Securities Act File No. _________________
Investment Company Act File No. _________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No._________ |_|
Post-Effective Amendment No._________ |_|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No.________ |_|
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SELIGMAN NEW ECONOMIES FUND, INC.
(Exact name of registrant as specified in charter)
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100 PARK AVENUE, NEW YORK, NEW YORK 10017
(Address of principal executive offices)
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Registrant's Telephone Number: 212-850-1864 or
Toll Free: 800-221-2450
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THOMAS G. ROSE, Treasurer
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)
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It is proposed that this filing will become effective (check appropriate box):
|_| immediately upon filing |_| on (date) pursuant to paragraph
pursuant to paragraph (b) (a)(1)
|_| on (date) pursuant to |_| 75 days after filing pursuant
paragraph (b) to paragraph (a)(2)
|_| 60 days after filing pursuant |_| on (date) pursuant to
to paragraph (a)(1) paragraph (a)(2) of rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
SELIGMAN
-------------------
NEW ECONOMIES
FUND, INC.
The Securities and Exchange Commission has neither approved nor disapproved this
Fund, and it has not determined the prospectus to be accurate or adequate. Any
representation to the contrary is a criminal offense.
An investment in this Fund or any other fund cannot provide a complete
investment program. The suitability of an investment in the Fund should be
considered based on the investment objective, strategies and risks described in
this Prospectus, considered in light of all of the other investments in your
portfolio, as well as your risk tolerance, financial goals and time horizons. We
recommend that you consult your financial advisor to determine if this Fund is
suitable for you.
EQNE1 6/2000
[PHOTO]
PROSPECTUS
_________, 2000
----------
Seeking Long-Term
Capital Appreciation
by Investing in Small
and Medium-Sized
Companies Believed to Rely
Significantly on
Technological Developments
managed by
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
<PAGE>
Table of Contents
The Fund
Investment Objective 1
Principal Investment Strategies 1
Principal Risks 2
Past Performance 2
Fees and Expenses 3
Management 4
Shareholder Information
Deciding Which Class of Shares to Buy 5
Pricing of Fund Shares 7
Opening Your Account 7
How to Buy Additional Shares 8
How to Exchange Shares Among
the Seligman Mutual Funds 9
How to Sell Shares 9
Important Policies That May Affect
Your Account 10
Dividends and Capital Gain Distributions 11
Taxes 11
The Seligman Mutual Funds 12
How to Contact Us 14
For More Information back cover
TIMES CHANGE ... VALUES ENDURE
<PAGE>
The Fund
Investment Objective
The Fund's investment objective is long-term capital appreciation. Income is
not an objective.
Principal Investment Strategies
The Fund uses the following principal strategies to pursue its investment
objective:
The Fund invests primarily in equity securities of companies considered by the
investment manager to provide opportunities to benefit significantly from
technological developments. 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. Under normal circumstances, the Fund
will invest at least 65% of its assets in securities of these types of
companies.
The Fund may invest in companies of any size, but generally expects to invest
at least 65% of its assets in small and medium-sized companies. In current
market conditions, the Fund considers small and medium-sized companies to be
those with market capitalizations, at the time of purchase by the Fund, of as
little as $10 million and as much as $10 billion.
The Fund uses a bottom-up stock selection approach. This means that the
investment manager uses extensive in-depth research to find those companies
that it believes offer the greatest prospects for future growth. In selecting
individual securities, the investment manager looks for companies that it
believes displays or are expected to display:
. Robust growth prospects
. Revenue-producing technological innovations
. High profit margins or return on capital
. Attractive valuation relative to expected earnings or cash flow
. Strong current or future cash flow
. Large installed base or distribution franchise
. Quality management
. Favorable new product cycles
. Unique competitive advantages, including intellectual property
The Fund generally sells a stock if the investment manager believes its target
price has been reached, its earnings are disappointing, its revenue growth has
slowed, or its underlying fundamentals have deteriorated.
The Fund invests primarily in common stocks. However, the Fund may also invest
in securities convertible into or exchangeable for common stocks, in rights and
warrants to purchase common stocks, and in debt securities or preferred stocks
believed to provide opportunities for capital gain.
The Fund may also invest in American Depositary Receipts (ADRs), which are
publicly traded instruments generally issued by domestic banks or trust
companies that represent a security of a foreign issuer.
The Fund may invest up to 15% of its net assets in illiquid securities (i.e.,
securities that cannot readily be sold). The Fund may also invest up to 25% of
its total assets directly in foreign securities. The limit on foreign
securities does not include ADRs or commercial paper or certificates of
deposits issued by foreign banks. The Fund may also purchase put options in an
attempt to hedge against a decline in the price of securities it holds in its
portfolio. A put option gives the Fund the right to sell an underlying security
at a particular price during a fixed period of time. The Fund may, from time to
time, borrow money to purchase securities.
1
<PAGE>
The Fund may, from time to time, take temporary defensive positions that are
inconsistent with its principal strategies in seeking to minimize extreme
volatility caused by adverse market, economic, or other conditions. This could
prevent the Fund from achieving its investment objective.
The Fund may change its principal strategies if the Board of Directors believes
doing so is consistent with the Fund's objective. The Fund's objective may be
changed only with the approval of shareholders.
The Fund's Board of Directors may change the parameters by which small and
medium-sized companies are defined if it concludes that such a change is
appropriate.
As with any mutual fund, there is no guarantee that the Fund will achieve its
objective.
Principal Risks
Stock prices fluctuate. Therefore, as with any fund that invests in stocks, the
Fund's net asset value will fluctuate. You may experience a decline in the
value of your investment and you could lose money if you sell your shares at a
price lower than you paid for them.
The Fund concentrates its investments in companies that rely significantly on
technological events or advances in their product development, production or
operations. Therefore, the Fund may be susceptible to factors affecting these
industries and the Fund's net asset value may fluctuate more than a fund that
invests in a wider range of industries. In addition, the rapid pace of change
within many of these industries tends to create a more volatile operating
environment than other industries.
The stocks of small- and medium-sized companies, as a whole, may experience
larger price fluctuations than large-company stocks or other types of
investments. Small companies tend to have shorter operating histories and may
have less experienced management. In addition, medium-sized companies, as a
group, could fall out of favor with the market. During periods of investor
uncertainty, investor sentiment may favor large, well-known companies over
smaller, lesser-known companies.
The Fund may be negatively affected by the broad investment environment in the
international or US securities markets, which is influenced by, among other
things, interest rates, inflation, politics, fiscal policy, and current events.
Foreign securities, illiquid securities and options in the Fund's portfolio
involve higher risk and may subject the Fund to higher price volatility.
Investing in securities of foreign issuers involves risks not associated with
US investments, including settlement risks, currency fluctuations, foreign
taxation, differences in financial reporting practices, and changes in
political conditions.
The Fund may actively and frequently trade stocks in its portfolio to carry out
its principal strategies. A high portfolio turnover rate increases transaction
costs, which may increase the Fund's expenses. Frequent and active trading may
also cause adverse tax consequences for investors in the Fund due to an
increase in short-term capital gains.
An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Past Performance
The Fund offers four classes of shares: Class A shares, Class B shares, Class C
shares and Class D shares. Each class of the Fund's shares is new, effective
, so performance information is not available.
2
<PAGE>
Fees and Expenses
The table below summarizes the fees and expenses that you may pay as a
shareholder of the Fund. Each Class of shares has its own sales charge schedule
and is subject to different ongoing 12b-1 fees. Shareholder fees are charged
directly to your account. Annual fund operating expenses are deducted from Fund
assets and are therefore paid indirectly by you and other shareholders of the
Fund.
<TABLE>
<CAPTION>
Shareholder Fees Class A Class B Class C Class D
---------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load).............. 4.75% 5% 2% 1%
Maximum Sales Charge (Load) on Purchases
(as a % of offering price).............. 4.75%(/1/) none 1% none
Maximum Contingent Deferred Sales Charge
(Load) (CDSC) on Redemptions (as a % of
original purchase price or current net
asset value, whichever is less)......... none(/1/) 5% 1% 1%
Annual Fund Operating Expenses for 2000
---------------------------------------
(as a percentage of average net assets)
Management Fees.......................... 1.25% 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1)
Fees.................................... .25% 1.00% 1.00% 1.00%
Other Expenses(/2/)...................... % % % %
---- ---- ---- ----
Total Annual Fund Operating Expenses..... % % % %
==== ==== ==== ====
</TABLE>
(/1/) If you buy Class A shares for $1,000,000 or more you will not pay an
initial sales charge, but your shares will be subject to a 1% CDSC if sold
within 18 months.
(/2/) "Other Expenses" are based on estimated amounts for the current fiscal
year.
Management Fees:
Fees paid out of Fund
assets to the
investment manager to
compensate it for
managing the Fund.
12b-1 Fees:
Fees paid by each
Class, pursuant to a
plan adopted by the
Fund under Rule 12b-1
of the Investment
Company Act of 1940.
The plan allows each
Class to pay
distribution and/or
service fees for the
sale and distribution
of its shares and for
providing services to
shareholders.
Other Expenses:
Miscellaneous expenses
of running the Fund,
including such things
as transfer agency,
registration, custody,
auditing and legal
fees.
Example
This example is intended to help you compare the expenses of investing in the
Fund with the expenses of investing in other mutual funds. It assumes (1) you
invest $10,000 in the Fund for each period and then sell all of your shares at
the end of that period, (2) your investment has a 5% return each year, and (3)
the Fund's operating expenses remain the same. Although your actual expenses
may be higher or lower, based on these assumptions your expenses would be:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C> <C> <C>
Class A $ $
Class B
Class C
Class D
If you did not sell your shares at the end of each period, your expenses would
be:
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C> <C> <C>
Class A $ $
Class B
Class C
Class D
</TABLE>
3
<PAGE>
Management
The Fund's Board of Directors provides broad supervision over the affairs of
the Fund.
J. & W. Seligman & Co. Incorporated (Seligman), 100 Park Avenue, New York, New
York 10017, is the manager of the Fund. Seligman manages the investment of the
Fund's assets, including making purchases and sales of portfolio securities
consistent with the Fund's investment objective and strategies, and administers
the Fund's business and other affairs.
Established in 1864, Seligman currently serves as manager to 20 US registered
investment companies, which offer more than 50 investment portfolios with
approximately $30 billion in 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.
The Fund pays Seligman a fee for its management services. This fee is equal to
an annual rate of 1.25% of the Fund's average daily net assets.
Affiliates of Seligman:
Seligman Advisors, Inc.:
The Fund's general
distributor; responsible
for accepting orders for
purchases and sales of Fund
shares.
Seligman Services, Inc.:
A limited purpose
broker/dealer; acts as the
broker/dealer of record for
shareholder accounts that
do not have a designated
broker or financial
advisor.
Seligman Data Corp. (SDC):
The Fund's shareholder
service agent; provides
shareholder account
services to the Fund at
cost.
Portfolio Management
The Fund is co-managed by Mr. Paul H. Wick, leader of Seligman's Technology
Group, and Mr. Storm Boswick. 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. 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. and Co-Portfolio Manager of its Seligman Global Technology
Fund, and a Vice President and Co-Portfolio Manager of Seligman New
Technologies Fund, Inc. Mr. Wick is also a Vice President of Seligman
Portfolios, Inc. and 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 and Co-Portfolio Manager of Seligman New Technologies Fund, Inc.
Prior to joining Seligman, Mr. Boswick was a Financial Analyst, Investment
Research, with Goldman, Sachs & Co. from February 1994 to May 1996.
4
<PAGE>
Shareholder Information
Deciding Which Class of Shares to Buy
Each of the Fund's Classes represents an interest in the same portfolio of
investments. However, each Class has its own sales charge schedule, and its
ongoing 12b-1 fees may differ from other Classes. When deciding which Class of
shares to buy, you should consider, among other things:
. The amount you plan to invest.
. How long you intend to remain invested in the Fund, or another Seligman
mutual fund.
. If you would prefer to pay an initial sales charge and lower ongoing 12b-1
fees, or be subject to a CDSC and pay higher ongoing 12b-1 fees.
. Whether you may be eligible for reduced or no sales charges when you buy
or sell shares.
Your financial advisor will be able to help you decide which Class of shares
best meets your needs.
Class A
.Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
Sales Charge Sales Charge Regular Dealer
as a % as a % Discount
of Offering of Net as a % of
Amount of your Investment Price(1) Amount Invested Offering Price
------------------------- ------------ --------------- --------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 -- $99,999 4.00 4.17 3.50
$100,000 -- $249,999 3.50 3.63 3.00
$250,000 -- $499,999 2.50 2.56 2.25
$500,000 -- $999,999 2.00 2.04 1.75
$1,000,000 and over(2) 0.00 0.00 0.00
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(2) You will not pay a sales charge on purchases of $1 million or more, but
you will be subject to a 1% CDSC if you sell your shares within 18
months.
. Annual 12b-1 fee (for shareholder services) of up to 0.25%.
. No sales charge on reinvested dividends or capital gain distributions.
. Certain employer-sponsored defined contribution-type plans can purchase
shares with no initial sales charge.
Class B
. No initial sales charge on purchases.
. A declining CDSC on shares sold within 6 years of purchase:
<TABLE> Your purchase of Class B
<CAPTION> shares must be for less than
Years Since Purchase CDSC $250,000, because if you
-------------------- ---- invest $250,000 or more, you
<S> <C> will pay less in fees and
Less than 1 year 5% charges if you buy another
1 year or more but less than 2 years 4 Class of shares.
2 years or more but less than 3
years 3
3 years or more but less than 4
years 3
4 years or more but less than 5
years 2
5 years or more but less than 6
years 1
6 years or more 0
</TABLE>
. Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
. Automatic conversion to Class A shares after eight years, resulting in
lower ongoing 12b-1 fees.
. No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
5
<PAGE>
Class C
. Initial sales charge on Fund purchases, as set forth below:
<TABLE>
<CAPTION>
Sales Charge as a % Regular Dealer
Sales Charge as a % of Net Discount as a % of
Amount of your Investment of Offering Price(1) Amount Invested Offering Price
------------------------- -------------------- ------------------- ------------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 -- $249,999 0.50 0.50 0.50
$250,000 --
$1,000,000(2) 0.00 0.00 0.00
</TABLE>
(/1/) "Offering Price" is the amount that you actually pay for Fund shares;
it includes the initial sales charge.
(/2/) Your purchase of Class C shares must be for less than $1,000,000
because if you invest $1,000,000 or more you will pay less in fees and
charges if you buy Class A shares.
. A 1% CDSC on shares sold within eighteen months of purchase.
. Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
. No automatic conversion to Class A shares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
. No sales charge on reinvested dividends or capital gain distributions.
. No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
Class D*
. No initial sales charge on purchases.
. A 1% CDSC on shares sold within one year of purchase.
. Annual 12b-1 fee (for distribution and shareholder services) of 1.00%.
. No automatic conversion to Class A shares, so you will be subject to
higher ongoing 12b-1 fees indefinitely.
. No CDSC when you sell shares purchased with reinvested dividends or
capital gain distributions.
* Class D shares are not available to all investors. You may purchase Class
D shares only (1) if you already own Class D shares of the Fund or
another Seligman mutual fund, (2) if your financial advisor of record
maintains an omnibus account at SDC, or (3) pursuant to a 401(k) or other
retirement plan program for which Class D shares are already available or
for which the sponsor requests Class D shares because the sales
charge structure of Class D is comparable to the sales charge structure
of the other funds offered under the program.
Because the Fund's 12b-1 fees are paid out of each Class's assets on an
ongoing basis, over time these fees will increase your investment expenses
and may cost you more than other types of sales charges.
The Fund's Board of Directors believes that no conflict of interest currently
exists between the Fund's Class A, Class B, Class C and Class D shares. On an
ongoing basis, the Directors, in the exercise of their fiduciary duties under
the Investment Company Act of 1940 and Maryland law, will seek to ensure that
no such conflict arises.
How CDSCs Are Calculated
To minimize the amount of the CDSC you may pay when you sell your shares, the
Fund assumes that shares acquired through reinvested dividends and capital
gain distributions (which are not subject to a CDSC) are sold first. Shares
that have been in your account long enough so they are not subject to a CDSC
are sold next. After these shares are exhausted, shares will be sold in the
order they were purchased (oldest to youngest). The amount of any CDSC that
you pay will be based on the shares' original purchase price or current net
asset value, whichever is less.
You will not pay a CDSC when you exchange shares of the Fund to buy the same
class of shares of any other Seligman mutual fund. For the purpose of
calculating the CDSC when you sell shares that you acquired by exchanging
shares of the Fund, it will be assumed that you held the shares since the
date you purchased the shares of the Fund.
6
<PAGE>
Pricing of Fund Shares
When you buy or sell shares, you do so at the Class's net asset value (NAV)
next calculated after Seligman Advisors accepts your request. Any applicable
sales charge will be added to the purchase price for Class A shares and Class C
shares. Purchase or sale orders received by an authorized dealer or financial
advisor by the close of regular trading on the New York Stock Exchange (NYSE)
(normally 4:00 p.m. Eastern time) and accepted by Seligman Advisors before the
close of business (5:00 p.m. Eastern time) on the same day will be executed at
the Class's NAV calculated as of the close of regular trading on the NYSE on
that day. Your broker/dealer or financial advisor is responsible for forwarding
your order to Seligman Advisors before the close of business.
NAV: If your buy or sell order is
Computed received by your broker/dealer
separately for or financial advisor after the
each Class by close of regular trading on
dividing that the NYSE, or is accepted by
Class's share of Seligman Advisors after the
the net assets of close of business, the order
the fund (i.e., will be executed at the
its assets less Class's NAV calculated as of
liabilities) by the close of regular trading
the total number on the next NYSE trading day.
of outstanding When you sell shares, you
shares of the receive the Class's per share
Class. NAV, less any applicable CDSC.
The NAV of the Fund's shares
is determined each day, Monday
through Friday, on days that
the NYSE is open for trading.
Because of their higher 12b-1
fees, the NAV of Class B,
Class C and Class D shares
will generally be lower than
the NAV of Class A shares of
the Fund.
Securities owned by the Fund are valued at current market prices. If reliable
market prices are unavailable, securities are valued in accordance with
procedures approved by the Fund's Board of Directors.
Opening Your Account
The Fund's shares are sold through authorized broker/dealers or financial
advisors who have sales agreements with Seligman Advisors. There are several
programs under which you may be eligible for reduced sales charges or lower
minimum investments. Ask your financial advisor if any of these programs apply
to you. Class D shares are not available to all investors. For more
information, see "Deciding Which Class of Shares to Buy--Class D."
To make your initial investment in the Fund, contact your financial advisor or
complete an account application and send it with your check directly to SDC at
the address provided on the account application. If you do not choose a Class,
your investment will automatically be made in Class A shares.
The required minimum initial investments are:
. Regular (non-retirement) accounts: $1,000
. For accounts opened concurrently with Invest-A-Check(R):
$100 to open if you will be making monthly investments
$250 to open if you will be making quarterly investments
- --------------------------------------------------------------------------------
You may buy shares of the
Fund for all types of tax-
deferred retirement plans.
Contact Retirement Plan
Services at the address or
phone number listed on the
inside back cover of this
prospectus for information
and to receive the proper
forms.
- --------------------------------------------------------------------------------
If you buy shares by check and subsequently
sell the shares, SDC will not
send your proceeds until your check clears, which could take up to 15 calendar
days from the date of your purchase.
