Registration No. 33-77142
Investment Co. Act No. 811-266
U.S. SECURITIES AND EXCHANGE COMMISSION,
Washington, D.C. 20549
FORM N-2
|X| REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933
|_| Pre-Effective Amendment No.
|_| Post-Effective Amendment No.
and/or
|_| REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
|X| Amendment No. 24
--
- -------------------------------------------------------------------------------
Exact Name of Registrant as Specified in Charter:
TRI-CONTINENTAL CORPORATION
- -------------------------------------------------------------------------------
Address of Principal Executive Offices (Number, Street, City, State, Zip Code):
100 Park Avenue, New York, New York 10017
- -------------------------------------------------------------------------------
Registrant's Telephone Number, including Area Code:
(212) 850-1864 or (800) 221-2450
- -------------------------------------------------------------------------------
Name and Address (Number, Street, City, State, Zip Code) of Agent for Service:
Frank J. Nasta, Esq., 100 Park Avenue, New York, New York 10017
- -------------------------------------------------------------------------------
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.
- -------------------------------------------------------------------------------
If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933, other
than securities offered in connection with a dividend reinvestment plan, check
the following box. |X|
Calculation of Registration Fee Under the Securities Act of 1933
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Securities Amount Being Offering Price Aggregate Amount of
Being Registered Registered per Unit Offering Price Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$.50 par value 2,500,000 $ 21.125 $ 52,812,500 $ 18,209.75
</TABLE>
The Registration Statement shall become effective hereafter in accordance with
Section 8(a) of the Securities Act of 1933.
<PAGE>
TRI-CONTINENTAL CORPORATION
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
<TABLE>
<CAPTION>
Form N-2-Part A Prospectus Caption
- --------------- -------------------
Item No.
<S> <C>
1. Outside Front Cover Outside Front Cover of the Prospectus
2. Inside Front and Outside Back Cover Page Inside Front and Outside Back Cover Page of Prospectus
3. Fee Table and Synopsis Summary of Corporation Expenses; Prospectus Summary
4. Financial Highlights Financial Highlights
5. Plan of Distribution Not Applicable
6. Selling Shareholders Not Applicable
7. Use of Proceeds Description of Investment Plans and Other Services - Method of
Purchase
8. General Description of the Registrant Prospectus Summary; The Corporation; Investment and Other
Policies; Trading and Net Asset Value Information Concerning
Tri-Continental Corporation Common Stock
9. Management Management of the Corporation; Description of Investment Plans
and Other Services; Back Cover Page of Prospectus
10. Capital Stock, Long-Term Debt, and Other Description of Capital Stock; Description of Warrants;
Securities Dividend Policy and Taxes; Description of Investment Plans and
Other Services; Capitalization at March 31, 1995
11. Defaults and Arrears on Senior Securities Not Applicable
12. Legal Proceedings Not Applicable
13. Table of Contents of the Statement Table of Contents of the Statement of Additional
of Additional Information Information
</TABLE>
<PAGE>
TRI-CONTINENTAL CORPORATION
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
<TABLE>
<CAPTION>
Form N-2-Part B Statement of Additional Information Caption
- --------------- -------------------------------------------
Item No.
<S> <C>
14. Cover Page Cover Page of the Statement of Additional Information
15. Table of Contents Cover Page of the Statement of Additional Information
16. General Information and History Certain Transactions of the Corporation
17. Investment Objectives and Policies Additional Investment Objectives and Policies
18. Management Directors and Officers
19. Control Persons and Principal Holders Directors and Officers - Holdings of Preferred Stock,
of Securities Common Stock and Warrants
20. Investment Advisory and Other Services Directors and Officers - Holdings of Preferred Stock, Common
Stock and Warrants; Management; Experts; Custodian, Stockholder
Service Agent and Dividend Paying Agent
21. Brokerage Allocation and Other Practices Brokerage Commissions
22. Tax Status Additional Investment Objectives and Policies
23. Financial Statements Incorporation of Financial Statements by Reference
</TABLE>
<PAGE>
[LOGO]
AN INVESTMENT YOU CAN LIVE WITH
May 1, 1995
100 Park Avenue
New York, NY 10017
New York City Telephone (212) 850-1864
Toll-Free Telephone (800) 874-1092 -- all continental United States
For Retirement Plan Information -- Toll-Free Telephone (800) 445-1777
Tri-Continental Corporation (the 'Corporation') is a diversified,
closed-end investment company -- a publicly traded investment fund. The
Corporation's Common Stock is traded on the New York Stock Exchange under the
symbol 'TY.'
The Corporation invests primarily for the longer term, and over the years
the Corporation's objective has been to produce future growth of both capital
and income while providing reasonable current income. Common stocks have made up
the bulk of investments. However, assets may be held in cash or invested in all
types of securities. See 'Investment and Other Policies.' No assurance can be
given that the Corporation's investment objective will be realized. The
Corporation's Investment Manager is J. & W. Seligman & Co. Incorporated.
This Prospectus applies to all shares of Common Stock purchased pursuant to
the Corporation's various Investment Plans. See 'Description of Investment Plans
and Other Services.' The shares of Common Stock covered by this Prospectus also
may be issued from time to time by the Corporation in connection with the
acquisition of the assets of personal holding companies, private investment
companies or publicly-owned investment companies. See 'Issuance of Shares in
Connection with Acquisitions.'
This Prospectus sets forth concisely the information that a prospective
investor should know about the Corporation before investing. Investors are
advised to read this Prospectus carefully and to retain it for future reference.
Additional information about the Corporation, including a Statement of
Additional Information (the 'SAI'), has been filed with the Securities and
Exchange Commission. The SAI is available upon request and without charge by
writing or calling the Corporation at the address or telephone numbers listed
above. The SAI is dated the same date as this Prospectus and is incorporated
herein by reference in its entirety. The table of contents of the SAI appears on
page 22 of this Prospectus. In addition, copies of the 1994 Annual Report to
stockholders of the Corporation (the '1994 Annual Report') will be furnished,
without charge, to investors requesting copies of the SAI. The 1994 Annual
Report contains financial statements of the Corporation for the year ended
December 31, 1994 which are incorporated by reference into the SAI.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C> <C> <C>
Summary of Corporation Expenses.................. 2 Computation of Net Asset Value................... 14
Prospectus Summary............................... 3 Dividend Policy and Taxes........................ 15
Financial Highlights............................. 4 Description of Investment Plans and Other
Capitalization at March 31, 1995................. 7 Services....................................... 17
Trading and Net Asset Value Information Issuance of Shares in Connection with
Concerning Tri-Continental Corporation Common Acquisitions................................... 21
Stock.......................................... 7 Additional Information........................... 21
The Corporation.................................. 8 Table of Contents of the Statement of Additional
Investment and Other Policies.................... 8 Information.................................... 22
Management of the Corporation.................... 10 Authorization Form for Automatic Dividend
Description of Capital Stock..................... 13 Investment and Cash Purchase Plan.............. 23
Description of Warrants.......................... 14 Authorization Form for Automatic Check Service... 24
</TABLE>
SUMMARY OF CORPORATION EXPENSES
The following table illustrates the expenses and fees that the Corporation
expects to incur and that stockholders can expect to bear.
<TABLE>
<S> <C>
STOCKHOLDER TRANSACTION EXPENSES
Automatic Dividend Investment and Cash Purchase Plan Fees.......................... (1)
ANNUAL EXPENSES FOR 1994 (AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO COMMON STOCK)
Management Fees.................................................................... .44%
Other Expenses..................................................................... .20%
----
Total Annual Expenses......................................................... .64%
----
----
</TABLE>
- ------------
(1) Stockholders participating in the Corporation's investment plans pay a
maximum $2.00 fee per transaction. See 'Description of Investment Plans and
Other Services -- Automatic Dividend Investment and Cash Purchase Plan'
for a description of the investment plans and services.
The purpose of the table above is to assist an investor in understanding
the various costs and expenses the investor will bear directly or indirectly.
For more complete descriptions of the various cost and expenses, see 'Management
of the Corporation' and 'Description of Investment Plans and Other
Services -- Automatic Dividend Investment and Cash Purchase Plan.'
The following example illustrates the expenses investors would pay on a
$1,000 investment, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Tri-Continental Corporation
Common Stock......................................... $7 $20 $36 $ 80
</TABLE>
The example does not represent actual or anticipated expenses, which may be
greater or less than those shown. Moreover, the Corporation's actual rate of
return may be greater or less than the hypothetical 5% return shown in the
example.
2
<PAGE>
PROSPECTUS SUMMARY
The following is qualified in its entirety by the more detailed information
included elsewhere in this Prospectus.
Tri-Continental Corporation is a Maryland corporation formed in 1929 by the
consolidation of two predecessor corporations. It is registered under the
Investment Company Act of 1940, as amended (the '1940 Act'), as a diversified
management investment company of the closed-end type. This Prospectus applies to
shares of Common Stock of the Corporation. The Corporation invests primarily for
the longer term and has no Charter restrictions with respect to such
investments. Over the years the Corporation's objective has been to produce
future growth of both capital and income while providing reasonable current
income. See 'The Corporation.' There can be no assurance that this objective
will be attained in the future. While common stocks have made up the bulk of
investments, assets may be held in cash or invested in all types of securities
in whatever amounts or proportions the Manager (as defined below) believes best
suited to current and anticipated economic and market conditions. These may
include repurchase agreements, options, illiquid securities and securities of
foreign issuers, each of which could involve certain risks. See 'Investment and
Other Policies.' The Corporation's Common Stock is listed on the New York Stock
Exchange under the symbol 'TY.' The average weekly trading volume on that and
other exchanges during 1994 was 241,048 shares. The Corporation's Common Stock
has historically been traded on the market at less than net asset value. As of
March 31, 1995, the Corporation had 83,874,027 shares of Common Stock
outstanding and net assets attributable to Common Stock of $2,119,250,752.
J. & W. Seligman & Co. Incorporated (the 'Manager') manages the investment
of the assets of the Corporation and administers its business and other affairs
pursuant to a Management Agreement approved by the Board of Directors and the
stockholders of the Corporation. The Manager also serves as manager of sixteen
other investment companies which, together with the Corporation, make up the
'Seligman Group.' The aggregate assets of the Seligman Group are approximately
$7.3 billion. The Manager also provides investment management or advice to
institutional accounts having a value of approximately $3.3 billion. The
Manager's fee is based in part on the average daily net assets of the
Corporation. The management fee rate for 1994 was equivalent to .44% of the
Corporation's average daily net assets. Seligman Henderson Co. acts as
subadviser with respect to a portion of the Corporation's assets. See
'Management of the Corporation.'
Shares of Common Stock covered by this Prospectus may be purchased from
time to time by Seligman Data Corp., the plan service agent for Automatic
Dividend Investment and Cash Purchase Plans, Individual Retirement Account
Trusts ('IRAs'), Retirement Plans for Self-Employed Individuals, Partnerships
and Corporations, the J. & W. Seligman & Co. Incorporated 401(K) Salary
Reduction Matched Accumulation Plan and the Seligman Data Corp. Employees'
Thrift Plan (collectively, the 'Plans'), as directed by participants, and may be
sold from time to time by the plan service agent for participants in Automatic
Cash Withdrawal Plans ('ACWP'). See 'Description of Investment Plans and Other
Services -- Automatic Dividend Investment and Cash Purchase Plan' and
' -- Automatic Cash Withdrawal Plan.' Shares will be purchased for the Plans on
the New York Stock Exchange or elsewhere when the market price of the Common
Stock is equal to or less than its net asset value, and any brokerage
commissions applicable to such purchases will be charged pro rata to the Plan
participants. Shares will be purchased for the Plans from the Corporation at net
asset value when the net asset value is lower than the market price, all as more
fully described in this Prospectus.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The Corporation's financial highlights for the years presented below have
been audited by Deloitte & Touche LLP, independent auditors. This information
which is derived from the financial and accounting records of the Corporation
should be read in conjunction with the financial statements and notes contained
in the 1994 Annual Report which may be obtained from the Corporation as provided
on the cover page of this Prospectus.
The per share operating performance data is designed to allow an investor
to trace the operating performance, on a per common share basis, from the
Corporation's beginning net asset value to its ending net asset value so that
investors may understand what effect the individual items have on the investor's
investment, assuming it was held throughout the year.
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE, TOTAL INVESTMENT RETURNS, RATIOS AND SUPPLEMENTAL DATA
(FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH YEAR)
YEAR ENDED DECEMBER 31
-------------------------------------------------------
1994 1993 1992 1991
------ ------ ------ ------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year........................ $27.49 $28.03 $28.57 $24.60
------ ------ ------ ------
Net investment income*.................................... .83 .83 .81 .81
Net realized and unrealized investment gain (loss)........ (1.69) 1.46 1.19 5.79
Net realized and unrealized gain on foreign currency
transactions............................................ .02 -- -- --
------ ------ ------ ------
Increase (decrease) from investment operations............ (.84) 2.29 2.00 6.60
Dividends paid on Preferred Stock......................... (.03) (.03) (.03) (.03)
Dividends paid on Common Stock............................ (.79) (.80) (.78) (.78)
Distribution from net gain realized....................... (1.90) (1.80) (.70) (1.80)
Issuance of Common Stock in gain distributions............ (.23) (.19) (.05) (.02)
Issuance of Common Stock from exercise of Rights.......... -- -- (.97) --
Rights offering costs..................................... -- -- (.01) --
Issuance of Common Stock upon Warrant exercise**.......... -- (.01) -- --
------ ------ ------ ------
Net increase (decrease) in net asset value................ (3.79) (.54) (.54) 3.97
------ ------ ------ ------
Net asset value at end of year............................ $23.70 $27.49 $28.03 $28.57
====== ====== ====== ======
Adjusted net asset value at end of year**................. $23.65 $27.42 $27.95 $28.48
Market value, end of period............................... $19.875 $23.75 $25.50 $27.75
TOTAL INVESTMENT RETURN FOR YEAR:
Based upon market value................................... (5.07)% 3.47% .61%`D' 42.98%
Based upon net asset value................................ (2.20)% 8.95% 7.42%`D' 27.91%
RATIOS AND SUPPLEMENTAL DATA:***
Expenses to average net assets............................ .64% .66% .67% .67%
Net investment income to average net assets............... 3.08% 2.88% 2.86% 2.90%
Portfolio turnover rate................................... 70.38% 69.24% 44.35% 49.02%
Net investment assets, end of year (000's omitted):
For Common Stock...................................... $1,994,098 $2,166,212 $2,088,102 $1,833,664
For Preferred Stock................................... 37,637 37,637 37,637 37,637
---------- ---------- ---------- ----------
Total net investment assets............................... $2,031,735 $2,203,849 $2,125,739 $1,871,301
========== ========== ========== ==========
</TABLE>
- ------------
* Net investment income per share has been calculated by dividing the
respective actual amounts for the year by average shares outstanding for
1986 - 1994 and by shares outstanding at year end for 1985.
** Assumes the exercise of outstanding warrants. Warrant exercise terms were:
March 5, 1984 to March 3, 1985 -- 5.54 shares at $4.06 per share, March 4,
1985 to March 31, 1985 -- 5.93 shares at $3.79 per share, April 1, 1985 to
June 30, 1985 -- 5.95 shares at $3.78 per share, July 1, 1985 to September
30, 1985 -- 5.97 shares at $3.77 per share, October 1, 1985 to March 2,
1986 -- 5.98 shares at $3.76 per share, March 3, 1986 to December 28,
1986 -- 6.37 shares at $3.53 per share, December 29, 1986 to January 1,
1987 -- 6.98 shares at $3.22 per share, January 2, 1987 to December 29,
1987 -- 7.00 shares at $3.21 per share, December 30, 1987 to December 29,
1988 -- 7.83 shares at $2.87 per share, December 30, 1988 to December 29,
1989 -- 8.14 shares at $2.76 per share, December 30, 1989
4
<PAGE>
Generally, the per share amounts are derived by converting the actual dollar
amounts incurred for each item, as disclosed in the financial statements, to
their equivalent per common share amount. The total investment return based on
market value measures the Corporation's performance assuming investors purchased
shares of the Corporation at the market value as of the beginning of the year,
invested dividends and capital gains paid as provided for in the Corporation's
Automatic Dividend Investment and Cash Purchase Plan and then sold their shares
at the closing market value per share on the last day of the year. The
computation does not reflect any sales commissions investors may incur in
purchasing or selling shares of the Corporation. The total investment return
based on net asset value is similarly computed except that the Corporation's net
asset value is substituted for the corresponding market value.
<TABLE>
<CAPTION>
PER SHARE OPERATING PERFORMANCE, TOTAL INVESTMENT RETURNS, RATIOS AND SUPPLEMENTAL DATA
(FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH YEAR)
YEAR ENDED DECEMBER 31
-----------------------------------------------------------
1990 1989 1988 1987 1986 1985
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year........................ $27.44 $23.55 $23.94 $27.94 $29.78 $25.36
------ ------ ------ ------ ------ ------
Net investment income*.................................... .81 .88 .84 .86 1.02 1.10
Net realized and unrealized investment gain (loss)........ (1.05) 6.78 1.01 (.03) 5.16 6.87
Net realized and unrealized gain on foreign currency
transactions............................................ -- -- -- -- -- --
------ ------ ------ ------ ------ ------
Increase (decrease) from investment operations............ (.24) 7.66 1.85 .83 6.18 7.97
Dividends paid on Preferred Stock......................... (.03) (.04) (.04) (.04) (.04) (.05)
Dividends paid on Common Stock............................ (.86) (.84) (.81) (.89) (.97) (1.04)
Distribution from net gain realized....................... (1.60) (2.55) (1.25) (3.73) (6.96) (2.40)
Issuance of Common Stock in gain distributions............ (.11) (.33) (.14) (.16) (.04) (.05)
Issuance of Common Stock from exercise of Rights.......... -- -- -- -- -- --
Rights offering costs..................................... -- -- -- -- -- --
Issuance of Common Stock upon Warrant exercise**.......... -- (.01) -- (.01) (.01) (.01)
------ ------ ------ ------ ------ ------
Net increase (decrease) in net asset value................ (2.84) 3.89 (.39) (4.00) (1.84) 4.42
------ ------ ------ ------ ------ ------
Net asset value at end of year............................ $24.60 $27.44 $23.55 $23.94 $27.94 $29.78
====== ====== ====== ====== ====== ======
Adjusted net asset value at end of year**................. $24.52 $27.35 $23.47 $23.86 $27.84 $29.66
Market value, end of period............................... $21.375 $23.00 $19.25 $20.625 $28.625 $29.375
TOTAL INVESTMENT RETURN FOR YEAR:
Based upon market value................................... 3.46% 37.96% 3.02% (12.27)% 26.62% 35.22%
Based upon net asset value................................ (.20)% 34.54% 8.58% 3.30% 21.89% 34.02%
RATIOS AND SUPPLEMENTAL DATA:***
Expenses to average net assets............................ .56% .55% .57% .53% .53% .55%
Net investment income to average net assets............... 3.01% 3.19% 3.33% 2.66% 3.14% 4.61%
Portfolio turnover rate................................... 41.23% 59.87% 67.39% 78.99% 51.46% 60.95%
Net investment assets, end of year (000's omitted):
For Common Stock...................................... $1,500,281 $1,594,505 $1,263,848 $1,237,091 $1,279,718 $1,156,863
For Preferred Stock................................... 37,637 37,637 37,637 37,637 37,637 37,637
---------- ---------- ---------- ---------- ---------- ----------
Total net investment assets............................... $1,537,918 $1,632,142 $1,301,485 $1,274,728 $1,317,355 $1,194,500
========== ========== ========== ========= ========== ==========
</TABLE>
- ------------
to December 28, 1990 -- 8.81 shares at $2.55 per share, December 29, 1990 to
December 27, 1991 -- 9.25 shares at $2.43 per share, December 28, 1991 to
November 1, 1992 -- 9.69 shares at $2.32 per share, November 2, 1992 to
December 28, 1992 -- 11.07 shares at $2.03 per share, December 29, 1992 to
December 28, 1993 -- 11.29 shares at $1.99 per share, December 29, 1993 to
December 21, 1994 -- 11.95 shares at $1.88 per share, and subsequently,
12.77 shares at $1.76 per share.
`D' The total investment returns for 1992 have been adjusted for the effect of
the exercise of Rights (equivalent to approximately $0.97 per share),
assuming full subscription by Common Stockholders.
*** The ratios of expenses to average net assets and net investment income to
average net assets for all periods presented do not reflect the effect of
dividends paid to Preferred Stockholders.
5
<PAGE>
SENIOR SECURITIES -- $2.50 CUMULATIVE PREFERRED STOCK
The following information is being presented with respect to the
Corporation's $2.50 Cumulative Preferred Stock. The first column presents the
number of preferred shares outstanding at the end of each of the periods
presented. Asset Coverage represents the total amount of net assets of the
Corporation in relation to each share of Preferred Stock outstanding as of the
end of the respective periods. The involuntary liquidation preference is the
amount each share of Cumulative Preferred Stock would be entitled to upon
involuntary liquidation of these shares.
<TABLE>
<CAPTION>
AVERAGE
YEAR- DAILY
END INVOLUNTARY MARKET
ASSET LIQUIDATING VALUE PER
TOTAL SHARES COVERAGE PREFERENCE SHARE (EXCLUDING
YEAR OUTSTANDING PER SHARE PER SHARE BANK LOANS)
- ------------------------------------ ------------ --------- ------------ ----------------
<S> <C> <C> <C> <C>
1994................................ 752,740 $ 2,699 $ 50 $34.12
1993................................ 752,740 2,928 50 36.17
1992................................ 752,740 2,824 50 34.97
1991................................ 752,740 2,486 50 31.51
1990................................ 752,740 2,043 50 28.62
1989................................ 752,740 2,168 50 28.61
1988................................ 752,740 1,729 50 28.49
1987................................ 752,740 1,693 50 31.05
1986................................ 752,740 1,750 50 32.87
1985................................ 752,740 1,587 50 26.73
</TABLE>
6
<PAGE>
CAPITALIZATION AT MARCH 31, 1995
<TABLE>
<CAPTION>
AMOUNT HELD
BY REGISTRANT
OR FOR ITS
TITLE OF CLASS AUTHORIZED OUTSTANDING ACCOUNT
- ------------------------------------------------------------ --------------- --------------- ------------
<S> <C> <C> <C>
$2.50 Cumulative Preferred Stock,
$50 par value............................................. 1,000,000 shs. 752,740 shs. - 0 - shs.
Common Stock,
$.50 par value............................................ 99,000,000 shs.* 83,874,027 shs. - 0 - shs.
Warrants to purchase
Common Stock.............................................. 15,760 wts. 15,760 wts. - 0 - wts.
</TABLE>
- ------------
* 201,255 shares of Common Stock were reserved for issuance upon the exercise
of outstanding Warrants.
TRADING AND NET ASSET VALUE INFORMATION CONCERNING
TRI-CONTINENTAL CORPORATION COMMON STOCK
The following table shows the high and low sale prices of the Corporation's
Common Stock on the composite tape for issues listed on the New York Stock
Exchange, the high and low net asset value and the percentage discount or
premium to net asset value per share for each calendar quarter since the
beginning of 1993.
<TABLE>
<CAPTION>
(DISCOUNT) OR
PREMIUM TO NET
MARKET PRICE NET ASSET VALUE ASSET VALUE
------------- ---------------- --------------------
1993 HIGH LOW HIGH LOW HIGH LOW
- ----------------------------------- ----------- ----------- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1st Q.............................. 26 1/4 24 7/8 28.97 27.89 (9.39)% (10.81)%
2nd Q.............................. 25 3/4 24 1/2 28.34 27.66 (9.14)% (11.42)%
3rd Q.............................. 25 5/8 24 3/8 29.32 28.07 (12.60)% (13.16)%
4th Q.............................. 25 1/2 23 1/2 29.59 27.36 (13.82)% (14.11)%
<CAPTION>
1994
- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st Q.............................. 24 1/2 21 1/2 28.46 26.47 (13.91)% (18.78)%
2nd Q.............................. 23 1/4 21 3/8 27.01 26.12 (13.92)% (18.17)%
3rd Q.............................. 23 5/8 22 27.32 25.86 (13.52)% (14.93)%
4th Q.............................. 22 3/4 19 3/4 26.70 23.75 (14.79)% (16.84)%
<CAPTION>
1995
- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st Q.............................. 21 1/8 19 7/8 25.30 23.69 (16.50)% (16.03)%
</TABLE>
The Corporation's Common Stock has historically been traded on the market
at less than net asset value. The closing market price, net asset value and
percentage discount to net asset value per share of the Corporation's Common
Stock on April 11, 1995 were $21.125, $25.46 and 17.03%, respectively.
