a liability for the incentive fee each day
based on its performance. The Fund's net asset value will be reduced or
increased each day to reflect this calculation. The daily calculation will be
made on the same basis as the incentive fee payable to Seligman, except that it
will also take into account unrealized gains. The portion of the incentive fee
that arises from unrealized gains will not be reflected in the fee payable to
Seligman until the year or years in which the appreciated assets are sold.
If the Fund is in a net loss situation, there will be no accrual, and no
incentive fee will be payable. If this situation arises, the Fund will keep
track of its "cumulative loss" on a daily basis. Each time shares are
repurchased in a repurchase offer, the Fund will adjust the amount of any
cumulative loss downward in proportion to the number of shares repurchased, so
that the repurchase of shares has the effect of reducing the amount of
cumulative loss. In addition, each time additional shares are sold, the Fund
will adjust the amount of any cumulative loss upward in proportion to the number
of shares issued (but not to an amount larger than the cumulative loss would be
if no shares had been repurchased). This will ensure that the amount of
cumulative loss remains constant on a per-share basis.
Portfolio management
The Fund will be co-managed by Mr. Paul H. Wick, leader of Seligman's
Technology Group, Mr. Storm Boswick and Mr. Michael J. Guthrie. Seligman's
Technology Group has substantial experience in technology investing. As of March
31, 2000, Seligman's Technology Group managed approximately $16.6 billion of
public and $580 million of private securities of technology and related
companies. Seligman's Technology Group also manages Seligman Communications and
Information Fund, Inc., one of the world's largest public technology funds;
Seligman Global Technology Fund, one of the world's largest public 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 100 years of combined technology investment experience and with
offices in both Palo Alto and New York, Seligman's Technology Group is able to
cover the broad scope of both public and private technology
companies in the world's largest technology market. The group conducts
first-hand research on all companies considered for inclusion in the Fund. The
group's research includes hundreds of on- site visits and one-on-one meetings
with management in the United States and internationally to assess the
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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 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. SDC will also function as the Fund's
dividend paying agent. SDC provides its services to the Fund at cost.
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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 very 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.
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:
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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 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
16
<PAGE>
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 - Leverage; 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 might distribute stock of a company in-kind if the Fund's
position is large relative to the company's market capitalization or trading
volume and the Fund believes that selling its position would adversely affect
the price received on sale or the value of the Fund's remaining position in that
company. In addition, in some circumstances, the Fund might distribute
appreciated assets in-kind if, by doing so, it could avoid triggering a
distribution requirement to other shareholders under applicable tax law. 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 until 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 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
management and incentive fees. See "Risk Factors - Incentive Fee." All fair
value determinations by Seligman are subject to ratification by the board of
directors.
17
<PAGE>
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 (800) 622-4597 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.
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. The Fund's charter provides that any transfer
will be void if made (i) to an account held through a broker or dealer that has
not entered into a shareholder servicing agreement with the Fund or (ii) to any
person who is not a Qualified Investor.
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
18
<PAGE>
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
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
19
<PAGE>
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 $1.30 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 ($5.20) 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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<PAGE>
TAXES
The Fund intends to qualify and elect to be treated as a regulated
investment company under the Internal Revenue Code. As a regulated investment
company, the Fund will generally be exempt from federal income taxes on net
investment income and capital 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
---- ---------
Salomon Smith Barney Inc.........................
PaineWebber Incorporated.........................
Advest, Inc......................................
CIBC World Markets Corp. ........................
A.G. Edwards & Sons, Inc.........................
McDonald Investments Inc., A KeyCorp Company.....
Raymond James & Associates, Inc...................
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, except that no underwriter will be under any obligation to
purchase any shares that were to be purchased but were not purchased by any
other underwriter. The Fund may terminate the underwriting agreement and not
sell any shares to the underwriters if the total number of shares to be
purchased by the underwriters at settlement is less than two-thirds of the total
shown above. In addition, the Fund will not be obligated to sell to the
underwriters any shares that have not been placed with Qualified Investors.
The underwriters, for whom Salomon Smith Barney Inc. and PaineWebber
Incorporated 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 reduction in the event of purchases of $500,000 or more, and may
offer some of the shares to certain dealers at the offering price less a
concession not in excess of $ |_________| per share. The underwriters may allow,
and such dealers may reallow, a concession not in excess of $ |_________| per
share on sales to certain other dealers. The offering price per share for
purchases of $500,000 or more will be reduced as set forth on the cover page of
this Prospectus. 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
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<PAGE>
Fund that the underwriters do not intend to confirm any sales to any accounts
over which they exercise discretionary authority. The minimum investment
requirement is 1,000 shares ($25,000). Investors must pay for any shares
purchased on or before June , 2000.
Up to |_________| 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 registered representatives and employees of brokers and dealers
that offer the Fund or other funds in the Seligman Group of Funds.
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
Salomon Smith Barney Inc., on behalf of the underwriters, dispose of or hedge
any shares of the Fund or securities convertible into or exchangeable for the
shares. Salomon Smith Barney Inc. 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.
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 0.50% of the net
asset value of the outstanding shares owned by customers of such brokers or
dealers, subject to reduction or elimination over time to the extent required by
applicable regulations or the requirements of the NASD.
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 or its affiliate Seligman Advisors, Inc. will pay to Salomon Smith
Barney Inc. and PaineWebber Incorporated from its own resources additional
compensation in connection with the sale and distribution of the shares in the
form of an advisory fee in an aggregate amount equal to 2.0% of the offering
price of all shares sold in this offering.
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 occurs: 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 or minimum prices established; 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, economic, legal or regulatory 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 address of Salomon Smith Barney Inc. is 388 Greenwich Street, New York,
NY 10013. The address of PaineWebber Incorporated is 1285 Avenue of the
Americas, New York, New York 10019.
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
who are not at the time shareholders of the Fund, depending upon market
conditions, available investment opportunities and other factors, but the Fund
has no current plans for any such offerings.
Additional sales to existing shareholders
The Fund intends at some time in the future to make additional sales of its
shares at their net asset value to investors who are shareholders of the Fund at
the time of sale. The number of shares available for sale will be approximately
the same as the number of shares repurchased by the Fund in its prior quarterly
repurchase offers that have not since been sold, subject to a
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<PAGE>
minimum offering size of 1% of the Fund's shares outstanding immediately before
the date of sale. If more shares are subscribed for than are offered, the Fund
will reduce the amount sold to each subscriber in proportion to the amount
subscribed for. Seligman or Seligman Advisors intends to make payments out of
its own resources to the brokers or dealers who participate in the offerings. It
is anticipated that sales will be conducted once each quarter. Such sales will
not commence until the Fund has committed to invest a substantial portion of the
proceeds from this offering. In deciding whether to commence sales, the Fund
will take into account all factors it considers relevant, including market
conditions, the cash available to it for investment, the number of shares
available for sale and the Fund's experience with repurchase offers. The board
of directors may discontinue the Fund's policy of making additional sales at any
time.
Shareholder servicing fee
The Fund intends to pay compensation to selected brokers and dealers that
are not affiliated with the Fund or Seligman that hold shares for their
customers in accordance with the several shareholder servicing agreements
between the Fund and the brokers and dealers. The shareholder servicing fee is
payable quarterly at an annual rate of 0.50% of the value of outstanding shares
held by the brokers and dealers for their customers (prorated for shorter
periods). The brokers and dealers will provide customary shareholder services,
including responding to shareholder questions about the Fund and the
transferability of shares, assisting in selecting dividend payment options and
assisting the Fund in conducting repurchases. In addition, the shareholder
servicing agreements provide that the brokers and dealers will have procedures
in place to ensure that all subsequent purchasers of the shares that are clients
of the brokers and dealers are Qualified Investors, including having a statement
regarding transfer restrictions on all customer confirmations, and that each
broker and dealer will agree to cooperate in the event of a regulatory audit to
determine the Qualified Investor status of the shareholders for whom it holds
shares. The amount of the shareholder servicing fee may be reduced or eliminated
over time to the extent required by applicable regulations or the requirements
of the National Association of Securities Dealers, Inc. Servicing fees will
accrue daily as an expense of the Fund.