You will be sent a statement confirming your purchase, and any subsequent
transactions in your account. You will also be sent quarterly and annual
statements detailing your transactions in the Fund and the other Seligman funds
you own under the same account number. Duplicate account statements will be
sent to you free of charge for the current year and most recent prior year.
Copies of year-end statements for prior years are available for a fee of $10
per year, per account, with a maximum charge of $150 per account. Send your
request and a check for the fee to SDC.
If you want to be able to buy, sell, or exchange shares by telephone,
you should complete an application when you open your account. This
will prevent you from having to complete a supplemental election form
(which may require a signature guarantee) at a later date.
7
<PAGE>
How to Buy Additional Shares
After you have made your initial investment, there are many options available
to make additional purchases of Fund shares. Subsequent purchases must be for
$100 or more.
Shares may be purchased through your authorized financial advisor, or you may
send a check directly to SDC. Please provide either an investment slip or a
note that provides your name(s), Fund name, and account number. Unless you
indicate otherwise, your investment will be made in the Class you already own.
Send investment checks to:
Seligman Data Corp.
P.O. Box 9766
Providence, RI 02940-9766
Your check must be in US dollars and be drawn on a US bank. You may not use
third party or credit card convenience checks for investment.
You may also use the following account services to make additional investments:
Invest-A-Check(R). You may buy Fund shares electronically from a savings or
checking account of an Automated Clearing House (ACH) member bank. If your bank
is not a member of ACH, the Fund will debit your checking account by
preauthorized checks. You may buy Fund shares at regular monthly intervals in
fixed amounts of $100 or more, or regular quarterly intervals in fixed amounts
of $250 or more. If you use Invest-A-Check(R), you must continue to make
automatic investments until the Fund's minimum initial investment of $1,000 is
met or your account may be closed.
Automatic Dollar-Cost-Averaging. If you have at least $5,000 in Seligman Cash
Management Fund, you may exchange uncertificated shares of that fund to buy
shares of the same class of another Seligman mutual fund at regular monthly
intervals in fixed amounts of $100 or more or regular quarterly intervals in
fixed amounts of $250 or more. If you exchange Class A shares or Class C
shares, you may pay an initial sales charge to buy Fund shares.
Automatic CD Transfer. You may instruct your bank to invest the proceeds of a
maturing bank certificate of deposit (CD) in shares of the Fund. If you wish to
use this service, contact SDC or your financial advisor to obtain the necessary
forms. Because your bank may charge you a penalty, it is not normally advisable
to withdraw CD assets before maturity.
Dividends From Other Investments. You may have your dividends from other
companies paid to the Fund. (Dividend checks must include your name, account
number, Fund name, and Class of shares.)
Direct Deposit. You may buy Fund shares electronically with funds from your
employer, the IRS, or any other institution that provides direct deposit. Call
SDC for more information.
Seligman Time Horizon Matrix SM. (Requires an initial total investment of
$10,000.) This is a needs-based investment process, designed to help you and
your financial advisor plan to seek your long-term financial goals. It
considers your financial needs, and helps frame a personalized asset allocation
strategy around the cost of your future commitments and the time you have to
meet them. Contact your financial advisor for more information.
Seligman Harvester SM. If you are a retiree or nearing retirement, this program
is designed to help you establish an investment strategy that seeks to meet
your needs throughout your retirement. The strategy is customized to your
personal financial situation by allocating your assets to seek to address your
income requirements, prioritizing your expenses, and establishing a prudent
withdrawal schedule. Contact your financial advisor for more information.
8
<PAGE>
How to Exchange Shares Among the Seligman Mutual Funds
You may sell Fund shares to buy shares of the same Class of another Seligman
mutual fund, or you may sell shares of another Seligman mutual fund to buy Fund
shares. Exchanges will be made at each fund's respective NAV. You will not pay
an initial sales charge when you exchange, unless you exchange Class A shares
or Class C shares of Seligman Cash Management Fund to buy shares of the same
Class of the Fund or another Seligman mutual fund.
Only your dividend and capital gain distribution options and telephone services
will be automatically carried over to any new fund account. If you wish to
carry over any other account options (for example, Invest-A-Check(R) or
Systematic Withdrawals) to the new fund, you must specifically request so at
the time of your exchange.
If you exchange into a new fund, you must exchange enough to meet the new
fund's minimum initial investment.
See "The Seligman Mutual Funds" for a list of the funds available for exchange.
Before making an exchange, contact your financial advisor or SDC to obtain the
applicable fund prospectus(es). You should read and understand a fund's
prospectus before investing. Some funds may not offer all classes of shares.
How to Sell Shares
The easiest way to sell Fund shares is by phone. If you have telephone
services, you may be able use this service to sell Fund shares. Restrictions
apply to certain types of accounts. Please see "Important Policies That May
Affect Your Account."
When you sell Fund shares by phone, a check for the proceeds is sent to your
address of record. If you have current ACH bank information on file, you may
have the proceeds of the sale of your Fund shares directly deposited into your
bank account (typically, 3-4 business days after your shares are sold).
You may sell shares to the Fund through a broker/ dealer or your financial
advisor. The Fund does not charge any fees or expenses, other than any
applicable CDSC, for this transaction; however, the dealer or financial advisor
may charge a service fee. Contact your financial advisor for more information.
You may always send a written request to sell Fund shares; however, it may take
longer to get your money.
As an additional measure to protect you and the Fund, SDC may confirm written
redemption requests that are (1) for $25,000 or more, or (2) directed to be
paid to an alternate payee or sent to an address other than the address of
record, with you or your financial advisor by telephone before sending you your
money. This will not affect the date on which your redemption request is
actually processed.
You will need to guarantee your signature(s) if the proceeds are:
(1) $50,000 or more;
(2) to be paid to someone other than the account owner; or
(3) mailed to other than your address of record.
- --------------------------------------------------------------------------------
Signature Guarantee:
Protects you and the Fund
from fraud. It guarantees
that a signature is
genuine. A guarantee must
be obtained from an
eligible financial
institution. Notarization
by a notary public is not
an acceptable guarantee.
- --------------------------------------------------------------------------------
You may need to provide additional documents to sell Fund shares if you are:
.a corporation;
.an executor or administrator;
.a trustee or custodian; or
.in a retirement plan.
If your Fund shares are represented by certificates, you will need to surrender
the certificates to SDC before you sell your shares.
Contact your financial advisor or SDC's Shareholder Services Department for
information on selling your shares under any of the above circumstances.
You may also use the following account service to sell Fund shares:
Systematic Withdrawal Plan. If you have at least $5,000 in the Fund, you may
withdraw (sell) a fixed dollar amount (minimum of $50) of uncertificated shares
at regular intervals. A check will be sent to you at your address of record or,
if you have current ACH bank information on file, you may have your payments
directly deposited to your predesignated bank account in 3-4 business days
after your shares are sold. If you bought $1,000,000 or more of Class A shares
without an initial sales charge, your withdrawals may be subject to a 1% CDSC
if they occur within 18 months of purchase. If you own Class B, Class C, or
Class D shares and reinvest your dividends and capital gain distributions, you
may withdraw 12%, 10%, or 10%, respectively, of the value of your Fund account
(at the time of election) annually without a CDSC.
9
<PAGE>
Important Policies That May Affect Your Account
To protect you and other shareholders, the Fund reserves the right to:
. Refuse an exchange request if:
1. you have exchanged twice from the same fund in any three-month period;
2. the amount you wish to exchange equals the lesser of $1,000,000 or 1%
of the Fund's net assets; or
3. you or your financial advisor have been advised that previous
patterns of purchases and sales or exchanges have been considered
excessive.
. Refuse any request to buy Fund shares;
. Reject any request received by telephone;
. Suspend or terminate telephone services;
. Reject a signature guarantee that SDC believes may be fraudulent;
. Close your fund account if its value falls below $500;
. Close your account if it does not have a certified taxpayer identification
number.
Telephone Services
You and your broker/dealer or financial advisor will be able to place the
following requests by telephone, unless you indicate on your account
application that you do not want telephone services:
. Sell uncertificated shares (up to $50,000 per day, payable to account
owner(s) and mailed to address of record);
. Exchange shares between funds;
. Change dividend and/or capital gain distribution options;
. Change your address;
. Establish systematic withdrawals to address of record.
If you do not complete an account application when you open your account,
telephone services must be elected on a supplemental election form (which may
require a signature guarantee).
Restrictions apply to certain types of accounts:
. Trust accounts on which the current trustee is not listed may not sell Fund
shares by phone;
. Corporations may not sell Fund shares by phone;
. IRAs may only exchange Fund shares or request address changes by phone;
. Group retirement plans may not sell Fund shares by phone; plans that allow
participants to exchange by phone must provide a letter of authorization
signed by the plan custodian or trustee and provide a supplemental election
form signed by all plan participants.
Unless you have current ACH bank information on file, you will not be able to
sell Fund shares by phone within thirty days following an address change.
Your request must be communicated to an SDC representative. You may not request
any phone transactions via the automated access line.
You may cancel telephone services at any time by sending a written request to
SDC. Each account owner, by accepting or adding telephone services, authorizes
each of the other owners to make requests by phone. Your broker/dealer or
financial advisor representative may not establish telephone services without
your written authorization. SDC will send written confirmation to the address
of record when telephone services are added or terminated.
During times of heavy call volume, you may not be able to get through to SDC by
phone to request a sale or exchange of Fund shares. In this case, you may need
to write, and it may take longer for your request to be processed. The Fund's
NAV may fluctuate during this time.
The Fund and SDC will not be liable for processing requests received by phone
as long as it was reasonable to believe that the request was genuine.
Reinstatement Privilege
If you sell Fund shares, you may, within 120 calendar days, use part or all of
the proceeds to buy shares of the Fund or any other Seligman mutual fund
(reinstate your investment) without paying an initial sales charge or, if you
paid a CDSC when you sold your shares, receiving a credit for the applicable
CDSC paid. This privilege is available only once each calendar year. Contact
your financial advisor for more information. You should consult your tax
advisor concerning possible tax consequences of exercising this privilege.
10
<PAGE>
Dividends and Capital Gain Distributions
The Fund generally pays any dividends from its net investment income and
distributes net capital gains realized on investments annually. It is expected
that the Fund's distributions will be primarily capital gains.
You may elect to:
(1) reinvest both dividends and capital gain
Dividend: distributions;
(2) receive dividends in cash and reinvest capital
A payment by a gain distributions; or
mutual fund,
usually derived (3) receive both dividends and capital gain
from the fund's distributions in cash.
net investment
income Your dividends and capital gain distributions will be
(dividends and reinvested if you do not instruct otherwise or if you
interest earned own Fund shares in a Seligman tax-deferred retirement
on portfolio plan.
securities less
expenses). If you want to change your election, you may write SDC
at the address listed on the back cover of this
Capital Gain prospectus or, if you have telephone services, you or
Distribution: your financial advisor may call SDC. Your request must
A payment to be received by SDC before the record date to be
mutual fund effective for that dividend or capital gain
shareholders distribution.
which
represents
profits Cash dividends or capital gain distributions will be
realized on the sent by check to your address of record or, if you
sale of have current ACH bank information on file, directly
securities in a deposited into your predesignated bank account within
fund's 3-4 business days from the payable date.
portfolio.
Dividends and capital gain distributions are
Ex-dividend Date: reinvested to buy additional Fund shares on the
The day on payable date using the NAV of the ex-dividend date.
which any
declared Dividends on Class B, Class C and Class D shares
distributions will be lower than the dividends on Class A shares
(dividends or as a result of their higher 12b-1 fees. Capital
capital gains) gain distributions will be paid in the same amount
are deducted for each Class.
from a fund's
assets before
it calculates
its NAV.
Taxes
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.
Tax-deferred retirement plans are not taxed currently on dividends or capital
gain distributions or on exchanges.
Dividends paid by the Fund are taxable to you as ordinary income. You may be
taxed at different rates on capital gains distributed by the Fund depending on
the length of time the Fund holds its assets.
When you sell Fund shares, 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.
An exchange of Fund shares is a sale and may result in a gain or loss for
federal income tax purposes.
Each January, you will be sent information on the tax status of any
distributions 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.
11
<PAGE>
The Seligman Mutual Funds
Equity
Specialty
- --------------------------------------------------------------------------------
Seligman Communications and
Information Fund
Seeks capital appreciation by investing in companies operating in all aspects
of the communications, information, and related industries.
Seligman Global Technology Fund
Seeks long-term capital appreciation by investing primarily in global
securities (US and non-US) of companies in the technology and technology-
related industries.
Seligman Emerging Markets Fund
Seeks long-term capital appreciation by investing primarily in equity
securities of companies in emerging markets.
Small Company
- --------------------------------------------------------------------------------
Seligman Frontier Fund
Seeks growth of capital by investing primarily in small company growth stocks.
Seligman Small-Cap Value Fund
Seeks long-term capital appreciation by investing in equities of small
companies, deemed to be "value" companies by the investment manager.
Seligman Global Smaller Companies Fund
Seeks long-term capital appreciation by investing in securities of smaller
companies around the world, including the US.
Medium Company
- --------------------------------------------------------------------------------
Seligman Capital Fund
Seeks capital appreciation by investing in the common stocks of companies with
significant potential for growth.
Large Company
- --------------------------------------------------------------------------------
Seligman Growth Fund
Seeks long-term growth of capital value and an increase in future income.
Seligman Global Growth Fund
Seeks capital appreciation by investing primarily in equity securities of
companies that have the potential to benefit from global economic or social
trends.
Seligman Large-Cap Value Fund
Seeks long-term capital appreciation by investing in equities of large
companies, deemed to be "value" companies by the investment manager.
Seligman Common Stock Fund
Seeks favorable, but not the highest, current income and long-term growth of
both income and capital, without exposing capital to undue risk.
Seligman International Growth Fund
Seeks long-term capital appreciation by investing in securities of medium- to
large-sized companies, primarily in the developed markets outside the US.
Balanced
- --------------------------------------------------------------------------------
Seligman Income Fund
Seeks high current income and improvement in capital value over the long term,
consistent with prudent risk of capital.
Fixed-Income
Income
- --------------------------------------------------------------------------------
Seligman High-Yield Bond Fund
Seeks to maximize current income by investing in a diversified portfolio of
high-yielding, high-risk corporate bonds, commonly referred to as "junk bonds."
Seligman U.S. Government Securities Fund
Seeks high current income primarily by investing in a diversified portfolio of
securities guaranteed by the US government, its agencies, or instrumentalities,
which have maturities greater than one year.
Municipal
- --------------------------------------------------------------------------------
Seligman Municipal Funds:
National Fund
Seeks maximum income, exempt from regular federal income taxes.
State-specific funds:*
Seek to maximize income exempt from regular federal income taxes and from
regular income taxes in the designated state.
<TABLE>
<S> <C> <C>
California Louisiana New Jersey
.High-Yield Maryland New York
.Quality Massachusetts North Carolina
Colorado Michigan Ohio
Florida Minnesota Oregon
Georgia Missouri Pennsylvania
South Carolina
</TABLE>
* A small portion of income may be subject to state taxes.
Money Market
- --------------------------------------------------------------------------------
Seligman Cash Management Fund
Seeks to preserve capital and to maximize liquidity and current income, by
investing only in high-quality money market securities having a maturity of 90
days or less. The fund seeks to maintain a constant net asset value of $1.00
per share.
12
<PAGE>
Asset Allocation
Seligman Time Horizon/Harvester Series, Inc. is an asset-allocation type mutual
fund. It offers four different asset allocation funds that pursue their
investment objectives by allocating their assets among other mutual funds in
the Seligman Group.
Seligman Time Horizon 30 Fund
Seeks long-term capital appreciation by creating a portfolio of mutual funds
that invests in aggressive growth-oriented domestic and international equity
securities weighted toward small- and medium-capitalization companies.
Seligman Time Horizon 20 Fund
Seeks long-term capital appreciation by creating a portfolio of mutual funds
that invests in growth-oriented domestic and international equity securities,
with a more even weighting among small-, medium- and large-capitalization
companies than Seligman Time Horizon 30 Fund.
Seligman Time Horizon 10 Fund
Seeks capital appreciation by creating a portfolio of mutual funds that invests
in small-, medium- and large-capitalization domestic and international equity
securities as well as domestic fixed-income securities.
Seligman Harvester Fund
Seeks capital appreciation and preservation of capital with current income and
growth of income by creating a portfolio of mutual funds that invests in
medium- and large-capitalization domestic and international equity securities
supplemented by a larger allocation of fixed-income securities and cash than
Seligman Time Horizon 10 Fund.
13
<PAGE>
How to Contact Us
<TABLE>
<S> <C> <C>
The Fund Write: Corporate Communications/
Investor Relations Department
J. & W. Seligman & Co. Incorporated
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-7844 in the US or
(212) 850-1864 outside the US
Website: http://www.seligman.com
Your Regular
(Non-Retirement)
Account Write: Shareholder Services Department
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 221-2450 in the US or
(212) 682-7600 outside the US
Website: http://www.seligman.com
Your Retirement
Account Write: Retirement Plan Services
Seligman Data Corp.
100 Park Avenue, New York, NY 10017
Phone: Toll-Free (800) 445-1777
</TABLE>
24-hour automated telephone access is
available by dialing (800) 622-4597 on a
touchtone telephone. You will have instant
access to price, yield, account balance, most
recent transaction, and other information.
14
<PAGE>
================================================================================
For More Information
---------------------------------------------------------------------------
The following information is available without charge upon request: Call
toll-free (800) 221-2450 in the US or (212) 682-7600 outside the US. You
may also call these numbers to request other information about the Fund or
to make shareholder inquiries.
Statement of Additional Information (SAI) contains additional information
about the Fund. It is on file with the Securities and Exchange Commission,
or SEC, and is incorporated by reference into (is legally part of) this
prospectus.
Annual/Semi-Annual Reports contain additional information about the Fund's
investments. In the Fund's annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year.
---------------------------------------------------------------------------
SELIGMAN ADVISORS, INC.
an affiliate of
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
Information about the Fund, including the SAI, can be viewed and copied at the
SEC's Public Reference Room in Washington, DC. For information about the
operation of the Public Reference Room, call (202) 942-8090. The SAI,
Annual/Semi-Annual reports and other information about the Fund are also
available on the Edgar Database on the SEC's Internet site: http://www.sec.gov.
Copies of this information may be obtained, upon payment of a duplicating fee,
by electronic request at the following E-mail address: [email protected], or by
writing: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102.
SEC FILE NUMBER: 811
================================================================================
<PAGE>
SELIGMAN NEW ECONOMIES FUND, INC.
Statement of Additional Information
__________________, 2000
100 Park Avenue
New York, New York 10017
(212) 850-1864
Toll Free Telephone: (800) 221-2450
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information (SAI) expands upon and supplements the
information contained in the current Prospectus of Seligman New Economies Fund,
Inc., dated _______, 2000. This SAI, although not in itself a prospectus, is
incorporated by reference into the Prospectus in its entirety. It should be read
in conjunction with the Prospectus, which you may obtain by writing or calling
the Fund at the above address or telephone numbers.