7
<PAGE>
THE CORPORATION
Tri-Continental Corporation is a Maryland corporation formed on December
31, 1929, by the consolidation of two predecessor corporations. Since the date
of its formation, it has been engaged in business as an investment company. It
is registered under the 1940 Act as a diversified, management investment company
of the closed-end type and is subject to applicable regulatory and other
provisions of that Act. Such registration, of course, does not involve
government supervision of management, investment policies or investment
practices. As indicated by its financial statements incorporated by reference
herein, the Corporation's principal assets, other than cash and receivables, are
its portfolio of investment securities.
INVESTMENT AND OTHER POLICIES
The Corporation invests primarily for the longer term and has no Charter
restrictions with respect to such investments. Over the years, the Corporation's
objective has been to produce future growth of both capital and income while
providing reasonable current income. There can be no assurance that this
objective will be attained in the future. While common stocks have made up the
bulk of investments, assets may be held in cash or invested in all types of
securities, that is, in bonds, debentures, notes, preferred and common stocks,
rights and warrants (subject to limitations as set forth in the SAI), and other
securities, in whatever amounts or proportions the Manager believes best suited
to current and anticipated economic and market conditions.
The management's present investment policies, in respect to which it has
freedom of action, are:
(1) it keeps investments in individual issuers within the limits
permitted diversified companies under the 1940 Act (i.e., 75% of its total
assets must be represented by cash items, government securities, securities
of other investment companies, and securities of other issuers which, at
the time of investment, do not exceed 5% of the Corporation's total assets
at market value in the securities of any issuer and do not exceed 10% of
the voting securities of any issuer);
(2) it does not make investments with a view to exercising control or
management except that it has an investment in Seligman Data Corp.;
(3) it ordinarily does not invest in other investment companies, but
it may purchase up to 3% of the voting securities of such investment
companies, provided purchases of securities of a single investment company
do not exceed in value 5% of the total assets of the Corporation and all
investments in investment company securities do not exceed 10% of total
assets; and
(4) it has no fixed policy with respect to portfolio turnover and
purchases and sales in the light of economic, market and investment
considerations. The portfolio turnover rates for the ten fiscal years ended
December 31, 1994 are shown under 'Financial Highlights.'
The foregoing objective and policies may be changed by management without
stockholder approval, unless such a change would change the Corporation's status
from a 'diversified' to a 'non-diversified' company under the 1940 Act.
The Corporation's stated fundamental policies relating to the issuance of
senior securities, the borrowing of money, the underwriting of securities of
other issuers, the concentration of investments in a particular industry or
groups of industries, the purchase or sale of real estate and real estate
mortgage loans, the purchase or sale of commodities or commodity contracts, and
the making of loans may not be
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changed without a vote of stockholders. A more detailed description of the
Corporation's investment policies, including a list of those restrictions on the
Corporation's investment activities which cannot be changed without such a vote,
appears in the SAI. Within the limits of these fundamental policies, the
management has reserved freedom of action.
REPURCHASE AGREEMENTS: The Corporation may enter into repurchase agreements
with respect to debt obligations which could otherwise be purchased by the
Corporation. A repurchase agreement is an instrument under which the Corporation
may acquire an underlying debt instrument and simultaneously obtain the
commitment of the seller (a commercial bank or a broker or dealer) to repurchase
the security at an agreed upon price and date within a number of days (usually
not more than seven days from the date of purchase). The value of the underlying
securities will be at least equal at all times to the total amount of the
repurchase obligation, including the interest factor. The Corporation will make
payment for such securities only upon physical delivery or evidence of book
transfer to the account of the Corporation's custodian. Repurchase agreements
could involve certain risks in the event of default or insolvency of the other
party, including possible delays or restrictions upon the Corporation's ability
to dispose of the underlying securities. The Corporation did not enter into
repurchase agreements in 1994.
ILLIQUID SECURITIES: The Corporation may invest up to 15% of its net assets
in illiquid securities, including restricted securities (i.e., securities
subject to restrictions on resale because they have not been registered under
the Securities Act of 1933, as amended (the '1933 Act')) and other securities
that are not readily marketable. The Corporation may purchase restricted
securities that can be offered and sold to 'qualified institutional buyers'
under the Rule 144A of the 1933 Act, and the Corporation's Board of Directors
may determine, when appropriate, that specific Rule 144A securities are liquid
and not subject to the 15% 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 restricted
securities sold and offered under Rule 144A will develop. This investment
practice could have the effect of increasing the level of illiquidity in the
Corporation to the extent that qualified institutional buyers become for a time
uninterested in purchasing Rule 144A securities.
FOREIGN SECURITIES: The Corporation may invest in commercial paper and
certificates of deposit issued by foreign banks and may invest in other
securities of foreign issuers directly or through American Depository Receipts
('ADRs'), American Depository Shares ('ADSs'), European Depository Receipts
('EDRs') or Global Depository Receipts ('GDRs'). 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 foreign
company than about a U.S. company and foreign companies may not be subject to
reporting standards and requirements comparable to those applicable to U.S.
companies. Foreign securities may not be as liquid as U.S. securities.
Securities of foreign companies may involve greater market risk than securities
of U.S. companies, and foreign brokerage commissions and custody fees are
generally higher than those 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. ADRs and ADSs are
instruments generally issued by domestic banks or trust companies that represent
the deposits of a security of a foreign issuer. ADRs and ADSs may be publicly
traded on exchanges or over-the-counter in the United States and are quoted and
settled in dollars at a price that generally reflects the dollar equivalent of
the home country share price. EDRs
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and GDRs are typically issued by foreign banks or trust companies traded in
Europe. ADRs, ADSs, EDRs and GDRs may be issued under sponsored or unsponsored
programs. In sponsored programs, the issuer has made arrangements to have its
securities traded in the form of ADRs, ADSs, EDRs or GDRs. In unsponsored
programs, the issuers may not be directly involved in the creation of the
program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, the issuers of unsponsored ADRs,
ADSs, EDRs or GDRs are not obligated to disclose material information in the
United States, and therefore, the import of such information may not be
reflected in the market value of such receipts. The Corporation may invest up to
10% of its total assets in foreign securities that it holds directly, but this
10% limit does not apply to foreign securities held through ADRs, ADSs, EDRs or
GDRs or to commercial paper and certificates of deposit issued by foreign banks.
Stockholders of the Corporation approved a proposal to permit the Manager
to enter into a Subadvisory Agreement with Seligman Henderson Co. pursuant to
which Seligman Henderson Co. is responsible for investing all or a portion of
the Corporation's investments in foreign investments and ADRs, ADSs, EDRs and
GDRs, see 'Management of the Corporation.'
LEVERAGE: Senior securities issued or money borrowed to raise funds for
investment have a prior fixed dollar claim on the Corporation's assets and
income. Any gain in the value of securities purchased or in income received in
excess of the cost of the amount borrowed or interest or dividends payable
causes the net asset value of the Corporation's Common Stock or the income
available to it to increase more than otherwise would be the case. Conversely,
any decline in the value of securities purchased or income received on them to
below the asset or income claims of the senior securities or borrowed money
causes the net asset value of the Common Stock or income available to it to
decline more sharply than would be the case if there were no prior claim. Funds
obtained through senior securities or borrowings thus create investment
opportunity, but they also increase exposure to risk. This influence ordinarily
is called 'leverage.' As of March 31, 1995, the only senior securities of the
Corporation outstanding were 752,740 shares of its $2.50 Cumulative Preferred
Stock, $50 par value. The Corporation's portfolio requires an annual return of
0.09% in order to cover dividend payments on the Preferred Stock. The following
table illustrates the effect of leverage relating to presently outstanding
Preferred Stock on the return available to a holder of the Corporation's Common
Stock.
<TABLE>
<CAPTION>
Assumed return on portfolio (net of
expenses).................................. - 10% - 5% 0% 5% 10%
<S> <C> <C> <C> <C> <C>
Corresponding return to common stockholder... - 10.27% - 5.18% - 0.09% 5.00% 10.09%
</TABLE>
The purpose of the table above is to assist an investor in understanding
the effects of leverage. The percentages appearing in the table do not represent
actual or anticipated returns, which may be greater or less than those shown.
MANAGEMENT OF THE CORPORATION
THE MANAGER: In accordance with the applicable laws of the State of
Maryland, the Board of Directors provides broad supervision over the affairs of
the Corporation. Pursuant to a Management Agreement approved by the Board and
the stockholders, the Manager manages the investment of the assets of the
Corporation and administers its business and other affairs. In that connection,
the Manager
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makes purchases and sales of portfolio securities consistent with the
Corporation's investment objectives and policies.
The Manager also serves as manager of sixteen other investment companies
which, together with the Corporation, make up the 'Seligman Group.' These other
companies 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
Henderson Global Fund Series, Inc., Seligman High Income Fund Series, Seligman
Income Fund, Inc., Seligman New Jersey Tax-Exempt Fund, Inc., Seligman
Pennsylvania Tax-Exempt Fund Series, Seligman Portfolios, Inc., Seligman Quality
Municipal Fund, Inc., Seligman Select Municipal Fund, Inc., Seligman Tax-Exempt
Fund Series, Inc. and Seligman Tax-Exempt Series Trust. The aggregate assets of
the Seligman Group are approximately $7.3 billion. The Manager also provides
investment management or advice to institutional accounts having a value of
approximately $3.3 billion. The address of the Manager is 100 Park Avenue, New
York, NY 10017.
As compensation for the services performed and the facilities and personnel
provided by the Manager, the Corporation pays to the Manager promptly after the
end of each month a fee, calculated on each day during such month, equal to the
Applicable Percentage of the daily net assets of the Corporation at the close of
business on the previous business day. The term 'Applicable Percentage' means
the amount (expressed as a percentage and rounded to the nearest one millionth
of one percent) obtained by dividing (i) the Fee Amount by (ii) the Fee Base.
The term 'Fee Amount' means the sum on an annual basis of:
.45 of 1% of the first $4 billion of Fee Base
.425 of 1% of the next $2 billion of Fee Base
.40 of 1% of the next $4 billion of Fee Base, and
.375 of 1% of the Fee Base in excess of $8 billion.
The term 'Fee Base' as of any day means the sum of the net assets at the close
of business on the previous day of each of the investment companies registered
under the 1940 Act for which the Manager or any affiliated company acts as
investment adviser or manager (including the Corporation).
Charles C. Smith, Jr., a Managing Director of the Manager since January 1,
1994, has been Portfolio Manager for the Corporation since January 1, 1995. Mr.
Smith is also Vice President and Portfolio Manager of Seligman Common Stock
Fund, Seligman Income Fund, and the Seligman Common Stock Portfolio and Seligman
Income Portfolio of Seligman Portfolios, Inc. Mr. Smith joined Seligman in 1985
as Vice President, Investment Officer and was promoted to Senior Vice President,
Senior Investment Officer in August 1992, and to Managing Director in January
1994.
The Corporation pays all its expenses other than those assumed by the
Manager, including brokerage commissions, fees and expenses of independent
attorneys and auditors, taxes and governmental fees, cost of stock certificates,
expenses of printing and distributing prospectuses, expenses of printing and
distributing reports, notices and proxy materials to stockholders, expenses of
printing and filing reports and other documents with governmental agencies,
expenses of stockholders' meetings, expenses of corporate data processing and
related services, stockholder record keeping and stockholder account services,
fees and disbursements of transfer agents and custodians, expenses of disbursing
dividends and distributions, fees and expenses of directors of the Corporation
not employed by the Manager or its affiliates, insurance premiums and
extraordinary expenses such as litigation expenses.
11
<PAGE>
The Management Agreement provides that it will continue in effect until
December 29, 1995 and from year to year thereafter if such continuance is
approved in the manner required by the 1940 Act (i.e., (1) by a vote of a
majority of the Board of Directors or of the outstanding voting securities of
the Corporation and (2) by a vote of a majority of Directors who are not parties
to the Management Agreement or interested persons of any such party) and if the
Manager shall not have notified the Corporation at least 60 days prior to such
December 29 or December 29 of any year thereafter that it does not desire such
continuance. The Management Agreement may be terminated by the Corporation,
without penalty, on 60 days' written notice to the Manager and would terminate
automatically in the event of its assignment.
THE SUBADVISER: On May 19, 1994, stockholders of the Corporation approved a
proposal to permit Seligman Henderson Co. (the 'Subadviser') to act as
Subadviser to the Corporation with respect to all or a portion of the
Corporation's investments in foreign securities and ADRs ('Qualifying Assets').
The Corporation has a non-fundamental policy in which it may invest up to 10% of
its total assets in foreign securities, in addition to ADRs, ADSs, EDRs and
GDRs. The Subadviser serves the Corporation pursuant to a Subadvisory Agreement
between the Manager and the Subadviser (the 'Subadvisory Agreement'), dated June
1, 1994. The Subadvisory Agreement provides that the Subadviser provides
investment management services with respect to the Qualifying Assets, including
investment research, advice and supervision, determines which securities will be
purchased or sold, makes purchases and sales on behalf of the Corporation and
determines how voting and other rights with respect to securities shall be
exercised, subject in each case to the control of the Board of Directors and in
accordance with the Corporation's investment objectives, policies and
principles.
As compensation for the services performed and the facilities and personnel
provided by the Subadviser, the Manager pays to the Subadviser a fee, equal to
the Applicable Percentage of the average monthly Net Qualifying Assets of the
Corporation. For this purpose, the term 'Net Qualifying Assets' means the assets
designated by the Manager for which the Subadviser provides investment
management services less any related liabilities as designated by the Manager.
Average monthly Net Qualifying Assets are determined, for any month, by
taking the average of the value of the Net Qualifying Assets as of the (i)
opening of business on the first day of such month and (ii) close of business on
the last day of such month.
The Subadviser was founded in 1991 as a joint venture between the Manager
and Henderson International, Inc., a controlled affiliate of Henderson
Administration Group plc. The Subadviser, headquartered in New York, was created
to provide international and global investment advice to institutional and
individual investors and investment companies in the United States. The
Subadviser currently serves as subadviser to Seligman Capital Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and Information Fund,
Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund, Inc., Seligman
Henderson Global Fund Series, Inc., Seligman Income Fund, Inc., the Global
Portfolio and Global Smaller Companies Portfolio of Seligman Portfolios, Inc.,
the International Equity Fund series of The Compass Capital Group, and the
Seligman Henderson International Small Capital Portfolio and the Seligman
Henderson International Equity Portfolio of the American Skandia Trust. The
address of Seligman Henderson Co. is 100 Park Avenue, New York, NY 10017.
The Subadviser's International Policy Group has overall responsibility for
directing and overseeing all aspects of foreign investment activity for the
Corporation and provides international investment policy, including country
weightings, asset allocations and industry sector guidelines, as appropriate.
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<PAGE>
Mr. Iain C. Clark, a Managing Director and Chief Investment Officer of the
Subadviser, is responsible for the day-to-day foreign investment activity of the
Corporation. Mr. Clark, who joined the Subadviser in 1992, has been a Director
of Henderson Administration Group plc and Henderson International, Ltd. and
Secretary, Treasurer and Vice President of Henderson International, Inc. since
1985.
DESCRIPTION OF CAPITAL STOCK
(a) DIVIDEND RIGHTS: Common Stockholders are entitled to receive dividends
only if and to the extent declared by the Board of Directors and only after (i)
such provisions have been made for working capital and for reserves as the Board
may deem advisable, (ii) full cumulative dividends at the rate of $.625 per
share per quarterly dividend period have been paid on the Preferred Stock for
all past quarterly periods and have been provided for the current quarterly
period, and (iii) such provisions have been made for the purchase or for the
redemption (at a price of $55 per share) of the Preferred Stock as the Board may
deem advisable. In any event, no dividend may be declared upon the Common Stock
unless, at the time of such declaration, the net assets of the Corporation,
after deducting the amount of such dividend and the amount of all unpaid
dividends declared on the Preferred Stock, shall be at least equal to $100 per
outstanding share of Preferred Stock. The equivalent figure was $2,865.38 at
March 31, 1995.
(b) VOTING RIGHTS: The Preferred Stock is entitled to two votes and the
Common Stock is entitled to one vote per share at all meetings of stockholders.
In the event of a default in payments of dividends on the Preferred Stock
equivalent to six quarterly dividends, the Preferred Stockholders are entitled,
voting separately as a class to the exclusion of Common Stockholders, to elect
two additional directors, such right to continue until all arrearages have been
paid and current Preferred Stock dividends are provided for. Notwithstanding any
provision of law requiring any action to be taken or authorized by the
affirmative vote of the holders of a designated portion of all the shares or of
the shares of each class, such action shall be effective if taken or authorized
by the affirmative vote of a majority of the aggregate number of the votes
entitled to vote thereon, except that a class vote of Preferred Stockholders is
also required to approve certain actions adversely affecting their rights. Any
change in the Corporation's fundamental policies may also be authorized by the
vote of 67% of the votes present at a meeting if the holders of a majority of
the aggregate number of votes entitled to vote are present or represented by
proxy.
Consistent with the requirements of Maryland law, the Corporation's Charter
provides that the affirmative vote of two-thirds of the aggregate number of
votes entitled to be cast thereon shall be necessary to authorize any of the
following actions: (i) the dissolution of the Corporation; (ii) a merger or
consolidation of the Corporation (in which the Corporation is not the surviving
corporation) with (a) an open-end investment company or (b) a closed-end
investment company, unless such closed-end investment company's Articles of
Incorporation require a two-thirds or greater proportion of the votes entitled
to be cast by such company's stock to approve the types of transactions covered
by clauses (i) through (iv) of this paragraph; (iii) the sale of all or
substantially all of the assets of the Corporation to any person (as such term
is defined in the 1940 Act); or (iv) any amendment of the Charter of this
Corporation which makes any class of the Corporation's stock a redeemable
security (as such term is defined in the 1940 Act) or reduces the two-thirds
vote required to authorize the actions listed in this paragraph. This could have
the effect of delaying, deferring or preventing changes in control of the
Corporation.
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(c) LIQUIDATION RIGHTS: In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, after payment to the
Preferred Stockholders of an amount equal to $50 per share plus dividends
accrued or in arrears, the Common Stockholders are entitled, to the exclusion of
the Preferred Stockholders, to share ratably in all the remaining assets of the
Corporation available for distribution to stockholders.
(d) OTHER PROVISIONS: Common Stockholders do not have preemptive,
subscription or conversion rights, and are not liable for further calls or
assessments. Upon consideration and determination made by the Board of Directors
of the Corporation that such amendment is in the best interests of the
Corporation and its Stockholders, the Corporation's By-Laws have been amended to
provide that, beginning in 1994, as Directors' terms expire, the Corporation's
Board of Directors (other than any directors who may be elected to represent
Preferred Stockholders as described above) will be classified as nearly as
possible into three equal classes with a maximum three year term so that the
term of one class of directors expires annually. Such classification provides
continuity of experience and stability of management while providing for the
election of a portion of the Board of Directors each year. Such classification
could have the effect of delaying, deferring or preventing changes in control of
the Corporation.
The Board of Directors may classify or reclassify any unissued stock of any
class with or without par value (including Preferred Stock and Common Stock)
into one or more classes of preference stock on a parity with, but not having
preference or priority over, the Preferred Stock by fixing or altering before
the issuance thereof the designations, preferences, voting powers, restrictions
and qualifications of, the fixed annual dividends on, the times and prices of
redemption, the terms of conversion, the number and/or par value of the shares
and other provisions of such stock to the full extent permitted by the laws of
Maryland and the Corporation's Charter. Stockholder approval of such action is
not required.
DESCRIPTION OF WARRANTS
The Corporation's Charter and Warrant certificates provide that each
Warrant represents the right during an unlimited time to purchase one share of
Common Stock at a price of $22.47 per share, subject to increase in the number
of shares purchasable and adjustment of the price payable pursuant to provisions
of the Charter requiring such adjustments whenever the Corporation issues any
shares of Common Stock at a price less than the Warrant purchase price in effect
immediately prior to issue. Each Warrant presently entitles the holder to
purchase 12.77 shares of Common Stock at $1.76 per share. There were 15,760
Warrants outstanding at March 31, 1995. Fractional shares of Common Stock are
not issued upon the exercise of Warrants. In lieu thereof, the Corporation
issues scrip certificates representing corresponding fractions of the right to
receive a full share of Common Stock if exchanged by the end of the second
calendar year following issuance or of the proceeds of the sale of a full share
if surrendered during the next four years thereafter.
COMPUTATION OF NET ASSET VALUE
Net asset value per share of Common Stock is determined by dividing the
current value of the assets of the Corporation less its liabilities and the
prior claim of the Preferred Stock by the total number of shares of Common Stock
outstanding. Securities owned by the Corporation for which market quotations are
readily available are valued at current market value or, in their absence, fair
value
14
<PAGE>
determined in accordance with procedures approved by the Board of Directors at
current market value. Securities traded on national exchanges are valued at the
last sales prices, or in their absence and in the case of over-the-counter
securities, a mean of bid and asked prices. 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
for which recent market quotations are not readily available are valued at fair
value determined in accordance with procedures approved by the Board of
Directors. Short-term holdings maturing in 60 days or less are generally valued
at amortized cost if their original maturity was 60 days or less. Short-term
holdings with more than 60 days remaining to maturity will be valued at current
market value until the 61st day prior to maturity, and will then be valued on an
amortized cost basis based on the value of such date unless the Board determines
that this amortized cost value does not represent fair market value.
All assets and liabilities initially expressed in foreign currencies will
be converted into U.S. dollars by a pricing service based upon the mean of the
bid and asked prices of such currencies against the U.S. dollar quoted by a
major bank which is a regular participant in the institutional foreign exchange
markets.
Net asset value of the Common Stock is determined daily as of the close of
the New York Stock Exchange (usually 4:00 p.m. New York City time) each day the
New York Stock Exchange is open for trading.
DIVIDEND POLICY AND TAXES
DIVIDENDS: Dividends are paid quarterly on the Preferred Stock and on the
Common Stock in amounts representing substantially all of the net investment
income earned each year. Payments on the Preferred Stock are in a fixed amount,
but payments on the Common Stock vary in amount, depending on investment income
received and expenses of operation. Substantially all of any taxable net gain
realized on investments is paid to Common Stockholders at least annually in
accordance with requirements under the Internal Revenue Code of 1986, as amended
('the Code'), and other applicable statutory and regulatory requirements. Unless
Seligman Data Corp. is otherwise instructed by a Common Stockholder, dividends
on the Common Stock are paid in cash and capital gain distributions are paid in
book shares of Common Stock which are entered in a stockholder's Tri-Continental
account as 'book credits.' Long-term gain distributions ordinarily are paid in
shares of Common Stock, or, at the stockholder's option, 75% in book shares and
25% in cash, or, in the alternative, 100% in cash. Shares distributed in payment
of gain distributions are valued at market price or at net asset value,
whichever is lower, on the valuation date. Dividends and capital gain
distributions will generally be taxable to stockholders in the year in which
they are declared by the Corporation if paid before February 1 of the following
year. Distributions or dividends received by a stockholder will have the effect
of reducing the net asset value of the shares of the Corporation by the amount
of such distributions. If the net asset value of shares is reduced below a
stockholder's cost by a distribution, the distribution will be taxable as
described below even though it is in effect a return of capital.
TAXES: The Corporation intends to continue to qualify and elect to be
treated as a regulated investment company under Subchapter M of the Code. As a
regulated investment company, the Corporation will generally be exempt from
Federal income taxes on net investment income and capital gains that it
distributes to stockholders provided that at least 90% of its investment income
and net short-term capital gains are distributed to stockholders each year.