INVESTOR QUALIFICATIONS AND TRANSFER RESTRICTIONS
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, as that rule may be amended from time to time. Currently, qualified
clients include natural persons and companies that 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 meet the standard for a "qualified purchaser" in the
Investment Company Act of 1940 and the rules thereunder. Qualified clients also
include persons who have at least $750,000 under Seligman's management,
including any amount invested in the Fund, and certain knowledgeable employees
who participate in Seligman's investment activities. All of these persons are
referred to in this prospectus as "Qualified Investors." Your broker or dealer
may require you to complete and sign an investor certification before you may
invest. The form of investor certification that you may be asked to sign is
included as Appendix B to this prospectus. The Fund will not be obligated to
sell to the underwriters any shares that have not been placed with Qualified
Investors.
Shares may be transferred only to another Qualified Investor. In addition,
shares may be held only through a broker or dealer that is a party to a
shareholder servicing agreement with the Fund. The existence of transfer
restrictions will be indicated on customer confirmations by the brokers and
dealers through which shares are held. These brokers and dealers will be
required to implement procedures designed to ensure that transfers between their
customers are made only to Qualified Investors. In accordance with the Fund's
charter, the Fund will not recognize any transfer (i) to an account held through
a broker or dealer that is not party to a shareholder servicing agreement with
the Fund or (ii) to any person who is not a Qualified Investor. Any such
transfer will be void. These transfer restrictions will apply to all transfers,
including gifts or bequests of your shares. It will be difficult to sell or
transfer your shares in the Fund. You may be unable to sell or transfer shares
in the manner or at the time you desire, and you should not expect that you will
be able to transfer your shares at all.
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 10, 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.
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TABLE OF CONTENTS OF SAI
Additional Investment Policies...................................... B-2
Directors and Officers.............................................. B-6
Investment Advisory and Other Services.............................. B-12
Experts............................................................. B-13
Custodian, Stockholder Service Agent and Dividend Paying Agent...... B-13
Brokerage Commissions............................................... B-14
Other Information .................................................. B-14
Financial Statements................................................ B-14
Appendix A.......................................................... B-15
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APPENDIX A
Seligman's Venture Capital Investments
The following table lists, in chronological order, each venture capital
company investment that Seligman has caused one or more of its clients to make
through the date of this prospectus, along with Seligman's classification of
each company's principal area of business. Seligman's clients included
registered investment companies and private funds. There can be no assurance
that the Fund will have the opportunity to invest in any of the companies shown
below.
<TABLE>
<CAPTION>
Company Classification
------- --------------
<S> <C>
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
WorldRes.com ..................................................... Internet and new media
eMusic (formerly GoodNoise) ...................................... Internet and new media
Applied Science Fiction .......................................... Digital consumer electronics
Centillium Communications, Inc. .................................. 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
</TABLE>
A - 1
<PAGE>
<TABLE>
<CAPTION>
Company Classification
------- --------------
<S> <C>
CrossRoads Systems, Inc. ........................................ Broadband and fiber optics
Vuent, Inc ( formerly Adaptive Media, Inc.) ...................... Digital consumer electronics
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
NeuVis, Inc. ..................................................... Internet and new media
RealEstate.com ................................................... Internet and new media
EoExchange, Inc. ................................................. 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
Vcommerce Corporation ............................................ 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
YOUpowered, ...................................................... 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
</TABLE>
A - 2
<PAGE>
<TABLE>
<CAPTION>
Company Classification
------- --------------
<S> <C>
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
T. Square, Inc. .................................................. Broadband and fiber optics
USA Digital Radio, Inc. .......................................... Digital consumer electronics
Internet Appliance Network, Inc. ................................. Digital consumer electronics
Kestrel Solutions, Inc. .......................................... Broadband and fiber optics
Moai Technologies, Inc. .......................................... Internet and new media
techies.com, Inc. ................................................ Internet and new media
LifeMasters Supported SelfCare, Inc. ............................. Biometric technologies
OurHouse, Inc. ................................................... Internet and new media
EverAd, Inc. ..................................................... Internet and new media
Entegrity Solutions Corporation .................................. Internet and new media
Nitorum Corporation .............................................. Internet and new media
e-centives, Inc. ................................................. Internet and new media
NeoPlanet, Inc. .................................................. Internet and new media
Capstone Turbine Corporation ..................................... Broadband and fiber optics
YOUcentric, Inc. ................................................. Internet and new media
The Petroleum Place, Inc. ........................................ Internet and new media
Microcosm Technologies, Inc. ..................................... Digital platforms
NextVenue, Inc. .................................................. Internet and new media
2Bridge, Inc. .................................................... Internet and new media
Lineo, Inc. ...................................................... Internet and new media
Index Stock Imagery, Inc. ........................................ Internet and new media
CyberBills, Inc. ................................................. Internet and new media
Gateway Learning Corporation ..................................... Internet and new media
Consumer Financial Network ....................................... Internet and new media
AccessData Corp. ................................................. Internet and new media
Go Solo Technologies, Inc. ....................................... Wireless platforms
SensAble Technologies, Inc. ...................................... Digital platforms
Docent, Inc. ..................................................... Internet and new media
Global Commerce Systems, Inc. .................................... Internet and new media
Arzoon.com, Inc. ................................................. Internet and new media
Network Specialists, Inc. ........................................ Internet and new media
</TABLE>
A - 3
<PAGE>
[This page intentionally left blank]
<PAGE>
APPENDIX B
Seligman New Technologies Fund II, Inc.
Account No.: _____________
Broker Name: _____________
Investor Certification
This certificate relates to Seligman New Technologies Fund II, Inc.
(the "Fund") and is given to you as broker with respect to a potential purchase
of shares in the Fund.
I hereby certify that I am a natural person with, or I am signing on
behalf of a company with, a net worth (if a natural person, together with assets
held jointly with my spouse) of more than the amount specified in Rule 205-3
under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), for
a "qualified client" (currently $1,500,000). If I am signing on behalf of a
company, I further certify that (A) such company is not a private investment
company,* a registered investment company or a business development company or
(B) if such a company, each equity owner can make the certification in the
preceding sentence. For purposes of this test, net worth is the fair market
value of the assets that I (jointly with my spouse) or such company own(s) other
than household effects, less all indebtedness and liabilities of any type
(including joint liabilities with any other person). I agree to produce evidence
to support the foregoing certification upon request.
In addition, I hereby confirm that I understand and agree that should I
(or the company) purchase shares of the Fund, the following conditions will
apply to the ownership and transfer of the shares:
(1) Shares may be held only through a broker or dealer that has
entered into a Shareholder Servicing Agreement with the Fund; and
(2) Shares may not be transferred except to a person who is a
"qualified client," as such term is defined in Rule 205-3 of the
Advisers Act, who agrees to hold his, her or its shares through a
broker or dealer that has entered into a Shareholder Servicing
Agreement with the Fund, and who agrees not to transfer the
shares except to another person who is a qualified client and
agrees to comply with the foregoing ownership and transfer
restrictions.