Table of Contents
Fund History ................................................ 2
Description of the Fund and its Investments and Risks ....... 2
Management of the Fund ...................................... 10
Control Persons and Principal Holders of Securities ......... 13
Investment Advisory and Other Services ...................... 13
Brokerage Allocation and Other Practices .................... 17
Capital Stock and Other Securities .......................... 18
Purchase, Redemption, and Pricing of Shares ................. 18
Taxation of the Fund ........................................ 23
Underwriters ................................................ 24
Calculation of Performance Data ............................. 25
Financial Statements ........................................ 26
General Information ......................................... 26
Appendix A .................................................. 27
Appendix B .................................................. 30
- ----------
<PAGE>
Fund History
The Fund was incorporated under the laws of the state of Maryland on April 28,
2000.
Description of the Fund and its Investments and Risks
Classification
The Fund is a diversified open-end management investment company, or mutual
fund.
Investment Strategies and Risks
The following information regarding the Fund's investments and risks supplements
the information contained in the Fund's Prospectus.
Convertible Bonds
The Fund may purchase convertible bonds. Convertible bonds are convertible at a
stated exchange rate or price into common stock. Before conversion, convertible
securities are similar to non-convertible debt securities in that they provide a
steady stream of income with generally higher yields than an issuer's equity
securities. The market value of all debt securities, including convertible
securities, tends to decline as interest rates increase and to increase as
interest rates decline. In general, convertible securities may provide lower
interest or dividend yields than non-convertible debt securities of similar
quality, but they may also allow investors to benefit from increases in the
market price of the underlying common stock. When the market price of the
underlying common stock increases, the price of the convertible security tends
to reflect the increase. When the market price of the underlying common stock
declines, the convertible security tends to trade on the basis of yield, and may
not depreciate to the same extent as the underlying common stock. In an issuer's
capital structure, convertible securities are senior to common stocks. They are
therefore of higher quality and involve less risk than the issuer's common
stock, but the extent to which risk is reduced depends largely on the extent to
which the convertible security sells above its value as a fixed-income security.
In selecting convertible securities for the Fund, the investment manager
evaluates such factors as economic and business conditions involving the issuer,
future earnings growth potential of the issuer, potential for price appreciation
of the underlying equity, the value of individual securities relative to other
investment alternatives, trends in the determinants of corporate profits, and
capability of management. In evaluating a convertible security, the investment
manager gives emphasis to the attractiveness of the underlying common stock and
the capital appreciation opportunities that the convertible security presents.
Convertible securities can be callable or redeemable at the issuer's discretion,
in which case the investment manager would be forced to seek alternative
investments.
Debt securities convertible into equity securities may be rated as low as CC by
Standard & Poor's Ratings Services (S&P) or Ca by Moody's Investors Service
(Moody's). Debt securities rated below investment grade (frequently referred to
as "junk bonds") often have speculative characteristics and will be subject to
greater market fluctuations and risk of loss of income and principal than
higher-rated securities. A description of credit ratings and risks associated
with lower-rated debt securities is set forth in Appendix A to this Statement of
Additional Information. The investment manager does not rely on the ratings of
these securities in making investment decisions but performs its own analysis,
based on the factors described above, in light of the Fund's investment
objective.
Derivatives
The Fund may invest in derivatives only for hedging or investment purposes. The
Fund will not invest in derivatives for speculative purposes, i.e., where the
derivative investment exposes the Fund to undue risk of loss, such as where the
risk of loss is greater than the cost of the investment.
A derivative is generally defined as an instrument whose value is derived from,
or based upon, some underlying index, reference rate (e.g., interest rates or
currency exchange rates), security, commodity or other asset. The Fund will not
invest in a specific type of derivative without prior approval from the Board of
Directors, after consideration of, among other things, how the derivative
instrument serves the Fund's investment objective, and
2
<PAGE>
the risk associated with the investment. The only types of derivatives in which
the Fund is currently permitted to invest, as described more fully below, are
forward foreign currency exchange contracts, put options, and rights and
warrants.
Forward Foreign Currency Exchange Contracts
The Fund will generally enter into forward foreign currency exchange contracts
to fix the US 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 US dollar value of securities it owns. 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 a forward contract to sell or buy the amount of a
foreign currency it believes may experience a substantial movement against the
US dollar. In this case the contract would approximate the value of some or all
of the Fund's securities denominated in such foreign currency. Under normal
circumstances, the investment manager will limit forward currency contracts to
not greater than 75% of the Fund's position in any one country as of the date
the contract is entered into. This limitation will be measured at the point the
hedging transaction is entered into by the Fund. Under extraordinary
circumstances, the Fund's investment manager may enter into forward currency
contracts in excess of 75% of the Fund's 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 movement 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 a substantial portion or the entire value of
its assets to the consummation of these contracts. The Fund's investment manager
will consider the effect a substantial commitment of its 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
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 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 securities or other assets
denominated in that currency provided the excess amount is "covered" by cash
and/or liquid, high-grade debt securities, denominated in any currency, having a
value 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, the investment manager 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 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 the Fund's 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
Fund's 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 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
3
<PAGE>
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. 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 the Fund's investment
manager. 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.
Shareholders 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.
Put Options
The Fund may purchase put options in an attempt to provide a hedge against a
decrease in the market price of an underlying security held by the Fund. The
Fund will not purchase options for speculative purposes. Purchasing a put option
gives the Fund the right to sell, and obligates the writer to buy, the
underlying security at the exercise price at any time during the option period.
This hedge protection is provided during the life of the put option since the
Fund, as holder of the put option, can sell the underlying security at the put
exercise price regardless of any decline in the underlying security's market
price. In order for a put option to be profitable, the market price of the
underlying security must decline sufficiently below the exercise price to cover
the premium and transaction costs. By using put options in this manner, the Fund
will reduce any profit it might otherwise have realized in the underlying
security by the premium paid for the put option and by transaction costs.
Because a purchased put option gives the purchaser a right and not an
obligation, the purchaser is not required to exercise the option. If the
underlying position incurs a gain, the Fund would let the option expire
resulting in a reduced profit on the underlying security equal to the cost of
the put option premium and transaction costs.
When the Fund purchases an option, it is required to pay a premium to the party
writing the option and a commission to the broker selling the option. If the
option is exercised by the Fund, the premium and the commission paid may be
greater than the amount of the brokerage commission charged if the security were
to be purchased or sold directly. The cost of the put option is limited to the
premium plus commission paid. The Fund's maximum financial exposure will be
limited to these costs.
The Fund may purchase both listed and over-the-counter put options. The Fund
will be exposed to the risk of counterparty nonperformance in the case of
over-the-counter put options.
The Fund's ability to engage in option transactions may be limited by tax
considerations.
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 received as part of a unit or attached to securities
purchased (i.e., not separately purchased) are not included in the Fund's
investment restrictions regarding such securities.
Foreign Securities
The Fund may invest in foreign securities. Foreign investments may be affected
favorably or unfavorably by changes in currency rates and exchange control
regulations. There may be less information available about a
4
<PAGE>
foreign company than about a US company, and foreign companies may not be
subject to reporting standards and requirements comparable to those applicable
to US companies. Foreign securities may not be as liquid as US securities.
Securities of foreign companies may involve greater market risk than securities
of US companies, and foreign brokerage commissions and custody fees are
generally higher than in the United States. Investments in foreign securities
may also be subject to local economic or political risks, political instability
and possible nationalization of issuers.
By investing in foreign securities, the Fund will attempt to take advantage of
differences among economic trends and the performance of securities markets in
various countries. To date, the market values of securities of issuers located
in different countries have moved relatively independently of each other. During
certain periods, the return on equity investments in some countries has exceeded
the return on similar investments in the United States. The investment manager
believes that, in comparison with investment companies investing solely in
domestic securities, it may be possible to obtain significant appreciation from
a portfolio of foreign investments and securities from various markets that
offer different investment opportunities and are affected by different economic
trends. Global diversification reduces the effect that events in any one country
will have on the entire investment portfolio. Of course, a decline in the value
of the Fund's investments in one country may offset potential gains from
investments in another country.
Investments in securities of foreign issuers may involve risks that are not
associated with domestic investments, and there can be no assurance that the
Fund's foreign investments will present less risk than a portfolio of domestic
securities. Foreign issuers may lack uniform accounting, auditing and financial
reporting standards, practices and requirements, and there is generally less
publicly available information about foreign issuers than there is about US
issuers. Governmental regulation and supervision of foreign stock exchanges,
brokers and listed companies may be less pervasive than is customary in the
United States. Securities of some foreign issuers are less liquid and their
prices are more volatile than securities of comparable domestic issuers. Foreign
securities settlements may in some instances be subject to delays and related
administrative uncertainties which could result in temporary periods when assets
of the Fund are uninvested and no return is earned thereon and may involve a
risk of loss to the Fund. Foreign securities markets may have substantially less
volume than US markets and far fewer traded issues. Fixed brokerage commissions
on foreign securities exchanges are generally higher than in the United States,
and transaction costs with respect to smaller capitalization companies may be
higher than those of larger capitalization companies. Income from foreign
securities may be reduced by a withholding tax at the source or other foreign
taxes. In some countries, there may also be the possibility of nationalization,
expropriation or confiscatory taxation, (in which case the Fund could lose its
entire investment in a certain market), limitations on the removal of monies or
other assets of the Fund, higher rates of inflation, political or social
instability or revolution, or diplomatic developments that could affect
investments in those countries. In addition, it may be difficult to obtain and
enforce a judgement in a court outside the United States.
Investments in foreign securities will usually be denominated in foreign
currencies, and the Fund may temporarily hold cash in foreign currencies. The
value of the Fund's investments denominated in foreign currencies may be
affected, favorably or unfavorably, by the relative strength of the US dollar,
changes in foreign currency and US dollar exchange rates and exchange control
regulations. The Fund may incur costs in connection with conversions between
various currencies. The Fund's net asset value per share will be affected by
changes in currency exchange rates. Changes in foreign currency exchange rates
may also affect the value of dividends and interest earned, and gains and losses
realized on the sale of securities and the resulting amount, if any, to be
distributed to shareholders by the Fund. The rate of exchange between the US
dollar and other currencies is determined by the forces of supply and demand in
the foreign exchange markets (which in turn are affected by interest rates,
trade flows and numerous other factors, including, in some countries, local
governmental intervention).
Depositary Receipts
Depositary Receipts are instruments generally issued by domestic banks or trust
companies that represent the deposits of a security of a foreign issuer.
American Depositary Receipts (ADRs), which are traded in dollars on US exchanges
or over-the-counter, are issued by domestic banks and evidence ownership of
securities issued by foreign corporations. European Depositary Receipts (EDRs)
are typically traded in Europe. Global Depositary Receipts (GDRs) are typically
traded in both Europe and the United States. Depositary Receipts may be issued
as sponsored or unsponsored programs. In sponsored programs, the issuer has made
arrangements to have its securities trade in the form of Depositary Receipts. In
unsponsored programs, the issuer may not be directly involved in the creation of
the program. Although regulatory requirements with respect to sponsored and
5
<PAGE>
unsponsored programs are generally similar, the issuers of 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 instruments.
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 (1933 Act)) and other securities that are not readily
marketable. Certain restricted securities can be offered and sold to "qualified
institutional buyers" under Rule 144A of the 1933 Act, and the Fund's Board of
Directors may determine, when appropriate, that specific Rule 144A securities
are liquid and not subject to the Fund's limitation on illiquid securities.
Should the Board of Directors make this determination, it will carefully monitor
the security (focusing on such factors, among others, as trading activity and
availability of information) to determine that the Rule 144A security continues
to be liquid. It is not possible to predict with assurance exactly how the
market for Rule 144A securities will further evolve. This investment practice
could have the effect of increasing the level of illiquidity in the Fund, if and
to the extent that qualified institutional buyers become for a time uninterested
in purchasing Rule 144A securities.
Money Market Instruments
The Fund may invest a portion of its assets in the following money market
instruments:
US Government Obligations
US Government Obligations are obligations issued or guaranteed as to both
principal and interest by the US Government or backed by the full faith and
credit of the United States, such as US Treasury Bills, securities issued or
guaranteed by a US Government agency or instrumentality, and securities
supported by the right of the issuer to borrow from the US Treasury.
Bank Obligations
Bank obligations include US dollar-denominated certificates of deposit, banker's
acceptances, fixed time deposits and commercial paper of domestic banks,
including their branches located outside the United States, and of domestic
branches of foreign banks. Investments in bank obligations will be limited at
the time of investment to the obligations of the 100 largest domestic banks in
terms of assets which are subject to regulatory supervision by the US Government
or state governments, and the obligations of the 100 largest foreign banks in
terms of assets with branches or agencies in the United States.
Commercial Paper and Short-Term Corporate Debt Securities
Commercial paper and short-term debt securities include short-term unsecured
promissory notes with maturities not exceeding nine months issued in bearer form
by bank holding companies, corporations and finance companies. Investments in
commercial paper issued by bank holding companies will be limited at the time of
investment to the 100 largest US bank holding companies in terms of assets.
Mortgage-Related Securities
The Fund may invest in mortgage pass-through securities. Mortgage pass-through
securities include securities that represent interests in pools of mortgage
loans made by lenders such as savings and loan institutions, mortgage bankers,
and commercial banks. Such securities provide a "pass-through" of monthly
payments of interest and principal made by the borrowers on their residential
mortgage loans (net of any fees paid to the issuer or guarantor of such
securities). Although the residential mortgages underlying a pool may have
maturities of up to 30 years, a pool's effective maturity may be reduced by
prepayments of principal on the underlying mortgage obligations. Factors
affecting mortgage prepayments include, among other things, the level of
interest rates, general economic and social conditions and the location and age
of the mortgages. High interest rate mortgages are more likely to be prepaid
than lower-rate mortgages; consequently, the effective maturities of
mortgage-related obligations that pass-through payments of higher-rate mortgages
are likely to be shorter than those of obligations that pass-through payments of
lower-rate mortgages. If such prepayment of mortgage-related
6
<PAGE>
securities in which the Fund invests occurs, the Fund may have to invest the
proceeds in securities with lower yields.
The Government National Mortgage Association (GNMA) is a US Government
corporation within the Department of Housing and Urban Development, authorized
to guarantee, with the full faith and credit of the US Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of Federal Housing Administration insured or
Veterans Administration guaranteed residential mortgages. These securities
entitle the holder to receive all interest and principal payments owed on the
mortgages in the pool, net of certain fees, regardless of whether or not the
mortgagors actually make the payments. Other government-related issuers of
mortgage-related securities include the Federal National Mortgage Association
(FNMA), a government-sponsored corporation subject to general regulation by the
Secretary of Housing and Urban Development but owned entirely by private
stockholders, and the Federal Home Loan Mortgage Corporation (FHLMC), a
corporate instrumentality of the US Government created for the purpose of
increasing the availability of mortgage credit for residential housing that is
owned by the twelve Federal Home Loan Banks. FHLMC issues Participation
Certificates (PCs), which represent interests in mortgages from FHLMC's national
portfolio. FHLMC guarantees the timely payment of interest and ultimate
collection of principal, but PCs are not backed by the full faith and credit of
the US Government. Pass-through securities issued by FNMA are backed by
residential mortgages purchased from a list of approved seller/servicers and are
guaranteed as to timely payment of principal and interest by FNMA, but are not
backed by the full faith and credit of the US Government.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through securities based on pools of conventional residential mortgage
loans. Securities created by such non-governmental issuers may offer a higher
rate of interest than government-related securities; however, timely payment of
interest and principal may or may not be supported by insurance or guarantee
arrangements, and there can be no assurance that the private issuers can meet
their obligations.
Repurchase Agreements
The Fund may hold cash or cash equivalents and may enter into repurchase
agreements with respect to securities; normally repurchase agreements relate to
money market obligations backed by the full faith and credit of the US
Government. Repurchase agreements are transactions in which an investor (e.g.,
the Fund) purchases a security from a bank, recognized securities dealer, or
other financial institution and simultaneously commits to resell that security
to such institution at an agreed upon price, date and market rate of interest
unrelated to the coupon rate or maturity of the purchased security. A repurchase
agreement thus involves the obligation of the bank or securities dealer to pay
the agreed upon price on the date agreed to, which obligation is in effect
secured by the value of the underlying security held by the Fund. 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, decline in value of the underlying
securities and loss of interest. Although repurchase agreements carry certain
risks not associated with direct investments in securities, the Fund intends to
enter into repurchase agreements only with financial institutions believed to
present minimum credit risks in accordance with guidelines established by the
Board of Directors. The creditworthiness of such institutions will be reviewed
and monitored under the general supervision of the Board of Directors. The Fund
will invest only in repurchase agreements collateralized in an amount at least
equal at all times to the purchase price plus accrued interest. Repurchase
agreements usually are for short periods, such as one week or less, but may be
for longer periods.
Short Sales
The Fund may sell securities short "against-the-box." A short sale
"against-the-box" is a short sale in which the Fund owns an equal amount of the
securities sold short or securities convertible into or exchangeable without
payment of further consideration for securities of the same issue as, and equal
in amount to, the securities sold short. To effect a short sale, the Fund will
borrow a security from a brokerage firm to make delivery to the buyer. The Fund
will be obligated to replace the borrowed security. The Fund will realize a gain
if the borrowed security declines in price between the date of the short sale
and the date on which the Fund replaces the security. The Fund will incur a loss
if the price of the borrowed security increases between those dates.
Additionally, the Fund will incur transaction costs, including interest
expenses, in connection with opening, maintaining and closing
7
<PAGE>
short sales against-the-box. Short selling involves a risk of losses to the Fund
and may exaggerate the volatility of the Fund's investment portfolio.
Lending of Portfolio Securities
The Fund may lend portfolio securities to broker/dealers, banks or other
institutional borrowers, provided that securities loaned by the Fund may not
exceed 33 1/3% of the Fund's total assets taken at market value. The Fund will
not lend portfolio securities to any institutions affiliated with the Fund. The
borrower must maintain with the Fund's custodian bank cash or equivalent
collateral equal to at least 100% of the market value of the securities loaned.
During the time portfolio securities are on loan, the borrower pays the Fund an
amount equal to any dividends or interest paid on the securities. The Fund may
invest the collateral and earn additional income or receive an agreed upon
amount of interest income from the borrower. Loans made by the Fund will
generally be short-term. Loans are subject to termination at the option of the
Fund or the borrower. The Fund may pay reasonable administrative and custodial
fees in connection with a loan and may pay a negotiated portion of the interest
earned on the collateral to the borrower or placing broker. The Fund does not
have the right to vote securities on loan, but would terminate the loan and
regain the right to vote if that were considered important with respect to the
investment. The lending of portfolio securities may involve certain risks such
as: 1) an increase in the market value of the borrowed securities without a
corresponding increase in the value of the posted collateral might result in an
imbalance in value between the borrowed securities and the collateral; 2) in the
event the borrower sought protection under the Federal bankruptcy laws,
repayment of the borrowed securities to the Fund might be delayed; and 3) the
borrower might refuse to repay the borrowed securities. 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. The Fund may lend portfolio securities to the extent that the
investment manager deems appropriate in seeking to achieve the Fund's investment
objective and with only a prudent degree of risk.
Borrowing
The Fund may from time to time borrow money in order to purchase securities.
Borrowings may be made only from banks in amounts up to 33 1/3% of the Fund's
assets (including the amount borrowed), and up to an additional 5% of its total
assets for temporary purposes. The Fund may not pledge more than 15% of its
total assets, taken at cost, to secure the borrowing.