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<PAGE>
Dividends on Common or Preferred Stock representing net investment income
and distributions of net short-term capital gains are taxable to stockholders as
ordinary income, whether received in cash or invested in additional shares and,
to the extent designated as derived from the Corporation's dividend income that
would be eligible for the dividends received deduction if the Corporation 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 gain (i.e., the excess of net long-term capital
gains over any net short-term capital losses) are taxable as long-term capital
gain, whether received in cash or invested in additional shares, regardless of
how long shares have been held by the stockholders, but such distributions are
not eligible for the dividends received deduction allowed to corporate
stockholders. Individual stockholders will be subject to Federal income tax on
net capital gains at a maximum rate of 28%. Net capital gain of a corporate
stockholder is taxed at the same rate as ordinary income. Assuming current
investment policies remain in effect, taxable income derived from the holding,
sale or exchange of Common or Preferred Stock of the Corporation will not be
adjusted or increased in calculating the alternative minimum taxable income
derived from such holding, sale or exchange.
Any gain or loss realized upon a sale or redemption of Common or Preferred
Stock by a stockholder 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. 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. No loss will be allowed
on the sale or other disposition 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 (such as through the Automatic Dividend
Investment and Cash Purchase Plan), or enters into a contract or option to
acquire, securities that are substantially identical to the shares of the Fund.
The Corporation will generally be subject to an excise tax of 4% on the
amount by which distributions to stockholders fall short of certain required
levels, such that income or gain is not taxable to stockholders in the calendar
year in which it was earned by the Corporation. Furthermore, dividends declared
in October, November or December payable to stockholders 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 Corporation and received by each stockholder in
December. Under this rule, therefore, stockholders may be taxed in one year on
dividends or distributions actually received in January of the following year.
The tax treatment of the Corporation and of stockholders under the tax laws
of the various states may differ from the Federal tax treatment. Stockholders
are urged to consult their own tax advisers regarding specific questions as to
Federal, state or local taxes.
THE CORPORATION IS REQUIRED TO WITHHOLD AND REMIT TO THE U.S. TREASURY 31%
OF TAXABLE DIVIDENDS AND OTHER REPORTABLE PAYMENTS PAID ON AN ACCOUNT IF THE
HOLDER OF THE ACCOUNT PROVIDES THE CORPORATION WITH EITHER AN INCORRECT TAXPAYER
IDENTIFICATION NUMBER OR NO NUMBER AT ALL OR FAILS TO CERTIFY THAT THE
STOCKHOLDER IS NOT SUBJECT TO SUCH WITHHOLDING. STOCKHOLDERS SHOULD BE AWARE
THAT, UNDER REGULATIONS PROMULGATED BY THE INTERNAL REVENUE SERVICE, THE
CORPORATION MAY BE FINED $50 ANNUALLY FOR EACH ACCOUNT FOR WHICH A CERTIFIED
TAXPAYER IDENTIFICATION NUMBER IS NOT PROVIDED. THE CORPORATION MAY CHARGE A
SERVICE FEE OF UP TO $50 FOR ACCOUNTS NOT HAVING A CERTIFIED TAXPAYER
IDENTIFICATION NUMBER. CERTIFICATES WILL NOT BE ISSUED UNLESS AN ACCOUNT IS
CERTIFIED.
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DESCRIPTION OF INVESTMENT PLANS AND OTHER SERVICES
AUTOMATIC DIVIDEND INVESTMENT AND CASH PURCHASE PLAN
The Automatic Dividend Investment and Cash Purchase Plan is available for
any Common stockholder who wishes to purchase additional shares of the
Corporation's Common Stock with dividends or other cash payments on shares
owned, with cash dividends paid by other corporations in which he owns stock or
with cash funds. Details of the services offered under the Plan are given in the
Authorization Form appearing in this Prospectus. Under the Plan, stockholders
appoint the Corporation as their purchase agent to receive or invest such
dividends and cash funds forwarded by stockholders for their accounts in
additional shares of the Corporation's Common Stock (after deducting a service
charge), as described under 'Method of Purchase.' Funds forwarded by
stockholders under the Plan should be made payable to Tri-Continental
Corporation and mailed to Tri-Continental Corporation, P.O. Box 3936, New York,
NY 10008-3936. Checks for investment must be in U.S. dollars drawn on a domestic
bank. Stockholders should direct all correspondence concerning the Plan to
Seligman Data Corp., 100 Park Avenue, New York, NY 10017. At present, a service
fee of up to a maximum of $2.00 will be charged for each cash purchase
transaction. There is no charge for Automatic Dividend Investment. As of March
31, 1995, 25,746 stockholders, owning 26,804,723 shares of Common Stock, were
using the Plan. A stockholder may choose one or more of the services under the
Plan and is free to change his choices (or terminate his participation) at any
time by notifying Seligman Data Corp. in writing. The Plan may be amended or
terminated by written notice to Planholders.
AUTOMATIC CHECK SERVICE
The Automatic Check Service enables an Automatic Dividend Investment and
Cash Purchase Planholder to authorize checks to be drawn on the stockholder's
regular checking account at regular intervals for fixed amounts to be invested
in additional shares of Common Stock for his account. An Authorization Form to
be used to start the Automatic Check Service is included in this Prospectus.
SHARE KEEPING SERVICE
Any stockholder may send certificates for shares of the Corporation's
Common Stock to Seligman Data Corp. to be placed in the stockholder's account.
Certificates should be sent to Seligman Data Corp., 100 Park Avenue, New York,
NY 10017, with a letter requesting that they be placed in the account. The
stockholder should not sign the certificates and they should be sent by
registered mail. When a stockholder's certificates are received, the shares will
be entered in the stockholder's Tri-Continental account as 'book credits' and
shown on the Statement of Account the stockholder receives from Seligman Data
Corp. Stockholders using the Share Keeping Service should keep in mind that they
must have a stock certificate for delivery to a broker if they wish to sell
shares. A certificate will be issued on the stockholder's written request to
Seligman Data Corp., usually within two business days of the receipt of the
request, and sent to the stockholder. The time it takes for a letter of request
to arrive and for a certificate to be delivered by mail should be taken into
consideration.
17
<PAGE>
TAX-DEFERRED RETIREMENT PLANS
Shares of the Corporation may be purchased for all types of tax-deferred
retirement plans. The Corporation makes available plans, plan forms and custody
agreements for:
-- Individual Retirement Accounts (IRAs);
-- Simplified Employee Pension Plans (SEPs);
-- Section 401(k) Plans for corporations and their employees; and
-- Pension and Profit Sharing Plans for sole proprietorships,
partnerships and corporations.
These types of plans may be established only upon receipt of a written
application form. For more information, write Pension Plan Services, Seligman
Data Corp., 100 Park Avenue, New York, NY 10017. You may telephone toll-free by
dialing (800) 445-1777 from all continental United States.
Investors Fiduciary Trust Company ('IFTC') acts as trustee and custodian
and performs other related services with respect to the Plans.
J. & W. SELIGMAN & CO. INCORPORATED 401(K) SALARY REDUCTION MATCHED ACCUMULATION
PLAN
J. & W. Seligman & Co. Incorporated has a 401(k) Salary Reduction Matched
Accumulation Plan ('401(k) Plan') which provides that, through payroll
deductions which may be combined with matching contributions and through any
profit sharing distribution made by the Manager to the 401(k) Plan, eligible
employees of the Manager, Seligman Financial Services, Inc. and Seligman
Services, Inc. may designate that the payroll deductions and contributions made
by the Manager and invested by the Plan trustee, be invested in certain
investment companies for which the Manager serves as investment adviser. One
such fund consists of Common Stock of the Corporation purchased by the trustee
as described under 'Method of Purchase.'
SELIGMAN DATA CORP. EMPLOYEES' THRIFT PLAN
Seligman Data Corp. has an Employees' Thrift Plan ('Thrift Plan') which
provides a systematic means by which savings, through payroll deductions, of
eligible employees of Seligman Data Corp. may be combined with matching
contributions made by the company and invested by the Plan trustee, in certain
investment companies for which the Manager serves as investment adviser, as
designated by the employee. One such fund consists of Common Stock of the
Corporation purchased by the trustee as described under 'Method of Purchase.'
METHOD OF PURCHASE
Purchases will be made by the Corporation from time to time on the New York
Stock Exchange or elsewhere to satisfy dividend and cash purchase investments
under the Automatic Dividend Investment and Cash Purchase Plan, tax-deferred
retirement plans, and the investment plans noted above. Purchases will be
suspended on any day when the closing price (or closing bid price if there were
no sales) of the Common Stock on the New York Stock Exchange on the preceding
trading day was higher than the net asset value per share (without adjustment
for the exercise of Warrants remaining outstanding). If on the dividend payable
date or the date shares are issuable to stockholders making Cash Purchase
investments under the Plan (the 'Issuance Date'), shares previously purchased by
the
18
<PAGE>
Corporation are insufficient to satisfy dividend or Cash Purchase investments
and on the last trading day immediately preceding the dividend payable date or
the Issuance Date the closing sale or bid price of the Common Stock is lower
than or the same as the net asset value per share, the Corporation will continue
to purchase shares until a number of shares sufficient to cover all investments
by stockholders has been purchased or the closing sale or bid price of the
Common Stock becomes higher than the net asset value, in which case the
Corporation will issue the necessary additional shares. If on the last trading
date immediately preceding the dividend payable date or Issuance Date, the
closing sale or bid price of the Common Stock was higher than the net asset
value per share, and if shares of the Common Stock previously purchased on the
New York Stock Exchange or elsewhere are insufficient to satisfy dividend or
Cash Purchase investments, the Corporation will issue the necessary additional
shares from authorized but unissued shares of the Common Stock.
Shares will be issued at a price equal to the lower of (i) the closing sale
or bid price, plus commission, of the Common Stock on the New York Stock
Exchange on the last trading day preceding the dividend payable date or Issuance
Date or (ii) the greater of the net asset value per share of the Common Stock on
such trading day (without adjustment for the exercise of Warrants remaining
outstanding) and 95% of the closing sale or bid price of the Common Stock on the
New York Stock Exchange on such trading day. In the past, the Common Stock
ordinarily has been priced in the market at less than net asset value per share.
The Corporation may change the price at which shares of its Common Stock may be
purchased from it for the Plans, if the Board of Directors determines it to be
desirable, but the Board may not authorize the issuance of shares of Common
Stock at a price less than net asset value without prior specific approval of
stockholders or of the Securities and Exchange Commission.
The net proceeds to the Corporation from the sale of any shares of Common
Stock to the Plan will be added to its general funds and will be available for
additional investments and general corporate purposes. The Manager anticipates
that investment of any proceeds, in accordance with the Corporation's investment
objective and policies, will take up to thirty days from their receipt by the
Corporation, depending on market conditions and the availability of appropriate
securities, but in no event will such investment take longer than six months.
Pending such investment in accordance with the Corporation's objectives and
policies, the proceeds will be held in U.S. Government Securities (which term
includes obligations of the United States Government, its agencies or
instrumentalities) and other short-term money market instruments.
Stockholders participating in the Automatic Dividend Investment and Cash
Purchase Plan who wish to terminate their participation in the Plan and whose
shares are held under the Plan in book credit form may choose to receive a
certificate for all or a part of their shares or to have all or a part of their
shares sold for them by the Corporation and to retain unsold shares in book
credit form or receive a certificate for any shares not sold. Instructions must
be signed by all registered stockholders and should be sent to Seligman Data
Corp., 100 Park Avenue, New York, NY 10017. Stockholders who elect to have
shares sold will receive the proceeds from the sale, less any brokerage
commissions. Only participants whose shares are held in book credit form may
elect upon termination of their participation in the Plan to have shares sold in
the above manner. Whenever the value of the shares being sold is $50,000 or
more, or the proceeds are to be paid or mailed to an address or payee different
from that on our records, the signature of all stockholders must be guaranteed
by an eligible financial institution including, but not limited to, the
following: banks, trust companies, credit unions, securities brokers and
dealers, savings and loan associations and participants in the Securities
Transfer Association Medallion
19
<PAGE>
Program (STAMP), the Stock Exchanges Medallion Program ('SEMP') and the New York
Stock Exchange Medallion Signature Program ('MSP'). Notarization by a notary
public is not an acceptable signature guarantee. The Corporation reserves the
right to reject a signature guarantee where it is believed that the Corporation
will be placed at risk by accepting such guarantee.
AUTOMATIC CASH WITHDRAWAL PLAN
This Plan is available for stockholders who wish to receive fixed payments
from their investment in the Common Stock in any amount at specified regular
intervals. A Plan may be started with shares of the Corporation's Common Stock
with a market value of $5,000 or more. Shares must be held in the stockholder's
account as book credits. Seligman Data Corp. acts for stockholders, makes
payments to them in specified amounts on the 15th day of each month designated,
and maintains their accounts. There is a charge by the agent of $1.00 per
withdrawal payment for this service, which charge may be changed from time to
time.
Payments under the Withdrawal Plan will be made by selling exactly enough
full and fractional shares of Common Stock to cover the amount of designated
withdrawal. Sales may be made on the New York Stock Exchange, to the agent or a
trustee for one of the other Plans or elsewhere. Payments from sales of shares
will reduce the amount of capital at work and dividend earning ability, and
ultimately may liquidate the investment. Sales of shares may result in gain or
loss for income tax purposes. Withdrawals under this Plan or any similar Plan of
any other investment company, concurrent with purchases of shares of the Common
Stock or of shares of any other investment company, will ordinarily be
disadvantageous to the Planholder because of the payment of duplicative
commission or sales loads.
STOCKHOLDER INFORMATION
Seligman Data Corp. maintains books and records for all of the Plans, and
confirms transactions to Planholders. To insure prompt delivery of checks,
account statements and other information notify Seligman Data Corp. immediately,
in writing, of any address changes. Stockholders will be sent reports quarterly
regarding the Corporation. General information about the Corporation, may be
requested by writing the Corporate Communications/Investor Relations Department,
J. & W. Seligman & Co. Incorporated, 100 Park Avenue, New York, NY 10017 or by
telephoning the Corporate Communications/Investor Relations Department toll-free
by dialing (800) 221-7844 from all continental United States, except New York or
(212) 850-1864 in New York State and in the greater New York City area.
Information about a stockholder account (other than a retirement plan account),
may be requested by writing Stockholder Services, Seligman Data Corp., at the
same address or by toll-free telephone by dialing (800) 874-1092 from all
continental United States. For information about a retirement account, call
Pension Plan Services toll-free by dialing (800) 445-1777 or write Pension Plan
Services, Seligman Data Corp. at the same address. Seligman Data Corp. may be
telephoned Monday through Friday (except holidays) between the hours of 8:30
a.m. and 6:00 p.m. New York City time, and calls will be answered by service
representatives.
24 HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING (800) 622-4597 ON A
TOUCHTONE PHONE, WHICH PROVIDES INSTANT ACCESS TO PRICE, ACCOUNT BALANCE, MOST
RECENT TRANSACTION AND OTHER INFORMATION. IN ADDITION, ACCOUNT STATEMENTS AND
FORM 1099-DIVS MAY BE ORDERED.
20
<PAGE>
ISSUANCE OF SHARES IN CONNECTION WITH ACQUISITIONS
The Corporation may issue shares of its Common Stock in exchange for the
assets of another investing company in transactions in which the number of
shares of Common Stock of the Corporation to be delivered will be generally
determined by dividing the current value of the seller's assets by the current
per share net asset value or market price on the New York Stock Exchange of the
Common Stock of the Corporation, or by an intermediate amount. In such
acquisitions, the number of shares of the Corporation's Common Stock to be
issued will not be determined on the basis of the market price of such Common
Stock if such price is lower than its net asset value per share, except pursuant
to an appropriate order of the Securities and Exchange Commission or approval by
stockholders of the Corporation, as required by law. The Corporation is not
presently seeking to acquire the assets of any investing company, but it may
acquire the assets of companies from time to time in the future.
Some or all of the stock so issued may be sold from time to time by the
recipients or their stockholders through brokers in ordinary transactions on
stock exchanges at current market prices. The Corporation has been advised that
such sellers may be deemed to be underwriters as that term is defined in the
1933 Act.
ADDITIONAL INFORMATION
During 1994, the Corporation had transactions in the ordinary course of
business with firms and companies of which one or more directors and officers
was a director and/or officer of the Corporation and it is expected that the
Corporation will continue to have transactions of such nature during the current
year.
21
<PAGE>
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
The table of contents of the SAI is as follows:
TABLE OF CONTENTS
<TABLE>
<S> <C>
Certain Transactions of the Corporation...................................................................... 2
Additional Investment Objectives and Policies................................................................ 2
Directors and Officers....................................................................................... 4
Management................................................................................................... 9
Experts...................................................................................................... 9
Custodian, Stockholder Service and Dividend Paying Agent..................................................... 10
Brokerage Commissions........................................................................................ 10
Incorporation of Financial Statements by Reference........................................................... 11
Independent Auditors' Report on Financial Highlights --
Senior Securities -- $2.50 Cumulative Preferred Stock...................................................... 12
Appendix..................................................................................................... 13
</TABLE>
22
<PAGE>
<TABLE>
<S> <C>
[LOGO] AUTHORIZATION FORM
an investment you can live with FOR
To: Seligman Data Corp. AUTOMATIC DIVIDEND INVESTMENT
P.O. Box 3936 AND CASH PURCHASE PLAN
New York, New York 10008-3936 AUTOMATIC DIVIDEND INVESTMENT
AUTOMATIC INVESTMENT OF OTHER
CORPORATIONS' DIVIDENDS
CASH PURCHASE PLAN
AUTOMATIC CHECK SERVICE
Date ....................................
</TABLE>
Gentlemen:
I own shares of Tri-Continental Corporation Common Sock registered as shown
below.
ACCOUNT REGISTRATION
<TABLE>
<S> <C>
Stockholder's Name (print or type) Stockholder's Signature*
Co-Holder's Name Co-Holder's Signature*
Address (street and number) Taxpayer Identification Number
City State Zip Code Stockholder Account Number, if known
</TABLE>
* If shares are held or to be held in more than one name, all must sign, and
plural pronouns will be implied in the text. In the case of co-holders, a
joint tenancy with right of survivorship will be presumed unless otherwise
specified.
Under penalties of perjury I certify that the number shown on this form is my
correct Taxpayer Identification Number (Social Security Number) and that I am
not subject to backup withholding either because I have not been notified that I
am subject to backup withholding as a result of failure to report all interest
or dividends, or the Internal Revenue Service has notified me that I am no
longer subject to backup withholding. I certify that to my legal capacity to
purchase or sell shares of the Corporation for my own Account, or for the
Account of the organization named above. I have received a current Prospectus of
the Corporation and appoint Seligman Data Corp. as my agent to act in accordance
with my instructions herein.
<TABLE>
<S> <C>
- ------------------ ------------------------------------------------------------------------------------------
Date Stockholder's Signature
</TABLE>
I have read the Terms and Conditions of the Automatic Dividend Investment
and Cash Purchase Plan and the current Prospectus, a copy of which I have
received, and I wish to establish a Plan to use the Services checked below:
SERVICE(S) DESIRED
[ ] AUTOMATIC INVESTMENT OF TRI-CONTINENTAL DIVIDENDS
I wish to have my quarterly dividends invested in additional shares,
and distributions from gains paid as follows:
[ ] Credited to my account in additional full and fractional shares.
[ ] Credited 75% to my account in shares and 25% paid to me in cash.
[ ] AUTOMATIC INVESTMENT OF OTHER CORPORATION'S DIVIDENDS
I intend to give orders for the payment of cash dividends from other
corporations to be invested in shares of Tri-Continental Common Stock
for my account.
Note: Checks in payment of dividends from other corporations should
indicate your name and Tri-Continental Account Number. The checks
should be payable to the order of Tri-Continental Corporation and
mailed to Seligman Data Corp., P.O. Box 3936, New York, N.Y.
10008-3936.
[ ] CASH PURCHASES
I intend to send funds from time to time to be invested in shares of
Tri-Continental Common Stock for my account.
Note: Your checks should indicate your name and Tri-Continental Account
Number. Make all checks payable to Tri-Continental Corporation and mail
to Seligman Data Corp., P.O. Box 3936, New York, N.Y. 10008-3936.
[ ] AUTOMATIC CHECK SERVICE
I have completed an Authorization Form to have pre-authorized checks
drawn on my regular checking account at regular intervals for
investment in shares of Tri-Continental Common Stock.
5/95
23
<PAGE>
<TABLE>
<S> <C>
[LOGO] AUTHORIZATION FORM
an investment you can live with FOR
AUTOMATIC CHECK SERVICE
</TABLE>
To start your Automatic Check Service, fill out the form and forward it with an
unsigned bank check from your regular checking account (marked 'void') to:
Seligman Data Corp.
P.O. Box 3936
New York, New York 10008-3936
Date ......................
Gentlemen:
I own shares of Tri-Continental Corporation Common Stock, registered as
shown below, which are entered in the Automatic Dividend Investment and Cash
Purchase Plan.
1. Stockholder Account Number (if known)________________________________________
2. AUTOMATIC CHECK SERVICE
Please arrange with my bank to draw pre-authorized checks on my regular
checking account and invest $___________________________ in shares of
Tri-Continental Common Stock every:
[ ] month [ ] 3 months
I have completed the 'Bank Authorization to Honor Pre-Authorized Checks'
which appears below and have enclosed one of my bank checks marked 'void.'
I understand that my checks will be invested on the fifth day of the month
and that I must remember to deduct the amount of my investment as it is
made from my checking account balance.
BANK AUTHORIZATION TO HONOR PRE-AUTHORIZED CHECKS
To:_____________________________________________________________________________
(Name of Bank)
________________________________________________________________________________
(Address of Bank or Branch, Street, City, State and Zip)
Please honor pre-authorized checks drawn on my account by Seligman Data Corp.,
100 Park Avenue, New York, NY 10017, to the order of Tri-Continental
Corporation, and charge them to my checking account. Your authority to do so
shall continue until you receive written notice from me revoking it. You may
terminate your participation in this arrangement at any time by written notice
to me. I agree that your rights with respect to each pre-authorized check shall
be the same as if it were a check drawn and signed by me. I further agree that
should any such check be dishonored, with or without cause, intentionally or
inadvertently, you shall be held under no liability whatsoever.
<TABLE>
<S> <C>
Checking Account No.
Name(s) of Depositor(s) -- Please Print Signature(s) of Depositor(s) -- As Carried by Bank
Address (Street) City State Zip Code
</TABLE>
5/95
24
<PAGE>
TERMS AND CONDITIONS
The Automatic Dividend Investment and Cash Purchase Plan provides
Tri-Continental Common Stockholders with four ways to add to their investments:
1) with Tri-Continental dividends or other cash payments, 2) with cash dividends
payable to them by other corporations, 3) with cash sent in, in any amount at
any time, and 4) with cash provided by pre-authorized checks through the
Automatic Check Service. A Planholder may use any or all of these Services,
subject to the following terms and conditions:
1. Seligman Data Corp. ('SDC'), as plan service agent, will maintain
accounts and conform to Planholders, as soon as practicable after each
investment, the number of shares of Common Stock acquired and credited to the
accounts and the cost. Tri-Continental Corporation (the 'Corporation'), as
purchase agent, will purchase shares for Planholders. All checks for dividends
payable by other corporations or for cash purchase payments sent by Planholders
for investment in additional shares of Tri-Continental Common Stock should be
drawn to the order of Tri-Continental Corporation and mailed to Seligman Data
Corp., P.O. Box 3936, New York, NY 10008-3936.
2. Funds received by the Corporation for a Planholder will be combined with
funds of other Planholders and those funds may be combined with funds available
under the plans for the purchase of Tri-Continental Common Stock in order to
minimize brokerage commissions when paid. Shares will be purchased in accordance
with the current Prospectus. Dividends from other corporations and purchase cash
received from Planholders or through the Automatic Check Service will be
invested at least once each 30 days.
3. The cost of shares acquired for each Plan will be the average cost,
including brokerage commissions and any other costs of acquisition, of all
shares acquired for all Planholders in connection with a particular investment.