I understand that you, the Fund and its investment adviser are relying
on the certification and agreements made herein in determining qualification and
suitability as an investor in the Fund. I understand that shares of the Fund are
not an appropriate investment for, and may not be acquired by, any person who
can not make this certification, and agree to indemnify you and hold you
harmless from any liability that you may incur as a result of this certification
being untrue in any respect. I understand that it may be a violation of state
and federal law for me (or the company) to provide this certification if I know
that it is not true. I have read the preliminary or final prospectus for the
Fund, including the investor qualification and investor suitability provisions
contained therein. I understand that an investment in the Fund involves a
considerable amount of risk and that I (or the company) may lose some or all of
my (or its) investment. I understand that 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. I will promptly
advise you if any of the statements herein ceases to be true prior to my (or the
company's) purchase of shares.
Date: ____________ By:
------------------------------------
__________________ Name:
* For this purpose, "private investment company" means a company that would
be defined as an investment company under Section 3(a) of the Investment
Company Act but for the exception provided from the definition by Section
3(c)(1) of such Act (i.e., not more than 100 security owners).
================================================================================
<PAGE>
5,000,000 Shares
SELIGMAN
NEW TECHNOLOGIES FUND II, INC.
Common Stock
----------
PROSPECTUS
June , 2000
----------
SALOMON SMITH BARNEY
PAINEWEBBER INCORPORATED
ADVEST, INC.
CIBC WORLD MARKETS
A.G. EDWARDS & SONS, INC.
MCDONALD INVESTMENTS INC.
RAYMOND JAMES & ASSOCIATES, INC.
----------
Until September , 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.
<PAGE>
Subject to Completion, Dated May 2, 2000
SELIGMAN NEW TECHNOLOGIES FUND II, INC.
June , 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 June , 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-12
Experts....................................................................B-13
Custodian, Stockholder Service Agent and Dividend Paying Agent.............B-13
Brokerage Commissions......................................................B-14
Other Information .........................................................B-14
Financial Statements.......................................................B-14
Appendix A.................................................................B-15
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 Investment Company
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
Investment Company 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 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
B - 3
<PAGE>
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 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 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 may 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
B - 4
<PAGE>
or other assets denominated in that currency provided the excess amount is
"covered" by cash or liquid, high-grade debt securities, denominated in any
currency, at least equal at all times to the amount of such excess. Under normal
circumstances, consideration of the prospect for currency parities will be
incorporated into the longer-term investment decisions made with regard to
overall diversification strategies. However, Seligman believes that it is
important to have the flexibility to enter into such forward contracts when it
determines that the best interests of the Fund will be served.
At the maturity of a forward contract, the Fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute precision
the market value of portfolio securities at the expiration of the forward
contract. Accordingly, it may be necessary for the Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security is less than the amount of foreign currency the
Fund is obligated to deliver and if a decision is made to sell the security and
make delivery of the foreign currency. Conversely, it may be necessary to sell
on the spot market some of the foreign currency received upon the sale of the
portfolio security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver. However, the Fund may use liquid, high-grade
debt securities, denominated in any currency, to cover the amount by which the
value of a forward contract exceeds the value of the securities to which it
relates.
If the Fund retains the portfolio security and engages in offsetting
transactions, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Fund's 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
B - 5
<PAGE>
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.
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 net assets that may be
invested in illiquid securities, but Seligman does not expect that illiquid
securities will ordinarily exceed 50% of the Fund's 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 "Investment Company 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;
(62) Chairman of the Chairman and Chief Executive Officer, the Seligman
100 Park Avenue, Board and Chief Group of investment companies; Chairman, Seligman
New York, NY 10017 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.
(47) President Incorporated; President (with the exception of Seligman
100 Park Avenue, Quality Municipal Fund, Inc. and Seligman Select
New York, NY 10017 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,
(59) J. & W. Seligman & Co. Incorporated; Director or Trustee,
100 Park Avenue, the Seligman Group of investment companies (except
New York, NY 10017 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.
John R. Galvin Director Dean, Fletcher School of Law and Diplomacy at Tufts
(70) University; Director or Trustee, the Seligman Group of
Tufts University investment companies; Chairman Emeritus, American
Packard Avenue, Council on Germany; Governor of the Center for Creative
Medford, MA 02155 Leadership; Director; Raytheon Co., electronics; National
Defense University; and the Institute for Defense
Analyses. Formerly, Director, USLIFE Corporation, life
insurance; Ambassador, U.S. State Department for
negotiations in Bosnia; Distinguished Policy Analyst at
Ohio State University and Olin Distinguished Professor of
National Security Studies at the United States Military
Academy. From June 1987 to June 1992, he was the
Supreme Allied Commander, Europe and the Commander-
in-Chief, United States European Command.
Alice S. Ilchman Director Retired President, Sarah Lawrence College; Director or
(65) Trustee, the Seligman Group of investment companies;
18 Highland Circle, Trustee, the Committee for Economic Development; and
Bronxville, NY 10708 Chairman, The Rockefeller Foundation, charitable
foundation. Formerly, Trustee, The Markle Foundation,
philanthropic organization; and Director, New York
Telephone Company and International Research and Exchange
Board, intellectual exchanges.
</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>
Frank A. McPherson Director Retired Chairman and Chief Executive Officer of Kerr-
(67) McGee Corporation; Director or Trustee, the Seligman
2601 Northwest Group of investment companies; Director, Kimberly-Clark
Expressway, Suite 805E Corporation, consumer products; Conoco Inc, oil
Oklahoma City, OK exploration and production; Bank of Oklahoma Holding
73112 Company; Baptist Medical Center; Oklahoma Chapter of
the Nature Conservancy; Oklahoma Medical Research
Foundation; and National Boys and Girls Clubs of
America; and Member of the Business Roundtable and
National Petroleum Council. Formerly, Chairman,
Oklahoma City Public Schools Foundation; and Director,
Federal Reserve System's Kansas City Reserve Bank and
the Oklahoma City Chamber of Commerce.
John E. Merow Director Retired Chairman and Senior Partner, Sullivan &
(70) Cromwell, law firm; Director or Trustee, the Seligman
125 Broad Street, Group of investment companies; Director, Commonwealth
New York, NY 10004 Industries, Inc., manufacturers of aluminum sheet
products; the Foreign Policy Association; Municipal Art
Society of New York; the U.S. Council for International
Business; and New York-Presbyterian Hospital; Chairman,
New York-Presbyterian Healthcare Network, Inc; Vice-
Chairman, the U.S.-New Zealand Council; and Member of
the American Law Institute and Council on Foreign
Relations.
Betsy S. Michel Director Attorney; Director or Trustee, the Seligman Group of
(57) investment companies; Trustee, The Geraldine R. Dodge
P. O. Box 719, Foundation, charitable foundation. Formerly, Chairman of
Gladstone, NJ 07934 the Board of Trustees of St. George's School (Newport,
RI) and, Director, the National Association of Independent
Schools (Washington, DC).
James C. Pitney Director Retired Partner, Pitney, Hardin, Kipp & Szuch, law firm;
(73) Director or Trustee, the Seligman Group of investment
Park Avenue at Morris companies. Formerly, Director, Public Service Enterprise
County, P. O. Box 1945, Group, public utility.
Morristown, NJ 07962
James Q. Riordan Director Director or Trustee, the Seligman Group of investment
(72) companies; Director, The Houston Exploration Company,
2893 S. E. Ocean oil exploration; The Brooklyn Museum, KeySpan Energy
Boulevard, Corporation; and Public Broadcasting Service; and
Stuart, FL 34996 Trustee, the Committee for Economic Development.
Formerly, Co-Chairman of the Policy Council of the Tax
Foundation; Director, Tesoro Petroleum Companies, Inc.
and Dow Jones & Company, Inc.; Director and President,
Bekaert Corporation; and Co-Chairman, Mobil
Corporation.