Current asset value coverage of three times any amount borrowed by the Fund is
required at all times. Borrowed money creates an opportunity for greater capital
appreciation, but at the same time increases exposure to capital risk. The net
cost of any money borrowed would be an expense that otherwise would not be
incurred, and this expense will reduce the Fund's net investment income in any
given period. Any gain in the value of securities purchased with money borrowed
to an amount in excess of amounts borrowed plus interest would cause the net
asset value of the Fund's shares to increase more than otherwise would be the
case. Conversely, any decline in the value of securities purchased to an amount
below the amount borrowed plus interest would cause the net asset value to
decrease more than would otherwise be the case.
Except as otherwise specifically noted above, the Fund's investment strategies
are not fundamental and the Fund, with the approval of the Board of Directors,
may change such strategies without the vote of shareholders.
Fund Policies
The Fund is subject to fundamental policies that place restrictions on certain
types of investments. These policies cannot be changed except by vote of a
majority of the Fund's outstanding voting securities. Under these policies, the
Fund may not:
- Make any investment inconsistent with the Fund's classification as a
diversified company under the Investment Company Act of 1940, as
amended and supplemented (1940 Act);
- Invest more than 25% of its assets, taken at market value, in the
securities of issuers in any particular industry, except that the Fund
will invest at least 25% of the value of its total assets in
securities of companies considered by the Fund's investment manager to
rely significantly on technological developments or advances in
8
<PAGE>
their product development, production or operations, except when
investing for temporary defensive purposes;
- As to 75% of the value of its total assets, invest more than 5% of its
total assets (taken at market) in securities of any one issuer, other
than the US Government, its agencies or instrumentalities, buy more
than 10% of the outstanding voting securities or more than 10% of all
the securities of any issuer, or invest to control or manage any
company;
- Invest in securities issued by other investment companies, except as
permitted by the 1940 Act and other applicable law or for the purpose
of hedging the Fund's obligations under its deferred compensation plan
for directors;
- Purchase or hold the securities of any issuer, if to its knowledge,
directors or officers of the Fund individually owning beneficially
more than 0.5% of the securities of that issuer own in the aggregate
more than 5% of such securities;
- Deal with its directors or officers, or firms they are associated
with, in the purchase or sale of securities of other issuers, except
as broker;
- Purchase or sell real estate, except that the Fund may invest in
securities directly or indirectly secured by real estate or interests
therein or issued by companies which invest in real estate or
interests therein;
- Make loans, except that the acquisition of bonds, debentures or other
corporate debt securities and investment in government obligations,
commercial paper, pass-through instruments, certificates of deposit,
bankers acceptances, repurchase agreements or any similar instruments
shall not be deemed to be the making of a loan, and except further
that the Fund may lend its portfolio securities, provided that the
lending of portfolio securities may be made only in accordance with
applicable law and the guidelines set forth in the Prospectus and this
Statement of Additional Information, as they may be amended from time
to time; and except that the Fund may lend cash to any other mutual
fund (or series thereof) in the Seligman Group to the extent permitted
by any order that may be obtained from the SEC relating to borrowing
and lending among mutual funds in the Seligman Group;
- Issue senior securities to the extent such issuance would violate
applicable law;
- Borrow money, except that the Fund may (i) borrow from banks (as
defined in the Investment Company Act) in amounts up to 33 1/3% of its
total assets (including the amount borrowed), (ii) borrow up to an
additional 5% of its total assets for temporary purposes (iii) obtain
such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities, (iv) purchase securities
on margin to the extent permitted by applicable law and (v) borrow
cash from any other mutual fund (or series thereof) in the Seligman
Group to the extent permitted by any order that may be obtained from
the SEC relating to borrowing and lending among mutual funds in the
Seligman Group. The Fund may not pledge its assets other than to
secure such borrowings or, to the extent permitted by the Fund's
investment policies as set forth in the Prospectus and this Statement
of Additional Information, as they may be amended from time to time,
in connection with hedging transactions, short sales, when-issued and
forward commitment transactions and similar investment strategies;
- Underwrite securities of other issuers except insofar as the Fund
technically may be deemed an underwriter under the 1933 Act in selling
portfolio securities;
- Purchase or sell commodities or contracts on commodities, except to
the extent the Fund may do so in accordance with applicable law and
the Prospectus and this Statement of Additional Information, as they
may be amended from time to time, and without registering as a
commodity pool operator under the Commodity Exchange Act.
The Fund also may not change its investment objective without shareholder
approval.
Under the Investment Company Act of 1940, as amended (1940 Act), a "vote of a
majority of the outstanding voting securities" of the Fund means the affirmative
vote of the lesser of (l) more than 50% of the outstanding
9
<PAGE>
shares of the Fund; or (2) 67% or more of the shares present at a shareholders'
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy.
The Fund also may not acquire any securities of a registered open-end investment
company or a registered unit investment trust in reliance on subparagraph (F) or
subparagraph (G) of Section 12(d)(1) of the 1940 Act. This policy is not
fundamental.
Temporary Defensive Position
In an attempt to respond to adverse market, economic, political, or other
conditions, the Fund may invest up to 100% of its assets in cash or cash
equivalents, including, but not limited to, prime commercial paper, bank
certificates of deposit, bankers' acceptances, or repurchase agreements for such
securities, and securities of the US Government and its agencies and
instrumentalities, as well as cash and cash equivalents denominated in foreign
currencies. The Fund's investments in foreign cash equivalents will be limited
to those that, in the opinion of the investment manager, equate generally to the
standards established for US cash equivalents. Investments in bank obligations
will be limited at the time of investment to the obligations of the 100 largest
domestic banks in terms of assets which are subject to regulatory supervision by
the US Government or state governments, and the obligations of the 100 largest
foreign banks in terms of assets with branches or agencies in the United States.
Portfolio Turnover
The Fund's portfolio turnover rate is calculated by dividing the lesser of
purchases or sales of portfolio securities for the year by the monthly average
of the value of the portfolio securities owned during the year. Securities whose
maturity or expiration date at the time of acquisition were one year or less are
excluded from the calculation.
Management of the Fund
Board of Directors
The Board of Directors provides broad supervision over the affairs of the Fund.
Management Information
Directors and officers of the Fund, together with information as to their
principal business occupations during the past five years, are shown below. Each
Director who is an "interested person" of the Fund, as defined in the 1940 Act,
is indicated by an asterisk. Unless otherwise indicated, their addresses are 100
Park Avenue, New York, NY 10017.
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
William C. Morris* Director, Chairman of Chairman, J. & W. Seligman & Co. Incorporated, Chairman and Chief
(62) the Board, Chief Executive Officer, the Seligman Group of investment companies;
Executive Officer and Chairman, Seligman Advisors, Inc., Seligman Services, Inc., and Carbo
Chairman of the Ceramics Inc., ceramic proppants for oil and gas industry; and
Executive Committee Director, Seligman Data Corp., Kerr-McGee Corporation, diversified
energy company. Formerly, Director, Daniel Industries Inc.,
manufacturer of oil and gas metering equipment.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Name, Principal
(Age) and Position(s) Held Occupation(s) During
Address With Fund Past 5 Years
------- --------- ------------
<S> <C> <C>
Brian T. Zino* Director, President Director and President, J. & W. Seligman & Co. Incorporated; President
(47) and Member of the (with the exception of Seligman Quality Municipal Fund, Inc. and
Executive Committee Seligman Select Municipal Fund, Inc.) and Director or Trustee, the
Seligman Group of investment companies; Chairman, Seligman Data Corp.;
Member of the Board of Governors of the Investment Company Institute;
and Director, ICI Mutual Insurance Company, Seligman Advisors, Inc.,
and Seligman Services, Inc.
Paul H. Wick Vice President and Director and Managing Director, J. & W. Seligman & Co. Incorporated
(37) Portfolio Manager since January 1995 and November 1997, respectively; Vice President and
Portfolio Manager, Seligman Communications and Information Fund, Inc.,
Seligman Global Fund Series, Inc. and Seligman Portfolios, Inc.;
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 and Managing Director, J. & W. Seligman & Co. Incorporated since January
(31) Portfolio Manager 1999; Portfolio Manager, Seligman New Technologies Fund, Inc. Mr.
Boswick joined J. & W. Seligman & Co. Incorporated in June 1996 as an
Associate, Investment Research. Formerly, Vice President, Investment
Officer of J. & W. Seligman & Co. Incorporated from January 1997 to
December 1998; and Financial Analyst, Investment Research, Goldman,
Sachs and Co. from February 1994 to May 1996.
Lawrence P. Vogel Vice President Senior Vice President, Finance, J. & W. Seligman & Co. Incorporated,
(43) Seligman Advisors, Inc., and Seligman Data Corp.; Vice President, the
Seligman Group of investment companies, and Seligman Services, Inc.;
and Vice President and Treasurer, Seligman International, Inc.
Formerly, Treasurer, Seligman Henderson Co.
Frank J. Nasta Secretary General Counsel, Senior Vice President, Law and Regulation and
(35) Corporate Secretary, J. & W. Seligman & Co. Incorporated; Secretary,
the Seligman Group of investment companies, Seligman Advisors, Inc.,
Seligman Services, Inc., Seligman International, Inc. and Seligman Data
Corp. Formerly, Secretary, Seligman Henderson Co.
Thomas G. Rose Treasurer Treasurer, the Seligman Group of investment companies and Seligman Data
(42) Corp.
</TABLE>
The Executive Committee of the Board acts on behalf of the Board between
meetings to determine the value of securities and assets owned by the Fund for
which no market valuation is available, and to elect or appoint officers of the
Fund to serve until the next meeting of the Board.
Directors and officers of the Fund are also directors and officers of some or
all of the other investment companies in the Seligman Group.
11
<PAGE>
Compensation
<TABLE>
<CAPTION>
Pension or Total Compensation
Aggregate Retirement Benefits from Fund and
Name and Compensation Accrued as Part of Fund Complex Paid
Position with Fund from Fund (1) Fund Expenses to Directors (1)(2)
------------------ ------------- ------------- -------------------
<S> <C> <C> <C>
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
</TABLE>
- ----------
(1) For the year ending December 31, 2000. The per meeting fee for Directors is
$3,000, which is allocated among all Funds in the Fund Complex.
(2) The Seligman Group of investment companies consists of twenty-one
investment companies.
The Fund has a compensation arrangement under which outside directors may elect
to defer receiving their fees. The Fund has adopted a deferred compensation plan
under which a director who has elected deferral of his or her fees may choose a
rate of return equal to either (1) the interest rate on short-term Treasury
Bills, or (2) the rate of return on the shares of certain of the investment
companies advised by J. & W. Seligman & Co. Incorporated (Seligman), as
designated by the director. The cost of such fees and earnings is included in
directors' fees and expenses, and the accumulated balance thereof is included in
other liabilities in the Fund's financial statements.
The Fund may, but is not obligated to, purchase shares of the other funds in the
Seligman Group of investment companies to hedge its obligations in connection
with the Fund's deferred compensation plan.
Sales Charges
Class A shares of the Fund may be issued without a sales charge to present and
retired directors, trustees, officers, employees (and their family members) of
the Fund, the other investment companies in the Seligman Group, and Seligman and
its affiliates. Family members are defined to include lineal descendants and
lineal ancestors, siblings (and their spouses and children) and any company or
organization controlled by any of the foregoing. Such sales may also be made to
employee benefit plans and thrift plans for such persons and to any investment
advisory, custodial, trust or other fiduciary account managed or advised by
Seligman or any affiliate. The sales may be made for investment purposes only,
and shares may be resold only to the Fund.
Class A shares may be sold at net asset value to these persons since such sales
require less sales effort and lower sales related expenses as compared with
sales to the general public.
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 that 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.
12
<PAGE>
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). You can access it
through the SEC's Internet site, http://www.sec.gov.
Control Persons and Principal Holders of Securities
Control Persons
The Fund's classes of shares are new, so such information is not available.
Principal Holders
The Fund's classes of shares are new, so such information is not available.
Management Ownership
The Fund's classes of shares are new, so such information is not available.
Investment Advisory and Other Services
Investment Manager
Seligman manages the Fund. 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. Mr. William C. Morris
owns a majority of the outstanding voting securities of Seligman. See Appendix
for further history of Seligman.
All of the officers of the Fund listed above are officers or employees of
Seligman. Their affiliations with the Fund and with Seligman are provided under
their principal business occupations.
The Fund pays to Seligman a fee for its services, calculated daily and payable
monthly, equal to 1.25% per annum of the Fund's average daily net assets.
The Fund pays all of its expenses other than those assumed by Seligman,
including brokerage commissions, administration, shareholder services and
distribution fees, fees and expenses of independent attorneys and auditors,
taxes and governmental fees, including fees and expenses of qualifying the Fund
and its shares under Federal and State securities laws, cost of stock
certificates and expenses of repurchase or redemption of shares, expenses of
printing and distributing reports, notices and proxy materials to shareholders,
expenses of printing and filing reports and other documents with governmental
agencies, expenses of shareholders' meetings, expenses of corporate data
processing and related services, shareholder record keeping and shareholder
account services, fees and disbursements of transfer agents and custodians,
expenses of disbursing dividends and distributions, fees and expenses of
directors of the Fund not employed by or serving as a Director of Seligman or
its affiliates, insurance premiums and extraordinary expenses such as litigation
expenses.
The Management Agreement provides that Seligman will not be liable to the Fund
for any error of judgment or mistake of law, or for any loss arising out of any
investment, or for any act or omission in performing its duties under the
Agreement, except for willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the Agreement.
The Management Agreement was initially approved by the Board of Directors at a
Meeting held on ______________, 2000 and by the sole shareholder of the Fund on
______________, 2000. The Management Agreement will continue in effect until
December 31, 2001 and thereafter from year to year if (1) such continuance is
approved in the manner required by the 1940 Act (i.e., by a vote of a majority
of the Board of Directors or of the outstanding voting securities of the Fund
and by a vote of a majority of the Directors who are
13
<PAGE>
not parties to the Management Agreement or interested persons of any such party)
and (2) Seligman shall not have notified the Fund at least 60 days prior to
December 31 of any year that it does not desire such continuance. The Management
Agreement may be terminated by the Fund, without penalty, on 60 days' written
notice to Seligman and will terminate automatically in the event of its
assignment. The Fund has agreed to change its name upon termination of the
Management Agreement if continued use of the name would cause confusion in the
context of Seligman's business.
Principal Underwriter
Seligman Advisors, an affiliate of Seligman, 100 Park Avenue, New York, New York
10017, acts as general distributor of the shares of the Fund and of each of the
other mutual funds in the Seligman Group. Seligman Advisors is an "affiliated
person" (as defined in the 1940 Act) of Seligman, which is itself an affiliated
person of the Fund. Those individuals identified above under "Management
Information" as directors or officers of both the Fund and Seligman Advisors are
affiliated persons of both entities.
Services Provided by the Investment Manager
Under the Management Agreement, dated ___________, 2000, subject to the control
of the Board of Directors, Seligman manages the investment of the assets of the
Fund, including making purchases and sales of portfolio securities consistent
with the Fund's investment objective and policies, and administers its business
and other affairs. Seligman provides the Fund with such office space,
administrative and other services and executive and other personnel as are
necessary for Fund operations. Seligman pays all of the compensation of
directors of the Fund who are employees or consultants of Seligman and of the
officers and employees of the Fund. Seligman also provides senior management for
Seligman Data Corp., the Fund's shareholder service agent.
Service Agreements
There are no other management-related service contracts under which services are
provided to the Fund.
Other Investment Advice
No person or persons, other than directors, officers, or employees of Seligman,
regularly advise the Fund with respect to its investments.
Dealer Reallowances
Dealers and financial advisors receive a percentage of the initial sales charge
on sales of Class A shares and Class C shares of the Fund, as set forth below:
Class A shares:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of As a % of Net as a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ ----------------- --------------- --------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 - $99,999 4.00 4.17 3.50
$100,000 - $249,999 3.50 3.63 3.00
$250,000 - $499,999 2.50 2.56 2.25
$500,000 - $999,999 2.00 2.04 1.75
$1,000,000 and over 0 0 0
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
14
<PAGE>
Class C shares:
<TABLE>
<CAPTION>
Regular Dealer
Sales Charge Sales Charge Reallowance
as a % of As a % of Net as a % of
Amount of Purchase Offering Price(1) Amount Invested Offering Price
- ------------------ -------------- --------------- --------------
<S> <C> <C> <C>
Less than $100,000 1.00% 1.01% 1.00%
$100,000 - $249,999 0.50 0.50 0.50
$250,000 - $1,000,000 0 0 0
</TABLE>
(1) "Offering Price" is the amount that you actually pay for Fund shares; it
includes the initial sales charge.
Seligman Services, Inc. (Seligman Services), an affiliate of Seligman, is a
limited purpose broker/dealer. Seligman Services is eligible to receive
commissions from certain sales of Fund shares.
Rule 12b-1 Plan
The Fund has adopted an Administration, Shareholder Services and Distribution
Plan (12b-1 Plan) in accordance with Section 12(b) of the 1940 Act and Rule
12b-1 thereunder.
Under the 12b-1 Plan, the Fund may pay to Seligman Advisors an administration,
shareholder services and distribution fee in respect of the Fund's Class A,
Class B, Class C and Class D shares. Payments under the 12b-1 Plan may include,
but are not limited to: (1) compensation to securities dealers and other
organizations (Service Organizations) for providing distribution assistance with
respect to assets invested in the Fund; (2) compensation to Service
Organizations for providing administration, accounting and other shareholder
services with respect to Fund shareholders; and (3) otherwise promoting the sale
of shares of the Fund, including paying for the preparation of advertising and
sales literature and the printing and distribution of such promotional materials
and prospectuses to prospective investors and defraying Seligman Advisors' costs
incurred in connection with its marketing efforts with respect to shares of the
Fund. Seligman, in its sole discretion, may also make similar payments to
Seligman Advisors from its own resources, which may include the management fee
that Seligman receives from the Fund. Payments made by the Fund under the 12b-1
Plan are intended to be used to encourage sales of the Fund, as well as to
discourage redemptions.
Fees paid by the Fund under the 12b-1 Plan with respect to any class of shares
may not be used to pay expenses incurred solely in respect of any other class or
any other Seligman fund. Expenses attributable to more than one class of the
Fund are allocated between the classes in accordance with a methodology approved
by the Fund's Board of Directors. Expenses of distribution activities that
benefit both the Fund and other Seligman funds will be allocated among the
applicable funds based on relative gross sales during the quarter in which such
expenses are incurred, in accordance with a methodology approved by the Board.
Class A
Under the 12b-1 Plan, the Fund, with respect to Class A shares, pays quarterly
to Seligman Advisors a service fee at an annual rate of up to .25% of the
average daily net asset value of the Class A shares. This fee is used by
Seligman Advisors exclusively to make payments to Service Organizations which
have entered into agreements with Seligman Advisors. Such Service Organizations
receive from Seligman Advisors a continuing fee of up to .25% on an annual
basis, payable quarterly, of the average daily net assets of Class A shares
attributable to the particular Service Organization for providing personal
service and/or maintenance of shareholder accounts. The fee payable to Service
Organizations from time to time shall, within such limits, be determined by the
Board of Directors. The Fund is not obligated to pay Seligman Advisors for any
such costs it incurs in excess of the fee described above. No expense incurred
in one year by Seligman Advisors with respect to Class A shares of the Fund may
be paid from Class A 12b-1 fees received from the Fund in any other year. If the
Fund's 12b-1 Plan is terminated in respect of Class A shares, no amounts (other
than amounts accrued but not yet paid) would be owed by the Fund to Seligman
Advisors with respect to Class A shares.