4. No stock certificates will be delivered for shares acquired unless the
Plan account is terminated or the Planholder requests their delivery by writing
to SDC. The shares acquired will be held in each Planholder's account as book
credits.
5. Certificates held by a Planholder, or subsequently received, may be sent
to SDC for credit to a Plan account. A certificate for any full shares held in a
Plan account will be issued at a Planholder's request. The time required to
obtain a certificate to sell through a broker, or for other purposes, will be
that need to send a written request to SDC to withdraw the certificate (normally
two business days) and to mail the certificate to the Planholder through the
U.S. Postal Service.
6. A maximum service charge of $2.00 will be deducted before each
investment is made for a Plan account. There is no charge for Automatic Dividend
Investment.
7. Applications for the Automatic Check Service are subject to acceptance
by the Planholder's bank and SDC. SDC will prepare Automatic Check Service
checks with the same magnetic ink numbers that are on a Planholder's check and
will arrange with the Planholder's bank to start the Service in accordance with
the Planholder's instructions. A minimum of 30 days from the date of receipt of
an application by SDC is required to contact the bank and initiate the Service.
If for any reason the bank is unable to honor the pre-authorized check request,
the Planholder will be notified promptly.
Shares with a market value of at least two times the amount of the
authorized checks must be held as book credits for the Planholder's account by
SDC. If any check is honored or if the value of shares held by SDC in an account
falls below the required minimum, the Service will be suspended. The Service
will not be reinstated until requested in writing by the Planholder including an
indication that the cause of the interruption has been corrected.
If a Planholder's check is not honored by his or her bank at any time, SDC
is authorized to sell exactly enough full and fractional shares from the
Planholder's account to equal the amount of the dishonored check.
8. A Planholder or SDC may terminate a Plan account at any time upon notice
in writing before the record date of a dividend or distribution by
Tri-Continental. A Plan account will terminate automatically if the Planholder
sells or transfers all of the shares in the Plan account. If a Plan account is
terminated, a certificate for the full shares held may be issued and sent to the
Planholder, and any fractional shares may be liquidated at the Planholder's
request. Terminating Planholders may elect to have all or part of their shares
sold by the Corporation, if their shares are held in book credit form. If a Plan
account is terminated between the record and payment dates of a dividend, the
payment will be made in cash.
9. In acting under this Plan, the Corporation and SDC will be liable only
for willful misfeasance or gross negligence.
10. A Planholder may adopt or suspend one or more of the Plan Services by
sending a revised Authorization Form or notice in writing to SDC.
11. All additional shares registered in a Planholder's name which are
acquired under one or more of the Plan Services or elsewhere will participate
automatically in each of the Plan services elected.
5/95
25
<PAGE>
- ------------------------------------------------------
- ------------------------------------------------------
[LOGO]
AN INVESTMENT YOU CAN LIVE WITH
100 Park Avenue
New York, New York 10017
INVESTMENT MANAGER
J. & W. Seligman & Co.
Incorporated
100 Park Avenue
New York, New York 10017
SUBADVISER
Seligman Henderson Co.
100 Park Avenue
New York, New York 10017
STOCKHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, New York 10017
PORTFOLIO SECURITIES CUSTODIAN
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
GENERAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
---------------
Listed on the
New York Stock Exchange
- ------------------------------------------------------
- ------------------------------------------------------
CETRI 1
- ------------------------------------------------------
- ------------------------------------------------------
[LOGO]
AN INVESTMENT YOU CAN LIVE WITH
A MANAGEMENT TYPE
DIVERSIFIED, CLOSED-END
INVESTMENT COMPANY
---------------
COMMON STOCK
($.50 PAR VALUE)
---------------
PROSPECTUS
MAY 1, 1995
26
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1995
TRI-CONTINENTAL CORPORATION
100 Park Avenue
New York, New York 10017
New York City Telephone: (212) 850-1864
Toll-Free Telephone: (800) 874-1092 all continental United States
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the Prospectus dated May 1, 1995,
and should be read in conjunction therewith. A copy of the Prospectus may be
obtained from Tri-Continental Corporation ("Corporation") at 100 Park Avenue,
New York, New York 10017.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission (the "Commission"). These securities
may not be sold nor any offers to buy be accepted prior to the time the
registration statement becomes effective.
TABLE OF CONTENTS
Page
Certain Transactions Of The Corporation...........................2
See "The Corporation" in the Prospectus
Additional Investment Objectives And
Policies.........................................................2
See "Investment and Other Policies" in the
Prospectus
Directors And Officers............................................4
Management........................................................9
See "Management of the Corporation" in the
Prospectus
Experts...........................................................9
Custodian, Stockholder Service And
Dividend Paying Agent..........................................10
Brokerage Commissions............................................10
Incorporation Of Financial Statements By
Reference......................................................11
Independent Auditors' Report on
Financial Highlights - Senior Securities -
$2.50 Cumulative Preferred Stock...............................12
Appendix.........................................................13
CETRI1A
-1-
<PAGE>
CERTAIN TRANSACTIONS OF THE CORPORATION
On October 2, 1992, the Corporation distributed to stockholders of record on
that date a transferable Right for each of the 63,997,099 shares of Common Stock
then outstanding, entitling each stockholder to acquire one share of Common
Stock for each seven Rights held at a price of $21.00 per share. The
subscription period for exercising the Rights terminated on October 30, 1992 and
all shares offered were fully subscribed. J. & W. Seligman & Co. Incorporated,
the Corporation's Investment Manager (the "Manager") agreed to waive a portion
of its 1993 Fee Amount equal to one-third of the Corporation's expenses incurred
in connection with the Rights Offering.
ADDITIONAL INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the Corporation are set forth in
the Prospectus. Certain additional investment information is set forth below.
Defined terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Prospectus.
The Corporation's stated fundamental policies, which may not be changed
without a vote of stockholders are listed below; within the limits of these
fundamental policies, the management has reserved freedom of action. The
Corporation:
(1) may issue senior securities such as bonds, notes or other evidences of
indebtedness if immediately after issuance the net assets of the Corporation
provide 300% coverage of the aggregate principal amount of all bonds, notes or
other evidences of indebtedness and that amount does not exceed 150% of the
capital and surplus of the Corporation;
(2) may issue senior equity securities on a parity with, but not having
preference or priority over, the Preferred Stock if immediately after issuance
its net assets are equal to at least 200% of the aggregate amount (exclusive of
any dividends accrued or in arrears) to which all shares of the Preferred Stock,
then outstanding, shall be entitled as a preference over the Common Stock in the
event of voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(3) may borrow money for substantially the same purposes as it may issue
senior debt securities, subject to the same restrictions and to any applicable
limitations prescribed by law;
(4) may engage in the business of underwriting securities either directly or
through majority-owned subsidiaries subject to any applicable restrictions and
limitations prescribed by law;
(5) does not intend to concentrate its assets in any one industry although
it may from time to time invest up to 25% of the value of its assets, taken at
market value, in a single industry;
(6) may not, with limited exceptions, purchase and sell real estate directly
but may do so through majority-owned subsidiaries, so long as its real estate
investments do not exceed 10% of the value of the Corporation's total assets;
(7) may not purchase or sell commodities or commodity contracts; and
(8) may make money loans (subject to restrictions imposed by law and by
charter) (a) only to its subsidiaries, (b) as incidents to its business
transactions or (c) for other purposes. It may lend its portfolio securities to
brokers or dealers in corporate or government securities, banks or other
recognized institutional borrowers of securities subject to any applicable
requirements of a national securities exchange or of a governmental regulatory
body against collateral consisting of cash or direct obligations of the United
States, maintained on a current basis, so long as all such loans do not exceed
10% of the value of total assets, and it may make loans represented by
repurchase agreements, as described in the Prospectus, so long as such loans do
not exceed 10% of the value of total assets.
When securities are loaned, the Corporation receives from the borrower the
equivalent of dividends or interest paid by the issuer of securities on loan
and, at the same time, makes short-term investments with the cash collateral and
retains the interest earned, after payment to the borrower or placing broker of
a negotiated portion of such interest, or receives from the borrower an agreed
upon rate of interest in the case of loans collateralized by direct obligations
of the United States. The Corporation does not have the right to vote securities
on loan, but would expect to terminate the loan and regain the right to vote if
that were considered important with respect to the investment.
-2-
<PAGE>
During its last three fiscal years, the Corporation did not: (a) issue
senior securities; (b) borrow any money; (c) underwrite securities; (d)
concentrate investments in particular industries or groups of industries; (e)
purchase or sell real estate, commodities, or commodity contracts; or (f) make
money loans or lend portfolio securities.
In order to take advantage of opportunities that may be provided by debt
instruments of foreign issuers, the Corporation may from time to time invest up
to 3% of its assets in debt securities issued or guaranteed by a foreign
government or any of its political subdivisions, authorities, agencies or
instrumentalities and in related forward contracts. The Manager will determine
the percentage of assets invested in securities of a particular country or
denominated in a particular currency in accordance with its assessment of the
relative yield and appreciation potential of such securities and the
relationship of a country's currency to the U.S. dollar. Currently, the
Corporation will invest in securities denominated in foreign currencies or U.S.
dollars of issuers located in the following countries: Australia, Austria,
Belgium, Canada, Denmark, France, Germany, Hong Kong, Italy, Japan, Malaysia,
Mexico, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden,
Switzerland, Thailand and the United Kingdom. An issuer of debt securities
purchased by the Corporation may be domiciled in a country other than the
country in whose currency the instrument is denominated. The Corporation may
also invest in debt securities denominated in the European Currency Unit
("ECU"), which is a "basket" consisting of specified amounts of the currencies
of certain of the economic member states of the European Community.
The Corporation's returns on foreign currency denominated debt instruments
can be adversely affected by changes in the relationship between the U.S. dollar
and foreign currencies. The Corporation may engage in currency exchange
transactions to protect against uncertainty in the level of future exchange
rates in connection with hedging and other non-speculative strategies involving
specific settlement transactions or portfolio positions. The Corporation will
conduct its currency exchange transactions either on a spot (i.e., cash) basis
at the rate prevailing in the currency market or through forward contracts.
Rights and Warrants. The Corporation may not invest in rights and warrants if,
at the time of acquisition, the investment in rights and warrants would exceed
5% of the Corporation's net assets, valued at the lower of cost or market. In
addition, no more than 2% of net assets may be invested in warrants not listed
on the New York or American Stock Exchanges. For purposes of this restriction,
warrants acquired by the Corporation in units or attached to securities may be
deemed to have been purchased without cost.
Foreign Currency Transactions. A forward foreign currency exchange contract is
an agreement to purchase or sell a specific currency at a future date and at a
price set at the time the contract is entered into. The Corporation 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.
The Corporation 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 Corporation's portfolio securities denominated in such foreign
currency. Under normal circumstances, the portfolio manager will limit forward
currency contracts to not greater than 75% of the Corporation's portfolio
position in any one country as of the date the contract is entered into. This
limitation will be measured at the point the hedging transaction is entered into
by the Corporation. Under extraordinary circumstances, the Subadviser may enter
into forward currency contracts in excess of 75% of the Corporation's portfolio
position in any one country as of the date the contract is entered into. The
precise matching of the forward contract amounts and the value of securities
involved will not generally be possible since the future value of such
securities in foreign currencies will change as a consequence of market
involvement in the value of those securities between the date the forward
contract is entered into and the date it matures. The projection of short-term
currency market movement is extremely difficult, and the successful execution of
a short-term hedging strategy is highly uncertain. Under certain circumstances,
the Corporation may commit up to the entire value of its assets which are
denominated in foreign currencies to the consummation of these contracts. The
Subadviser will consider the effect a substantial commitment of its assets to
forward contracts would have on the investment program of the Corporation and
its ability to purchase additional securities.
Except as set forth above and immediately below, the Corporation will also
not enter into such forward contracts or maintain a net exposure to such
contracts where the consummation of the contracts would oblige the Corporation
to deliver an amount of foreign currency in excess of the value of the
Corporation's portfolio securities or other assets denominated in that currency.
The Corporation, in order to avoid excess transactions and transaction costs,
may nonetheless maintain a net exposure
-3-
<PAGE>
to forward contracts in excess of the value of the Corporation's portfolio
securities or other assets denominated in that currency provided the excess
amount is "covered" by cash or liquid, high-grade debt securities, denominated
in any currency, at least equal at all times to the amount of such excess. Under
normal circumstances, consideration of the prospect for currency parties will be
incorporated into the longer term investment decisions made with regard to
overall diversification strategies. However, the Subadviser believes that it is
important to have the flexibility to enter into such forward contracts when it
determines that the best interests of the Corporation will be served.
At the maturity of a forward contract, the Corporation may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of the forward contract.
Accordingly, it may be necessary for the Corporation 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
Corporation is obligated to deliver and if a decision is made to sell the
security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received upon
the sale of the portfolio security if its market value exceeds the amount of
foreign currency the Corporation is obligated to deliver. However, the
Corporation 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 Corporation retains the portfolio security and engages in offsetting
transactions, the Corporation will incur a gain or a loss (as described below)
to the extent that there has been movement in forward contract prices. If the
Corporation engages in an offsetting transaction, it may subsequently enter into
a new forward contract to sell the foreign currency. Should forward prices
decline during the period between the Corporation'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 Corporation
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 Corporation 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 Corporation's dealing in forward foreign currency exchange contracts
will be limited to the transactions described above. Of course, the Corporation
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 Subadviser. It also should be realized that this method of hedging against a
decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange at
a future date. Additionally, although such contracts tend to minimize the risk
of loss due to a decline in the value of a hedged currency, at the same time,
they tend to limit any potential gain which might result from an increase in the
value of that currency.
Stockholders should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Corporation at one rate, while offering a lesser rate of
exchange should the Corporation desire to resell that currency to the dealer.
Investment income received by the Corporation from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Corporation to a reduced rate of such taxes or exemption from taxes
on such income. It is impossible to determine the effective rate of foreign tax
in advance since the amounts of the Corporation's assets to be invested within
various countries is not known.
DIRECTORS AND OFFICERS
A listing of the directors and officers of the Corporation and their
business experience for the past five years follows. An asterisk (*) indicates
directors who are "interested persons" of the Corporation (as defined by the
Investment Company Act of 1940 (the "1940 Act"). Unless otherwise noted, the
address of each director and officer is 100 Park Avenue, New York, NY 10017.
-4-
<PAGE>
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief
(56) Executive Officer and Chairman of the
Executive Committee
Managing Director, Chairman and
President, J. & W. Seligman & Co.
Incorporated, investment managers and
advisors; and Seligman Advisors, Inc.,
advisors; Chairman and Chief Executive
Officer, the Seligman Group of Investment
Companies; Chairman, Seligman Financial
Services, Inc., distributor; Seligman
Holdings, Inc., holding company; Seligman
Services, Inc., broker/dealer; J. & W.
Seligman Trust Company, trust company;
and Carbo Ceramics Inc., ceramic
proppants for oil and gas industry;
Director or Trustee, Seligman Data Corp.
(formerly, Union Data Service Center,
Inc.), stockholder service agent; Daniel
Industries, Inc., manufacturer of oil and
gas metering equipment; Kerr-McGee
Corporation, diversified energy company;
and Sarah Lawrence College; and a Member
of the Board of Governors of the
Investment Company Institute; formerly,
Chairman, Seligman Securities, Inc.,
broker/dealer.
RONALD T. SCHROEDER* Director, President and Member of the
(47) Executive Committee
Director, Managing Director and Chief
Investment Officer, J. & W. Seligman &
Co. Incorporated, investment managers and
advisors; Managing Director and Chief
Investment Officer, Seligman Advisors,
Inc., advisors; Director or Trustee and
President and Chief Investment Officer,
Tri-Continental Corporation, closed-end
investment company and the open-end
investment companies in the Seligman
Group of Investment Companies; Director
and President, Seligman Holdings, Inc.,
holding company; Director, Seligman
Financial Services, Inc., distributor;
Director, Seligman Data Corp.,
stockholder service agent; Seligman
Quality Municipal Fund, Inc. and Seligman
Select Municipal Fund, Inc., closed-end
investment companies; Seligman Henderson
Co., advisors; and Seligman Services,
Inc., broker/dealer; formerly, Director,
J. & W. Seligman Trust Company, trust
company; and Seligman Securities, Inc.,
broker/dealer.
FRED E. BROWN* Director
(81)
Director and Consultant, J. & W. Seligman
& Co. Incorporated, investment managers
and advisors; Director or Trustee,
Tri-Continental Corporation, closed-end
investment company; the open-end
investment companies in the Seligman
Group of Investment Companies; Director,
Seligman Financial Services, Inc.,
distributor; Seligman Quality Municipal
Fund, Inc. and Seligman Select Municipal
Fund, Inc., closed-end investment
companies; Seligman Services, Inc.,
broker/dealer; Trustee, Trudeau
Institute, Inc., non-profit biomedical
research organization; Lake Placid Center
for the Arts, cultural organization; and
Lake Placid Education Foundation,
education foundation; formerly, Director,
J. & W. Seligman Trust Company, trust
company; and Seligman Securities, Inc.,
broker/dealer.
ALICE S. ILCHMAN Director
(59)
President, Sarah Lawrence College;
Director or Trustee, the Seligman Group
of Investment Companies; NYNEX,
telephone company; The Rockefeller
Foundation, charitable foundation; and
the Committee for Economic Development;
formerly, Trustee, The Markle
Foundation, philanthropic organization;
and Director, International Research and
Exchange Board, intellectual exchanges.
Sarah Lawrence College, Bronxville, New
York 10708
-5-
<PAGE>
JOHN E. MEROW* Director
(65)
Chairman and Senior Partner, Sullivan &
Cromwell, law firm; Director or Trustee,
the Seligman Group of Investment
Companies; The Municipal Art Society of
New York; Commonwealth Aluminum
Corporation; the U.S. Council for
International Business and the U.S.-New
Zealand Council; Chairman, American
Australian Association; Member of the
American Law Institute and Council on
Foreign Relations; Member of the Board
of Governors of Foreign Policy
Association and New York Hospital.
125 Broad Street, New York, NY 10004
BETSY S. MICHEL Director
(52)
Attorney; Director or Trustee, the
Seligman Group of Investment Companies;
The National Association of Independent
Schools (Washington DC), education;
Chairman of the Board of Trustees of St.
George's School (Newport, RI).
St. Bernard's Road, Gladstone, NJ 07934
DOUGLAS R. NICHOLS, JR. Director
(74)
Management Consultant; Director or
Trustee, the Seligman Group of
Investment Companies; formerly, Trustee,
Drew University.
790 Andrews Avenue, Delray Beach, FL
33483
JAMES C. PITNEY Director
(68)
Partner, Pitney, Hardin, Kipp & Szuch,
law firm; Director or Trustee, the
Seligman Group of Investment Companies;
Public Service Enterprise Group, public
utility. Park Avenue at Morris County,
P.O. Box 1945, Morristown, NJ 07962-1945
JAMES Q. RIORDAN Director
(67)
Director, Various Corporations; Director
or Trustee, the Seligman Group of
Investment Companies; The Brooklyn
Museum; The Brooklyn Union Gas Company;
The Committee for Economic Development;
Dow Jones & Co. Inc.; Public
Broadcasting Service; Tesoro Petroleum
Companies, Inc.; formerly, Co-Chairman
of the Policy Council of the Tax
Foundation; Director and Vice Chairman,
Mobil Corporation; and Director and
President, Bekaert Corporation. 675
Third Avenue, Suite 3004, New York, NY
10017
HERMAN J. SCHMIDT Director
(78)
Director, Various Corporations; Director
or Trustee, the Seligman Group of
Investment Companies; H. J. Heinz
Company; HON Industries, Inc.; and MAPCO,
Inc; formerly, Director of MetLife Series
Fund, Inc. and MetLife Portfolios, Inc.;
Macmillan, Inc. and Ryder System, Inc. 15
Oakley Lane, Greenwich, CT 06830
ROBERT L. SHAFER Director
(62)
Vice President, Pfizer Inc.,
pharmaceuticals; Director or Trustee, the
Seligman Group of Investment Companies;
and USLIFE Corporation, life insurance.
235 East 42nd Street, New York, NY 10017
-6-
<PAGE>
JAMES N. WHITSON Director
(60)
Executive Vice President, Chief Operating
Officer and Director, Sammons
Enterprises, Inc., Director or Trustee,
Red Man Pipe and Supply Company; the
Seligman Group of Investment Companies;
and C-SPAN. 300 Crescent Court, Suite
700, Dallas, TX 75202
BRIAN T. ZINO* Director
(42)
Managing Director (formerly, Chief
Administrative and Financial Officer),
J. & W. Seligman & Co. Incorporated,
investment managers and advisors;
Director or Trustee, the Seligman Group
of Investment Companies; Chairman,
Seligman Data Corp., stockholder service
agent; Director, Seligman Financial
Services, Inc., distributor; Seligman
Services, Inc., broker/dealer; J. & W.
Seligman Trust Company, trust company;
Senior Vice President, Seligman
Henderson Co., advisor; formerly,
Director and Secretary, Chuo Trust - JWS
Advisors, Inc., advisors; and Director,
Seligman Securities, Inc.,
broker/dealer.
CHARLES C. SMITH, JR. Vice President and Portfolio Manager
(38)
Managing Director (formerly, Senior Vice
President and Senior Investment
Officer), J. & W. Seligman & Co.
Incorporated, investment managers and
advisors; Vice President and Portfolio
Manager, three other open-end investment
companies in the Seligman Group of
Investment Companies.
LAWRENCE P. VOGEL Vice President
(38)
Senior Vice President, Finance, J. & W.
Seligman & Co. Incorporated, investment
managers and advisors; Seligman Financial
Services, Inc., distributor; and Seligman
Advisors, Inc., advisors; Vice President
(formerly, Treasurer), the Seligman Group
of Investment Companies; Senior Vice
President, Finance (formerly, Treasurer),
Seligman Data Corp., stockholder service
agent; Treasurer, Seligman Holdings,
Inc., holding company; and Seligman
Henderson Co., advisors; formerly, Senior
Vice President, Seligman Securities,
Inc., broker/dealer; Vice President,
Finance, J. & W. Seligman Trust Company;
and Senior Audit Manager, Price
Waterhouse, independent accountants.
FRANK J. NASTA Secretary
(30)
Secretary, the Seligman Group of
Investment Companies; J. & W. Seligman &
Co. Incorporated, investment managers and
advisors; Seligman Financial Services,
Inc., distributor; Seligman Henderson
Co., advisors; Seligman Services, Inc.,
broker/dealer; and Seligman Data Corp.,
stockholder service agent; Vice
President, Law and Regulation, J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; formerly,
attorney, Seward & Kissel.
THOMAS G. ROSE Treasurer
(37)
Treasurer, the Seligman Group of
Investment Companies; and Seligman Data
Corp., stockholder service agent;
formerly, Treasurer, American Investors
Advisors, Inc. and the American Investors
Family of Funds.
-7-
<PAGE>
<TABLE>
<CAPTION>
Compensation Table
Pension or
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as part of from Fund and
Position With Registrant from Fund (1) Fund Expenses Fund Complex (2)
------------------------ ------------- ------------- ----------------
<S> <C> <C> <C>
William C. Morris, Director N/A N/A N/A
Ronald T. Schroeder, Director N/A N/A N/A
Fred E. Brown, Director N/A N/A N/A
Alice S. Ilchman, Director $18,800.00 N/A $67,000.00
John E. Merow, Director 18,400.00(d) N/A 66,000.00(d)
Betsy S. Michel, Director 18,400.00 N/A 66,000.00
Douglas R. Nichols, Jr., Director 18,400.00 N/A 66,000.00
James C. Pitney, Director 18,800.00 N/A 67,000.00
James Q. Riordan, Director 18,400.00 N/A 66,000.00
Herman J. Schmidt, Director 18,400.00 N/A 66,000.00
Robert L. Shafer, Director 18,400.00 N/A 66,000.00
James N. Whitson, Director 18,400.00(d) N/A 66,000.00(d)
Brian T. Zino, Director N/A N/A N/A
- ----------------------
</TABLE>
(1) Based on remuneration received by the Directors of the Fund for the year
ended December 31, 1994.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
(d) Deferred. As of December 31, 1994, the total amounts of deferred
compensation (including interest) payable to Messrs. Merow, Pitney and Whitson
were $73,710, $225,766 and $31,559, respectively. Mr. Pitney no longer defers
current compensation.