</TABLE>
B - 8
<PAGE>
<TABLE>
<CAPTION>
Name, (Age) and Position(s) Held
Address with Fund Principal Occupation(s) During the Past 5 Years
------- --------- -----------------------------------------------
<S> <C> <C>
Robert L. Shafer Director Retired Vice President, Pfizer Inc., pharmaceuticals;
(67) Director or Trustee, the Seligman Group of investment
96 Evergreen Avenue, companies. Formerly, Director, USLIFE Corporation, life
Rye, NY 10580 insurance.
James N. Whitson Director Director and Consultant, Sammons Enterprises, Inc., a
(65) diversified holding company; Director or Trustee, the
6606 Forestshire Drive, Seligman Group of investment companies; Director, C-
Dallas, TX 75230 SPAN, cable television, and CommScope, Inc.,
manufacturer of coaxial cables. Formerly, Executive Vice
President, Chief Operating Officer, Sammons Enterprises,
Inc.
Paul H. Wick Vice President Director and Managing Director, J. & W. Seligman & Co.
(37) and Portfolio Incorporated since January 1995 and November 1997,
100 Park Avenue, Manager respectively; Vice President and Portfolio Manager, three
New York, NY 10017 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
(30) and Portfolio since January 1999; Portfolio Manager, Seligman New
100 Park Avenue, Manager Technologies Fund, Inc. Mr. Boswick joined J. & W.
New York, NY 10017 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.
Michael J. Guthrie Vice President Vice President of the Fund and Senior Vice President,
(35) Investment Officer of Seligman since September 1999;
100 Park Avenue, formerly, Vice President in the Technology Investment
New York, NY 10017 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.
(43) Incorporated, Seligman Advisors, Inc., and Seligman
100 Park Avenue, Data Corp.; Vice President, the Seligman Group of
New York, NY investment companies and Seligman Services, Inc.; Vice
10017 President and Treasurer, Seligman International, Inc.;
and Treasurer, Seligman Henderson Co.
</TABLE>
B - 9
<PAGE>
<TABLE>
<CAPTION>
Name, (Age) and Position(s) Held
Address with Fund Principal Occupation(s) During the Past 5 Years
------- --------- -----------------------------------------------
<S> <C> <C>
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and
(35) Regulation, and Corporate Secretary, J. & W. Seligman &
100 Park Avenue Co. Incorporated; Secretary, the Seligman Group of
New York, NY 10017 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
(42) and Seligman Data Corp.
100 Park Avenue,
New York, NY 10017
</TABLE>
Compensation
<TABLE>
<CAPTION>
Aggregate Pension or Retirement Total Compensation
Name and Position Compensation from Benefits Accrued as received from Fund
with 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
John R. Galvin, $2,000 N/A $84,000
Director
Alice S. Ilchman, 2,000 N/A 84,000
Director
Frank A. McPherson, 2,000 N/A 84,000
Director
John E. Merow, 2,000 N/A 84,000
Director
Betsy S. Michel, 2,000 N/A 84,000
Director
James C. Pitney, 2,000 N/A 84,000
Director
James Q. Riordan, 2,000 N/A 84,000
Director
Robert L. Shafer, 2,000 N/A 84,000
Director
James N. Whitson, 2,000(3) N/A 84,000
Director
</TABLE>
- ----------
(1) Estimated for the fiscal year ending December 31, 2000.
(2) The Seligman Group of Investment Companies consists of twenty investment
companies.
(3) Deferred.
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
B - 10
<PAGE>
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 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.
Code of Ethics
Seligman, Seligman Advisors, Inc. (Seligman Advisors), their subsidiaries
and affiliates, and the Seligman Group of Investment Companies have adopted a
Code of Ethics that sets forth the circumstances under which officers, directors
and employees (collectively, Employees) are permitted to engage in personal
securities transactions. The Code of Ethics proscribes certain practices with
regard to personal securities transactions and personal dealings, provides a
framework for the reporting and monitoring of personal securities transactions
by Seligman's Director of Compliance, and sets forth a procedure of identifying,
for disciplinary action, those individuals who violate the Code of Ethics. The
Code of Ethics prohibits Employees (including all investment team members) from
purchasing or selling any security or an equivalent security that is being
purchased or sold by any client, or where the Employee intends, or knows of
another's intention, to purchase or sell a security on behalf of a client. The
Code also prohibits all Employees from acquiring securities in a private
placement or in an initial or secondary public offering unless an exemption has
been obtained from Seligman's Director of Compliance.
The Code of Ethics prohibits (1) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) that the portfolio manager or investment team
manages; (2) each Employee from engaging in short-term trading (a purchase and
sale or vice-versa within 60 days); and (3) each member of an investment team
from engaging in short sales of a security if, at any time, any client managed
by that team has a long position in that security. Any profit realized pursuant
to any of these prohibitions must be disgorged.
Employees are required, except under very limited circumstances, to engage
in personal securities transactions through Seligman's order desk. The order
desk maintains a list of securities that may not be purchased due to a possible
conflict with clients. All Employees are also required to disclose all
securities beneficially owned by them upon commencement of employment and at the
end of each calendar year.
A copy of the Code of Ethics is on public file with, and is available upon
request from, the Securities and Exchange Commission (SEC). The Code of Ethics
can be reviewed and copied at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the Public Reference Room may be obtained
by calling the SEC at 1-202-942-8090. Copies of the Code of Ethics may also be
obtained: at the SEC's Internet site, http://www.sec.gov; by writing the SEC's
Public Reference Section, Washington, D.C. 20549-0102; or, after paying a
duplicating fee, by electronic request at the following email address:
[email protected].
B - 11
<PAGE>
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 below. 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.
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.
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 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.
B - 12
<PAGE>
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 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. Conversely, each time
additional shares of the Fund are sold (other than upon the reinvestment of
dividends and distributions), the Fund will adjust the amount of any Cumulative
Loss upward in proportion to the number of shares issued (but not to an amount
larger than the Cumulative Loss would be if no shares had previously been
repurchased), and a similar proportional adjustment will be made for purposes of
calculating the incentive fee, if any, actually payable to Seligman at the end
of the year. 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.
EXPERTS
________ 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.
CUSTODIAN, STOCKHOLDER SERVICE AGENT AND
DIVIDEND PAYING AGENT
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City, Missouri
64105, serves as custodian to the Fund. It also maintains, under the general
supervision of Seligman, the Fund's accounting records and is responsible for
the determination of the net asset value of the Fund.
Seligman Data Corp., an affiliate of both Seligman and the Fund, acts as
the stockholder service agent and dividend paying agent of the Fund, and
performs, at cost, certain recordkeeping functions for the Fund. In other words,
Seligman Data Corp. maintains the records of shareholder accounts and furnishes
dividend paying, redemption and related services.
B - 13
<PAGE>
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.
OTHER INFORMATION
Venture Capital Investments
According to National Venture Capital Association and Venture Economics, a
division of Thomson Financial Securities Data, venture capital investments in
U.S. companies totalled $5.8 billion in 1995, $9.9 billion in 1996, $14.0
billion in 1997, $19.1 billion in 1998 and $48.2 billion in 1999.
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 - 14
<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 - 15
<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 _____.
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.
r. Code of Ethics
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 ________, 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 ___ of the Underwriting Agreement between the Registrant and
____, each filed as an exhibit to this Registration Statement.
As stated in Article VII of its Bylaws, the Registrant will indemnify
any person who is or was a Director, officer or employee of the
Registrant and may advance the reasonable expenses incurred by a
Director, officer or employee who is a party to a proceeding to the
maximum extent permitted by the Maryland General Corporation Law. The
rights of indemnification and advancement of expenses provided by
Article VII of the Registrant's Bylaws are not exclusive and will not
limit any right to which any person may otherwise be entitled or
permitted by any agreement or otherwise. However, no Director, officer
or employee of the Registrant will be indemnified against any
liability to the Registrant or its stockholders to which he is subject
by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his
office. Also, in the case of criminal proceedings, no Director,
officer or employee will be indemnified for any penalty or expense
incurred by the Director, officer or employee in connection with such
proceedings in circumstances where the Director, officer or employee
had reasonable cause to believe that the act or omission was unlawful.