15
<PAGE>
Class B
Under the 12b-1 Plan, the Fund, with respect to Class B shares, pays monthly a
12b-1 fee at an annual rate of up to 1% of the average daily net asset value of
the Class B shares. This fee is comprised of (1) a distribution fee equal to
.75% per annum, which is paid directly to a third party, FEP Capital, L.P., to
compensate it for having funded, at the time of sale of Class B shares (i) a 4%
sales commission to Service Organizations and (ii) a payment of up to .15% of
sales to Seligman Advisors to help defray its costs of distributing Class B
shares; and (2) a service fee of up to .25% per annum which is paid to Seligman
Advisors. The service fee is used by Seligman Advisors exclusively to make
payments to Service Organizations which have entered into agreements with
Seligman Advisors. Such Service Organizations receive from Seligman Advisors a
continuing service fee of up to .25% on an annual basis, payable quarterly, of
the average daily net assets of Class B shares attributable to the particular
Service Organization for providing personal service and/or maintenance of
shareholder accounts. The amounts expended by Seligman Advisors or FEP Capital,
L.P. in any one year upon the initial purchase of Class B shares of the Fund may
exceed the 12b-1 fees paid by the Fund in that year. The Fund's 12b-1 Plan
permits expenses incurred in respect of Class B shares in one year to be paid
from Class B 12b-1 fees received from the Fund in any other year; however, in
any fiscal year the Fund is not obligated to pay any 12b-1 fees in excess of the
fees described above. Seligman Advisors and FEP Capital, L.P. are not reimbursed
for expenses which exceed such fees. If the Fund's 12b-1 Plan is terminated in
respect of Class B shares, no amounts (other than amounts accrued but not yet
paid) would be owed by that Fund to Seligman Advisors or FEP Capital, L.P. with
respect to Class B shares.
Class C
Under the 12b-1 Plan, the Fund, with respect to Class C shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class C shares. This fee is used by Seligman Advisors as
follows: During the first year following the sale of Class C shares, a
distribution fee of .75% of the average daily net assets attributable to Class C
shares is used, along with any CDSC proceeds during the first eighteen months,
to (1) reimburse Seligman Advisors for its payment at the time of sale of Class
C shares of a 1.25% sales commission to Service Organizations, and (2) pay for
other distribution expenses, including paying for the preparation of advertising
and sales literature and the printing and distribution of such promotional
materials and prospectuses to prospective investors and other marketing costs of
Seligman Advisors. In addition, during the first year following the sale of
Class C shares, a service fee of up to .25% of the average daily net assets
attributable to such Class C shares is used to reimburse Seligman Advisors for
its prepayment to Service Organizations at the time of sale of Class C shares of
a service fee of .25% of the net asset value of the Class C share sold (for
shareholder services to be provided to Class C shareholders over the course of
the one year immediately following the sale). The payment of service fees to
Seligman Advisors is limited to amounts Seligman Advisors actually paid to
Service Organizations at the time of sale as service fees. After the initial
one-year period following a sale of Class C shares, the entire 12b-1 fee
attributable to such Class C shares is paid to Service Organizations for
providing continuing shareholder services and distribution assistance in respect
of the Fund.
The amounts expended by Seligman Advisors in any one year with respect to Class
C shares of the Fund may exceed the 12b-1 fees paid by the Fund in that year.
The Fund's 12b-1 Plan permits expenses incurred by Seligman Advisors in respect
of Class C shares in one year to be paid from Class C 12b-1 fees in any other
year; however, in any year the Fund is not obligated to pay any 12b-1 fees in
excess of the fees described above.
If the Fund's 12b-1 Plan is terminated in respect of Class C shares of the Fund,
no amounts (other than amounts accrued but not yet paid) would be owed by the
Fund to Seligman Advisors with respect to Class C shares.
Class D
Under the 12b-1 Plan, the Fund, with respect to Class D shares, pays monthly to
Seligman Advisors a 12b-1 fee at an annual rate of up to 1% of the average daily
net asset value of the Class D shares. This fee is used by Seligman Advisors as
follows: During the first year following the sale of Class D shares, a
distribution fee of .75% of the average daily net assets attributable to such
Class D shares is used, along with any CDSC proceeds, to (1) reimburse Seligman
Advisors for its payment at the time of sale of Class D shares of a .75% sales
commission to Service Organizations, and (2) pay for other distribution
expenses, including paying for the
16
<PAGE>
preparation of advertising and sales literature and the printing and
distribution of such promotional materials and prospectuses to prospective
investors and other marketing costs of Seligman Advisors. In addition, during
the first year following the sale of Class D shares, a service fee of up to .25%
of the average daily net assets attributable to such Class D shares is used to
reimburse Seligman Advisors for its prepayment to Service Organizations at the
time of sale of Class D shares of a service fee of .25% of the net asset value
of the Class D shares sold (for shareholder services to be provided to Class D
shareholders over the course of the one year immediately following the sale).
The payment of service fees to Seligman Advisors is limited to amounts Seligman
Advisors actually paid to Service Organizations at the time of sale as service
fees. After the initial one-year period following a sale of Class D shares, the
entire 12b-1 fee attributable to such Class D shares is paid to Service
Organizations for providing continuing shareholder services and distribution
assistance in respect of the Fund.
The amounts expended by Seligman Advisors in any one year with respect to Class
D shares of the Fund may exceed the 12b-1 fees paid by the Fund in that year.
The Fund's 12b-1 Plan permits expenses incurred by Seligman Advisors in respect
of Class D shares in one year to be paid from Class D 12b-1 fees in any other
year; however, in any year the Fund is not obligated to pay any 12b-1 fees in
excess of the fees described above.
If the Fund's 12b-1 Plan is terminated in respect of Class D shares of the Fund,
no amounts (other than amounts accrued but not yet paid) would be owed by the
Fund to Seligman Advisors with respect to Class D shares.
The 12b-1 Plan was approved on __________, 2000 by the Board of Directors,
including a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) of the Fund and who have no direct or indirect
financial interest in the operation of the 12b-1 Plan or in any agreement
related to the 12b-1 Plan (Qualified Directors) and by the sole shareholder of
the Fund on __________, 2000. The 12b-1 Plan will continue in effect until
December 31 of each year so long as such continuance is approved annually by a
majority vote of both the Directors of the Fund and the Qualified Directors,
cast in person at a meeting called for the purpose of voting on such approval.
The 12b-1 Plan may not be amended to increase materially the amounts payable to
Service Organizations with respect to a class without the approval of a majority
of the outstanding voting securities of the class. If the amount payable in
respect of Class A shares under the 12b-1 Plan is proposed to be increased
materially, the Fund will either (1) permit holders of Class B shares to vote as
a separate class on the proposed increase or (2) establish a new class of shares
subject to the same payment under the 12b-1 Plan as existing Class A shares, in
which case the Class B shares will thereafter convert into the new class instead
of into Class A shares. No material amendment to the 12b-1 Plan may be made
except by vote of a majority of both the Directors and the Qualified Directors.
The 12b-1 Plan requires that the Treasurer of the Fund shall provide to the
Directors, and the Directors shall review, at least quarterly, a written report
of the amounts expended (and purposes therefor) under the 12b-1 Plan. Rule 12b-1
also requires that the selection and nomination of Directors who are not
"interested persons" of the Fund be made by such disinterested Directors. The
12b-1 Plan is reviewed by the Directors annually.
Seligman Services acts as a broker/dealer of record for shareholder accounts
that do not have a designated financial advisor and receives compensation
pursuant to the Fund's 12b-1 Plan for providing personal services and account
maintenance to such accounts and other distribution services.
Brokerage Allocation and Other Practices
Brokerage Transactions
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 of 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.
17
<PAGE>
Commissions
The Fund's classes of shares are new, so this information is not available.
Brokerage Selection
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.
Directed Brokerage
The Fund's classes of shares are new, so no directed brokerage information is
available.
Regular Broker-Dealers
The Fund's classes of shares are new, so this information is not available.
Capital Stock and Other Securities
Capital Stock
The Fund is authorized to issue 1,000,000,000 shares of capital stock, each with
a par value of $.001, divided into four classes, designated Class A common
stock, Class B common stock, Class C common stock, and Class D common stock.
Each share of the Fund's Class A, Class B, Class C, and Class D common stock is
equal as to earnings, assets, and voting privileges, except that each class
bears its own separate distribution and, potentially, certain other class
expenses and has exclusive voting rights with respect to any matter to which a
separate vote of any class is required by the 1940 Act or Maryland law. The Fund
has adopted a multiclass plan pursuant to Rule 18f-3 under the 1940 Act
permitting the issuance and sale of multiple classes of common stock. In
accordance with the Articles of Incorporation, the Board of Directors may
authorize the creation of additional classes of common stock with such
characteristics as are permitted by the multiclass plan and Rule 18f-3. The 1940
Act requires that where more than one class exists, each class must be preferred
over all other classes in respect of assets specifically allocated to such
class. All shares have noncumulative voting rights for the election of
directors. Each outstanding share is fully paid and non-assessable, and each is
freely transferable. There are no liquidation, conversion, or preemptive rights.
Other Securities
The Fund has no authorized securities other than the above-mentioned common
stock.
Purchase, Redemption, and Pricing of Shares
Purchase of Shares
Class A
Class A shares may be purchased at a price equal to the next determined net
asset value per share, plus an initial sales charge.
Purchases of Class A shares by a "single person" (as defined below under
"Persons Entitled to Reductions") may be eligible for the following reductions
in initial sales charges:
18
<PAGE>
Volume Discounts are provided if the total amount being invested in Class A
shares of the Fund alone, or in any combination of shares of the other mutual
funds in the Seligman Group which are sold with an initial sales charge, reaches
levels indicated in the sales charge schedule set forth in the Prospectus.
The Right of Accumulation allows an investor to combine the amount being
invested in Class A shares of the Fund and shares of the other Seligman mutual
funds sold with an initial sales charge with the total net asset value of shares
of those mutual funds already owned that were sold with an initial sales charge
and the total net asset value of shares of Seligman Cash Management Fund which
were acquired through an exchange of shares of another Seligman mutual fund on
which there was an initial sales charge at the time of purchase to determine
reduced sales charges in accordance with the schedule in the prospectus. The
value of the shares owned, including the value of shares of Seligman Cash
Management Fund acquired in an exchange of shares of another Seligman mutual
fund on which there was an initial sales charge at the time of purchase will be
taken into account in orders placed through a dealer, however, only if Seligman
Advisors is notified by an investor or a dealer of the amount owned by the
investor at the time the purchase is made and is furnished sufficient
information to permit confirmation.
A Letter of Intent allows an investor to purchase Class A shares over a 13-month
period at reduced initial sales charges in accordance with the schedule in the
Prospectus, based on the total amount of Class A shares of the Fund that the
letter states the investor intends to purchase plus the total net asset value of
shares that were sold with an initial sales charge of the other Seligman mutual
funds already owned and the total net asset value of shares of Seligman Cash
Management Fund which were acquired through an exchange of shares of another
Seligman mutual fund on which there was an initial sales charge at the time of
purchase. Reduced sales charges also may apply to purchases made within a
13-month period starting up to 90 days before the date of execution of a letter
of intent.
Persons Entitled To Reductions. Reductions in initial sales charges apply to
purchases of Class A shares by a "single person," including an individual;
members of a family unit comprising husband, wife and minor children; or a
trustee or other fiduciary purchasing for a single fiduciary account. Employee
benefit plans qualified under Section 401 of the Internal Revenue Code of 1986,
as amended, organizations tax exempt under Section 501(c)(3) or (13) of the
Internal Revenue Code, and non-qualified employee benefit plans that satisfy
uniform criteria are considered "single persons" for this purpose. The uniform
criteria are as follows:
1. Employees must authorize the employer, if requested by the Fund, to
receive in bulk and to distribute to each participant on a timely basis the Fund
prospectus, reports, and other shareholder communications.
2. Employees participating in a plan will be expected to make regular
periodic investments (at least annually). A participant who fails to make such
investments may be dropped from the plan by the employer or the Fund 12 months
and 30 days after the last regular investment in his account. In such event, the
dropped participant would lose the discount on share purchases to which the plan
might then be entitled.
3. The employer must solicit its employees for participation in such an
employee benefit plan or authorize and assist an investment dealer in making
enrollment solicitations.
Eligible Employee Benefit Plans. The table of sales charges in the Prospectus
applies to sales to "eligible employee benefit plans," except that the Fund may
sell shares at net asset value to "eligible employee benefit plans" which have
at least (1) $500,000 invested in the Seligman Group of mutual funds or (2) 50
eligible employees to whom such plan is made available. Such sales must be made
in connection with a payroll deduction system of plan funding or other systems
acceptable to Seligman Data Corp., the Fund's shareholder service agent.
"Eligible employee benefit plan" means any plan or arrangement, whether or not
tax qualified, which provides for the purchase of Fund shares. Sales of shares
to such plans must be made in connection with a payroll deduction system of plan
funding or other system acceptable to Seligman Data Corp. Section 403(b) plans
sponsored by public educational institutions are not eligible for net asset
value purchases based on the aggregate investment made by the plan or number of
eligible employees.
Such sales are believed to require limited sales effort and sales-related
expenses and therefore are made at net asset value. Contributions or account
information for plan participation also should be transmitted to Seligman
19
<PAGE>
Data Corp. by methods which it accepts. Additional information about "eligible
employee benefit plans" is available from financial advisors or Seligman
Advisors.
Further Types of Reductions. Class A shares may also be issued without an
initial sales charge in the following instances:
(1) to any registered unit investment trust which is the issuer of periodic
payment plan certificates, the net proceeds of which are invested in Fund
shares;
(2) to separate accounts established and maintained by an insurance company
which are exempt from registration under Section 3(c)(11) of the 1940 Act;
(3) to registered representatives and employees (and their spouses and minor
children) of any dealer that has a sales agreement with Seligman Advisors;
(4) to financial institution trust departments;
(5) to registered investment advisers exercising discretionary investment
authority with respect to the purchase of Fund shares;
(6) to accounts of financial institutions or broker/dealers that charge account
management fees, provided Seligman or one of its affiliates has entered
into an agreement with respect to such accounts;
(7) pursuant to sponsored arrangements with organizations which make
recommendations to, or permit group solicitations of, its employees,
members or participants in connection with the purchase of shares of the
Fund;
(8) to other investment companies in the Seligman Group in connection with a
deferred fee arrangement for outside Directors;
(9) to certain "eligible employee benefit plans" as discussed above;
(10) to those partners and employees of outside counsel to the Fund or its
directors or trustees who regularly provide advice and services to the
Fund, to other funds managed by Seligman, or to their directors or
trustees; and
(11) in connection with sales pursuant to a 401(k) alliance program which has an
agreement with Seligman Advisors.
CDSC Applicable to Class A Shares. Class A shares purchased without an initial
sales charge due to a purchase of $1,000,000 or more either alone or through a
Volume Discount, Right of Accumulation, or Letter of Intent are subject to a
CDSC of 1% on redemptions of such shares within eighteen months of purchase.
Employee benefit plans eligible for net asset value sales may be subject to a
CDSC of 1% for terminations at the plan level only, on redemptions of shares
purchased within eighteen months prior to plan termination. The 1% CDSC will be
waived on shares that were purchased through Morgan Stanley Dean Witter & Co. by
certain Chilean institutional investors (i.e., pension plans, insurance
companies, and mutual funds). Upon redemption of such shares within an
eighteen-month period, Morgan Stanley Dean Witter will reimburse Seligman
Advisors a pro rata portion of the fee it received from Seligman Advisors at the
time of sale of such shares.
See "CDSC Waivers" below for other waivers which may be applicable to Class A
shares.
Class B
Class B shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class B shares are
subject to a CDSC if the shares are redeemed within six years of purchase at
rates set forth in the table below, charged as a percentage of the current net
asset value or the original purchase price, whichever is less.
20
<PAGE>
Years Since Purchase CDSC
- -------------------- ----
Less than 1 year .......................................... 5%
1 year or more but less than 2 years ...................... 4%
2 years or more but less than 3 years ..................... 3%
3 years or more but less than 4 years ..................... 3%
4 years or more but less than 5 years ..................... 2%
5 years or more but less than 6 years ..................... 1%
6 years or more ........................................... 0%
Approximately eight years after purchase, Class B shares will convert
automatically into Class A shares. Shares purchased through reinvestment of
dividends and distributions on Class B shares also will convert automatically to
Class A shares along with the underlying shares on which they were earned.
Conversion occurs at the end of the month which precedes the eighth anniversary
of the purchase date. If Class B shares of the Fund are exchanged for Class B
shares of another Seligman Mutual Fund, the conversion period applicable to the
Class B shares acquired in the exchange will apply, and the holding period of
the shares exchanged will be tacked onto the holding period of the shares
acquired. Class B shareholders of the Fund exercising the exchange privilege
will continue to be subject to the Fund's CDSC schedule if such schedule is
higher or longer than the CDSC schedule relating to the new Class B shares. In
addition, Class B shares of the Fund acquired by exchange will be subject to the
Fund's CDSC schedule if such schedule is higher or longer than the CDSC schedule
relating to the Class B shares of the Seligman mutual fund from which the
exchange has been made.
Class C
Class C shares may be purchased at a price equal to the next determined net
asset value, plus an initial sales charge. Purchases of Class C shares by a
"single person" may be eligible for the reductions in initial sales charges
described above for Class A shares. Class C shares are subject to a CDSC of 1%
if the shares are redeemed within eighteen months of purchase, charged as a
percentage of the current net asset value or the original purchase price,
whichever is less.
Class D
Class D shares may be purchased at a price equal to the next determined net
asset value, without an initial sales charge. However, Class D shares are
subject to a CDSC of 1% if the shares are redeemed within one year of purchase,
charged as a percentage of the current net asset value or the original purchase
price, whichever is less. Unlike Class B shares, Class D shares do not
automatically convert to Class A shares after eight years.
Systematic Withdrawals. Class B, Class C and Class D shareholders who reinvest
both their dividends and capital gain distributions to purchase additional
shares of the Fund, may use the Systematic Withdrawal Plan to withdraw up to
12%, 10% and 10%, respectively, of the value of their accounts per year without
the imposition of a CDSC. Account value is determined as of the date the
systematic withdrawals begin.
CDSC Waivers. The CDSC on Class B, Class C and Class D shares (and certain Class
A shares, as discussed above) will be waived or reduced in the following
instances:
(1) on redemptions following the death or disability (as defined in Section
72(m)(7) of the Internal Revenue Code) of a shareholder or beneficial
owner;
(2) in connection with (1) distributions from retirement plans qualified under
Section 401(a) of the Internal Revenue Code when such redemptions are
necessary to make distributions to plan participants (such payments
include, but are not limited to, death, disability, retirement, or
separation of service), (2) distributions from a custodial account under
Section 403(b)(7) of the Internal Revenue Code or an IRA due to death,
disability, minimum distribution requirements after attainment of age 70
1/2 or, for accounts established prior to January 1, 1998, attainment of
age 59 1/2, and (3) a tax-free return of an excess contribution to an IRA;
(3) in whole or in part, in connection with shares sold to current and retired
Directors of the Fund;
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(4) in whole or in part, in connection with shares sold to any state, county,
or city or any instrumentality, department, authority, or agency thereof,
which is prohibited by applicable investment laws from paying a sales load
or commission in connection with the purchase of any registered investment
management company;
(5) in whole or in part, in connection with systematic withdrawals;
(6) in connection with participation in the Merrill Lynch Small Market 401(k)
Program.