The Fund has a compensation arrangement under which outside directors may elect
to defer receiving their fees. Under this arrangement, interest is accrued on
the deferred balances. The annual cost of such fees and interest is included in
the director's fees and expenses and the accumulated balance thereof is included
in "Liabilities" in the Fund's financial statements. Directors and officers of
the Corporation are also directors, trustees and officers of some or all of the
other investment companies in the Seligman Group.
The Executive Committee of the Board of Directors has the power to (a)
determine the value of securities and assets owned by the Corporation, (b) elect
or appoint officers of the Corporation to serve until the next meeting of the
Directors succeeding such action and (c) determine the price at which shares of
Common Stock of the Corporation shall be issued and sold. All action taken by
the Executive Committee is recorded and reported to the Board of Directors at
their meeting succeeding such action. The members of the Executive Committee
consist of Mr. William C. Morris, Chairman, Ronald T. Schroeder and Brian T.
Zino.
Holdings of Preferred Stock, Common Stock and Warrants:
As of March 31, 1995 holders of record of Preferred Stock totaled 844,
holders of Common Stock, 47,951, and holders of Warrants, 240. Insofar as is
known by the Corporation, no person owns or controls or holds, directly or
indirectly, 5% or more of the outstanding equity securities, except that Cede &
Co., a nominee for the Depository Trust Company, P.O. Box 20, Bowling Green
Station, New York, NY 10274 owns of record 38% of the Corporation's Common
Stock. As of March 31, 1995 all directors and officers of the Corporation, as a
group, owned 147,675 shares or less than 1% of Common Stock. As of that date, no
directors or officers owned any of the Corporations's Preferred Stock or
Warrants. Mr. William C. Morris is Chairman and Chief Executive Officer of the
Manager and Chairman of the Board and Chief Executive Officer of the
Corporation. Mr. Morris owns a majority of the outstanding voting securities of
the Manager.
-8-
<PAGE>
These securities of the Corporation shown as being owned beneficially by the
directors and officers include shares held by or for the benefit of members of
their families or held by a trust of which a director is a trustee but in which
they disclaim beneficial ownership.
MANAGEMENT
The Corporation pays the Manager for its services a management fee,
calculated daily and payable monthly, equal to a percentage of the daily net
assets of the Corporation. The method for determining this percentage, referred
to as the management fee rate, is set forth in the Prospectus. The Manager
agreed to waive a portion of its 1993 Fee Amount equal to one-third of the
Corporation's expenses in connection with an offering of Rights to acquire
Common Stock in October, 1992. See "Certain Transactions of the Corporation."
The management fee amounted to $9,372,713 in 1994, $9,484,255 in 1993 and
$8,340,889 in 1992.
As part of its services to the Corporation, the Manager provides the
Corporation with such office space, administrative and other services and
executive and other personnel as are necessary for the operations of the
Corporation. The Manager also provides senior management for Seligman Data
Corp., a wholly-owned subsidiary of the Corporation and certain other investment
companies in the Seligman Group. The Manager pays all of the compensation of the
directors of the Corporation who are employees or consultants of the Manager and
its affiliates, of the officers and employees of the Corporation and of certain
executive officers of Seligman Data Corp.
The Manager is a successor firm to an investment banking business founded in
1864 which has provided investment services to individuals, families,
institutions and corporations. See the Appendix for a history of the Manager. On
December 23, 1988, a majority of the outstanding voting securities of the
Manager were purchased by Mr. William C. Morris, and a simultaneous
recapitalization of the Manager occurred.
Under the Subadvisory Agreement, dated June 1, 1994, the Subadviser
supervises and directs all or a portion of the of the Corporation's investments
in foreign securities and ADRs, consistent with the Corporation's investment
objectives, policies and principles. For these services the Subadviser is paid a
fee as described in the Corporation's Prospectus. The Subadvisory Agreement was
approved by the Board of Directors at a meeting held on January 20, 1994 and by
the stockholders of the Corporation on May 19, 1994. The Subadvisory Agreement
will continue in effect until December 31, 1995, and from year to year
thereafter if such continuance is approved in the manner required by the 1940
Act (by a vote of a majority of the Board of Directors or of the outstanding
voting securities of the Corporation and by a vote of a majority of the
Directors who are not parties to the Subadvisory Agreement or interested persons
of any such party) and (2) if the Subadviser shall not have notified the Manager
in writing at least 60 days prior to December 31 of any year that it does not
desire such continuance. The Subadvisory Agreement may be terminated at any time
by the Corporation, on 60 days written notice to the Subadviser. The Subadvisory
Agreement will terminate automatically in the event of its assignment or upon
the termination of the Management Agreement.
The Subadviser is a New York general partnership formed by the Manager and
Henderson International, Inc., a controlled affiliate of Henderson
Administration Group plc. Henderson Administration Group plc, headquartered in
London, is one of the largest independent money managers in Europe. The firm
currently manages approximately $18.5 billion in assets, and is recognized as a
specialist in global equity investing.
EXPERTS
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281
acts as independent auditors for the Corporation and in such capacity audits the
Corporation's annual and semi-annual financial statements and financial
highlights.
The financial information of the Corporation included in the Prospectus
under the caption "Financial Highlights" and the financial statements
incorporated by reference in this Statement of Additional Information have been
so included or incorporated by reference in reliance on the reports of Deloitte
& Touche LLP given upon their authority as experts in auditing and accounting.
-9-
<PAGE>
CUSTODIAN, STOCKHOLDER SERVICE AGENT AND DIVIDEND PAYING AGENT
Seligman Data Corp., a wholly-owned subsidiary of the Corporation, acts as
the stockholder service agent and dividend paying agent and performs, at cost,
certain recordkeeping functions for the Corporation, maintains the records of
shareholder accounts and furnishes dividend paying, redemption and related
services.
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri 64105, serves as custodian for the Corporation. It also maintains,
under the general supervision of the Manager, the accounting records and
determines the net asset value for the Corporation.
BROKERAGE COMMISSIONS
The Management and Subadvisory Agreements recognize that in the purchase and
sale of portfolio securities of the Corporation, the Manager and Subadviser will
seek the most favorable price and execution, and, consistent with that policy,
may give consideration to the research, statistical and other services furnished
by brokers or dealers to the Manager and Subadviser for its use, as well as to
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 the
Manager and Subadviser to be beneficial to the Corporation. In addition, the
Manager and Subadviser are 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
Corporation 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 the Manager and Subadviser in connection with its services to
clients other than the Corporation.
In over-the-counter markets, the Corporation deals with primary market
makers unless a more favorable execution or price is believed to be obtainable.
The Corporation may buy securities from or sell securities to dealers acting as
principal, except dealers with which its directors and/or officers are
affiliated.
When two or more of the investment companies in the Seligman Group or other
investment advisory clients of the Manager desire to buy or sell the same
security at the same time, the securities purchased or sold are allocated by the
Manager 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.
Information as to the Corporation's portfolio turnover rate for recent
fiscal years is stated under "Financial Highlights" in the Prospectus. Brokerage
commissions for the last three fiscal years are presented as follows:
Brokerage
Year Total Commissions
Ended Brokerage Paid to
December 31 Commissions (1) Seligman Securities, Inc. (2)
- ----------- --------------- -----------------------------
1994 $3,062,434 N/A
1993 2,268,428 $ 251,559
1992 1,538,057 736,114
(1) Not including any spreads on principal transactions on a net basis.
(2) Brokerage commissions paid to Seligman Securities, Inc., an affiliate of the
Manager, were 11.09% of total brokerage commissions paid for 1993. The aggregate
dollar amount of the Corporation's transactions for which the Seligman
Securities, Inc. acted as broker was 13.29% of the total dollar amount of all
commission transactions in 1993. The Board adopted procedures effective January
1, 1984, pursuant to which Seligman Securities, Inc. was available to the Fund
as broker for approximately one-half of agency transactions in listed securities
(exclusive of option and option-related transactions) at commission rates
believed in accordance with applicable regulations to be fair and reasonable. As
of March 31, 1993, Seligman Securities, Inc. ceased functioning as a broker for
the Corporation and its other clients.
-10-
<PAGE>
INCORPORATION OF FINANCIAL STATEMENTS BY REFERENCE
The Corporation's financial statements for the year ended December 31, 1994
are herein incorporated by reference from the 1994 Annual Report to Stockholders
of the Corporation (the "1994 Annual Report"), filed with the Commission
pursuant to Section 30(b) of the 1940 Act and the rules and regulations
thereunder. The 1994 Annual Report also contains schedules of the Corporation's
portfolio investments as of December 31, 1994 and certain other financial
information. A copy of the 1994 Annual Report will be sent without charge, to
all investors who request a copy of this Statement of Additional Information.
-11-
<PAGE>
INDEPENDENT AUDITORS' REPORT ON FINANCIAL HIGHLIGHTS - SENIOR SECURITIES -
$2.50 CUMULATIVE PREFERRED STOCK
To the Board of Directors and Security Holders of
Tri-Continental Corporation:
We have previously audited, in accordance with generally accepted auditing
standards, the statements of assets and liabilities, including the portfolio of
investments, and the statements of capital stock and surplus of Tri-Continental
Corporation as of December 31 for each of the ten years in the period ended
December 31, 1994 and the related statements of operations and of changes in net
investment assets, and the financial highlights for each of the years then ended
(none of which are presented herein); and we expressed unqualified opinions on
those financial statements.
In our opinion, the information appearing on page 6 of the Prospectus under
the caption "Senior Securities - $2.50 Cumulative Preferred Stock", for each of
the ten years in the period ended December 31, 1994 is fairly stated, in all
material respects, in relation to the financial statements from which it has
been derived.
/s/ DELOITTE & TOUCHE LLP
- --------------------------
DELOITTE & TOUCHE LLP
New York, New York
February 3, 1995
-12-
<PAGE>
APPENDIX
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, Seligman played a major role
in the geographical expansion and industrial development of the United States.
Seligman:
.... Prior to 1900
o Helps finance America's fledgling railroads through underwriting.
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 Plays a significant role 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 finance World War I.
...1920s
o Participates in hundreds of 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.
o Establishes Investment Advisory Service.
...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.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund.
-13-
<PAGE>
...1950-1989
o Develops new open-end investment companies. Today, manages 44 mutual
fund portfolios with combined assets of $7.3 billion.
o Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific tax-exempt 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 and Seligman Quality
Municipal Fund, two closed-end funds that invest in high-quality
municipal bonds.
o In 1991 establishes a joint venture with Henderson Administration Group
plc, of London, known as Seligman Henderson Co., to offer global
investment products.
o Introduces Seligman Frontier Fund, Inc., a small capitalization mutual
fund.
o Launches Seligman Henderson Global Fund Series, Inc., which today
offers three separate series: Seligman Henderson International Fund,
Seligman Henderson Global Smaller Companies Fund and Seligman Henderson
Global Technology Fund.
-14-
================================================================================
65th ANNUAL REPORT 1994
================================================================================
TRI-CONTINENTAL
CORPORATION
================================================================================
an investment you can live with
<PAGE>
TRI-CONTINENTAL CORPORATION
Board of Directors
Fred E. Brown
Director and Consultant,
J. & W. Seligman & Co.
Incorporated
Alice S. Ilchman (3,4)
President, Sarah Lawrence College
Trustee, Committee for Economic Development
Director, NYNEX
Trustee, The Rockefeller Foundation
John E. Merow
Partner, Sullivan & Cromwell, Attorneys
Betsy S. Michel (2,4)
Director or Trustee, Various Organizations
William C. Morris (1)
Chairman
Chairman of the Board and President, J. & W. Seligman & Co. Incorporated
Chairman, Carbo Ceramics Inc.
Director, Daniel Industries, Inc.
Director, Kerr-McGee Corporation
Douglas R. Nichols, Jr. (2,4)
Management Consultant
James C. Pitney (3,4)
Partner, Pitney, Hardin, Kipp & Szuch, Attorneys
Director, Public Service Enterprise Group
James Q. Riordan (3,4)
Director, The Brooklyn Union Gas Company
Trustee, Committee for Economic Development
Director, Dow Jones & Co., Inc.
Director, Public Broadcasting
Service
Herman J. Schmidt (2,4)
Director, H.J. Heinz Company
Director, HON Industries, Inc.
Director, MAPCO, Inc.
Ronald T. Schroeder (1)
President
Managing Director, J. & W. Seligman & Co. Incorporated
Robert L. Shafer (3,4)
Vice President, Pfizer Inc.
Director, USLIFE Corporation
James N. Whitson (2,4)
Executive Vice President and Director,
Sammons Enterprises, Inc.
Director, C-SPAN
Brian T. Zino (1)
Managing Director, J. & W. Seligman & Co. Incorporated
- --------------------
Member:
(1) Executive Committee
(2) Audit Committee
(3) Director Nominating Committee
(4) Board Operations Committee
- --------------------------------------------------------------------------------
Executive Officers
William C. Morris
Chairman
Ronald T. Schroeder
President
Charles C. Smith, Jr.
Vice President
Lawrence P. Vogel
Vice President
Thomas G. Rose
Treasurer
Frank J. Nasta
Secretary
2
<PAGE>
Highlights of the Year
Assets at year end: 1994 1993
------------- -------------
Total assets ........................... $2,049,281,845 $2,249,978,091
Amounts owed ......................... 17,546,369 46,128,793
------------- -------------
Net investment assets $2,031,735,476 $2,203,849,298
Preferred Stock, at par value ........ 37,637,000 37,637,000
------------- -------------
Net assets for Common Stock ............ $1,994,098,476 $2,166,212,298
============== =============
Common shares outstanding .............. 84,144,106 78,812,785
Net assets behind each
Common share ......................... $23.70 $27.49
With 1994 gain distribution
taken in shares ...................... $25.94 --
Taxable gain:
Net capital gain realized* ............. $ 149,773,270 $ 133,505,475
Per Common share $ 1.90 $ 1.80
Unrealized capital gain, end of
year* ................................ $ 191,363,863 $ 471,377,172
Per Common share ..................... $ 2.27 $ 5.98
Distribution of current year's gain:
Per Common share ..................... $ 1.90 $ 1.80
Income:
Total income earned* ................... $ 79,332,941 $ 76,383,174
Expenses 13,705,939 14,141,470
Preferred Stock dividends ............ 1,881,850 1,881,850
------------- -------------
Income for Common Stock ................ $ 63,745,152 $ 60,359,854
============== =============
Dividends per Common share ............. $ .79 $ .80
With December 1993 gain
distribution taken in shares ....... $ .85 --
If the 15,822 Warrants remaining outstanding had been exercised at December 31,
1994, the Corporation would have issued 202,047 additional shares of Common
Stock for $355,603. The net assets behind each Common share would have been
$23.65 and, with the 1994 gain distribution taken in shares, $25.89.
*Amounts include the effect of related foreign currency transactions.
3
<PAGE>
TRI-CONTINENTAL CORPORATION
February 3, 1995
To the Stockholders:
We are pleased to provide you with Tri-Continental's 65th Annual Report.
1994 was another difficult year for investments in high-quality stocks and
bonds. We expect that an improvement in the overall conditions for investors,
and the Corporation's exposure to international holdings and its shift in
investment focus, will bring about better years in 1995 and in the future.
Your Corporation's net asset value per share was $23.70 at December 31,
compared to $26.37 at September 30, and $27.49 a year ago. Your Corporation's
market price per share was $19.875 at December 31, compared to $22.25 at
September 30, and $23.75 a year ago. The change in both net asset value and
market price is partly caused by the deduction of the $1.90 per share capital
gain payment made on December 21 to Common Stockholders of record December 8.
On December 21, your Corporation also paid a $0.21 per share dividend to
Common Stockholders of record December 16, which brought the total dividends for
1994 to $0.79 per share.
Your Corporation's total return was -0.68% for the three months and -2.20%
for the 12 months ended December 31, based on net asset value. For the same
periods, total return was -1.28% and -5.07%, respectively, based on market
price. (Total return reflects change in price, net asset value or market, as
applicable, and assumes that any dividends are invested and capital gain
distributions are taken in additional shares during the quoted period.) Your
Corporation's total returns in 1994 compare to the 1.32% total return for the
Standard & Poor's 500 Composite Stock Price Index (S&P 500). However, more
broadly based market indicators fared far worse than the S&P 500; the New York
Stock Exchange Composite Index returned -3.14%, and the Value Line Index
returned -6.01%.
Looking back on 1994, the one generalization that can be made with
confidence is that it was a turbulent and trying year for equity and bond
investors alike. The Federal Reserve Board exhibited an aggressive stance
against inflation, putting through six short-term interest rate increases by the
end of the year. This caused an upheaval in the bond market, with yields
increasing and bond prices spiraling lower--an event in the financial markets
unmatched in magnitude since 1973-74.
4
<PAGE>
The equity market remained hostage to the bond market and demonstrated
lackluster performance for the year.
The U.S. economy continued to grow at a modest yet controlled pace,
accompanied by corporate news of solid growth and strong earnings. This economic
news, although positive, caused the underlying question to remain: Will the
economy overheat, opening the door to increased inflation? We don't believe so.
We believe an economic slowdown is close at hand. In March of 1995, the
current growth cycle will mark its fourth year. The consumer has both increased
debt as a percentage of income and drawn down savings--suggesting nearer-term
caution after a stronger-than-expected pattern of spending in 1994. We also
believe that inflation will remain under control in light of intense global
competition, low unit labor costs, and an aging population that should favor
saving over spending. Job creation remains strong despite gains in productivity,
and U.S. competitiveness in world markets is likely to be enhanced under
G.A.T.T.--General Agreement on Tariffs and Trade.
As of January 1, 1995, the portfolio management responsibilities of
Tri-Continental Corporation have been assumed by Mr. Charles C. Smith, Jr. Mr.
Smith is supported by a group of investment professionals dedicated to the
objectives of Tri-Continental Corporation. Please refer to page 6 for a
discussion about your Corporation, and page 9 for a more detailed look at your
Corporation's results for the year.
By order of the Board of Directors,
/s/ William C. Morris
William C. Morris
Chairman
/s/ Ronald T. Schroeder
Ronald T. Schroeder
President
5
<PAGE>
Your Portfolio Manager
Charles C. Smith, Jr. is a Managing
Director of J. & W. Seligman & Co.
Incorporated and Portfolio Manager of
Seligman Common Stock Fund, Seligman
Income Fund, and Tri-Continental [photograph of Charles C. Smith, Jr.]
Corporation. Mr. Smith joined Seligman
in 1985 as Vice President, Investment
Officer and was promoted to Senior Vice
President, Senior Investment Officer in
August 1992, and to Managing Director in
January 1994.
Economic Factors Affecting Tri-Continental
Corporation
"The rise in short-term interest rates and investors' concerns over
an increased rate of future inflation had a tremendous effect on both the equity
and bond markets. This made 1994 a challenging year for investors, and for
Tri-Continental Corporation."
Sector Performance
"In 1994, your portfolio's strongest sector was technology, with holdings such
as EMC and Micron Technology. Consumer staples companies with solid
international exposure, such as Coca-Cola and Gillette, did well due to stronger
earnings growth and greater pricing flexibility. In addition, restructuring
corporations, such as IBM, provided solid returns as their earnings outlook
improved. On the other hand, consumer cyclicals and several interest
rate-sensitive industries, such as electric utilities and regional banks, had
difficulties in 1994 due to the rise in interest rates."
Investment Strategy
"Tri-Continental Corporation has been managed as a portfolio that consisted of
both fixed-income securities to obtain income and traditional growth stocks to
achieve capital appreciation. While this strategy was fruitful in the late 1980s
and early 1990s, it has been less effective in recent years.
"Although the investment objective and policy will not change, we view 1995 as a
transitional year in which we are shifting the structure of the portfolio by
reducing the fixed-income commitment and increasing the diversification in the
equity portion. It is our intention to obtain income by owning companies with
attractive rates of return in the form of dividends, and to achieve capital
appreciation by using a bottom-up stock selection process to identify companies
within a broad range of industries that offer the best opportunities for good
long-term growth. This strategy, we feel, may be able to enhance your
Corporation's earnings outlook for the future."
6
<PAGE>
Diversification of Assets
The diversification of portfolio holdings by industry on December 31, 1994 was
as follows. Individual securities owned are listed on pages 17 to 24.
Percent of
Net Investment
Assets
--------------
December 31,
Issues Cost Value 1994 1993
----- ------------- ------------- ------ ------
Net Cash and Short-Term
Holdings 2 $ 83,827,413 $ 83,827,413 4.2% 2.6%
U.S. Government Securities 2 70,318,125 67,440,598 3.3 8.3
Corporate Bonds 4 46,827,085 44,075,000 2.2 2.7
Tri-Continental
Financial Division 4 25,209,602 27,690,898 1.3 1.2
--- ------------- ------------- ----- -----
12 $ 226,182,225 $ 223,033,909 11.0% 14.8%
--- ------------- ------------- ----- -----
Common Stocks and
Convertible Issues:
Aerospace 2 $ 34,149,974 $ 33,850,000 1.7% --%
Automotive and related 4 76,196,340 82,337,500 4.0 6.2
Basic materials 6 72,834,421 75,276,848 3.7 5.3
Building and construction 2 19,333,162 17,341,697 0.9 0.7
Communications 8 79,187,622 81,728,844 4.0 5.4
Computers and business
services 6 74,794,783 106,050,625 5.2 3.4
Consumer goods and
services 14 164,477,245 215,512,749 10.6 9.0
Diversified 8 99,997,377 105,855,500 5.2 3.5
Drugs and health care 8 102,422,189 117,362,111 5.8 4.3
Electric and gas utilities 5 51,081,226 46,366,345 2.3 4.3
Electronics 3 30,426,861 56,139,375 2.8 3.3
Energy 15 192,352,785 192,274,816 9.4 8.3
Entertainment and leisure 3 23,156,680 24,316,250 1.2 3.7
Environmental management 1 15,911,127 14,187,500 0.7 0.7
Finance and insurance 16 190,746,426 212,803,141 10.5 11.8
Manufacturing and
industrial equipment 11 144,386,892 159,955,507 7.9 5.4
Packaging and paper 3 21,072,298 20,975,851 1.1 --
Publishing 1 5,615,308 6,784,890 0.3 --
Real estate investment trust10 86,487,038 99,881,250 4.9 3.0
Retail trade 6 79,914,198 90,995,000 4.4 4.3
Transportation 5 39,446,390 39,378,355 1.9 2.6
Miscellaneous 3 10,199,046 9,327,413 0.5 --
--- ------------- ------------- ----- -----
140 $1,614,189,388 $1,808,701,567 89.0% 85.2%
--- -------------- -------------- ----- -----
NET INVESTMENT
ASSETS 152 $1,840,371,613 $2,031,735,476 100.0% 100.0%
=== ============== ============== ===== =====
7
<PAGE>
LARGEST PORTFOLIO CHANGES*
October 1 to December 31, 1994
Shares
-----------------------------
Holdings
Additions Increase 12/31/94
------------ ------------
COMMON STOCKS
Bank of New York, Inc. 450,000 450,000
Bristol-Myers Squibb Company 250,000 250,000
Corning, Inc. 350,000 350,000
Dover Corporation 200,000 200,000
Eastman Kodak Company 450,000 450,000
Kimberly-Clark Corporation 300,000 300,000
Liz Claiborne, Inc. 500,000 500,000
Premark International, Inc. 300,000 300,000
Warner-Lambert Company 100,000 200,000
CONVERTIBLE PREFERRED STOCK
AK Steel Holdings Corporation, 7% 350,000 350,000
Holdings
Reductions Decrease 12/31/94
------------ ------------
COMMON STOCKS
AirTouch Communications Inc. 500,000 --
Engelhard Corporation 500,000 --
Georgia-Pacific Corporation 200,000 150,000
Intel Corporation 200,000 --
Micron Technology, Inc. 285,000 615,000
PPG Industries, Inc. 500,000 --
Teva Pharmaceutical Industries Ltd. (ADRs) 375,000 --
Weyerhaeuser Company 200,000 --
Wheelabrator Technologies, Inc. 780,000 --
CONVERTIBLE PREFERRED STOCK
Barnett Banks, Inc., $4.50 200,000 --
*Largest portfolio changes from the previous quarter to the current quarter are
based on cost of purchases and proceeds from sales of securities.