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 ________.
C - 2
<PAGE>
Item 31. Location of Accounts and Records:
Custodian: Investors Fiduciary Trust Company
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 2nd day of May, 2000.
SELIGMAN NEW TECHNOLOGIES FUND II, INC.
By: /S/ BRIAN T. ZINO
------------------------------------
Brian T. Zino
President
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 May 2, 2000.
Name Title
---- -----
/s/ * Chairman of the Board
- ------------------------------- (Principal executive officer and Director)
(William C. Morris)
/s/ Brian T. Zino President and Director
- -------------------------------
(Brian T. Zino)
* Director
- -------------------------------
(Richard R. Schmaltz)
Director
- -------------------------------
(John R. Galvin)
* Director
- -------------------------------
(Alice S. Ilchman)
C - 4
<PAGE>
* Director
- -------------------------------
(Frank A. McPherson)
* Director
- --------------------------------
(John E. Merow)
* Director
- ---------------------------------
(Betsy S. Michel)
* Director
- ---------------------------------
(James C. Pitney)
Director
- ---------------------------------
(James Q. Riordan)
* Director
- ----------------------------------
(Robert L. Shafer)
* Director
- ----------------------------------
(James N. Whitson)
/s/ Thomas G. Rose Treasurer
- ---------------------------------- (Principal financial and accounting officer)
(Thomas G. Rose)
* By: Brian T. Zino, attorney-in-fact
C - 5
<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 ___*
h(2). Form of Shareholder Servicing Agreement*
i. Deferred Compensation Plan for Directors*
j. Custody and Investment Accounting Agreement between
Registrant and State Street - Kansas City*
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. Code of Ethics
s. Powers of Attorney (all directors except General Galvin
and Mr. Riordan)
- ----------
* to be filed subsequently by amendment
C - 6
EXHIBIT R
CODE OF ETHICS
J. & W. Seligman & Co. Incorporated
Seligman Advisors, Inc.
Seligman Services, Inc.
Seligman Data Corp.
Seligman International, Inc.
Seligman International UK Limited
The Seligman Group of Investment Companies
I. Introduction
A primary duty of all directors, officers and employees (collectively
"Employees") of J. & W. Seligman & Co. Incorporated, its subsidiaries and
affiliates (collectively, "Seligman") is to be faithful to the interest of the
various Seligman advisory clients, including the registered and unregistered
companies advised by Seligman (collectively, "Clients"). Directors of the
Seligman Registered Investment Companies also have a duty to the Seligman
Registered Investment Companies and their shareholders. Persons who are
Disinterested Directors are "Employees" for purposes of this Code of Ethics.
Through the years, Seligman and its predecessor organizations have had a
reputation of maintaining the highest business and ethical standards and have
been favored with the confidence of investors and the financial community. Such
a reputation and confidence are not easily gained and are among the most
precious assets of Seligman. In large measure, they depend on the devotion and
integrity with which each Employee discharges his or her responsibilities. Their
preservation and development must be a main concern of each Employee, and each
Employee has a primary obligation to avoid any action or activity that could
produce conflict between the interest of the Clients and that Employee's
self-interest.
The purpose of this Code of Ethics ("Code") is to set forth the policies of
Seligman in the matter of conflicts of interest and to provide a formal record
for each Employee's reference and guidance. This Code is also designed to
prevent any act, practice or course of business prohibited by the rules and
regulations governing our industry.
Each Employee owes a fiduciary duty to each Client. Therefore, all Employees
must avoid activities, interests and relationships that might appear to
interfere with making decisions in the best interest of the Clients.
As an Employee, you must at all times:
1. Avoid serving your own personal interests ahead of the interests of
Clients. You may not cause a Client to take action, or not to take action,
for your personal benefit rather than the Client's benefit.
<PAGE>
2. Avoid taking inappropriate advantage of your position. The receipt of
investment opportunities, perquisites or gifts from persons seeking
business with Clients or with Seligman could call into question the
exercise of your better judgment. Therefore, you must not give or receive
benefits that would compromise your ability to act in the best interest of
the Clients.
3. Conduct all personal Securities Transactions in full compliance with the
Code, including the pre-authorization and reporting requirements, and
comply fully with the Seligman Insider Trading Policies and Procedures (See
Appendix A).
While Seligman encourages you and your families to develop personal investment
programs, you must not take any action that could cause even the appearance that
an unfair or improper action has been taken. Accordingly, you must follow the
policies set forth below with respect to trading in your Account(s). This Code
places reliance on the good sense and judgment of you as an Employee; however,
if you are unclear as to the Code's meaning, you should seek the advice of the
Law and Regulation Department and assume the Code will be interpreted in the
most restrictive manner. Questionable situations should be resolved in favor of
Clients. Technical compliance with the Code's procedures will not insulate from
scrutiny any trades that indicate a violation of your fiduciary duties.
Application of the Code to Disinterested Directors
Disinterested Directors are only subject to the reporting requirements in
Section III.5(b) of the Code. Disinterested Directors are not subject to other
provisions of the Code but are subject to the requirements of the federal
securities laws and other applicable laws, such as the prohibition on trading in
securities of an issuer while in possession of material non-public information.
II. Definitions
(a) "Accounts" means all Employee Accounts and Employee Related Accounts.
(b) "Beneficial Interest" is broadly interpreted. The SEC has said that
the final determination of Beneficial Interest is a question to be
determined in the light of the facts of each particular case. The
terms Employee Account and Employee Related Account, as defined below,
generally define Beneficial Interest. However, the meaning of
"Beneficial Interest" may be broader than that described below. If
there are any questions as to Beneficial Interest, please contact the
Director of Compliance, General Counsel or Associate General Counsel.
(c) "Employee Account" means the following securities Accounts: (i) any of
your personal account(s); (ii) any joint or tenant-in-common account
in which you have an interest or are a participant; (iii) any account
for which you act as trustee, executor, or custodian; (iv) any account
over which you have investment discretion or otherwise can exercise
control, including the accounts of entities controlled
2
<PAGE>
directly or indirectly by you; (v) any account in which you have a
direct or indirect interest through a contract, arrangement or
otherwise (e.g., economic, voting power, power to buy or sell, or
otherwise); (vi) any account held by pledges, or for a partnership in
which you are a member, or by a corporation which you should regard as
a personal holding company; (vii) any account held in the name of
another person in which you do not have benefits of ownership, but
which you can vest or revest title in yourself at once or some future
time; (viii) any account of which you have benefit of ownership; and
(ix) accounts registered by custodians, brokers, executors or other
fiduciaries for your benefit.
(d) "Employee Related Account" means any Account of (i) your spouse and
minor children and (ii) any account of relatives or any other persons
to whose support you materially contribute, directly or indirectly.
(e) "Disinterested Director" means a director or trustee of a Seligman
Registered Investment Company who is not an "interested person" of
such investment company within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940.
(f) "Equivalent Security" includes, among other things, an option to
purchase or sell a Security or an instrument convertible or
exchangeable into a Security.
(g) "Investment Team" means one or more Investment Teams formed by the
Manager in various investment disciplines to review and approve
Securities for purchase and sale by Client Accounts. This includes a
team's leader, portfolio managers, research analysts, traders and
their direct supervisors.