If, with respect to a redemption of any Class A, Class B, Class C or Class D
shares sold by a dealer, the CDSC is waived because the redemption qualifies for
a waiver as set forth above, the dealer shall remit to Seligman Advisors
promptly upon notice, an amount equal to the payment or a portion of the payment
made by Seligman Advisors at the time of sale of such shares.
Fund Reorganizations
Class A shares and Class C shares may be issued without an initial sales charge
in connection with the acquisition of cash and securities owned by other
investment companies. Any CDSC will be waived in connection with the redemption
of shares of the Fund if the Fund is combined with another Seligman mutual fund,
or in connection with a similar reorganization transaction.
Payment in Securities. In addition to cash, the Fund may accept securities in
payment for Fund shares sold at the applicable public offering price (net asset
value and, if applicable, any sales charge), although the Fund does not
presently intend to accept securities in payment for Fund shares. Generally, the
Fund will only consider accepting securities (l) to increase its holdings in a
portfolio security, or (2) if Seligman determines that the offered securities
are a suitable investment for the Fund and in a sufficient amount for efficient
management. Although no minimum has been established, it is expected that the
Fund would not accept securities with a value of less than $100,000 per issue in
payment for shares. The Fund may reject in whole or in part offers to pay for
Fund shares with securities, may require partial payment in cash for applicable
sales charges, and may discontinue accepting securities as payment for Fund
shares at any time without notice. The Fund will not accept restricted
securities in payment for shares. The Fund will value accepted securities in the
manner provided for valuing portfolio securities of the Fund.
Offering Price
When you buy or sell Fund shares, you do so at the Class's net asset value (NAV)
next calculated after Seligman Advisors accepts your request. Any applicable
sales charge will be added to the purchase price for Class A shares and Class C
shares.
NAV per share of each class of the Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time), on
each day that the NYSE is open for business. The NYSE is currently closed on New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. The Fund
will also determine NAV for each class on each day in which there is a
sufficient degree of trading in the Fund's portfolio securities that the NAV of
Fund shares might be materially affected. NAV per share for a class is computed
by dividing such class's share of the value of the net assets of the Fund (i.e.,
the value of its assets less liabilities) by the total number of outstanding
shares of such class. All expenses of the Fund, including the management fee,
are accrued daily and taken into account for the purpose of determining NAV. The
NAV of Class B, Class C and Class D shares will generally be lower than the NAV
of Class A shares as a result of the higher 12b-1 fees with respect to such
shares.
Portfolio securities are valued at the last sale price on the securities
exchange or securities market on which such securities primarily are traded.
Securities not listed on an exchange or securities market, or securities in
which there were no transactions, are valued at the average of the most recent
bid and asked price, except in the case of open short positions where the asked
price is available. Securities traded on a foreign exchange or over-the-counter
market are valued at the last sales price on the primary exchange or market on
which they are traded. United Kingdom securities and securities for which there
are no recent sales transactions are valued based on quotations provided by
primary market makers in such securities. Any securities or other assets for
which recent
22
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market quotations are not readily available are valued at fair value as
determined in accordance with procedures approved by the Board of Directors.
Short-term obligations with less than 60 days remaining to maturity are
generally valued at amortized cost. Short-term obligations with more than 60
days remaining to maturity will be valued at current market value until the
sixtieth day prior to maturity, and will then be valued on an amortized cost
basis based on the value on such date unless the Board determines that this
amortized cost value does not represent fair market value. Expenses and fees,
including the investment management fee, are accrued daily and taken into
account for the purpose of determining the net asset value of Fund shares.
Generally, trading in foreign securities, as well as US Government securities,
money market instruments and repurchase agreements, is substantially completed
each day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the shares of the Fund are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the close of the NYSE.
For purposes of determining the net asset value per share of the Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into US dollars at the mean between the bid and offer prices of such
currencies against US dollars quoted by a major bank that is a regular
participant in the foreign exchange market or on the basis of a pricing service
that takes into account the quotes provided by a number of such major banks.
Redemption in Kind
The procedures for selling Fund shares under ordinary circumstances are set
forth in the Prospectus. In unusual circumstances, payment may be postponed, or
the right of redemption postponed for more than seven days, if the orderly
liquidation of portfolio securities is prevented by the closing of, or
restricted trading on, the NYSE during periods of emergency, or such other
periods as ordered by the SEC. Under these circumstances, redemption proceeds
may be made in securities. If payment is made in securities, a shareholder may
incur brokerage expenses in converting these securities to cash.
Taxation of the Fund
The Fund is qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code. For each
year so qualified, the Fund will not be subject to federal income taxes on its
net investment income and capital gains, if any, realized during any taxable
year, which it distributes to its shareholders, provided that at least 90% of
its net 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 gains are taxable as ordinary income to shareholders, whether received
in cash or reinvested in additional shares. To the extent designated as derived
from the Fund's dividend income that would be eligible for the dividends
received deduction if the Fund were not a regulated investment company, they are
eligible, subject to certain restrictions, for the 70% dividends received
deduction for corporations.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over any net short-term losses) are taxable as long-term capital gain,
whether received in cash or invested in additional shares, regardless of how
long the shares have been held by a shareholder. Such distributions are not
eligible for the dividends received deduction allowed to corporate shareholders.
Shareholders receiving distributions in the form of additional shares issued by
the Fund will be treated for federal income tax purposes as having received a
distribution in an amount equal to the fair market value on the date of
distribution of the shares received. Individual shareholders generally will be
subject to federal tax on distributions of net capital gains at a maximum rate
of 20% if designated as derived from the Fund's capital gains from property held
for more than one year.
Any gain or loss realized upon a sale or redemption of shares in the Fund by a
shareholder who is not a dealer in securities will generally be treated as a
long-term capital gain or loss if the shares have been held for more than one
year and otherwise as a short-term capital gain or loss. Individual shareholders
will be subject to federal income tax on net capital gains at a maximum rate of
20% in respect of shares held for more than one year. Net capital gain of a
corporate shareholder is taxed at the same rate as ordinary income. However, if
shares on which a long-term capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less, any loss realized will be treated as long-term capital loss to the extent
that it offsets the long-term capital gain distribution. In addition, no loss
will be allowed on the sale or other disposition
23
<PAGE>
of shares of the Fund if, within a period beginning 30 days before the date of
such sale or disposition and ending 30 days after such date, the holder acquires
(including shares acquired through dividend reinvestment) securities that are
substantially identical to the shares of the Fund.
In determining gain or loss on shares of the Fund that are sold or exchanged
within 90 days after acquisition, a shareholder generally will not be permitted
to include in the tax basis attributable to such shares the sales charge
incurred in acquiring such shares to the extent of any subsequent reduction of
the sales charge by reason of the Exchange or Reinstatement Privilege offered by
the Fund. Any sales charge not taken into account in determining the tax basis
of shares sold or exchanged within 90 days after acquisition will be added to
the shareholder's tax basis in the shares acquired pursuant to the Exchange or
Reinstatement Privilege.
The Fund will generally be subject to an excise tax of 4% on the amount of any
income or capital gains, above certain permitted levels, distributed to
shareholders on the basis such that such income or gain is not taxable to
shareholders in the calendar year in which it was earned by the Fund.
Furthermore, dividends declared in October, November or December, payable to
shareholders of record on a specified date in such a month and paid in the
following January will be treated as having been paid by the Fund and received
by each shareholder in December. Under this rule, therefore, shareholders may be
taxed in one year on dividends or distributions actually received in January of
the following year.
Shareholders are urged to consult their tax advisors concerning the effect of
federal income taxes in their individual circumstances.
Unless a shareholder includes a certified taxpayer identification number (social
security number for individuals) on the account application and certifies that
the shareholder is not subject to backup withholding, the fund is required to
withhold and remit to the US Treasury a portion of distributions and other
reportable payments to the shareholder. The rate of backup withholding is 31%.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed, the Fund may charge a service fee of up to $50 that may be
deducted from the shareholder's account and offset against any undistributed
dividends and capital gain distributions. The Fund also reserves the right to
close any account which does not have a certified taxpayer identification
number.
Underwriters
Distribution of Securities
The Fund and Seligman Advisors are parties to a Distributing Agreement dated
___________, 2000 under which Seligman Advisors acts as the exclusive agent for
distribution of shares of the Fund. Seligman Advisors accepts orders for the
purchase of Fund shares, which are offered continuously. As general distributor
of the Fund's capital stock, Seligman Advisors allows reallowances to all
dealers on sales of Class A shares and Class C shares, as set forth above under
"Dealer Reallowances." Seligman Advisors retains the balance of sales charges on
Class A shares and any CDSCs paid by investors.
Compensation
The Fund's classes of shares are new, so compensation information is not
available.
Other Payments
Seligman Advisors shall pay broker/dealers, from its own resources, a fee on
purchases of Class A shares of $1,000,000 or more (NAV sales), calculated as
follows: 1.00% of NAV sales up to but not including $2 million; .80% of NAV
sales from $2 million up to but not including $3 million; .50% of NAV sales from
$3 million up to but not including $5 million; and .25% of NAV sales from $5
million and above. The calculation of the fee will be based on assets held by a
"single person," including an individual, members of a family unit comprising
husband, wife and minor children purchasing securities for their own account, or
a trustee or other fiduciary purchasing for a single fiduciary account or single
trust. Purchases made by a trustee or other fiduciary for a fiduciary account
may not be aggregated purchases made on behalf of any other fiduciary or
individual account.
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Seligman Advisors shall also pay broker/dealers, from its own resources, a fee
on assets of certain investments in Class A shares of the Seligman mutual funds
participating in an "eligible employee benefit plan" that are attributable to
the particular broker/dealer. The shares eligible for the fee are those on which
an initial sales charge was not paid because either the participating eligible
employee benefit plan has at least (1) $500,000 invested in the Seligman mutual
funds or (2) 50 eligible employees to whom such plan is made available. Class A
shares representing only an initial purchase of Seligman Cash Management Fund
are not eligible for the fee. Such shares will become eligible for the fee once
they are exchanged for shares of another Seligman mutual fund. The payment is
based on cumulative sales for each Plan during a single calendar year, or
portion thereof. The payment schedule, for each calendar year, is as follows:
1.00% of sales up to but not including $2 million; .80% of sales from $2 million
up to but not including $3 million; .50% of sales from $3 million up to but not
including $5 million; and .25% of sales from $5 million and above.
Seligman Advisors may from time to time assist dealers by, among other things,
providing sales literature to, and holding informational programs for the
benefit of, dealers' registered representatives. Dealers may limit the
participation of registered representatives in such informational programs by
means of sales incentive programs which may require the sale of minimum dollar
amounts of shares of Seligman mutual funds. Seligman Advisors may from time to
time pay a bonus or other incentive to dealers that sell shares of the Seligman
mutual funds. In some instances, these bonuses or incentives may be offered only
to certain dealers which employ registered representatives who have sold or may
sell a significant amount of shares of the Fund and/or certain other mutual
funds managed by Seligman during a specified period of time. Such bonus or other
incentive will be made in the form of cash or, if permitted, may take the form
of non-cash payments. The non-cash payments will include (i) business seminars
at Seligman's headquarters or other locations, (ii) travel expenses, including
meals, entertainment and lodging, incurred in connection with trips taken by
qualifying registered representatives and members of their families to places
within or outside the United States, or (iii) the receipt of certain
merchandise. The cash payments may include payment of various business expenses
of the dealer. The cost to Seligman Advisors of such promotional activities and
payments shall be consistent with the rules of the National Association of
Securities Dealers, Inc., as then in effect.
Calculation of Performance Data
The Fund's Class A shares, Class B shares, Class C shares and Class D shares are
new, so no performance data is presented.
From time to time, reference may be made in advertising or promotional material
to performance information, including mutual fund rankings, prepared by Lipper
Analytical Services, Inc., an independent reporting service which monitors the
performance of mutual funds. In calculating the total return of the Fund's Class
A, Class B, Class C, and Class D shares, the Lipper analysis assumes investment
of all dividends and distributions paid but does not take into account
applicable sales charges. The Fund may also refer in advertisements in other
promotional material to articles, comments, listings and columns in the
financial press pertaining to the Fund's performance. Examples of such financial
and other press publications include BARRON'S, BUSINESS WEEK, CDA/WIESENBERGER
MUTUAL FUNDS INVESTMENT REPORT, CHRISTIAN SCIENCE MONITOR, FINANCIAL PLANNING,
FINANCIAL TIMES, FINANCIAL WORLD, FORBES, FORTUNE, INDIVIDUAL INVESTOR,
INVESTMENT ADVISOR, INVESTORS BUSINESS DAILY, KIPLINGER'S, LOS ANGELES TIMES,
MONEY MAGAZINE, MORNINGSTAR, INC., PENSION AND INVESTMENTS, SMART MONEY, THE NEW
YORK TIMES, THE WALL STREET JOURNAL, USA TODAY, U.S. NEWS AND WORLD REPORT,
WORTH MAGAZINE, WASHINGTON POST and YOUR MONEY.
The Fund's advertising or promotional material may make reference to the Fund's
"Beta," "Standard Deviation," or "Alpha." Beta measures the volatility of the
Fund, as compared to that of the overall market. Standard deviation measures how
widely the Fund's performance has varied from its average performance, and is an
indicator of the Fund's potential for volatility. Alpha measures the difference
between the returns of the Fund and the returns of the market, adjusted for
volatility.
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<PAGE>
Financial Statements
The Fund's classes of shares are new, so financial statements are not available.
General Information
Custodian. Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105, serves as custodian of the Fund. It also maintains, under the
general supervision of Seligman, the accounting records and determines the net
asset value for the Fund.
Auditors. [___________], independent auditors, have been selected as auditors of
the Fund. Their address is [____].
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Appendix A
MOODY'S INVESTORS SERVICE (MOODY'S)
DEBT SECURITIES
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than Aaa bonds because margins of protection may not
be as large or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be characteristically lacking or may be unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact may have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in high
degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers (1, 2 and 3) in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; modifier 2 indicates a mid-range ranking; and modifier 3
indicates that the issuer ranks in the lower end of its generic rating category.
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COMMERCIAL PAPER
Moody's Commercial Paper Ratings are opinions of the ability of issuers to repay
punctually promissory senior debt obligations not having an original maturity in
excess of one year. Issuers rated "Prime-1" or "P-1" indicates the highest
quality repayment ability of the rated issue.
The designation "Prime-2" or "P-2" indicates that the issuer has a strong
ability for repayment of senior short-term promissory obligations. Earnings
trends and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternative liquidity is maintained.
The designation "Prime-3" or "P-3" indicates that the issuer has an acceptable
capacity for repayment of short-term promissory obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
Issuers rated "Not Prime" do not fall within any of the Prime rating categories.
STANDARD & POOR'S RATINGS SERVICES (S&P)
DEBT SECURITIES
AAA: Debt issues rated AAA are highest grade obligations. Capacity to pay
interest and repay principal is extremely strong.
AA: Debt issues rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A: Debt issues rated A are regarded as upper medium grade. They have a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB: Debt issues rated BBB are regarded as having an adequate capacity to pay
interest and re-pay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and re-pay principal for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC, CC: Debt issues rated BB, B, CCC and CC are regarded on balance, as
predominantly speculative with respect to capacity to pay interest and pre-pay
principal in accordance with the terms of the bond. BB indicates the lowest
degree of speculation and CC the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposure to adverse conditions.
C: The rating C is reserved for income bonds on which no interest is being paid.
D: Debt issues rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that S&P does not rate a particular
type of bond as a matter of policy.
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COMMERCIAL PAPER
S&P Commercial Paper ratings are current assessments of the likelihood of timely
payment of debts having an original maturity of no more than 365 days.
A-1: The A-1 designation indicates that the degree of safety regarding timely
payment is very strong.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."
A-3: Issues carrying this designation have adequate capacity for timely payment.
They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.
B: Issues rated "B" are regarded as having only a speculative capacity for
timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful
capacity of payment.
D: Debt rated "D" is in payment default.
The ratings assigned by S&P may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within its major rating categories.
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Appendix B
HISTORY OF J. & W. SELIGMAN & CO. INCORPORATED
Seligman's beginnings date back to 1837, when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. He earned his living
as a pack peddler in Pennsylvania, and began sending for his brothers. The
Seligmans became successful merchants, establishing businesses in the South and
East.
Backed by nearly thirty years of business success - culminating in the sale of
government securities to help finance the Civil War - Joseph Seligman, with his
brothers, established the international banking and investment firm of J. & W.
Seligman & Co. In the years that followed, the Seligman Complex played a major
role in the geographical expansion and industrial development of the United
States.
The Seligman Complex:
...Prior to 1900
o Helps finance America's fledgling railroads through underwritings.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
...1900-1910
o Helps Congress finance the building of the Panama Canal.
...1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
...1920s
o Participates in hundreds of successful underwritings including those for
some of the country's largest companies: Briggs Manufacturing, Dodge
Brothers, General Motors, Minneapolis-Honeywell Regulatory Company, Maytag
Company, United Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, with over $2 billion in
assets, and one of its oldest.
...1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
<PAGE>
...1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
...1950-1989
o Develops new open-end investment companies. Today, manages more than 50
mutual fund portfolios.
o Helps pioneer state-specific municipal bond funds, today managing a
national and 18 state-specific municipal funds.
o Establishes J. & W. Seligman Trust Company and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle offered
through variable annuity products.
...1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc. two closed-end funds that invest in high quality
municipal bonds.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Global Fund Series, Inc., which today offers five
separate series: Seligman International Growth Fund, Seligman Global
Smaller Companies Fund, Seligman Global Technology Fund, Seligman Global
Growth Fund and Seligman Emerging Markets Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value
Fund.
o Launches innovative Seligman New Technologies Fund, Inc., a closed-end
"interval" fund seeking long-term capital appreciation by investing in
technology companies, including venture capital investing.
...2000
o Introduces Seligman Time Horizon/Harvester Series, Inc., an asset
allocation type mutual fund containing four funds: Seligman Time Horizon 30
Fund, Seligman Time Horizon 20 Fund, Seligman Time Horizon 10 Fund and
Seligman Harvester Fund.
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Securities Act File No. _________________
Investment Company Act File No. _________________
PART C. OTHER INFORMATION
Item 23. Exhibits.
All Exhibits listed below marked with an asterisk (*) will be filed by
amendment, except Exhibit Item 23(a), which is filed herewith.
(a) Articles of Incorporation of Registrant.
(b) *By-Laws of the Corporation.
(c) *Specimen Stock Certificates of Class A, Class B, Class C and Class D
Capital Stock.
(d) *Management Agreement between Registrant and J. & W. Seligman & Co.
Incorporated.
(e) *Form of Distributing Agreement between Registrant and Seligman
Advisors, Inc.
(e)(1) *Form of Sales Agreement between Seligman Advisors, Inc. and Dealers.
(f) *Deferred Compensation Plan for Directors of Seligman New Economies
Fund, Inc.
(g) *Form of Custody Agreement between the Registrant and Investors
Fiduciary Trust Company.
(h) Not Applicable.
(i) *Opinion and Consent of Counsel.