8
<PAGE>
RESULTS OF YEAR
The following table presents actual investment gains realized, dividends paid,
and year-end net asset values per Common share for the past 10 years. Also
presented are the corresponding amounts of realized gains, dividends earned, and
net asset values for a Common share owned at the beginning of the 10-year
period, assuming gain distributions had been taken in additional shares.
- --------------------------------------------------------------------------------
Net asset
Gains Dividends value of a
earned earned Net asset share
Gain assuming assuming value of a assuming
realized gains Dividends gains share gains
per taken in paid per taken in outstanding taken in
share shares* share shares* at year end shares*
----- ------ ----- ------ --------- ------
1994 $1.90 $4.60 $0.79 $1.91 $23.70 $57.41
1993 1.80 4.05 0.80 1.80 27.49 61.87
1992 0.70 1.53 0.78 1.71 28.03 61.40
1991 1.80 3.69 0.78 1.60 28.57 58.53
1990 1.60 3.06 0.86 1.64 24.60 47.00
1989 2.55 4.38 0.84 1.44 27.44 47.08
1988 1.25 2.02 0.81 1.31 23.55 38.02
1987 3.68 5.09 0.89 1.23 23.94 33.08
1986 4.39 5.26 0.97 1.16 27.94 33.49
1985 2.62 2.88 1.04 1.14 29.78 32.68
*Reflects the compounding effect from additional shares that would have been
received had capital gain distributions been taken in shares since January 1,
1985, rather than in cash.
- --------------------------------------------------------------------------------
NET INVESTMENT ASSETS were $2,031,735,476 at December 31.
NET ASSET VALUE of each share of Common Stock was $23.70 at December 31,
compared to $27.49 at the start of the year. If you took shares in payment of
the December gain distribution, the net asset value of each share you owned at
the beginning of 1994 was equivalent to $25.94 at year end. Assuming you
invested dividends and took the gain distribution in shares, your total return
was -2.20%. This compares with 1.32% for common stock prices generally, as
measured by the Standard & Poor's 500 Composite Stock Price Index.
INVESTMENT INCOME was $79,332,941 in 1994, up 3.9% over last year.
OPERATING EXPENSES for the year were $13,705,939. The ratio of expenses to the
average value of net assets was 0.64%, down 3% from last year.
DIVIDENDS DECLARED totaled $64,024,229. Preferred Stock dividends paid each
quarter completed 65 years of uninterrupted payments. Income available to cover
the $2.50 Preferred dividend was equivalent to $87.18 per share.
9
<PAGE>
Common Stock dividends, paid quarterly, totaled $0.79 per share on an average of
78,668,000 shares, compared to $0.80 in 1993 when, on average, there were
approximately 4,213,000 fewer shares outstanding.
TAXABLE NET INVESTMENT GAIN of $149,773,270 was realized in 1994. This amounted
to $1.90 per share of Common Stock. The amount of net gain realized is the
result of sales of securities in the portfolio throughout the year.
UNREALIZED GAIN on investments totaled $191,363,863, or $2.27, per share of
Common Stock, as of December 31, 1994.
10 Largest Equity Holdings
- --------------------------------------------------------------------------------
Increase (Decrease)
December 31, 1994 in Per Share Price
----------------------- ---------------------
Cost Value For Since
(000's) (000's) 1994 Purchase
--------- --------- --------- ---------
General Electric Company.. $ 23,043 $ 40,800 (2.8)% 77.1%
Coca-Cola Company......... 5,545 36,050 15.4 550.1
Citicorp $5.375
(Conv. Pfd.) ........... 21,988 28,656 4.6 30.3
American International
Group Inc............... 15,972 27,930 11.7 74.9
Microsoft Corporation .... 13,581 27,562 51.9 102.9
Chrysler Corporation
$4.625 (Conv. Pfd.) .... 21,308 27,475 (8.9) 28.9
Micron Technology, Inc.... 5,851 27,137 137.9 363.8
Dow Chemical Company...... 21,473 25,219 18.5 17.4
Procter & Gamble Company.. 22,124 24,800 8.8 12.1
Eaton Corporation......... 25,084 24,750 (2.0) (1.3)
-------- --------
$175,969 $290,379
======== ========
- --------------------------------------------------------------------------------
The 10 largest equity investments at year end had an aggregate market value of
$290.4 million and accounted for 14.3% of net investment assets.
DISTRIBUTION OF REALIZED GAIN
Your Directors declared a distribution of $1.90 per Common share from taxable
net gains realized in 1994, which was paid on December 21 to Stockholders of
record on December 8.
The number of shares of Common Stock issued to those who took the December
payment in shares was determined by dividing the total dollar amount payable by
$20.063, the mean of the high and low market prices on the New York Stock
Exchange on December 16. Distributions should be taken into account in measuring
the results of an investment in Tri-Continental Common and should be taken in
shares if you wish to benefit from the compounding effect of the full amount of
your investment.
10
<PAGE>
PURCHASES OF COMMON STOCK
Under the Automatic Dividend Investment and Cash Purchase Plan, and other
stockholder plans, purchases of Common Stock were made by the Corporation in the
open market and from Stockholders participating in withdrawal plans to satisfy
Plan requirements. Those shares were then sold to Stockholders using the Plan.
During 1994, 2,106,411 shares were purchased by Stockholders through the Plan.
The Corporation may make additional purchases of its Common Stock in the open
market at such prices and in such amounts as the Board of Directors may deem
advisable. No such additional purchases were made during 1994.
STOCKHOLDER SERVICES
Tri-Continental provides a number of services to make maintaining an investment
in its Common Stock more convenient.
INDIVIDUAL RETIREMENT ACCOUNT TRUST (IRA) is available to individuals under age
70 1/2 who have earned income. The maximum annual deductible individual
contribution is $2,000. A married person with a non-working spouse may set aside
$2,250 annually, while a working couple may shelter up to $4,000 a year. If your
adjusted gross income as a single person exceeds $25,000 a year, or as a married
couple filing jointly exceeds $40,000, and you or your spouse are participating
in an employer's retirement plan, your deduction for the IRA contribution is
reduced or eliminated. To the extent that your deduction for an IRA contribution
is reduced, you will be able to make a non-deductible contribution, the earnings
on which accumulate tax-free. The IRA allows you to invest for your retirement,
to defer taxes on dividends and gain distributions, and to provide benefits for
your spouse, if you wish.
ROLLOVER IRAs
You may be eligible to roll over a distribution of assets received from another
IRA, from a qualified employee benefit plan, or tax-deferred annuity into an IRA
with Tri-Continental. To avoid a tax penalty, the transfer to a Rollover IRA
must occur within 60 days of receipt of the qualifying distribution. However, if
you do not make a direct transfer of a distribution from a qualified employee
benefit plan or a tax-deferred annuity to a Rollover IRA, the payor of the
distribution must withhold 20% of the distribution.
RETIREMENT PLANNING -- QUALIFIED PLANS. Unincorporated businesses and the
self-employed may take advantage of the same benefits in their retirement plans
that were previously available only to corporations. Maximum contribution levels
11
<PAGE>
are 25% of earned income (reduced by plan contributions), up to $30,000 per
participant for pension plans, and 15%, up to $30,000, for profit-sharing plans.
For retirement plan purposes, no more than $150,000 may be taken into account as
earned income under the plan in 1994 and future years (subject to adjustments to
reflect cost of living increases). Social Security integration and employee
vesting schedules are also available as options in the Tri-Continental prototype
retirement plans. Although you already may be participating in an employer's
retirement plan, you may be eligible to establish another plan based upon income
from other sources, such as director's fees.
RETIREMENT PLAN SERVICES provides information about our prototype retirement
plans. The toll-free telephone number is (800) 445-1777 in the Continental U.S.
GIFTS FREE OF FEDERAL TAX are often made using Tri-Continental Common Stock. You
may give as much as $10,000 a year to as many individuals as desired free of
federal gift tax, and a married couple may give up to $20,000 a year.
THE AUTOMATIC CASH WITHDRAWAL PLAN enables owners of Common shares with a market
value of $5,000 or more to receive a fixed amount from their investment at
regular intervals. Investors use the plan to supplement current or retirement
income, for educational expenses, or for other purposes.
FEDERAL TAXES
Quarterly dividends paid on both the Preferred and Common Stocks in 1994 are
subject to federal income tax as "ordinary dividend income." Under the Internal
Revenue Code, 61% of such 1994 ordinary dividend income paid to Common and
Preferred Stockholders qualifies for the dividends received deduction available
to corporate stockholders. In order to claim the dividends received deduction on
these distributions, corporate stockholders must have been treated as holding
the shares for at least 46 days.
The distribution of $1.90 from net long-term gain realized on investments during
1994 was paid to Common Stockholders on December 21, 1994. The long-term gain is
designated as a "capital gain dividend" for federal income tax purposes and is
taxable to stockholders in 1994 as a long-term gain from the sale of capital
assets no matter how long Tri-Continental Common may have been owned. If shares
on which a capital gain distribution was received are subsequently sold, and
such shares have been held for six months or less from date of purchase, any
loss would be treated as long-term to the extent it offsets the long-term gain
distribution. The tax cost basis of the December 21 distribution was $20.063 per
share.
12
<PAGE>
INTEREST ON U.S. GOVERNMENT OBLIGATIONS
Certain states do not tax dividends paid by regulated investment companies, such
as Tri-Continental, to the extent the income is derived from interest on U.S.
Government obligations. Tax treatment varies by state, and it is suggested that
you consult your tax advisor. Information regarding that portion of dividends
derived from interest on U.S. Government obligations and other relevant
information was included in the 1994 Important Tax Information attached to your
Form 1099-DIV.
Discount or Premium on Common Stock
[Market Discount or Premium from Asset Value graph appears here]
------------------
Tri-Continental Common Stock was priced in the market at a discount to net asset
value during 1994. At year end, the discount was 16.14%.
Market price for Tri-Continental Common Stock appears daily, and net asset value
and premium or discount are reported weekly, in The Wall Street Journal and
other newspapers and can also be obtained by calling our 24-Hour Automated
Telephone Access Service using a touch-tone telephone. The number is (800)
622-4597.
13
<PAGE>
TRI-CONTINENTAL CORPORATION
ASSETS AND LIABILITIES December 31, 1994
Assets:
Investments at value:
Common stocks (cost--$1,392,405,032).... $1,576,928,522
Convertible issues
(cost--$221,784,356).................. 231,773,045
U.S. Government securities
(cost--$70,318,125)................... 67,440,598
Corporate bonds (cost--$46,827,085)..... 44,075,000
Tri-Continental Financial Division
(cost--$25,209,602)................... 27,690,898
Short-term holdings (cost--$70,400,000). 70,400,000 $2,018,308,063
--------------
Cash...................................................... 12,326,049
Receivable for dividends and interest..................... 9,877,196
Receivable for securities sold............................ 8,035,344
Investment in, and expenses prepaid to, stockholder
service agent........................................... 575,001
Other..................................................... 160,192
--------------
Total Assets...................................... $2,049,281,845
--------------
Liabilities:
Payable for securities purchased.......................... $ 14,247,623
Dividends payable......................................... 470,463
Accrued expenses, taxes, and other........................ 2,828,283
--------------
Total Liabilities................................. $ 17,546,369
--------------
Net Investment Assets .................................... $2,031,735,476
Preferred Stock, at $50 par value................. 37,637,000
--------------
Net Assets for Common Stock .............................. $1,994,098,476
==============
Net Assets per share of Common Stock
(market value--$19.875).......................... $23.70
======
CAPITAL STOCK AND SURPLUS December 31, 1994
Capital Stock:
$2.50 Cumulative Preferred Stock, $50 par value,
asset coverage per share--$2,699.12
Shares authorized--1,000,000; issued
and outstanding--752,740............................ $ 37,637,000
Common Stock, $.50 par value:
Shares authorized--99,000,000; issued
and outstanding--84,144,106.......................... 42,072,053
Surplus:
Capital surplus......................................... 1,758,861,246
Undistributed net investment income..................... 1,794,265
Net unrealized appreciation of investments.............. 189,367,095
Net unrealized appreciation on translation of assets
and liabilities denominated in foreign currencies..... 2,003,817
--------------
$2,031,735,476
==============
- ------------
See notes to financial statements.
14
<PAGE>
TRI-CONTINENTAL CORPORATION
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
Investment income:
Dividends (net of foreign taxes
withheld of $349,067)................ $ 52,950,519
Interest............................... 26,726,963
-----------
Total investment income ................ $79,677,482
Expenses:
Management fee......................... $ 9,372,713
Stockholder account and
registrar services................... 2,986,475
Stockholder reports and
communications....................... 626,447
Directors' fees and expenses........... 191,495
Stockholders' meeting.................. 169,984
Auditing and legal fees................ 161,164
Registration........................... 56,033
Miscellaneous.......................... 141,628
-----------
Total expenses .......................... 13,705,939
-----------
Net investment income ................... $65,971,543*
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions:
Net realized gain on investments....... $149,714,043
Net realized loss from foreign
currency transactions................ (285,314)
Net change in unrealized appreciation
of investments....................... (282,010,077)
Net change in unrealized appreciation
on translation of assets and liabilities
denominated in foreign currencies.... 2,003,817
------------
Net loss on investments and foreign
currency transactions ................. (130,577,531)
------------
Decrease in net investment assets
from operations ....................... $(64,605,988)
============
- ------------
*Net investment income available for Common Stock is $63,745,152, which is net
of Preferred Stock dividends of $1,881,850 and net realized ordinary losses
from foreign currency transactions of $344,541.
See notes to financial statements.
15
<PAGE>
TRI-CONTINENTAL CORPORATION
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS
Year Ended December 31,
-----------------------------------
1994 1993
------------- ---------------
Operations:
Net investment income .................... $ 65,971,543 $ 62,241,704
Net realized gain on investments ......... 149,714,043 133,505,475
Net realized loss from foreign
currency transactions .................. (285,314) --
Net change in unrealized appreciation
of investments ......................... (282,010,077) (22,580,341)
Net change in unrealized appreciation on
translation of assets and liabilities
denominated in foreign currencies ...... 2,003,817 --
--------------- ---------------
Increase (decrease) in net investment
assets from operations ............... $ (64,605,988) $ 173,166,838
--------------- ---------------
Distributions to stockholders:
Net investment income:
Preferred Stock (per share: $2.50
and $2.50) ......................... $ (1,881,850) $ (1,881,850)
Common Stock (per share: $.79
and $.80) .......................... (62,142,379) (59,563,874)
--------------- ---------------
$ (64,024,229) $ (61,445,724)
Net realized gain on investments:
Common Stock (per share: $1.90
and $1.80) ......................... (149,879,009) (134,056,360)
--------------- ---------------
Decrease in net investment assets
from distributions ................. $ (213,903,238) $ (195,502,084)
--------------- ---------------
Capital share transactions:
Value of shares of Common Stock issued
at market price in gain distributions
(5,366,690 and 4,135,298 shares) ....... $ 107,671,901 $ 97,440,027
Value of shares of Common Stock issued
for investment plans (2,106,411
and 1,798,305 shares) .................. 46,577,919 44,786,885
Cost of shares purchased
for investment plans (2,142,604
and 1,673,427 shares) .................. (47,855,965) (41,884,303)
Net proceeds from issuance of shares of
Common Stock upon exercise of
Warrants (824 and 51,884 shares) ....... 1,549 103,031
--------------- ---------------
Increase in net investment assets
from capital share transactions .... $ 106,395,404 $ 100,445,640
--------------- ---------------
Increase (decrease) in net investment
assets ................................. $ (172,113,822) $ 78,110,394
Net investment assets:
Beginning of year ........................ 2,203,849,298 2,125,738,904
--------------- ---------------
End of year (including undistributed
net investment income of $1,794,265
and $297,231) .......................... $ 2,031,735,476 $ 2,203,849,298
=============== ===============
- ------------
See notes to financial statements.
16
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS December 31, 1994
Shares Value
---------- ------------
COMMON STOCKS - 77.6%
AEROSPACE - 1.7%
Boeing Company 400,000 $ 18,700,000
Aircraft manufacturer
Loral Corporation 400,000 15,150,000
Military electronic equipment -------------
$ 33,850,000
-------------
AUTOMOTIVE AND RELATED - 2.7%
Autoliv (ADRs)+* 200,000 $ 7,712,500
Swedish supplier of safety
restraint systems
Eaton Corporation 500,000 24,750,000
Equipment for trucks and automobiles
Ford Motor Company 800,000 22,400,000
Second largest automotive manufacturer -------------
$ 54,862,500
-------------
BASIC MATERIALS - 2.4%
AK Steel Holdings Corporation 300,000 $ 9,225,000
Integrated steel producer
Bayer AG 28,000 6,489,348
Producer of specialty chemicals,
pharmaceuticals, and plastics
Aluminum Company of America 100,000 8,662,500
Leading U.S. aluminum producer
Dow Chemical Company 375,000 25,218,750
Diversified chemicals -------------
$ 49,595,598
-------------
BUILDING AND CONSTRUCTION - 0.9%
Georgia-Pacific Corporation 150,000 $ 10,725,000
Plywood, lumber, and
paper manufacturer
Hopewell Holdings Ltd. 8,000,000 6,616,697
Hong Kong construction company -------------
$ 17,341,697
-------------
COMMUNICATIONS - 3.7%
Alcatel Alsthom Compagnie
Generale d'Electricite 65,000 $ 5,553,682
French developer of equipment
and systems for
public telecommunications
American Telephone & Telegraph Company 400,000 20,100,000
International and domestic
telecommunications services
Bell Atlantic Corporation 300,000 14,925,000
Local telephone services in
mid-Atlantic states
GTE Corporation 600,000 18,225,000
Telephone systems and equipment
Tele Danmark (ADSs) 300,000 7,650,000
Domestic and international
telephone services in Denmark
Telecom Italia-Di Risp 2,526,000 5,039,537
Single provider of the whole
spectrum of telecommunications
services throughout Italy
Telefonica de Espana (ADSs) 115,000 4,010,625
Domestic and international -------------
telephone services in Spain
$ 75,503,844
--------------
17
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) December 31, 1994
Shares Value
---------- ------------
COMPUTERS AND BUSINESS SERVICES - 3.9%
EMC Corporation* 600,000 $ 12,975,000
Mainframe storage devices
COMPUTERS AND
BUSINESS SERVICES (continued)
First Data Corporation 500,000 $ 23,687,500
Information processing services
International Business Machines Corporation 200,000 14,700,000
Manufacturer and distributor of computers
and office equipment
Microsoft Corporation* 450,000 27,562,500
Computer software -------------
$ 78,925,000
-------------
CONSUMER GOODS AND SERVICES - 10.6%
Allied-Domecq PLC 870,000 $ 7,352,370
International food, drink, and hospitality
group
B.A.T. Industries PLC 1,200,000 8,103,570
UK financial services and tobacco company
Coca-Cola Company 700,000 36,050,000
Soft drinks, consumer products
Colgate-Palmolive Company 300,000 19,012,500
Household and personal care products
CPC International Inc. 300,000 15,975,000
International food company
Eastman Kodak Company 450,000 21,487,500
Film, chemicals, and health care products
Gillette Company 300,000 22,425,000
Personal care products
Liz Claiborne, Inc. 500,000 8,437,500
Designer and distributor of women's
apparel
LVMH Moet Hennessy 15,000 2,369,309
Producers of wine, spirits, and
luxury products
Maytag Corporation 700,000 10,500,000
Manufacturer of major home appliances
Philip Morris Companies, Inc. 275,000 15,812,500
Tobacco, food, and beverage manufacturer
Premark International, Inc. 300,000 13,125,000
Manufacturer of Tupperware and
food-equipment products
Procter & Gamble Company 400,000 24,800,000
Household and personal care products
Wendy's International, Inc. 700,000 10,062,500
Fast food restaurant franchise -------------
$ 215,512,749
-------------
DIVERSIFIED - 3.5%
Alco Standard Corporation 300,000 $ 18,825,000
Distributor of paper and
office equipment
Allied-Signal, Inc. 400,000 13,600,000
Aerospace and automotive materials
Corning, Inc. 350,000 10,456,250
Specialty glass products
Dover Corporation 200,000 10,325,000
Elevators; petroleum equipment; and
industrial products
Grace (W.R.) & Co. 500,000 19,312,500
Manufactures and sells -------------
specialty chemicals and
medical products
$ 72,518,750
-------------
18
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) December 31, 1994
Shares Value
---------- ------------
DRUGS AND HEALTH CARE - 5.0%
Abbott Laboratories 600,000 $ 19,575,000
Diversified health care products
Bristol-Myers Squibb Company 250,000 14,468,750
Health and personal care products
Columbia/HCA Healthcare Corporation 500,000 18,250,000
Hospital management company
Merck & Co., Inc. 400,000 15,250,000
Pharmaceutical company
Quorum Health Group Corporation 7,496 143,361
Owner and operator of acute care hospitals
United Healthcare Corporation 400,000 18,050,000
National managed health care company
Warner-Lambert Company 200,000 15,400,000
Drug, toiletries, and food manufacturer -------------
$101,137,111
-------------
ELECTRIC AND GAS UTILITIES - 2.3%
AES Corporation* 470,000 $ 9,194,375
Constructor and operator of independent
power generating facilities
American Electric Power Company, Inc. 350,000 11,506,250
Utility holding company
China Light & Power Co. Ltd. (ADRs) 2,200,000 9,383,220
Electric utility in Hong Kong and China
Detroit Edison Company 500,000 13,062,500
Electric utility
Empresa Nacional de Electricidad (ADRs) 80,000 3,220,000
Major electric utility in Spain -------------
$ 46,366,345
-------------
ELECTRONICS - 2.8%
AMP Inc. 160,000 $ 11,640,000
Manufacturer of electronic connectors
and systems
Micron Technology, Inc. 615,000 27,136,875
Semiconductor manufacturer
Motorola Inc. 300,000 17,362,500
Producer of semiconductors and -------------
communications equipment
$ 56,139,375
-------------
ENERGY - 9.0%
Amoco Corporation 400,000 $ 23,650,000
Oil and gas producer
Atlantic Richfield Company 125,000 12,718,750
Oil producer and West Coast marketer
Baker Hughes Inc. 500,000 9,125,000
Oil service company
Enron Corporation 700,000 21,350,000
Pipeline exploration and production
Enron Global Power and Pipeline L.L.C. 250,000 5,500,000
Major natural gas pipeline systems
Exxon Corporation 350,000 21,262,500
Integrated oil and gas company
Royal Dutch Petroleum Company 56,000 6,020,000
International oil enterprise
Schlumberger Ltd. 300,000 15,112,500
Worldwide energy services
19
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) December 31, 1994
Shares Value
---------- ------------
ENERGY (continued)
Sonat Inc. 410,000 $ 11,480,000
Natural gas company
Sun Company, Inc. 600,000 17,250,000
East Coast oil refiner and marketer
Texaco Inc. 300,000 17,962,500
International oil company
Total S.A. Class "B" 75,000 4,359,191
International oil enterprise
USX-Marathon Group, Inc. 700,000 11,462,500
Worldwide oil and gas producer and refiner
YPF Sociedad Anonima (ADRs) 275,000 5,878,125
Major Argentinean oil and gas company -------------
$183,131,066
-------------
ENTERTAINMENT AND LEISURE - 1.2%
Disney (Walt) Company 400,000 $ 18,450,000
Film entertainment, amusement parks, and
other forms of leisure related activities
News Corp. Ltd. (ADRs) 260,000 4,062,500
Worldwide media and television provider
News Corp. Ltd. (ADRs)*** 130,000 1,803,750
Worldwide media and television provider -------------
$ 24,316,250
-------------
ENVIRONMENTAL MANAGEMENT - 0.7%
Browning-Ferris Industries, Inc. 500,000 $ 14,187,500
Solid- and liquid-waste management services -------------
FINANCE AND INSURANCE - 8.2%
American International Group Inc. 285,000 $ 27,930,000
International insurance holding company
Corporacion Bancaria de Espana, S.A. (ADRs) 340,000 6,077,500