(h) "Security" includes, among other things, stocks, notes, bonds,
debentures, and other evidences of indebtedness (including loan
participation and assignments), limited partnership interests,
investment contracts, and all derivative instruments (e.g., options
and warrants).
(i) "Securities Transaction" means a purchase or sale of a Security.
(j) "Seligman Registered Investment Company" means an investment company
registered under the Investment Company Act of 1940 for which Seligman
serves as investment manager or adviser.
3
<PAGE>
III. Personal Securities Transactions
1. Prohibited Transactions
These apply to all of your Accounts.
(a) Seven-Day Blackout: If you are a member of an Investment Team,
Securities Transactions are prohibited within seven calendar days
either before or after the purchase or sale of the relevant security
(or an Equivalent Security) by a Client whose Account is managed by
your Investment Team.
(b) Intention to Buy or Sell for Clients: Securities Transactions are
prohibited at a time when you intend, or know of another's intention,
to purchase or sell that Security (or an Equivalent Security) on
behalf of a Client.
(c) Sixty-Day Holding Period: Profits on Securities Transactions made
within a sixty-day period are prohibited and must be disgorged. This
is a prohibition of short term trading. Specifically,
o Purchase of a Security within 60 days of your sale of the
Security (or an Equivalent Security), at a price that is less
than the price in the previous sale is prohibited.
o Sale of a Security within the 60 day period of your purchase of
the Security (or an Equivalent Security), at a price that is
greater than the price in the previous purchase is prohibited.
Examples are as follows:
1. Employee purchases 100 shares of XYZ ($10 a share) on
January 1. Employee sells 100 shares of XYZ ($15 a share) on
February 15. Employee must disgorge $500.
2. Employee purchases 100 shares of XYZ ($10 a share) on
January 1. Employee purchases 50 shares of XYZ ($12 a share)
on January 30. Employee sells 50 shares of XYZ ($15 a share)
on March 15. Employee must disgorge $150. (The March 15 sale
may not be matched to the January 1 purchase).
3. Employee purchases 100 shares of XYZ ($10 a share) on
January 1. Employee sells 100 shares of XYZ ($10 a share) on
February 1. Employee purchases 100 shares of XYZ ($9 a
share) on March 1 Employee must disgorge $100. (The February
1 sale is permissible because no profit was made. However,
the March 1 purchase is matched against the February 1 sale
resulting in a $100 profit).
4
<PAGE>
(d) Restricted Transactions: Transactions in a Security are prohibited (i)
on the day of a purchase or sale of the Security by a Client, or (ii)
anytime a Client's order in the Security is open on the trading desk.
Other Securities may be restricted from time to time as deemed
appropriate by the Law and Regulation Department.
(e) Short Sales: If you are a member of an Investment Team, you may not
engage in any short sale of a Security if, at the time of the
transaction, any Client managed by your Team has a long position in
that same Security. However, this prohibition does not prevent you
from engaging short sales against the box and covered call writing, as
long as these personal trades are in accordance with the sixty-day
holding period described above.
(f) Public Offerings: Acquisitions of Securities in initial and secondary
public offerings are prohibited, unless granted an exemption by the
Director of Compliance. An exemption for an initial public offering
will only be granted in certain limited circumstances, for example,
the demutualization of a savings bank.
(g) Private Placements: Acquisition of Securities in a private placement
is prohibited absent prior written approval by the Director of
Compliance.
(h) Market Manipulation: Transactions intended to raise, lower, or
maintain the price of any Security or to create a false appearance of
active trading are prohibited.
(i) Inside Information: You may not trade, either personally or on behalf
of others, on material, non-public information or communicate
material, non-public information to another in violation of the law.
This policy extends to activities within and outside your duties at
Seligman. (See Appendix A).
2. Maintenance of Accounts
All Accounts that have the ability to engage in Securities Transactions
must be maintained at Ernst & Company (Investec) and/or the specific
Merrill Lynch branch office located at 712 Fifth Avenue, New York, NY. You
are required to notify the Director of Compliance of any change to your
account status. This includes opening a new Account, converting,
transferring or closing an existing account or acquiring Beneficial
Interest in an Account through marriage or otherwise. You must place all
orders for Securities Transactions in these Account(s) with the Equity
Trading Desk or the appropriate Fixed Income Team as set forth in Section
III.3 ("Trade Pre-authorization Requirements").
The Director of Compliance may grant exceptions to the foregoing
requirements on a case by case basis. All requests for exceptions must be
applied for in writing and submitted for approval to the Director of
Compliance and will be subject to certain conditions.
5
<PAGE>
3. Trade Pre-authorization Requirements
All Securities Transactions in an Employee Account or Employee Related
Account must be pre-authorized, except for Securities Transactions set
forth in Section III.4 ("Exempt Transactions").
(a) Trade Authorization Request Form: Prior to entering an order for a
Securities Transaction in an Employee Account or Employee Related
Account, which is subject to pre-authorization, you must complete a
Trade Authorization Request Form (set forth in Appendix B) and submit
the completed Form (faxed or hand delivered) to the Director of
Compliance (or designee).
(b) Review of the Form and Trade Execution: After receiving the completed
Trade Authorization Request Form, the Director of Compliance (or
designee) will review the information and, as soon as practical,
determine whether to authorize the proposed Securities Transaction.
The authorization, date and time of the authorization must be
reflected on the Form. Once approved the order may then be executed by
Equity Trading Desk or the appropriate Fixed Income Team, except for
accounts for which an exemption was granted under Section III.2.
(c) Length of Trade Authorization Approval: Any authorization, if granted,
is effective until the earliest of (i) its revocation, (ii) the close
of business on the day from which authorization was granted or (iii)
your discovery that the information in the Trade Authorization Request
Form is no longer accurate. If the Securities Transaction was not
placed or executed within that period, a new pre-authorization must be
obtained. A new pre-authorization need not be obtained for orders
which cannot be filled in one day due to an illiquid market, so long
as such order was placed for execution on the day the original
pre-authorization was given.
No order for a Securities Transaction may be placed prior to the Director
of Compliance (or designee) receiving the completed Trade Pre-authorization
Form and approving the transaction. In some cases, trades may be rejected
for a reason that is confidential.
4. Exempt Transactions
The prohibitions of this Code shall not apply to the following Securities
Transactions in your Account(s):
(a) Purchases or sales of Securities which are non-volitional (i.e., not
involving any investment decision or recommendation).
(b) Purchases of Securities through certain corporate actions (such as
stock dividends, dividend reinvestments, stock splits, mergers,
consolidations, spin-offs, or other
6
<PAGE>
similar corporate reorganizations or distributions generally
applicable to all holders of the same class of Securities).
(c) Purchases of Securities effected upon the exercise of rights issued by
an issuer pro rata to all holders of a class of its Securities, to the
extent such rights were acquired from the issuer.
(d) Purchases or sales of open-end registered investment companies, U.S.
Government Securities and money market instruments (e.g., U.S.
Treasury Securities, bankers acceptances, bank certificates of
deposit, commercial paper and repurchase agreements).
(e) Purchases of Securities which are part of an automatic dividend
reinvestment plan or stock accumulation plan; however, quarterly
account statement of such plans must be sent to the Director of
Compliance.
(f) Securities Transactions that are granted a prior exemption by the
Director of Compliance, the General Counsel or the Associate General
Counsel.
5. Reporting
(a) You must arrange for the Director of Compliance to receive from the
executing broker, dealer or bank duplicate copies of each confirmation
and account statement for each Securities Transaction in an Employee
Account or Employee Related Account.