(j) *Consent of Independent Auditors.
(k) Not Applicable.
(l) *Form of Purchase Agreement (Investment Letter) for Initial Capital
between Registrant and J. & W. Seligman & Co. Incorporated.
(m) *Form of Administration, Shareholder Services and Distribution Plan of
Registrant.
(m)(1) *Form of Administration, Shareholder Services and Distribution
Agreement between Seligman Advisors, Inc. and Dealers.
(o) *Plan of Multiple Class of Shares (four Classes) pursuant to Rule
18f-3 under the Investment Company Act of 1940, as amended.
(p) *Code of Ethics.
(Other Exhibits) *Powers of Attorney.
Item 24. Persons Controlled by or Under Common Control with Registrant. None.
Item 25. Indemnification. To be filed by amendment.
Item 26. Business and Other Connections of Investment Adviser. J. & W. Seligman
& Co. Incorporated, a Delaware corporation, (Seligman), is the
Registrant's investment manager. Seligman also serves as investment
manager to twenty other associated investment companies. They are:
Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and
Information Fund, Inc., Seligman Frontier Fund, Inc., Seligman Growth
Fund, Inc., Seligman Global Fund Series, Inc., Seligman High Income
Fund Series, Seligman Income Fund, Inc., Seligman Municipal Fund
Series, Inc., Seligman Municipal Series Trust, Seligman New Jersey
Municipal Fund, Inc., Seligman Pennsylvania Municipal Fund Series,
Seligman Portfolios, Inc., Seligman New Technologies Fund, Inc.,
Seligman Quality Municipal Fund, Inc., Seligman Select
C-1
<PAGE>
Securities Act File No. _________________
Investment Company Act File No. _________________
PART C. OTHER INFORMATION (continued)
Municipal Fund, Inc., Seligman Time Horizon/Harvester Series, Inc.,
Seligman Value Fund Series, Inc. and Tri-Continental Corporation.
Seligman has an investment advisory service division which provides
investment management or advice to private clients. The list required
by this Item 26 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, as amended (SEC File No. 801-15798),
which was filed on March 30, 2000.
Item 27. Principal Underwriters.
(a) The names of each investment company (other than the Registrant) for
which Registrant's principal underwriter is currently distributing
securities of the Registrant and also acts as a principal underwriter,
depositor or investment adviser are as follows: Seligman Capital Fund,
Inc., Seligman Cash Management Fund, Inc., Seligman Common Stock Fund,
Inc., Seligman Communications and Information Fund, Inc., Seligman
Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income Fund,
Inc., Seligman Municipal Fund Series, Inc., Seligman Municipal Series
Trust, Seligman New Jersey Municipal Fund, Inc., Seligman Pennsylvania
Municipal Fund Series, Seligman Portfolios, Inc., Seligman Time
Horizon/Harvester Series, Inc., Seligman Value Fund Series, Inc.
(b) Name of each director, officer or partner of Registrant's principal
underwriter named in response to Item 20:
Seligman Advisors, Inc.
As of March 31, 2000
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
William C. Morris* Director Chairman of the Board and
Chief Executive Officer
Brian T. Zino* Director President and Director
Ronald T. Schroeder* Director None
Fred E. Brown* Director Director Emeritus
William H. Hazen* Director None
Thomas G. Moles* Director None
David F. Stein* Director None
Stephen J. Hodgdon* President and Director None
Charles W. Kadlec* Chief Investment Strategist None
Lawrence P. Vogel* Senior Vice President, Finance Vice President
Edward F. Lynch* Senior Vice President, National None
Sales Director
James R. Besher Senior Vice President, Division None
14000 Margaux Lane Sales Director
Town & Country, MO 63017
Gerald I. Cetrulo, III Senior Vice President, Sales None
140 West Parkway
Pompton Plains, NJ 07444
Matthew A. Digan* Senior Vice President, None
Domestic Funds
Jonathan G. Evans Senior Vice President, Sales None
222 Fairmont Way
Ft. Lauderdale, FL 33326
T. Wayne Knowles Senior Vice President, Division None
104 Morninghills Court Sales Director
Cary, NC 27511
</TABLE>
C-2
<PAGE>
Securities Act File No. _________________
Investment Company Act File No. _________________
PART C. OTHER INFORMATION (continued)
Seligman Advisors, Inc.
As of March 31, 2000
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Joseph Lam Senior Vice President, Regional None
Seligman International, Inc. Director, Asia
Suite 1133, Central Building
One Pedder Street
Central Hong Kong
Bradley W. Larson Senior Vice President, Sales None
367 Bryan Drive
Alamo, CA 94526
Michelle L. McCann-Rappa* Senior Vice President, Retirement Plans None
Scott H. Novak* Senior Vice President, Insurance None
Jeff Rold Senior Vice President, Product None
181 East 73rd Street, Apt 20B Business Management
New York, New York 10021
Ronald W. Pond* Senior Vice President, Division None
Sales Director
Richard M. Potocki Senior Vice President, Regional None
Seligman International UK Limited Director, Europe and the Middle East
Berkeley Square House 2nd Floor
Berkeley Square
London, United Kingdom W1X 6EA
Bruce M. Tuckey Senior Vice President, Sales None
41644 Chathman Drive
Novi, MI 48375
Andrew S. Veasey Senior Vice President, Sales None
14 Woodside Drive
Rumson, NJ 07760
Charles L. von Breitenbach, II* Senior Vice President, Managed None
Money
Gail S. Cushing* Vice President, National Accounts None
Jeffrey S. Dean* Vice President, Business Analysis None
Ron Dragotta* Vice President, Regional Retirement None
Plans Manager
Mason S. Flinn Vice President, Regional Retirement None
2130 Filmore Street Plans Manager
PMB 280
San Francisco, CA 94115-2224
Marsha E. Jacoby* Vice President, Offshore Business None
Manager
Jody Knapp* Vice President, Regional Retirement None
17011 East Monterey Drive Plans Manager
Fountain Hills, AZ 85268
David W. Mountford* Vice President, Regional Retirement None
7131 NW 46th Street Plans Manager
Lauderhill, FL 33319
Jeffery C. Pleet* Vice President, Regional Retirement None
Plans Manager
Tracy A. Salomon* Vice President, Retirement Marketing None
Helen Simon* Vice President, Sales Administration None
Gary A. Terpening* Vice President, Director of Business None
Development
John E. Skillman* Vice President, Portfolio Advisor None
</TABLE>
C-3
<PAGE>
Securities Act File No. _________________
Investment Company Act File No. _________________
PART C. OTHER INFORMATION (continued)
Seligman Advisors, Inc.
As of March 31, 2000
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
Charles E. Wenzel Vice President, Regional Retirement None
703 Greenwood Road Plans Manager
Wilmington, DE 19807
Robert McBride Vice President, Marketing Director None
Seligman International, Inc. Latin America
Sucursal Argentina
Edificio Laminar Plaza
Ingeniero Butty No. 240, 4th Floor
C1001ASB Buenos Aires, Argentina
Daniel Chambers Regional Vice President None
4618 Lorraine Avenue
Dallas, TX 75209
Richard B. Callaghan Regional Vice President None
7821 Dakota Lane
Orland Park, IL 60462
Kevin Casey Regional Vice President None
19 Bayview Avenue
Babylon, NY 11702
Bradford C. Davis Regional Vice President None
241 110th Avenue SE
Bellevue, WA 98004
Cathy Des Jardins Regional Vice President None
PMB 152
1705 14th Street
Boulder, CO 80302
Kenneth Dougherty Regional Vice President None
8640 Finlarig Drive
Dublin, OH 43017
Kelli A. Wirth Dumser Regional Vice President None
7121 Jardiniere Court
Charlotte, NC 28226
Edward S. Finocchiaro Regional Vice President None
120 Screenhouse Lane
Duxbury, MA 02332
Michael C. Forgea Regional Vice President None
32 W. Anapamu Street # 186
Santa Barbara, CA 93101
Carla A. Goehring Regional Vice President None
11426 Long Pine Drive
Houston, TX 77077
Michael K. Lewallen Regional Vice President None
908 Tulip Poplar Lane
Birmingham, AL 35244
Judith L. Lyon Regional Vice President None
7105 Harbour Landing
Alpharetta, GA 30005
Leslie A. Mudd Regional Vice President None
5243 East Calle Redonda
Phoenix, AZ 85018
Tim O'Connell Regional Vice President None
11908 Acacia Glen Court
San Diego, CA 92128
</TABLE>
C-4
<PAGE>
Securities Act File No. _________________
Investment Company Act File No. _________________
PART C. OTHER INFORMATION (continued)
Seligman Advisors, Inc.
As of March 31, 2000
<TABLE>
<CAPTION>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
<S> <C> <C>
George M. Palmer, Jr. Regional Vice President None
1805 Richardson Place
Tampa, FL 33606
Thomas Parnell Regional Vice President None
1575 Edgecomb Road
St. Paul, MN 55116
Craig Prichard Regional Vice President None
300 Spyglass Drive
Fairlawn, OH 44333
Nicholas Roberts Regional Vice President None
200 Broad Street, Apt. 2451
Stamford, CT 06901
Diane H. Snowden Regional Vice President None
11 Thackery Lane
Cherry Hill, NJ 08003
James Taylor Regional Vice President None
290 Bellington Lane
Creve Coeur, MO 63141
Steve Wilson Regional Vice President None
83 Kaydeross Park Road
Saratoga Springs, NY 12866
Frank J. Nasta* Secretary Secretary
Aurelia Lacsamana* Treasurer None
Sandra G. Floris* Assistant Vice President, Order Desk None
Keith Landry* Assistant Vice President, Order Desk None
Albert A. Pisano* Assistant Vice President and None
Compliance Officer
Joyce Peress* Assistant Secretary Assistant Secretary
</TABLE>
* The principal business address of each of these directors and/or officers
is 100 Park Avenue, New York, NY 10017.
Item 28. Location of Accounts and Records. The accounts, books and documents
required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are kept in the
possession of J. & W. Seligman & Co. Incorporated at its offices at
100 Park Avenue, New York, NY 10017 or at the following locations: (1)
Investors Fiduciary Trust Company, 801 Pennsylvania, Kansas City,
Missouri 64105 is custodian of the Registrant's cash and securities.
It also is agent to perform certain accounting and record-keeping
functions relating to portfolio transactions and to calculate the net
asset value of the Registrant, and (2) Seligman Data Corp., 100 Park
Avenue, New York, NY 10017, as shareholder servicing agent, maintains
shareholder records for the Registrant.
Item 29. Management Services. Not Applicable.
Item 30. Undertaking. Not Applicable.
C-5
<PAGE>
Securities Act File No. _________________
Investment Company Act File No. _________________
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on the 2nd day of May, 2000.
SELIGMAN NEW ECONOMIES FUND, INC.
By: /s/ William C. Morris
-----------------------------
William C. Morris, Chairman
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registration Statement has been signed below by the
following persons in the capacities indicated on May 2, 2000.
Signature Title
- --------- -----
/s/ William C. Morris Chairman of the Board
- -----------------------------
William C. Morris (Principal Executive Officer)
and Director
/s/ Brian T. Zino Director and President
- -----------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer
- -----------------------------
Thomas G. Rose
<PAGE>
Securities Act File No. _________________
Investment Company Act File No. _________________
SELIGMAN NEW ECONOMIES FUND, INC.
Registration Statement on Form N-1A
EXHIBIT INDEX
Form N-1A Item No. Description
Item 23(a) Articles of Incorporation of Registrant.
ARTICLES OF INCORPORATION
OF
SELIGMAN NEW ECONOMIES FUND, INC.
FIRST: I, the subscriber, Frank J. Nasta, whose post office address is 100
Park Avenue, New York, New York 10017, being at least twenty-one years of age,
do, under and by virtue of the General Laws of the State of Maryland authorizing
the formation of corporations, associate myself as incorporator with the
intention of forming a corporation (hereinafter called the "Corporation").
SECOND: Name. The name of the corporation is Seligman New Economies Fund,
Inc.
THIRD: Purposes and Powers. The purposes for which the Corporation is
formed and the business or objects to be carried on or promoted by it are to
engage in the business of an investment company, and in connection therewith, to
hold part or all of its funds in cash, to acquire by purchase, subscription,
contract, exchange or otherwise, and to own, hold for investment, resale or
otherwise, sell, assign, negotiate, exchange, transfer or otherwise dispose of,
or turn to account or realize upon, and generally to deal in and with, all forms
of stocks, bonds, debentures, notes, evidences of interest, evidences of
indebtedness, warrants, certificates of deposit, bankers' acceptances,
repurchase agreements, options on securities and other securities, commodity
futures contracts and options thereon and similar instruments, irrespective of
their form, the name by which they may be described, or the character or form of
the entities by which they are issued or created (hereinafter sometimes called
"Securities"), and to make payment therefor by any lawful means; to exercise any
and all rights, powers and privileges of individual ownership of interest in
respect of any and all such Securities, including the right to vote thereon and
to consent and otherwise act with respect thereto; to do any and all acts and
things for the preservation, protection, improvement and enhancement in value of
any and all such Securities; to acquire or become interested in any such
securities as aforesaid, irrespective of whether or not such Securities be fully
paid or subject to further payments, and to make payments thereon as called for
or in advance of calls or otherwise; and, in general, to do any or all such
other things in connection with the objects and purposes of the Corporation
herein above set forth, as are, in the opinion of the Board of Directors of the
Corporation, necessary, incidental, relative or conducive to the attainment of
such objects and purposes; and to do such acts and things; and to exercise any
and all such powers to the same extent authorized or permitted to a Corporation
under any laws that may be now or hereafter applicable or available to the
Corporation.
In addition, the Corporation may issue, sell, acquire through purchase,
exchange, or otherwise hold, dispose of, resell, transfer, reissue or cancel
shares of its capital stock in any manner and to the extent now or hereafter
permitted by the laws of Maryland and by these Articles of Incorporation.
The foregoing matters shall each be construed as purposes, objects and
powers, and none of such matters shall be in any wise limited by reference to,
or inference from, any other of such matters or any other Article of these
articles of Incorporation, but shall be regarded as independent purposes,
objects and powers and the enumeration of specific purposes, objects and powers
shall not be construed to limit or restrict in any manner the meaning of general
terms or the general powers of the Corporation now or hereafter conferred by the
laws of the State of Maryland, nor shall the expression of one thing be deemed
to exclude another, although it be of like nature, not expressed.
Nothing herein contained shall be construed as giving the Corporation any
rights, powers or privileges not permitted to it by law.
FOURTH: Principal Office. The post office address of the principal office
of the Corporation in this State is c/o The Corporation Trust Incorporated, 300
East Lombard Street, Baltimore, Maryland 21202.
1
<PAGE>
The resident agent of the Corporation is The Corporation Trust Incorporated, the
post office address of which is 300 East Lombard Street, Baltimore, Maryland
21202. Said resident agent is a Corporation of the State of Maryland.
FIFTH: Capital Stock.
A. The total number of shares of capital stock of all classes which the
Corporation has authority to issue is 1,000,000,000 shares ("Shares") of the par
value of $.001 per share, having an aggregate par value of $1,000,000. The
Shares shall be known and designated as "Common Stock". The Board of Directors
shall have power and authority to increase or decrease, from time to time, the
aggregate number of shares of stock, or of stock of any class, that the
Corporation shall have the authority to issue.
B. The Board of Directors may, from time to time and without stockholder
action, classify Shares into one or more additional classes, the voting,
dividend, liquidation and other rights of which shall differ from the classes of
Common Stock to the extent provided in Articles Supplementary for such
additional class, such Articles Supplementary to be filed for record with the
appropriate authorities of the state of Maryland. Any class of Common Stock
shall be referred to herein individually as a "Class" and collectively, together
with any further class or classes from time to time established, as the
"Classes".
C. The voting, dividend, liquidation and other rights of the Common Stock
of the Corporation designated herein or hereafter designated by the Board of
Directors shall be qualified as follows:
(1) The Common Stock shall initially be classified into four Classes
of Shares, which shall be designated Class A, Class B, Class C and Class D.
The number of authorized Shares of Class A, Class B, Class C and Class D
shall each consist of the sum of x and y, where x equals the issued and
outstanding shares of such Class and y equals one-fourth of the authorized
but unissued Shares of Common Stock of all Classes, provided that at all
times the aggregate authorized, issued and outstanding Shares of Class A,
Class B, Class C and Class D shall not exceed the authorized number of
Shares of Common Stock; and, in the event application of the formula above
would result, at any time, in fractional shares, the applicable number of
authorized shares of each Class shall be rounded down to the nearest whole
number of Shares of such Class.
(2) All Classes shall represent the same interest in the Corporation
and have identical voting, dividend, liquidation, and other rights;
provided, however, that notwithstanding anything in the charter of the
Corporation to the contrary:
(a) Class A Shares may be subject to such front-end sales loads
as may be established by the Board of Directors from time to time in
accordance with the Investment Company Act of 1940 and applicable
rules and regulations of the National Association of Securities
Dealers, Inc. (the "NASD").
(b) Class B Shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act of 1940 and
applicable rules and regulations of the NASD. Subject to paragraph (f)
below, each Class B Share shall convert automatically into Class A
Shares on the last business day of the month that precedes the eighth
anniversary of the date of issuance of such Class B Share; such
conversion shall be effected on the basis of the relative net asset
values of Class B Shares and Class A Shares as determined by the
Corporation on the date of conversion.
2
<PAGE>
(c) Class C Shares may be subject to such front-end sales loads
and such contingent deferred sales charges as may be established from
time to time by the Board of Directors in accordance with the
Investment Company Act and applicable rules and regulations of the
NASD.
(d) Class D Shares may be subject to such contingent deferred
sales charges as may be established from time to time by the Board of
Directors in accordance with the Investment Company Act of 1940 and
applicable rules and regulations of the NASD.
(e) Expenses related solely to a particular Class (including,
without limitation, distribution expenses under a Rule 12b-1 plan and
administrative expenses under an administration or service agreement,
plan or other arrangement, however designated, which may differ
between the Classes) shall be borne by that Class and shall be
appropriately reflected (in the manner determined by the Board of
Directors) in the net asset value, dividends, distribution and
liquidation rights of the shares of that Class.
(f) At such time as shall be permitted under the Investment
Company Act of 1940, any applicable rules and regulations thereunder
and the provisions of any exemptive order applicable to the
Corporation, and as may be determined by the Board of Directors and
disclosed in the then current prospectus of the Corporation, Shares of
a particular Class may be automatically converted into shares of
another Class; provided, however, that such conversion shall be
subject to the continuing availability of an opinion of counsel to the
effect that such conversion does not constitute a taxable event under
Federal income tax law. The Board of Directors, in its sole
discretion, may suspend any conversion rights if such opinion is no
longer available.
(g) As to any matter with respect to which a separate vote of any
Class is required by the Investment Company Act of 1940 or by the
Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in
paragraph (e) above), such requirement as to a separate vote by the
Class shall apply in lieu of Single Class Voting, and, if permitted by
the Investment Company Act of 1940 or any rules, regulations or orders
thereunder and the Maryland General Corporation Law, all Classes shall
vote together as a single class on any such matter that shall have the
same effect on each such Class. As to any matter that does not affect
the interest of a particular Class, only the holders of Shares of the
affected Class shall be entitled to vote.