Spanish banking and financial services company
BankAmerica Corporation 450,000 17,775,000
Largest commercial bank in California
and Western states
Bank of New York, Inc. 450,000 13,050,000
Commercial bank
Chemical Banking Corporation 400,000 14,350,000
Money center bank
EXEL Limited 300,000 11,850,000
Bermuda-based excess liability insurance company
Federal National Mortgage Association 200,000 14,575,000
Mortgage financing
General Re Corporation 140,000 17,325,000
Largest property casualty re-insurer in the US
Internationale Nederlanden Bank N.V. 138,875 6,567,330
Largest banking and insurance services
group in the Netherlands
MBNA Corporation 500,000 11,687,500
Issuer of bank credit cards
NationsBank Corporation 400,000 18,050,000
Southeast regional bank holding company
Travelers Inc. 250,000 8,125,000
Broad based financial services company -------------
$167,362,330
-------------
20
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) December 31, 1994
Shares Value
---------- ------------
MANUFACTURING AND
INDUSTRIAL EQUIPMENT - 7.4%
BTR PLC 1,300,000 $ 5,971,257
UK global manufacturer of industrial goods
Caterpillar, Inc. 300,000 16,537,500
Manufacturer of earth moving machinery
Deere & Company 200,000 13,250,000
Manufacturer of farm and construction
equipment worldwide
Foster Wheeler Corporation 400,000 11,900,000
Engineering and construction services
General Electric Company 800,000 40,800,000
Supplier of electrical equipment and
other industrial and consumer products
General Signal Corporation 440,000 14,025,000
Capital goods producer
Illinois Tool Works, Inc. 350,000 15,312,500
Manufacturer of fasteners, tools, and plastic items
Ingersoll-Rand Company 400,000 12,600,000
Worldwide standard machinery and
equipment manufacturer
Pacific Dunlop Ltd. 1,500,000 3,987,375
Australian manufacturer of a wide range
of products
York International Corporation 425,000 15,671,875
Manufacturer of climate control systems -------------
$150,055,507
-------------
PACKAGING AND PAPER - 0.9%
Kimberly-Clark Corporation 300,000 $ 15,150,000
Consumer paper products; newsprint
Pechiney International 80,000 2,398,351
Producer of packaging and -------------
turbine blades for
jet engines $ 17,548,351
-------------
PUBLISHING - 0.3%
Elsevier 650,000 $ 6,784,890
-------------
Global printer and publisher of professional
trade journals and magazines
REAL ESTATE INVESTMENT TRUST - 4.9%
Avalon Properties, Inc. 300,000 $ 6,900,000
REIT focusing on apartment properties in the
Eastern United States
DeBartolo Realty Corporation 750,000 11,250,000
Large REIT operator of shopping malls
Developers Diversified Realty Corp. 450,000 14,062,500
REIT operator of powerstrip malls
Duke Realty Investments, Inc. 200,000 5,650,000
REIT focused on commercial
properties in the Midwest
First Industrial Realty Trust, Inc. 300,000 5,850,000
REIT operator of industrial properties
Kimco Realty Corporation 500,000 18,937,500
High-quality REIT operator of shopping centers
Macerich Company 500,000 10,656,250
REIT operator of shopping malls
21
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) December 31, 1994
Shares Value
---------- ------------
REAL ESTATE
INVESTMENT TRUST (continued)
Post Properties, Inc. 250,000shs. $ 7,875,000
REIT aimed at apartment
communities in the Southeast
Property Trust of America 500,000 9,000,000
Real estate investment trust
Simon Property Group, Inc. 400,000 9,700,000
Nationwide REIT owner and -------------
operator of regional malls
$ 99,881,250
-------------
RETAIL TRADE - 3.4%
Home Depot, Inc. 410,000 $ 18,860,000
Home improvement store chain
May Department Stores Company 500,000 16,875,000
Large department store chain
Nordstrom, Inc. 500,000 21,062,500
Department store chain
Wal-Mart Stores, Inc. 600,000 12,750,000
Largest discount retail chain -------------
$ 69,547,500
-------------
TRANSPORTATION - 1.6%
Conrail Inc. 350,000 $ 17,675,000
Freight railroad system
Jurong Shipyard Ltd. 425,000 3,264,746
Leading ship repair company in Singapore
Kansas City Southern Industries, Inc. 300,000 9,262,500
Railroad and financial services
Roadway Services Inc. 50,000 2,831,250
Motor carrier -------------
$ 33,033,496
-------------
MISCELLANEOUS - 0.5%
European Vinyls Corporation* 112,000 $ 4,967,013
Market leader in the PVC industry
Huaneng Power International (ADRs)* 220,000 3,245,000
Flagship power company of China
Indosat (ADRs)* 31,200 1,115,400
International telecommunications -------------
to the Indonesian market $ 9,327,413
-------------
Total Common Stocks
(Cost: $1,392,405,032) $1,576,928,522
-------------
U.S. GOVERNMENT SECURITIES - 3.3%
U.S. Treasury Bonds, 11 7/8%, 11/15/2003 $ 10,000,000 $ 12,512,500
U.S. Treasury Notes, 11 1/4%, 5/15/1995 54,000,000 54,928,098
-------------
Total U.S. Government Securities
(Cost: $70,318,125) $ 67,440,598
-------------
22
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) December 31, 1994
Shares Value
---------- ------------
CORPORATE BONDS - 2.2%
OrNda HealthCorp, 12 1/4%, 5/15/2002 $ 10,000,000 $ 10,650,000
Penn Traffic Co., 9 5/8%, 4/15/2005 15,000,000 13,162,500
Stone Container Corporation, 9 7/8%, 2/1/2001 10,000,000 9,412,500
Unisys Corporation, 13 1/2%, 7/1/1997 10,000,000 10,850,000
-------------
Total Corporate Bonds
(Cost: $46,827,085) $ 44,075,000
-------------
CONVERTIBLE ISSUES - 11.4%
Convertible Debentures - 3.1%
COMPUTER AND BUSINESS SERVICES - 0.4%
EMC Corporation, 4 1/4%, 1/1/2001 7,000,000 $ 8,478,750
-------------
DIVERSIFIED - 1.1%
MascoTech Inc., 4 1/2%, 12/15/2006 11,300,000$ 7,599,250
Thermo Electron Corporation, 4 5/8%, 8/1/1997+ 10,000,000 14,050,000
-------------
$ 21,649,250
-------------
FINANCE AND INSURANCE - 0.4%
AXA, 6%, 1/1/2001 17,733,000** $ 3,895,811
Liberty Life, 6 1/2%, 9/30/2004 3,500,000 3,596,250
-------------
$ 7,492,061
-------------
MANUFACTURING AND INDUSTRIAL
EQUIPMENT - 0.5%
TriMas Corporation, 5%, 8/1/2003 10,000,000 $ 9,900,000
-------------
TRANSPORTATION - 0.3%
Nippon Yusen, 2%, 9/29/2000 505,000,000++ $ 6,344,859
-------------
PACKAGING AND PAPER - 0.2%
Land and General Berhad, 4 1/2%, 7/26/2004 3,000,000$ 3,427,500
-------------
RETAIL TRADE - 0.2%
Home Depot, Inc., 4 1/2%, 2/15/1997 4,000,000 $ 4,760,000
-------------
Total Convertible Debentures
(Cost: $59,296,883) $ 62,052,420
-------------
Convertible Preferred Stocks - 8.3%
AUTOMOTIVE AND RELATED - 1.3%
Chrysler Corporation, $4.625+ 200,000shs.$ 27,475,000
-------------
BASIC MATERIALS - 1.3%
AK Steel Holdings Corporation, 7% 350,000 $ 10,981,250
Bethlehem Steel Corporation, $3.50+ 300,000 14,700,000
-------------
$ 25,681,250
-------------
COMMUNICATIONS - 0.3%
Nacional Financiera, S.A., 11 1/4%,
5/15/1998 (ADRs)# 150,000 $ 6,225,000
-------------
23
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) December 31, 1994
Shares Value
---------- ------------
COMPUTER AND BUSINESS SERVICES - 0.9%
General Motors Corporation Series "C" $3.25 325,000 $ 18,646,875
-------------
DIVERSIFIED - 0.6%
Corning Delaware, 6% 250,000 $ 11,687,500
-------------
DRUGS AND HEALTH CARE - 0.8%
Beverly Enterprises Inc., $2.75 275,000 $ 16,225,000
-------------
ENERGY - 0.4%
Atlantic Richfield Company, 9%, 9/15/1997 ## 350,000 $ 9,143,750
-------------
FINANCE AND INSURANCE - 1.9%
Citicorp, $5.375+ 250,000 $ 28,656,250
Travelers Inc., 5 1/2% 180,000 9,292,500
-------------
$ 37,948,750
-------------
RETAIL TRADE - 0.8%
Sears, Roebuck & Co. Series "A" $3.75 300,000 $ 16,687,500
-------------
Total Convertible Preferred Stocks
(Cost: $162,487,473) $ 169,720,625
-------------
Total Convertible Issues
(Cost: $221,784,356) $ 231,773,045
-------------
TRI-CONTINENTAL FINANCIAL
DIVISION+++ - 1.3%
(Cost: $25,209,602) $ 27,690,898
-------------
SHORT-TERM HOLDINGS - 3.5%
(Cost: $70,400,000) $ 70,400,000
-------------
Total Investments - 99.3%
(Cost: $1,826,944,200) $2,018,308,063
Other Assets Less Liabilities - 0.7% 13,427,413
--------------
Net Investment Assets - 100.0% $2,031,735,476
==============
- ---------------
* Non-income producing security.
** Principal amount reported in French Francs.
***One ADR represents 4 limited voting preference shares. Non-income producing
security.
+ Rule 144A security.
++ Principal amount reported in Japanese Yen.
## Exchangeable into shares of Lyondale Petro-Chemical Company.
# Exchangeable into shares of Telefonos de Mexico S.A. (ADRs).
+++Restricted securities, see note 6.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. Investments in U.S. Government securities, stocks, corporate bonds,
limited partnership interests, and short-term holdings maturing in more
than 60 days are valued at current market values or, in their absence,
fair value determined in accordance with procedures approved by the Board
of Directors. Securities traded on national exchanges are valued at last
sales prices or, in their absence and in the case of over-the-counter
securities, a mean of bid and asked prices. Short-term holdings maturing
in 60 days or less are valued at amortized cost.
b. The books and records of the Corporation are maintained in U.S. dollars.
The market value of investment securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollars at the
closing daily rate of exchange as reported by a pricing service. Purchases
and sales of investment securities, income, and expenses are translated
into U.S. dollars at the rate of exchange prevailing on the respective
dates of such transactions.
The Corporation separates that portion of the results of operations
resulting from changes in the foreign exchange rates from the fluctuations
arising from changes in the market prices of securities held in the
portfolio. Similarly, the Corporation separates the effect of changes in
foreign exchange rates from the fluctuations arising from changes in the
market prices of portfolio securities sold during the period.
c. The Corporation may enter into forward currency contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings, or other amounts receivable or payable in
foreign currency. A forward contract is a commitment to purchase or sell a
foreign currency at a future date at a negotiated forward rate. Certain
risks may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts. The
contracts are valued daily at current exchange rates and any unrealized
gain or loss is included in net unrealized appreciation or depreciation on
translation of assets and liabilities denominated in foreign currencies
and forward currency contracts. The gain or loss, if any, arising from the
difference between the settlement value of the forward contract and the
closing of such contract, is included in net realized gain or loss from
foreign currency transactions.
d. There is no provision for federal income or excise tax. The Corporation
has elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
e. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statements and federal income
tax purposes. Dividends receivable and payable are recorded on ex-dividend
dates. Interest income is recorded on the accrual basis.
f. The treatment for financial statement purposes of distributions made
during the year from net investment income or net realized gains may
differ from their ultimate treatment for federal income tax purposes.
These differences primarily are caused by differences in the timing of the
recognition of certain components of income, expense or capital gain, and
the recharacterization of foreign exchange gains or losses to either
ordinary income or realized capital gain for federal income tax purposes.
Where such differences are permanent in nature, they are reclassified in
the components of net investment assets based on their ultimate
characterization for federal income tax purposes. Any such
reclassification will have no effect on net assets, results of operations,
or net asset value per share of the Corporation.
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
2. Under the Corporation's Charter, dividends on the Common Stock cannot be
declared unless net assets, after such dividends and dividends on Preferred
Stock, equal at least $100 per share of Preferred Stock outstanding. The
Preferred Stock is subject to redemption at the Corporation's option at any time
on 30 days' notice at $55 per share (or a total of $41,400,700 for the shares
outstanding) plus accrued dividends, and entitled in liquidation to $50 per
share plus accrued dividends.
The Corporation, in connection with its Automatic Dividend Investment and
Cash Purchase Plan and other stockholder plans, acquires and issues shares of
its own Common Stock, as needed, to satisfy Plan requirements. For the year
ended December 31, 1994, 2,142,604 shares were purchased from Plan participants
and on the open market at a cost of $47,855,965 which represented a weighted
average discount of 14.7% from the net asset value of those acquired shares. A
total of 2,106,411 shares were issued to Plan participants during the year for
proceeds of $46,577,919, a discount of 15.2% from the net asset value of those
shares.
At December 31, 1994, 202,047 shares of Common Stock were reserved for
issuance upon exercise of 15,822 Warrants, each of which entitled the holder to
purchase 12.77 shares of Common Stock at $1.76 per share. Assuming the exercise
of all Warrants outstanding at December 31, 1994, net investment assets would
have increased by $355,603 and the net asset value of the Common Stock would
have been $23.65 per share. The number of Warrants exercised during the years
1994 and 1993, was 69 and 4,586, respectively.
3. Purchases and sales of portfolio securities, excluding short-term
investments, amounted to $1,463,914,192 and $1,530,670,979, respectively. At
December 31, 1994, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes, and the tax
basis gross unrealized appreciation and depreciation of portfolio securities,
including the effects of foreign currency transactions, amounted to $279,669,777
and $88,305,914, respectively.
4. At December 31, 1994, the Corporation owned short-term investments which
matured in less than 7 days.
5. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Corporation and provides necessary personnel and facilities. Compensation of
all officers of the Corporation, all directors of the Corporation who are
employees or consultants of the Manager, and all personnel of the Corporation
and the Manager is paid by the Manager. The Manager receives a fee, calculated
daily and payable monthly, equal to a percentage of the Corporation's daily net
assets at the close of business on the previous business day. The management fee
rate is calculated on a sliding scale of 0.45% to 0.375%, based on average daily
net assets of all the investment companies managed by the Manager. The
management fee for the year ended December 31, 1994, was equivalent to an annual
rate of 0.44% of the average daily net assets of the Corporation. Effective June
1, 1994, Seligman Henderson Co. (the "Subadviser"), a 50% owned affiliate of the
Manager, is entitled to a portion of the Manager's fee for acting as subadviser
for certain of the international investments of the Corporation.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
Seligman Data Corp., owned by the Corporation and certain associated
investment companies, charged the Corporation at cost $2,939,129 for stockholder
account services. The Corporation's investment in Seligman Data Corp. is
recorded at a cost of $43,681.
Certain officers and directors of the Corporation are officers or directors
of the Manager, the Subadviser, and/or Seligman Data Corp.
Fees of $55,500 were incurred by the Corporation for legal services of
Sullivan & Cromwell, a member of which firm is a director of the Corporation.
The Corporation has a compensation arrangement under which directors who
receive fees may elect to defer receiving such fees. Interest is accrued on the
deferred balances. The annual cost of such fees and interest is included in
directors' fees and expenses, and the accumulated balance thereof at December
31, 1994, of $331,035 is included in other liabilities. Deferred fees and the
related accrued interest are not deductible for federal income tax purposes
until such amounts are paid.
6. At December 31, 1994, the Tri-Continental Financial Division of the
Corporation was comprised of four investments that were purchased through
private offerings and cannot be sold without prior registration under the
Securities Act of 1933 or pursuant to an exemption therefrom. These investments
are valued at fair value as determined in accordance with procedures approved by
the Board of Directors of the Corporation. The acquisition dates of investments
in the limited partnerships and stock, along with their cost and values at
December 31, 1994, are as follows:
Investments Acquisition Date(s) Cost Value
- -------------------- -------------------- ---------- ----------
Tempest Reinsurance
Company Ltd. 9/13/93 $10,000,000 $10,600,000
Water Street
Corporate Recovery
Fund I, L.P. 10/9/90 to 4/8/94 2,292,011 2,545,713
WCAS Capital
Partners II, L.P. 12/11/90 to 2/19/93 4,352,677 5,404,110
Whitney Subordinated
Debt Fund, L.P. 7/12/89 to 12/20/94 8,564,914 9,141,075
---------- ----------
Total $25,209,602 $27,690,898
=========== ===========
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
7. Following is a summary of unaudited quarterly results of operations, in
thousands of dollars except for per share amounts:
For quarters ended in the year 1994
-----------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
Total investment income.... $17,474 $20,844 $20,662 $20,697
Net investment income for
Common Stock............. $13,479 $16,919 $16,847 $16,845
Per Common share......... $0.17 $0.21 $0.21 $0.21
Net realized and unrealized
investment gain (loss)... $(79,263) $(58,099) $48,127 $(41,343)
Per Common Share......... $(1.00) $(0.74) $0.60 $(0.53)
For quarters ended in the year 1993
-----------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
Total investment income.... $16,912 $19,807 $18,857 $20,807
Net investment income for
Common Stock............. $12,867 $15,694 $14,946 $16,853
Per Common share......... $0.17 $0.21 $0.20 $0.22
Net realized and unrealized
investment gain (loss)... $34,822 $(26,511) $71,369 $31,245
Per Common Share......... $0.46 $(0.36) $0.95 $0.41
28
<PAGE>
FINANCIAL HIGHLIGHTS
The Corporation's financial highlights are presented below. The per share
operating performance data is designed to allow investors to trace the operating
performance, on a per Common share basis, from the Corporation's beginning net
asset value to the ending net asset value so that they can understand what
effect the individual items have on their investment, assuming it was held
throughout the year. Generally, the per share amounts are derived by converting
the actual dollar amounts incurred for each item, as disclosed in the financial
statements, to their equivalent per Common share amount.
The total investment return based on market value measures the Corporation's
performance assuming investors purchased shares of the Corporation at the market
value as of the beginning of the period, invested dividends and capital gains
paid as provided for in the Corporation's Prospectus and Automatic Dividend
Investment and Cash Purchase Plan, and then sold their shares at the closing
market value per share on the last day of the period. The total investment
return based on net asset value is similarly computed except that the
Corporation's net asset value is substituted for the corresponding market value.
The total investment return computations do not reflect any sales commissions
investors may incur in purchasing or selling shares of the Corporation.
The ratios of expenses to average net assets and net investment income to
average net assets for the years presented do not reflect the effect of
dividends paid to Preferred Stockholders.
Year Ended December 31,
-----------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
Per Share Operating Performance:
Net asset value,
beginning of year................. $27.49 $28.03 $28.57 $24.60 $27.44
------ ------ ------ ------ ------
Net investment income............... .83 .83 .81 .81 .81
Net realized and unrealized
investment gain (loss)............ (1.69) 1.46 1.19 5.79 (1.05)
Net realized and unrealized
gain on foreign currency
transactions .02 -- -- -- --
------ ------ ------ ------ ------
Increase (decrease) from
investment operations............. (.84) 2.29 2.00 6.60 (.24)
Dividends paid on
Preferred Stock................... (.03) (.03) (.03) (.03) (.03)
Dividends paid on
Common Stock...................... (.79) (.80) (.78) (.78) (.86)
Distribution from
net gain realized................. (1.90) (1.80) (.70) (1.80) (1.60)
Issuance of Common Stock
in gain distributions............. (.23) (.19) (.05) (.02) (.11)
Issuance of Common Stock
upon Warrant exercise............. -- (.01) -- -- --
Issuance of Common Stock
from exercise of Rights........... -- -- (.97) -- --
Rights offering costs............... -- -- (.01) -- --
------ ------ ------ ------ ------
Net increase (decrease)
in net asset value................ (3.79) (.54) (.54) 3.97 (2.84)
------ ------ ------ ------ ------
Net asset value,
end of year....................... $23.70 $27.49 $28.03 $28.57 $24.60
====== ====== ====== ====== ======
29
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C>
Adjusted net asset value,
end of year*................ $ 23.65 $27.42 $27.95 $28.48 $ 24.52
Market value, end of year..... $19.875 $23.75 $25.50 $27.75 $21.375
Total investment return:
Based upon market value..... (5.07)% 3.47% .61%+ 42.98% 3.46%
Based upon net asset value.. (2.20)% 8.95% 7.42%+ 27.91% (.20)%
Ratios/Supplemental Data:
Expenses to average
net assets.................. .64% .66% .67% .67% .56%
Net investment income to
average net assets.......... 3.08% 2.88% 2.86% 2.90% 3.01%
Portfolio turnover rate....... 70.38% 69.24% 44.35% 49.02% 41.23%
Net investment assets,
end of year
(000's omitted):
For Common Stock ...........$1,994,098 $2,166,212 $2,088,102 $1,833,664 $1,500,281
For Preferred Stock ........ 37,637 37,637 37,637 37,637 37,637
------ ------ ------ ------ ------
Total net investment
assets .....................$2,031,735 $2,203,849 $2,125,739 $1,871,301 $1,537,918
========== ========== ========== ========== ==========
</TABLE>
- ------------------
* Assumes the exercise of outstanding warrants.
+ The total investment returns for 1992 have been adjusted for the effect of
the exercise of Rights (equivalent to approximately $0.97 per share),
assuming full subscription by Common Stockholders.
See notes to financial statements.
30
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Security Holders,
Tri-Continental Corporation:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, and the statement of capital stock and
surplus of Tri-Continental Corporation as of December 31, 1994, the related
statements of operations for the year then ended and of changes in net
investment assets for the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994, by correspondence with the Corporation's custodians and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Tri-Continental
Corporation as of December 31, 1994, the results of its operations, the changes
in its net investment assets and the financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
---------------------
Deloitte & Touche LLP
New York, New York
February 3, 1995
- --------------------------------------------------------------------------------
Manager
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
Subadviser
Seligman Henderson Co.
100 Park Avenue
New York, NY 10017
Stockholder Service Agent
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
Important Telephone Numbers
(800) TRI-1092 Stockholder
Services
(800) 445-1777 Retirement Plan
Services
(800) 622-4597 24-Hour Automated
Telephone Access
Service
31
<PAGE>
TRI-CONTINENTAL CORPORATION
Managed by
[Logo]
J. & W. SELIGMAN & CO.
INCORPORATED
Investment Managers and Advisors
ESTABLISHED 1864
100 Park Avenue, New York, NY 10017
This report is intended only for the information of stockholders or those who
have received the current prospectus covering shares of Common Stock of
Tri-Continental Corporation, which contains information about management fees
and other costs.
CETRI2 12/94
-32-
<PAGE>
PART C. OTHER INFORMATION
- -------------------------
Item 24. Financial Statements and Exhibits
(1) Financial Statements: The following financial statements and
schedules of the Registrant are included in the Prospectus or
the 1994 Annual Report to Stockholders of the Corporation, which
are incorporated by reference into the Statement of Additional
Information, and are made a part of this Registration Statement:
Assets and Liabilities, December 31, 1994; Capital Stock and
Surplus, December 31, 1994; Statement of Operations for the year
ended December 31, 1994; Statement of Changes in Net Investment
Assets for the years ended December 31, 1994 and 1993; Portfolio
of Investments, December 31, 1994; Table for the ten years ended
December 31, 1994 under the caption "Senior Securities - $2.50
Cumulative Preferred Stock" in the Prospectus; Notes to
Financial Statements; Per Share Operating Performance, Total
Investment Returns, Ratios and Supplemental Data for the ten
years ended December 31, 1994; Report of Independent Auditors.*
* All other schedules are omitted, because the information is
included elsewhere in the Prospectus or the Statement of
Additional Information or is not required.