(b) If you are a Disinterested Director you are required to report the
information specified below with respect to any Securities Transaction
in any Securities Account in which you have Beneficial Interest, if
you knew, or in the ordinary course of fulfilling your official duties
as a Disinterested Director, should have known, that during 15 days
immediately before or after the date of your transaction, the Security
(or Equivalent Security) was purchased or sold by a Seligman
Registered Investment Company or considered for purchase or sale by a
Seligman Registered Investment Company. Such report shall be made not
later than 10 days after the end of the calendar quarter in which the
Transaction was effected and shall contain the following information:
(i) The date of the transaction, the name of the company, the number
of shares, and the principal amount of each Security involved;
(ii) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(iii) The price at which the transaction was effected;
7
<PAGE>
(iv) The name of the broker, dealer or bank with or through whom the
transaction was effected; and
(v) The date the report is submitted.
(c) You are required to disclose all Securities beneficially owned by you
within ten days of commencement of employment and at the end of each
calendar year within 10 days thereafter (See Appendix C).
(d) You are also required to disclose all Employee and Employee Related
Securities Accounts, Private Securities Transactions and Outside
Activities, Affiliations and Investments upon commencement of
employment and annually thereafter (See Appendix D).
(e) Any report may contain a statement that the report shall not be
construed as an admission by you, that you have any direct or indirect
beneficial ownership in the Security to which the report relates.
(f) The Director of Compliance or his designee will review all reports.
6. Dealings with the Clients
You should not have any direct or indirect investment interest in the purchase
or sale of any Security or property from or to Clients. This is a prohibition
against dealings between you and the Clients and is not intended to preclude or
limit investment transactions by you in Securities or property, provided such
transactions are not in conflict with the provisions of this Code.
7. Preferential Treatment, Favors and Gifts
You are prohibited from giving and receiving gifts of significant value or
cost from any person or entity that does business with or on behalf of any
Client. You should also avoid preferential treatment, favors, gifts and
entertainment which might, or might appear to, influence adversely or
restrict the independent exercise of your best efforts and best judgments
on behalf of the Clients or which might tend in any way to impair
confidence in Seligman by Clients. Cash Gifts that do not exceed $100 in
value per person for a calendar year are permissible. Ordinary courtesies
of business life, or ordinary business entertainment, and gifts of
inconsequential value are also permissible. However, they should not be so
frequent nor so extensive as to raise any question of impropriety.
8
<PAGE>
8. Outside Business Activities and Service as a Director, Trustee or in a
Fiduciary Capacity of any Organization
You may not engage in any outside business activities or serve as a
Director, Trustee or in a fiduciary capacity of any organization, without
the prior written consent of the Director of Compliance.
9. Remedies of the Code
Upon discovering a violation of this Code, sanctions may be imposed against
the person concerned as may be deemed appropriate, including, among other
things, a letter of censure, fines, suspension or termination of personal
trading rights and/or employment.
As part of any sanction, you may be required to absorb any loss from the
trade. Any profits realized, as a result of your personal transaction that
violates the Code must be disgorged to a charitable organization, which you
may designate.
10. Compliance Certification
At least once a year, you will be required to certify on the Employee
Certification Form (set forth in Appendix E) that you have read and
understand this Code, that you have complied with the requirements of the
Code, and that you have disclosed or reported all personal Securities
Transactions pursuant to the provisions of the Code.
11. Inquiries Regarding the Code
If you have any questions regarding this Code or any other
compliance-related matter, please call the Director of Compliance, or
in his absence, the General Counsel or Associate General Counsel.
--------------------------------
William C. Morris
Chairman
December 22, 1966
Revised: March 8, 1968 December 7, 1990
January 14, 1970 November 18, 1991
March 21, 1975 April 1, 1993
May 1, 1981 November 1, 1994
May 1, 1982 February 28, 1995
April 1, 1985 November 19, 1999*
9
<PAGE>
March 27, 1989
* Refers to the incorporation of the Code of Ethics of the Seligman Investment
Companies originally adopted June 12, 1962, as amended.
10
<PAGE>
Appendix A
Amended November 19, 1999
J. & W. Seligman & Co. Incorporated - Insider Trading Policies and Procedures
SECTION I. BACKGROUND
Introduction
United States law creates an affirmative duty on the part of broker-dealers
and investment advisers to establish, maintain and enforce written policies and
procedures that provide a reasonable and proper system of supervision,
surveillance and internal control to prevent the misuse of material, non-public
information by the broker-dealer, investment adviser or any person associated
with them. The purpose of these procedures is to meet those requirements. The
following procedures apply to J. & W. Seligman & Co. Incorporated, its
subsidiaries and affiliates (collectively, "Seligman") and all officers,
directors and employees (collectively, "Employees") thereof.
Statement of Policy
No Employee may trade, either personally or on behalf of others, on
material, non-public information or communicate material, non-public information
to another in violation of the law. This policy extends to activities within and
outside their duties at Seligman. Each Employee must read, acknowledge receipt
and retain a copy of these procedures.
Inside Information
The term "insider trading" is not defined in the federal securities laws,
but generally is used to refer to the use of material, non-public information to
trade in securities or to communicate material, non-public information to
others.
While the law concerning insider trading is not static, it is understood
that the law generally prohibits:
A. trading by an insider, while in possession of material, non-public
information, or
B. trading by a non-insider, while knowingly in possession of material,
non-public information, where the information either was disclosed to
the non-insider in violation of an insider's duty to keep it
confidential or was misappropriated, or
C. communicating material, non-public information to others.
11
<PAGE>
The elements of insider trading and the penalties for such unlawful conduct
are discussed below. If you have any questions after reviewing these procedures,
you should consult the Director of Compliance, General Counsel or Associate
General Counsel.
1. Who Is An Insider?
The concept of "insider" is broad. It includes Employees of a company. In
addition, a person can be a "temporary insider" if he or she enters into a
special confidential relationship in the conduct of a company's affairs and
as a result is given access to information solely for the company's
purposes. A temporary insider can include, among others, a company's
attorneys, accountants, consultants, bank lending officers, and the
Employees of such organizations. In addition, Seligman may become a
temporary insider of a company it advises or for which it performs other
services. According to the Supreme Court, the company must expect the
outsider to keep the disclosed non-public information confidential and the
relationship must at least imply such a duty before the outsider will be
considered an insider.
2. What Is Material Information?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" generally is defined as
information for which there is a substantial likelihood that a reasonable
investor would consider it important in making his or her investment
decisions, or information that is reasonably certain to have a substantial
affect on the price of a company's securities. Information that Employees
should consider material includes, but is not limited to: dividend changes,
earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major
litigation, liquidation problems and extraordinary management developments.
In addition, information about major contracts or new customers could also
qualify as material, depending upon the importance of such developments to
the company's financial condition or anticipated performance.
Material information does not have to relate to a company's business. For
example, in Carpenter v. U.S., 408 U.S. 316 (1987), the Supreme Court
considered as material certain information about the contents of a
forthcoming newspaper column that was expected to affect the market price
of a Security. In that case, a Wall Street Journal reporter was found
criminally liable for disclosing to others the dates that reports on
various companies would appear in the Journal and whether those reports
would be favorable or not.
3. What Is Non-Public Information?
Information is non-public until it has been effectively communicated to the
market place. One must be able to point to some fact to show that the
information is generally public. For example, information found in a report
filed with the SEC, or appearing in Dow Jones,
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Reuters Economic Services, The Wall Street Journal or other publications of
general circulation would be considered public. However, see Section II,
Paragraph 2.
4. Penalties for Insider Trading
Penalties for trading on or communicating material, non-public information
are severe, both for individuals involved in such unlawful conduct and
their employers. A person can be subject to some or all of the penalties
below even if he or she does not personally benefit from the violation.