D. The Board of Directors may provide for a holder of Shares of stock of
any Class, who surrenders his certificate in good form for transfer to the
Corporation or, if the Shares in question are not represented by certificates,
who delivers to the Corporation a written request in good order signed by the
stockholder, to convert the Shares in question on such basis as the Board may
provide, into Shares of stock of any other Class of the Corporation or otherwise
as permitted by the Board of Directors.
E. No holder of shares shall be entitled as such, as a matter of right, to
purchase or subscribe for any part of any new or additional issue of Shares or
securities of the Corporation.
3
<PAGE>
All Shares now or hereafter authorized, of any Class, shall be subject to
redemption and redeemable at the option of the stockholder, in the sense used in
the Maryland General Corporation Law, at the redemption or repurchase price for
shares of that Class, determined in the manner set out in these Articles of
Incorporation or in any amendment thereto. In the absence of any contrary
specification as to the purpose for which Shares are repurchased by it, all
Shares so repurchased shall be deemed to be acquired for retirement in the sense
contemplated by the Maryland General Corporation Law. Shares retired by
repurchase or retired by redemption shall thereafter have the status of
authorized but unissued Shares of the Corporation.
All persons who shall acquire Shares shall acquire the same subject to the
provisions of these Articles of Incorporation.
SIXTH: Directors. The initial number of directors of the Corporation shall
be two, which shall be the minimum number of directors for so long as there is
only one or no stockholders. The names of the directors who shall act until the
first annual meeting or until their successors are duly chosen and qualified are
William C. Morris and Brian T. Zino. Upon such time as the Corporation has
issued three or more shares of its capital stock, the minimum number of
directors shall be increased in accordance with the provisions of Section 2-402
of the Maryland General Corporation Law. The number of directors may be changed
from time to time in such lawful manner as is provided in the By-Laws of the
Corporation. Unless otherwise provided by the By-Laws of the Corporation, the
directors of the Corporation need not be stockholders.
SEVENTH: Provisions for Defining, Limiting and Regulating the Powers of the
Corporation, Directors and Stockholders.
A. Board of Directors. The Board of Directors shall have the general
management and control of the business, affairs and property of the Corporation,
and may exercise all the powers of the Corporation, except such as are by
statute or by these Articles of Incorporation or by the By-Laws conferred upon
or reserved to the stockholders. In furtherance and not in limitation of the
powers conferred by statute, the Board of Directors is hereby empowered:
(1) To authorize the issuance and sale, from time to time, of Shares
of any Class whether for cash at not less than the par value thereof or for
such other consideration as the Board of Directors may deem advisable, in
the manner and to the extent now or hereafter permitted by the laws of
Maryland; provided, however, the consideration (or the value thereof as
determined by the Board of Directors) per share to be received by the
Corporation upon the sale of shares of any Class (including treasury
Shares) shall not be less than the net asset value (determined as provided
in Article NINTH hereof) per Share of that Class outstanding at the time
(determined by the Board of Directors) as of which the computation of such
net asset value shall be made.
(2) To authorize the execution and performance by the Corporation of
an agreement or agreements, which may be exclusive contracts, with Seligman
Advisors, Inc., a Delaware corporation, or any other person, as
distributor, providing for the distribution of Shares of any Class.
(3) Subject to the General Corporation Law of the State of Maryland,
to specify, in instances in which it may be desirable, that Shares of any
Class repurchased by the Corporation are not acquired for retirement and to
specify the purposes for which such Shares are repurchased.
4
<PAGE>
(4) To authorize the execution and performance by the Corporation of
an agreement or agreements with J. & W. Seligman & Co. Incorporated, a
Delaware corporation, or any successor to the corporation, providing for
the investment and other operations of the Corporation. The Corporation may
in its By-Laws confer powers on the Board of Directors in addition to the
powers expressly conferred by statute.
B. Quorum; Adjournment; Majority Vote. The presence in person or by proxy
of the holders of record of one-third of the Shares of all Classes issued and
outstanding and entitled to vote thereat shall constitute a quorum for the
transaction of any business at all meetings of the shareholders except as
otherwise provided by law or in these Articles of Incorporation and except that
where the holders of Shares of any Class are entitled to a separate vote as a
Class (a "Separate Class") or where the holders of Shares of two or more (but
not all) Classes are required to vote as a single Class (a "Combined Class"),
the presence in person or by proxy of the holders of one-third of the Shares of
that Separate Class or Combined Class, as the case may be, issued and
outstanding and entitled to vote thereat shall constitute a quorum for such
vote. If, however, a quorum with respect to all Classes, a Separate Class or a
Combined Class, as the case may be, shall not be present or represented at any
meeting of the shareholders, the holders of a majority of the Shares of all
Classes, such Separate Class or such Combined Class, as the case may be, present
in person or by proxy and entitled to vote shall have power to adjourn the
meeting from time to time as to all Classes, such Separate Class or such
Combined Class, as the case maybe, without notice other than announcement at the
meeting, until the requisite number of Shares entitled to vote at such meeting
shall be present. At such adjourned meeting at which the requisite number of
Shares entitled to vote thereat shall be represented any business may be
transacted which might have been transacted at the meeting as originally
notified. The absence from any meeting of stockholders of the number of Shares
in excess of one-third of the Shares of all Classes, or of the affected Class or
Classes, as the case may be, which may be required by the laws of the State of
Maryland, the Investment Company Act of 1940 or any other applicable law or
these Articles of Incorporation, for action upon any given matter shall not
prevent action of such meeting upon any other matter or matters which may
properly come before the meeting, if there shall be present thereat, in person
or by proxy, holders of the number of Shares required for action in respect of
such other matter or matters. Notwithstanding any provision of law requiring any
action to be taken or authorized by the holders of a greater proportion than a
majority of the Shares of all Classes or of the Shares of a particular Class or
Classes, as the case may be, entitled to vote thereon, such action shall be
valid and effective if taken or authorized by the affirmative vote of the
holders of a majority of the Shares of all Classes or of such particular Class
or Classes, as the case may be, outstanding and entitled to vote thereon.
EIGHTH: Redemptions and Repurchases.
A. The Corporation shall under some circumstances redeem, and may under
other circumstances redeem or repurchase, Shares as follows:
(1) Obligation of the Corporation to Redeem Shares. Each holder of
Shares of any Class shall be entitled at his option to require the
Corporation to redeem all or any part of the Shares owned by such holder,
upon written or telegraphic request to the Corporation or its designated
agent, accompanied by surrender of the certificate or certificates for such
Shares, or such other evidence of ownership as shall be specified by the
Board of Directors, at a redemption price per Share equal to an amount
determined by the Board of Directors in accordance with any applicable laws
and regulations, subject to the provisions of paragraph B of this Article
and with any procedures or methods further prescribed or approved by the
Board of Directors; provided that (i) such amount shall not exceed the net
asset value per Share determined in accordance with Article NINTH hereof,
and (ii) if so authorized by the Board of Directors, the Corporation may,
at any time from time to time, charge fees for effecting such redemption,
at such rates as the Board of Directors may establish, as and to
5
<PAGE>
the extent permitted under the Investment Company Act of 1940.
Notwithstanding the foregoing (or any other provision of these Articles of
Incorporation), the Board of Directors of the Corporation may suspend the
right of the holders of Shares of any Class to require the Corporation to
redeem such Shares (or may suspend any voluntary purchase of shares
pursuant to the provisions of the charter of the Corporation) or postpone
the date of payment or satisfaction upon redemption of such Shares during
any financial emergency. For the purpose of these Articles, a "financial
emergency" is defined as the whole or part of any period (i) during which
the New York Stock Exchange is closed other than customary weekend and
holiday closings, (ii) during which trading on the New York Stock Exchange
is restricted, (iii) during which an emergency exists as a result of which
disposal by the Corporation of securities owned by such Class is not
reasonably practicable or it is not reasonably practicable for the
corporation fairly to determine the value of the net assets of such Class,
or (iv) during any other period when the Securities and Exchange Commission
(or any succeeding governmental authority) may for the protection of
security holders of the Corporation by order permit suspension of the right
of redemption or postponement of the date of payment on redemption.
(2) Right of the Corporation to Redeem Shares. In addition the Board
of Directors may, from time to time in its discretion, authorize the
Corporation to require the redemption of all or any part of the outstanding
Shares of any Class, for the proportionate interest per Share in the assets
of the Corporation belonging to that Class, or the cash equivalent thereof
(being the net asset value per Share of that Class determined as provided
in Article NINTH hereof), subject to and in accordance with the provisions
of paragraph B of this Article, upon the sending of written notice thereof
to each stockholder any of whose Shares are so redeemed and upon such terms
and conditions as the Board of Directors shall deem advisable.
(3) Right of the Corporation to Repurchase Shares. In addition the
Board of Directors may, from time to time in its discretion, authorize the
officers of the Corporation to repurchase Shares of any Class, either
directly or through an agent, subject to and in accordance with the
provisions of paragraph B of this Article. The price to be paid by the
Corporation upon any such repurchase shall be determined, in the discretion
of the Board of Directors, in accordance with any provision of the
Investment Company Act of 1940 or any rule or regulation thereunder,
including any rule or regulation made or adopted pursuant to Section 22 of
the Investment Company Act of 1940 by the Securities and Exchange
Commission or any securities association registered under the Securities
Exchange Act of 1934.
B. The following provisions shall be applicable with respect to redemptions
and repurchases of Shares of any Class pursuant to paragraph A hereof:
(1) The time as of which the net asset value per Share of a particular
Class therein applicable to any redemption pursuant to subparagraph A(1) or
A(2) of this Article shall be computed shall be such time as may be
determined by or pursuant to the direction of the Board of Directors (which
time may differ from Class to Class).
(2) Certificates for Shares of any Class to be redeemed or repurchased
shall be surrendered in proper form for transfer, together with such proof
of the authenticity of signatures as may be required by resolution of the
Board of Directors.
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(3) Payment of the redemption or repurchase price by the Corporation
or its designated agent shall be made in cash within seven days after the
time used for determination of the redemption or repurchase price, but in
no event prior to delivery to the Corporation or its designated agent of
the certificate or certificates for the Shares of the particular Class so
redeemed or repurchased, or of such other evidence of ownership as shall be
specified by the Board of Directors; except that any payment may be made in
whole or in part in securities or other assets of the Corporation belonging
to that Class if, in the event of the closing of the New York Stock
Exchange or the happening of any event at any time prior to actual payment
which makes the liquidation of Securities in orderly fashion impractical or
impossible, the Board of Directors shall determine that payment in cash
would be prejudicial to the best interests of the remaining stockholders of
that Class. In making any such payment in whole or in part in Securities or
other assets of the Corporation belonging to that Class, the Corporation
shall, as nearly as may be practicable, deliver Securities or other assets
of a gross value (determined in the manner provided in Article NINTH
hereof) representing the same proportionate interest in the Securities and
other assets of the Corporation belonging to that Class as is represented
by the Shares of that Class so to be paid for. Delivery of the Securities
included in any such payment shall be made as promptly as any necessary
transfers on the books of the several corporations whose Securities are to
be delivered may be made.
(4) The right of the holder of Shares of any Class redeemed or
repurchased by the Corporation as provided in this Article to receive
dividends thereon and all other rights of such holder with respect to such
Shares shall forthwith cease and terminate from and after the time as of
which the redemption or repurchase price of such Shares has been determined
(except the right of such holder to receive (a) the redemption or
repurchase price of such Shares from the Corporation or its designated
agent, in cash and/or securities or other assets of the Corporation
belonging to that Class, and (b) any dividend to which such holder had
previously become entitled as the record holder of such Shares on the
record date for such dividend, and, with respect to Shares otherwise
entitled to vote, except the right of such holder to vote at a meeting of
stockholders such Shares owned of record by him on the record date for such
meeting).
NINTH: Determination of Net Asset Value. For the purposes referred to in
Articles SEVENTH and EIGHTH hereof the net value per Share of any Class of the
Corporation's Common Stock shall be determined by or pursuant to the direction
of the Board of Directors in accordance with the following provisions:
A. Such net asset value per Share of a particular Class on any day shall be
computed as follows: The net asset value per Share of that Class shall be the
quotient obtained by dividing the "net value of the assets" of the Corporation
belonging to that Class by the total number of Shares of that Class at the time
deemed to be outstanding (including Shares sold whether paid for and issued or
not, and excluding Shares redeemed or repurchased on the basis of previously
determined values, whether paid for, received and held in treasury, or not). The
"net value of the assets" of the Corporation belonging to a particular Class
shall be the "gross value" of the assets belonging to that Class after deducting
the amount of all expenses incurred and accrued and unpaid belonging to that
Class, such reserves belonging to that Class as may be set up to cover taxes and
any other liabilities, and such other deductions belonging to that Class as in
the opinion of the officers of the Corporation are in accordance with accepted
accounting practice. The "gross value" of the assets belonging to a particular
Class shall be the amount of all cash and receivables and the market value of
all Securities and other assets held by the Corporation and belonging to that
Class at the time as of which the determination is made. Securities held shall
be valued at market value or, in the absence of readily available market
quotations, at fair value, both as determined pursuant to methods approved by
the Board of Directors and in accordance with applicable statutes and
regulations.
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B. The Board of Directors is empowered, in its absolute discretion, to
establish other methods for determining such net asset value whenever such other
methods are deemed by it to be necessary or desirable and are consistent with
the provisions of the Investment Company Act of 1940 and the rules and
regulations thereunder and any other applicable Federal securities law or rule
or regulation.
TENTH: Determination Binding. Any determination made by or pursuant to the
direction of the Board of Directors in good faith, and so far as accounting
matters are involved in accordance with accepted accounting practice, as to the
amount of the assets, obligations or liabilities of the Corporation belonging to
any Class, as to the amount of the net income of the Corporation belonging to
any Class for any period or amounts that are any time legally available for the
payment of dividends on shares of any Class, as to the amount of any reserves or
charges set up with respect to any Class and the propriety thereof, as to the
time of or purpose for creating any reserves or charges with respect to any
Class, as to the use, alteration or cancellation of any reserves or charges with
respect to any Class (whether or not any obligation or liability for which such
reserves or charges shall have been created or shall have been paid or
discharged or shall be then or thereafter required to be paid or discharged), as
to the price or closing bid or asked price of any security owned or held by the
Corporation and belonging to any Class, as to the market value of any security
or fair value of any other asset owned by the Corporation and belonging to any
Class, as to the number of Shares of any Class outstanding or deemed to be
outstanding, as to the impracticability or impossibility of liquidating
Securities in orderly fashion, as to the extent to which it is practicable to
deliver the proportionate interest in the Securities and other assets of the
Corporation belonging to any Class represented by any Shares belonging to any
Class redeemed or repurchased in payment for any such Shares, as to the method
of payment for any such Shares redeemed or repurchased, or as to any other
matters relating to the issue, sale, redemption, repurchase, and/or other
acquisition or disposition of Securities or Shares of the Corporation shall be
final and conclusive and shall be binding upon the Corporation and all holders
of Shares of all Classes past, present and future, and Shares of all Classes are
issued and sold on the condition and understanding that any and all such
determinations shall be binding as aforesaid. No provision of these Articles of
Incorporation shall be effective to (a) bind any person to waive compliance with
any provision of the Securities Act of 1933 or the Investment Company Act of
1940 or of any valid rule, regulation or order of the Securities and Exchange
Commission thereunder or (b) protect or purport to protect any director or
officer of the Corporation against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
ELEVENTH: Liabilities of Director or Officer. A director or officer of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for breach of fiduciary duty as a Director or Officer, except
to the extent such exemption from liability or limitation thereof is not
permitted by law (including the Investment Company Act of 1940 as currently in
effect or as the same may hereafter be amended).
No amendment, modification or repeal of this Article ELEVENTH shall
adversely affect any right or protection of a Director or Officer that exists at
the time of such amendment, modification or repeal.
TWELFTH: Indemnification of Directors, Officers and Employees. The
Corporation shall indemnify to the fullest extent permitted by law (including
the General Laws of the State of Maryland and the Investment Company Act of 1940
as currently in effect or as the same may hereafter be amended) any person made
or threatened to be made a party to any action, suit or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that
such person or such person's testator or intestate is or was a Director, Officer
or employee of the Corporation or serves or served at the request of the
Corporation any other enterprise as a Director, Officer or employee. To the
fullest extent permitted by law (including the General Laws of the State of
Maryland and the Investment Company Act of 1940 as currently
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in effect or as the same may hereafter be amended), expenses incurred by any
such person in defending any such action, suit or proceeding shall be paid or
reimbursed by the Corporation promptly upon receipt by it of an undertaking of
such person to repay such expenses if it shall ultimately be determined that
such person is not entitled to be indemnified by the Corporation. The rights
provided to any person by this Article shall be enforceable against the
Corporation by such person who shall be presumed to have relied upon it in
serving or continuing to serve as a Director, Officer or employee as provided
above. No amendment of this Article TWELFTH shall impair the rights of any
person arising at any time with respect to events occurring prior to such
amendment. For purposes of this Article TWELFTH, the term "Corporation" shall
include any predecessor of the Corporation and any constituent corporation
(including any constituent of a constituent) absorbed by the Corporation in a
consolidation or merger; the term "other enterprise" shall include any
corporation, partnership, joint venture, trust or employee benefit plan; service
"at the request of the Corporation" shall include service as a Director, Officer
or employee of the Corporation which imposes duties on, or involves services by,
such Director, Officer or employee with respect to an employee benefit plan, its
participants or beneficiaries; any excise taxes assessed on a person with
respect to an employee benefit plan shall be deemed to be indemnifiable
expenses; and action by a person with respect to any employee benefit plan which
such person reasonably believes to be in the interest of the participants and
beneficiaries of such plan shall be deemed to be action not opposed to the best
interests of the Corporation. The foregoing rights of indemnification shall not
be exclusive of any other rights to which those seeking indemnification may be
entitled. The Board of Directors may take such action as is necessary to carry
out these indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such By-Laws, resolutions or contracts
implementing such provisions or such further indemnification arrangements as may
be permitted by law.
THIRTEENTH: Amendments. The Corporation reserves the right to take any
lawful action and to make any amendment of these Articles of Incorporation,
including the right to make any amendment which changes the terms of any Shares
of any Class now or hereafter authorized by classification, reclassification, or
otherwise, and to make any amendment authorizing any sale, lease, exchange or
transfer of the property and assets of the Corporation or belonging to any Class
or Classes as an entirety, or substantially as an entirety, with or without its
good will and franchise, if a majority of all the Shares of all Classes or of
the affected Class or Classes, as the case may be, at the time issued and
outstanding and entitled to vote, vote in favor of any such action or amendment,
or consent thereto in writing, and reserves the right to make any amendment of
these Articles of Incorporation in any form, manner or substance now or
hereafter authorized or permitted by law.
FOURTEENTH: Corporate Books. The books of the Corporation may be kept
(subject to any provisions contained in applicable statutes) outside the State
of Maryland at such place or places as may be designated from time to time by
the Board of Directors or in the By-Laws of the Corporation. Election of
directors need not be by ballot unless the By-Laws of the Corporation shall so
provide.
FIFTEENTH: Duration. The duration of the Corporation shall be perpetual.
I acknowledge this document to be my act, and state under penalties of
perjury that with respect to all matters and facts therein, to the best of my
knowledge, information and belief such matters and facts are true in all
material respects.
DATE: April 26, 2000 By: /s/ Frank J. Nasta
--------------------
Name: Frank J. Nasta
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