(2) Exhibits: All Exhibits have been previously filed except
those marked with an asterisk (*) which are incorporated herein.
(a) Articles of Amendment to the Charter of Registrant. (Incorporated by
Reference to Registrant's Post-Effective Amendment #1 filed on March 30,
1993.)
(b) By-laws of the Registrant. (Incorporated by Reference to Registrant's
Post-Effective Amendment #1 filed on March 6, 1981.)
(d-1) Specimen certificates of Common Stock. (Incorporated by Reference to
Registrant's Post-Effective Amendment #1 filed on March 6, 1981.)
(d-2) Specimen certificates of $2.50 Cumulative Preferred Stock. (Incorporated
by Reference to Registrant's Post-Effective Amendment #1 filed on March
6, 1981.)
(d-3) Specimen of Warrant of the Registrant. (Incorporated by Reference to
Registrant's Post-Effective Amendment #1 filed on March 6, 1981.)
(d-4) Form of Subscription Certificate - Subscription Right for shares of
Common Stock. (Incorporated by Reference to Registrant's Registration
Statement filed on September 17, 1992.)
(d-5) The Registrant's Charter is the constituent instrument defining the
rights of the $2.50 Cumulative Preferred Stock, par value $50, and the
Common Stock of the Registrant. (Incorporated by Reference to
Registrant's Post-Effective Amendment #1 filed on March 6, 1981.)
(e) Dividend Reinvestment Plan. (Incorporated by Reference to Registrant's
Post-Effective Amendment #1 filed on March 6, 1981.)
(g) Amended Management Agreement between Registrant and J. & W. Seligman &
Co. Incorporated.*
(g-1) Form of Subadvisory Agreement between the Manager and Seligman Henderson
Co.*
(i-1) Amendments to the Amended Retirement Income Plan of J. & W. Seligman &
Co. Incorporated and Trust. (Incorporated by Reference to Registrants
Pre-Effective Amendment #1 filed on April 29, 1994.)
<PAGE>
PART C. OTHER INFORMATION
- -------------------------
Item 24. Financial Statements and Exhibits
(i-2) Amendments to the Amended Employees' Thrift Plan of Union Data Service
Center, Inc. and Trust. (Incorporated by Reference to Registrant's
Pre-Effective Amendment #1 filed on April 29, 1994.)
(j-1) Copy of Custodian Agreement between Registrant and Investors Fiduciary
Trust Company. (Incorporated by Reference to Registrant's Registration
Statement filed on March 20, 1991.)
(k) Copy of Agreement pursuant to Rule 11(a)2-2(T) and the Securities
Exchange Act of 1934, as amended. (Incorporated by Reference to
Registrant's Post-Effective Amendment #1 filed on March 6, 1981.)
(l) Opinion and Consent of Counsel*
(n) Consent of Independent Auditors.*
(q-1) Copy of amended Individual Retirement Account Trust. (Incorporated by
Reference to Registrant's Pre-Effective Amendment #1 filed on April 29,
1992.)
(q-2) Copy of Basic Business Retirement Plans. (Incorporated by Reference to
Registrant's Post-Effective Amendment #1 filed on March 6, 1981.)
(q-3) Copy of Comprehensive Business Retirement Plans. (Incorporated by
Reference to Registrant's Post-Effective Amendment #1 filed on March 6,
1981.)
(q-4) Copy of amended J. & W. Seligman & Co. Incorporated (SARSEP) Salary
Reduction and Other Elective Simplified Employee Pension-Individual
Retirement Accounts Contribution Agreement (under 401(k) of the Internal
Revenue Code). (Incorporated by Reference to Registrant's Pre-Effective
Amendment #1 filed on April 29, 1992.)
(x) Power of Attorney (Incorporated by Reference to Registrant's Registration
Statement filed on October 28, 1993)
Item 25. Marketing Arrangements: Not Applicable
Item 26. Other Expenses of Issuance and Distribution:
Registration fees $ 18,209.75
NYSE listing fees -0-
Registrar fees -0-
Legal fees -0-
Accounting fees -0-
Miscellaneous (mailing, etc.) -0-
Item 27. Persons Controlled by or Under Common Control with Registrant:
Seligman Data Corp., a New York Corporation, is owned by the
Registrant and certain associated investment companies. The
Registrant's investment in Seligman Data Corp. is recorded at a cost
of $43,681.
Item 28. Number of Holders of Securities As of March 31, 1995:
Title of Class Number of Recordholders
-------------- -----------------------
$2.50 Cumulative Preferred 843
Common Stock 47,951
Warrants 240
<PAGE>
PART C. OTHER INFORMATION
- -------------------------
Item 29. Indemnification: Incorporated by Reference to Registrant's
Registration Statement No. 2-67086 on Form N-2 dated March 27, 1980;
and Registration Statement No. 33-13772 on Form N-2 dated April 19,
1988.
Item 30. Business and Other Connections of Investment Adviser:
J. & W. Seligman & Co. Incorporated, a Delaware corporation
("Manager"), is the Registrant's investment manager. The Manager also
serves as investment manager to sixteen 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 Henderson Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income Fund,
Inc., Seligman New Jersey Tax-Exempt Fund, Inc. Seligman Pennsylvania
Tax-Exempt Fund Series, Seligman Portfolios, Inc., Seligman Quality
Municipal Fund, Inc., Seligman Tax-Exempt Fund Series, Inc., Seligman
Tax-Exempt Series Trust, and Seligman Select Municipal Fund, Inc.
Seligman Henderson Co. (the "Subadviser") also serves as subadviser
to eight other associated investment companies. They are Seligman
Capital Fund, Inc., Seligman Common Stock Fund, Inc., Seligman
Communications and Information Fund, Inc., Seligman Frontier Fund,
Inc., Seligman Growth Fund, Inc., Seligman Henderson Global Fund
Series, Inc., Seligman Income Fund, Inc. and the Global and Global
Smaller Companies Portfolios of Seligman Portfolios, Inc.
The Manager and Subadviser have an advisory service division which
provides investment management or advice to private clients. The list
required by this Item 28 of officers and directors of the Manager and
the Subadviser, respectively, 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 the Manager and the Subadviser, respectively, pursuant to
the Investment Advisers Act of 1940 (SEC File No. 801-5798 and SEC
File No. 801-4067) both of which were filed on March 31, 1995.
Item 31. Location of Accounts and Records:
Custodian: Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
and
Tri-Continental Corporation
100 Park Avenue
New York, New York 10017
Item 32. Management Services: Seligman Data Corp. ("SDC"), the Registrant's
shareholder service agent, has an agreement with The Shareholder
Service Group ("TSSG") pursuant to which TSSG provides a data
processing system for certain shareholder accounting and
recordkeeping functions performed by SDC, which commenced in July
1990. For the last three fiscal years ended December 31, 1994, the
approximate cost of these services on a fiscal year basis were as
follows:
1994 1993 1992
---- ---- ----
Tri-Continental Common Stock 250,773 $ 317,700 $ 315,600
Tri-Continental Preferred Stock 4,597 6,000 6,300
Tri-Continental Warrants 1,351 2,000 2,000
Tri-Continental Rights -0- 56,000 74,400
<PAGE>
PART C. OTHER INFORMATION
- -------------------------
Item 33. Undertakings:
I. The Registrant undertakes to suspend the offering of shares until
the prospectus is amended if (1) subsequent to the effective date of
its registration statement, the net asset value declines more than
ten percent from its net asset value as of the effective date of the
registration statement.
II. The Registrant undertakes:
(a) to file, during any period in which offers or sales are being
made, a post-effective amendment to the registration
statement:
(1) to include any prospectus required by Section 10(a)(3)
of the 1933 Act;
(2) to reflect in the prospectus any facts or events after
the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement; and
(3) to include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
(b) that, for the purpose of determining any liability under
the 1933 Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to
the securities offered therein, and the offering of
those securities at that time shall be deemed to be the
initial bona fide offering thereof.
III. The Registrant undertakes to send by first class mail or other
means designed to ensure equally prompt delivery within two business
days of receipt of a written or oral request, the Registrant's
Statement of Additional Information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or 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 13th day of
April, 1995.
TRI-CONTINENTAL CORPORATION
(Registrant)
By: /s/ William C. Morris
----------------------
William C. Morris, Chairman of the Board*
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on April 13, 1995.
Signature Title
--------- -----
/s/ William C. Morris
- --------------------- Chairman of the Board
William C. Morris* (Principal executive officer) and Director
/s/ Ronald T. Schroeder
- ----------------------- Director and President
Ronald T. Schroeder*
/s/ Thomas G. Rose
- ------------------- Treasurer
Thomas G. Rose
Fred E. Brown, Director )
Alice S. Ilchman, Director )
John E. Merow, Director )
Betsy S. Michel, Director ) /s/ Brian T. Zino
Douglas R. Nichols, Jr., Director) -----------------
James C. Pitney, Director ) * Brian T. Zino, Attorney-in-fact
James Q. Riordan, Director )
Herman J. Schmidt, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
Brian T. Zino, Director )
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of December 29, 1988, and amended April 10,
1991, between TRI-CONTINENTAL CORPORATION, a Maryland corporation (the
"Corporation"), and J. & W. SELIGMAN & CO. INCORPORATED, a Delaware corporation
(the "Manager").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Duties of the Manager. The Manager shall manage the affairs of the
Corporation including, but not limited to, continuously providing the
Corporation with investment management, including investment research,
advice and supervision, determining which securities shall be purchased or
sold by the Corporation, making purchases and sales of securities on behalf
of the Corporation and determining how voting and other rights with respect
to securities of the Corporation shall be exercised, subject in each case
to the control of the Board of Directors of the Corporation and in
accordance with the objectives, policies and principles set forth in the
Registration Statement and Prospectus of the Corporation and the
requirements of the Investment Company Act of 1940 (the "Act") and other
applicable law. In performing such duties, the Manager shall provide such
office space, such bookkeeping, accounting, internal legal, clerical,
secretarial and administrative services (exclusive of, and in addition to,
any such services provided by any others retained by the Corporation) and
such executive and other personnel as shall be necessary for the operations
of the Corporation. The Manager shall also, if requested by and subject to
the control of the Board of Directors of Union Data Service Center, Inc.
("Data"), manage the affairs of Data and provide Data with such office
management, personnel, reproduction, employee cafeteria and internal legal
services and such senior executive officers (other than vice presidents) as
may be necessary for the operation of Data, and with a treasurer, a
corporate secretary and a principal operating officer.
2. Expenses. The Manager shall pay all of its expenses arising from the
performance of its obligations under Section 1 and shall pay any salaries,
fees and expenses of the directors of the Corporation who are employees of
the Manager or its affiliates. The Manager shall not be required to pay any
other expenses of the Corporation, including, but not limited to, direct
charges relating to the purchase and sale of portfolio securities, interest
charges, fees and expenses of independent attorneys and auditors, taxes and
governmental fees, cost of stock certificates and any other expenses
(including clerical expenses) of issue, sale, repurchase or redemption of
shares, expenses of registering and qualifying shares for sale, expenses of
printing and distributing reports, notices and proxy materials to
stockholders, expenses of corporate data processing and related services,
stockholder recordkeeping and stockholder account service, expenses of
printing and filing reports and other documents filed with governmental
agencies, expenses of printing and distributing prospectuses, expenses of
annual and special stockholders' meetings, fees and disbursements of
transfer agents, registrars and custodians, expenses of disbursing
dividends and distributions, fees and expenses of directors of the
Corporation who are not employees of the Manager or its affiliates,
membership dues in the Association of Publicly Traded Investment Companies,
insurance premiums and extraordinary expenses such as litigation expenses.
-1-
<PAGE>
3. Compensation.
a. As compensation for the services performed and the facilities and
personnel provided by the Manager pursuant to Section 1, the Corporation
will pay to the Manager promptly after the end of each month a fee,
calculated on each day during such month, equal to the Applicable
Percentage of the daily net assets of the Corporation at the close of
business on the previous business day.
b. As used herein.
1. The term "Applicable Percentage" means the amount (expressed as a
percentage and rounded to the nearest one millionth of one percent)
obtained by dividing (i) the Fee Amount by (ii) the Fee Base.
2. The term "Fee Amount" means the sum of the following:
.45 of 1% on an annual basis of the first $4,000,000,000 of Fee Base,
.425 of 1% on an annual basis of the next $2,000,000,000 of Fee Base,
.40 of 1% on an annual basis of the next $2,000,000,000 of Fee Base, and
.375 of 1% on an annual basis of Fee Base in excess of $8,000,000,000.
3. The term "Fee Base" as of any day means the sum of the net assets at
the close of business on the previous day of each of the investment
companies registered under the Act for which the Manager or any
affiliated company acts as investment adviser or manager (including
the Corporation).
c. If the Manager shall serve hereunder for less than the whole of any
month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Manager shall purchase securities from
or through and sell securities to or through such persons, brokers or
dealers (including the Manager or an affiliate of the Manager) as the
Manager shall deem appropriate in order to carry out the policy with
respect to brokerage as set forth in the Registration Statement and
Prospectus of the Corporation or as the Board of Directors of the
Corporation may direct from time to time. In providing the Corporation with
investment management and supervision it is recognized that the Manager
will seek the most favorable price and execution, and, consistent with such
policy, may give consideration to the research, statistical and other
services furnished by brokers or dealers to the Manager for its use, to the
general attitude of brokers or dealers toward investment companies and
their support of them, and to such other considerations as the Board of
Directors of the Corporation may direct or authorize from time to time.
Notwithstanding the above, it is understood that it is desirable for the
Corporation that the Manager have access to supplemental investment and market
research and security and economic analysis provided by brokers who execute
brokerage transactions at a higher cost to the Corporation than may result when
allocating brokerage to other brokers on the basis of seeking the most favorable
price and execution.
-2-
<PAGE>
Therefore, the Manager is authorized to place orders for the purchase and sale
of securities for the Corporation with such brokers, subject to review by the
Corporation's Board of Directors from time to time with respect to the extent
and continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Manager in connection with its services to
other clients as well as to the Corporation.
The placing of purchase and sale orders may be carried out by the Manager
or any wholly-owned subsidiary of the Manager.
If, in connection with purchases and sales of securities for the
Corporation, the Manager or any subsidiary of the Manager may, without material
risk, arrange to receive a soliciting dealer's fee or other underwriter's or
dealer's discount or commission, the Manager shall, unless otherwise directed by
the Board of Directors of the Corporation, obtain such fee, discount or
commission and the amount thereof shall be applied to reduce the compensation to
be received by the Manager pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation
from approving the payment by the Corporation of additional compensation to
others for consulting services, supplemental research and security and economic
analysis.
5. Term of Agreement. This Agreement shall continue in full force and effect
until December 29, 1992 and from year to year thereafter if such
continuance is approved in the manner required by the Act and if the
Manager shall not have notified the Corporation in writing at least 60 days
prior to such December 29 or prior to December 29 of any year thereafter
that it does not desire such continuance. This Agreement may be terminated
at any time, without payment of penalty by the Corporation, on 60 days'
written notice to the Manager by vote of the Board of Directors of the
Corporation or by vote of a majority of the outstanding voting securities
of the Corporation (as defined by the Act). This Agreement shall
automatically terminate in the event of its assignment (as defined by the
Act).
6. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require,
or to impose any duty upon either of the parties, to do anything in
violation of any applicable laws or regulations.
IN WITNESS WHEREOF, the Corporation and the Manager have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
TRI-CONTINENTAL CORPORATION
By /s/ William C. Morris
----------------------
J. & W. SELIGMAN & CO. INCORPORATED
By /s/ Brian T. Zino
-----------------
SUBADVISORY AGREEMENT
Tri-Continental Corporation
SUBADVISORY AGREEMENT, dated as of May 19, 1994 between J. & W. SELIGMAN & CO.
INCORPORATED, a Delaware corporation (the "Manager") and SELIGMAN HENDERSON CO.,
a New York general partnership (the "Subadviser").
WHEREAS, the Manager has entered into a Management Agreement dated December 29,
1988, as amended April 10, 1991 (the "Management Agreement") with
Tri-Continental Corporation (the "Corporation"), a closed-end diversified
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), pursuant to which the Manager will render
investment management services to the Corporation, and to administer the
business and other affairs of the Corporation; and
WHEREAS, the Manager desires to retain the Subadviser to provide investment
management services to the Corporation, and the Subadviser is willing to render
such investment management services.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto agree as follows:
1. Duties of the Subadviser. The Subadviser will provide the Corporation with
investment management services with respect to assets of the Corporation if, and
to the extent, designated by the Manager (such designated assets, "Qualifying
Assets"). Such services shall include investment research, advice and
supervision, determining which securities shall be purchased or sold by the
Corporation, making purchases and sales of securities on behalf of the
Corporation and determining how voting and other rights with respect to
securities of the Corporation shall be exercised, subject in each case to the
control of the Board of Directors of the Corporation and in accordance with the
objectives, policies and principles set forth in the Registration Statement and
Prospectus(es) of the Corporation and the requirements of the 1940 Act and other
applicable law.
Subject to Section 36 of the 1940 Act, the Subadviser shall not be liable to the
Corporation 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 the management of the
Corporation and the performance of its duties under this Agreement except for
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of reckless disregard of its obligations and duties under
this Agreement.
2. Expenses. The Subadviser shall pay all of its expenses arising from the
performance of its obligations under Section 1.
-1-
<PAGE>
3. Compensation
(a) As compensation for the services performed and the facilities
and personnel provided by the Subadviser pursuant to Section 1,
the Manager will pay to the Subadviser each month a fee, equal
to the Applicable Percentage of the average monthly Net
Qualifying Assets of the Corporation.
(b) As used herein:
(1) The term "Applicable Percentage" means the amount
(expressed as a percentage and rounded to the nearest
one millionth of one percent) obtained by dividing (i)
the Fee Amount by (ii) the Fee Base.
(2) The term "Fee Amount" means the sum of the following:
.45 of 1% on an annual basis of the first
$4,000,000,000 of Fee Base, .425 of 1% on an annual
basis of the next $2,000,000,000 of Fee Base, .40 of 1%
on an annual basis of the next $2,000,000,000 of Fee
Base, .375 of 1% on an annual basis of Fee Base in
excess of $8,000,000,000.
(3) The term "Fee Base" as of any day means the sum of the
net assets at the close of business on the previous day
of each of the investment companies registered under
the 1940 Act for which the Manager or any affiliated
company acts as investment adviser or manager
(including the Corporation).
(4) The term "Net Qualifying Assets" means the Qualifying
Assets less related liabilities as designated by the
Manager.
(c) Average monthly Net Qualifying Assets shall be determined, for
any month, by taking the average of the value of the Net
Qualifying Assets as of the (i) opening of business on the first
day of such month and (ii) close of business on the last day of
such month.
(d) If the Subadviser shall serve hereunder for less than the whole
of any month, the fee hereunder shall be prorated.
4. Purchase and Sale of Securities. The Subadviser shall purchase securities
from or through and sell securities to or through such persons, brokers or
dealers as the Subadviser shall deem appropriate in order to carry out the
policy with respect to allocation of portfolio transactions as set forth in the
Registration Statement and Prospectus(es) of the Corporation or as the Board of
Directors of the Corporation may direct from time to time. In providing the
Corporation with investment management and supervision, it is recognized that
the Subadviser will seek the most favorable price and execution, and, consistent
with such policy, may give consideration to the research, statistical and other
services furnished by brokers or dealers to the Subadviser for its use, to the
general attitude of brokers or dealers toward investment companies and their
support of them, and to such other considerations as the Board of Directors of
the Corporation may direct or authorize from time to time.
-2-
<PAGE>
Notwithstanding the above, it is understood that it is desirable for the
Corporation that the Subadviser have access to supplemental investment and
market research and security and economic analysis provided by brokers who
execute brokerage transactions at a higher cost to the Corporation than may
result when allocating brokerage to other brokers on the basis of seeking the
most favorable price and execution. Therefore, the Subadviser is authorized to
place orders for the purchase and sale of securities of the Corporation with
such brokers, subject to review by the Corporation's Board of Directors from
time to time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Subadviser in connection with its services to other clients as well as the
Corporation.
If, in connection with purchases and sales of securities for the Corporation,
the Subadviser may, without material risk, arrange to receive a soliciting
dealer's fee or other underwriter's or dealer's discount or commission, the
Subadviser shall, unless otherwise directed by the Board of Directors of the
Corporation, obtain such fee, discount or commission and the amount thereof
shall be applied to reduce the compensation to be received by the Subadviser
pursuant to Section 3 hereof.
Nothing herein shall prohibit the Board of Directors of the Corporation from
approving the payment by the Corporation of additional compensation to others
for consulting services, supplemental research and security and economic
analysis.
5. Term of Agreement. This Agreement shall continue in full force and effect
until December 31, 1995, and from year to year thereafter if such continuance is
approved in the manner required by the 1940 Act, and if the Subadviser shall not
have notified the Manager in writing at least 60 days prior to such date or
prior to December 31 of any year thereafter that it does not desire such
continuance. This Agreement may be terminated at any time, without payment of
penalty by the Corporation, on 60 days' written notice to the Subadviser by vote
of the Board of Directors of the Corporation or by vote of a majority of the
outstanding voting securities of the Corporation (as defined by the 1940 Act).
This Agreement will automatically terminate in the event of its assignment (as
defined by the 1940 Act) or upon the termination of the Management Agreement.
6. Amendments. This Agreement may be amended by consent of the parties hereto
provided that the consent of the Corporation is obtained in accordance with the
requirements of the 1940 Act.
7. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require, or
to impose any duty upon either of the parties, to do anything in violation of
any applicable laws or regulations.
-3-
<PAGE>
IN WITNESS WHEREOF, the Manager and the Subadviser have caused this
Agreement to be executed by their duly authorized officers as of the date first
above written.
J. & W. SELIGMAN & CO. INCORPORATED
By /s/ BRIAN T. ZINO
---------------------
Brian T. Zino
Managing Director
SELIGMAN HENDERSON CO.
By /s/ DAVID STEIN
----------------
David Stein
Managing Director
-4-
<PAGE>
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
(212) 558-4000
Facsimile: (212) 558-3588
April 13, 1995
Tri-Continental Corporation,
100 Park Avenue,
New York, New York 10017.
Dear Sirs:
In connection with the registration under the Securities Act of 1933, as
amended (the "Act"), of 2,500,000 shares (the "Securities") of Common Stock, par
value $0.50 per share, of Tri-Continental Corporation, a Maryland corporation
(the "Corporation"), we, as your counsel, have examined such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our opinion,
when the registration statement relating to the Securities (the "Registration
Statement") has become effective under the Act, the terms of the sale of the
Securities have been duly established in conformity with Corporation's Articles
of Incorporation and By-Laws, and the Securities have been duly issued and sold
as contemplated by the Registration Statement, the Securities will be validly
issued, fully paid and nonassessable.
The foregoing opinion is limited to the Federal laws of the United States
and the General Corporation Law of
-1-
<PAGE>
the State of Maryland, and we are expressing no opinion as to the effect of the
laws of any other jurisdiction.
We have relied as to certain matters on information obtained from public
officials, officers of the Corporation and other sources believed by us to be
responsible.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act.
Very truly yours,
/s/ SULLIVAN & CROMWELL
-----------------------
Sullivan & Cromwell
Consent of Independent Auditors
Tri Continental Corporation:
We consent to the incorporation by reference in the Statement of Additional
Information in this Amendment No. 24 to Registration Statement No. 33-77142 of
our report dated February 3, 1995, appearing in the Annual Report to
Shareholders for the year ended December 31, 1994, and to the references to us
under the caption "Financial Highlights" in the Prospectus, and under the
caption "Experts" in the Statement of Additional Information, both of which are
part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
- --------------------------
DELOITTE & TOUCHE LLP
New York, New York
April 12, 1995
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