Penalties include:
- Civil injunctions
- Disgorgement of profits
- Jail sentences
- Fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited, and
- Fines for the employer or other controlling person of up to the
greater of $1,000,000 or three times the amount of the profit gained
or loss avoided.
In addition, any violation of policies and procedures set forth herein can
be expected to result in serious sanctions by Seligman, including dismissal of
the persons involved.
SECTION II. PROCEDURES
Procedures to Implement Policy Against Insider Trading.
The following procedures have been established to assist the Employees of
Seligman in avoiding insider trading, and to aid Seligman in preventing,
detecting and imposing sanctions against insider trading. Every Employee of
Seligman must follow these procedures or risk serious sanctions, including
dismissal, substantial personal liability and criminal penalties. If you have
any questions about these procedures you should consult the Director of
Compliance, the General Counsel or Associate General Counsel.
1. Identifying Inside Information.
Before trading for yourself or others (including investment companies and
private Accounts managed by Seligman), in the securities of a company about
which you may have potential inside information, ask yourself the following
questions:
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a. Is the information material? Is this information that an investor
would consider important in making his or her investment decisions? Is
this information that would substantially affect the market price of
the securities if generally disclosed?
b. Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace in a publication of general circulation or does it fall
within the circumstances set forth in paragraph 2 below.
If, after consideration of the above, you believe that the information is
material and non-public, or if you have questions as to whether the information
is material and non-public, you should take the following steps:
c. Report the matter immediately to the Director of Compliance, General
Counsel or Associate General Counsel.
d. Do not purchase or sell the securities on behalf of yourself or
others, including investment companies or private Accounts managed by
Seligman.
e. Do not communicate the information inside or outside Seligman other
than to the Director of Compliance, General Counsel or Associate
General Counsel.
f. After the Director of Compliance, General Counsel or Associate General
Counsel has reviewed the issue, you will be instructed to continue the
prohibitions against trading and communication, or you will be allowed
to trade and communicate the information.
2. Important Specific Examples
a. If you have a telephone or face-to-face conversation with a senior
executive of a publicly-traded company and are provided information
about the company that you have reason to believe has not yet been
disclosed in a widely-disseminated publication such as a press
release, quarterly report or other public filing, you have received
non-public information. This information is considered non-public even
if you believe that the company executive would provide the same
information to other analysts or portfolio managers who call the
company. Until information has been disclosed in a manner that makes
it available to (or capable of being accessed by) the investment
community as a whole, it is considered non-public. If the information
is material, as described above, you may not trade while in possession
of this information unless you first discuss the matter and obtain
approval from the Director of Compliance, General Counsel or Associate
General Counsel. Although it may be lawful for an analyst to act on
the basis of material information that the company's management has
chosen to disclose selectively to that analyst, where the information
is provided in a one-on-one context, regulators are likely to question
such conduct.
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Approval from the Law and Regulation Department will therefore depend
on the specific circumstances of the information and the disclosure.
Under the Supreme Court's important decision of Dirks v. SEC, 463 U.S.
646 (1983), securities analysts may be free to act on selectively
disclosed material information if it is provided by company executives
exclusively to achieve proper corporate purposes.
b. If you obtain material information in the course of an analysts'
conference call or meeting conducted by a publicly-traded company in
the ordinary course of its business in which representatives of
several other firms or investors are also present (as distinguished
from the one-on-one situation described in the preceding paragraph),
you may act on the basis of that information without need to consult
with the Director of Compliance, General Counsel or Associate General
Counsel, even if the information has not yet been published by the
news media. You should be aware, however, that if there is something
highly unusual about the meeting or conference call that leads you to
question whether it has been authorized by the company or is otherwise
suspect, you should first consult with the Director of Compliance,
General Counsel or Associate General Counsel.
c. If you are provided material information by a company and are
requested to keep such information confidential, you may not trade
while in possession of that information before first obtaining the
approval of the Director of Compliance, General Counsel or the
Associate General Counsel.
As these examples illustrate, the legal requirements governing insider
trading are not always obvious. You should therefore always consult with the
Director of Compliance, General Counsel or Associate General Counsel if you have
any question at all about the appropriateness of your proposed conduct.
3. Restricting Access To Material, Non-Public Information
Information in your possession that you identify as material and non-public
may not be communicated to anyone, including persons within Seligman,
except as provided in paragraphs 1 and 2 above. In addition, care should be
taken so that such information is secure. For example, files containing
material, non-public information should be sealed; access to computer files
containing material, non-public information should be restricted.
4. Resolving Issues Concerning Insider Trading
If, after consideration of the items set forth in paragraphs 1 and 2, doubt
remains as to whether information is material or non-public, or if there is
any unresolved question as to the applicability or interpretation of the
foregoing procedures, or as to the propriety of any action, it must be
discussed with the Director of Compliance, General Counsel and or the
Associate General Counsel before trading or communicating the information
to anyone.
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5. Personal Securities Trading
All Employees shall follow with respect to personal Securities trading the
procedures set forth in the Code of Ethics. In addition, no Employee shall
establish a brokerage Account with a Firm other than those previously
approved without the prior consent of the Director of Compliance and every
Employee shall be subject to reporting requirements under Section III.5 of
the Code of Ethics. The Director of Compliance, or his designee, shall
monitor the personal Securities trading of all Employees.
16
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN NEW
TECHNOLOGIES FUND II, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to the Registration
Statement on Form N-2 and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, her attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in her name and stead, in her capacity as
such director, to sign and file such Amendment to the Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 14th day of April, 2000.
/s/ Alice S. Ilchman
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN NEW
TECHNOLOGIES FUND II, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to the Registration
Statement on Form N-2 and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to the Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 14th day of April, 2000.
/s/ Frank A. McPherson
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN NEW
TECHNOLOGIES FUND II, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to the Registration
Statement on Form N-2 and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to the Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 14th day of April, 2000.
/s/ John E. Merow
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN NEW
TECHNOLOGIES FUND II, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to the Registration
Statement on Form N-2 and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, her attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in her name and stead, in her capacity as
such director, to sign and file such Amendment to the Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 14th day of April, 2000.
/s/ Betsy S. Michel
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN NEW
TECHNOLOGIES FUND II, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to the Registration
Statement on Form N-2 and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to the Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 14th day of April, 2000.
/s/ James C. Pitney
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN NEW
TECHNOLOGIES FUND II, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to the Registration
Statement on Form N-2 and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to the Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 14th day of April, 2000.
/s/ Richard R. Schmaltz
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN NEW
TECHNOLOGIES FUND II, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to the Registration
Statement on Form N-2 and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to the Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 14th day of April, 2000.
/s/ Robert L. Shafer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN NEW
TECHNOLOGIES FUND II, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to the Registration
Statement on Form N-2 and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to the Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 14th day of April, 2000.
/s/ James N. Whitson
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN NEW
TECHNOLOGIES FUND II, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to the Registration
Statement on Form N-2 and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to the Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 14th day of April, 2000.
/s/ William C. Morris
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of SELIGMAN NEW
TECHNOLOGIES FUND II, INC., a Maryland corporation, which proposes to file with
the Securities and Exchange Commission an Amendment to the Registration
Statement on Form N-2 and further amendments thereto, as necessary, under the
Securities Act of 1933 and the Investment Company Act of 1940, as amended,
hereby constitutes and appoints William C. Morris and Brian T. Zino, and each of
them individually, his attorneys-in-fact and agent, with full power of
substitution and resubstitution, for in his name and stead, in his capacity as
such director, to sign and file such Amendment to the Registration Statement or
further amendments thereto, and any and all applications or other documents to
be filed with the Securities and Exchange Commission pertaining thereto, with
full power and authority to do and perform all acts and things requisite and
necessary to be done on the premises.
Executed this 14th day of April, 2000.
/s/ Brian T. Zino
