TRI-CONTINENTAL CORPORATION
AN INVESTMENT YOU CAN LIVE WITH
May 1, 1996
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 1995 Annual Report to
Stockholders of the Corporation (the '1995 Annual Report') will be furnished,
without charge, to investors requesting copies of the SAI. The 1995 Annual
Report contains financial statements of the Corporation for the year ended
December 31, 1995 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.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE PAGE
---- ----
<S> <C>
Summary of Corporation Expenses.................. 2
Prospectus Summary............................... 3
Financial Highlights............................. 4
Capitalization at March 31, 1996................. 7
Trading and Net Asset Value Information
Concerning Tri-Continental Corporation Common
Stock.......................................... 7
The Corporation.................................. 8
Investment and Other Policies.................... 8
Management of the Corporation.................... 10
Description of Capital Stock..................... 13
Description of Warrants.......................... 14
Computation of Net Asset Value................... 14
Dividend Policy and Taxes........................ 15
Description of Investment Plans and Other
Services....................................... 17
Issuance of Shares in Connection with
Acquisitions................................... 21
Additional Information........................... 21
Table of Contents of the Statement of Additional
Information.................................... 22
Authorization Form for Automatic Dividend
Investment and Cash Purchase Plan.............. 23
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 1995 (AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO COMMON STOCK)
Management Fees.................................................................... .42%
Other Expenses..................................................................... .21%
----
Total Annual Expenses......................................................... .63%
----
----
</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 investors in understanding the
various costs and expenses they will bear directly or indirectly. For more
complete descriptions of the various costs 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 an investor 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......................................... $6 $20 $35 $ 79
</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.
The 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. 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 J. & W. Seligman & Co. Incorporated (the 'Manager')
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 1995 was 275,761 shares. The Corporation's
Common Stock has historically been traded on the market at less than net asset
value. As of March 31, 1996, the Corporation had 89,180,936 shares of Common
Stock outstanding and net assets attributable to Common Stock of $2,611,058,237.
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 at March 31, 1996 were approximately $11.9 billion.
The Manager also provides investment management or advice to institutional
accounts having a value at March 31, 1996 of approximately $3.9 billion. The
Manager's fee is based in part on the average daily net assets of the
Corporation. The management fee rate for 1995 was equivalent to .42% 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 1995 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.
PER SHARE OPERATING PERFORMANCE, TOTAL
(FOR A SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
-------------------------------------------------------
1995 1994 1993 1992
------ ------ ------ ------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year........................ $23.70 $27.49 $28.03 $28.57
------ ------ ------ ------
Net investment income*.................................... .74 .83 .83 .81
Net realized and unrealized investment gain (loss)........ 6.14 (1.69) 1.46 1.19
Net realized and unrealized gain on foreign currency
transactions............................................ .03 .02 -- --
------ ------ ------ ------
Increase (decrease) from investment operations............ 6.91 (.84) 2.29 2.00
Dividends paid on Preferred Stock......................... (.02) (.03) (.03) (.03)
Dividends paid on Common Stock............................ (.73) (.79) (.80) (.78)
Distribution from net gain realized....................... (2.01) (1.90) (1.80) (.70)
Issuance of Common Stock in gain distributions............ (.27) (.23) (.19) (.05)
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................ 3.88 (3.79) (.54) (.54)
------ ------ ------ ------
Net asset value at end of year............................ $27.58 $23.70 $27.49 $28.03
------ ------ ------ ------
------ ------ ------ ------
Adjusted net asset value at end of year**................. $27.52 $23.65 $27.42 $27.95
Market value, end of period............................... $22.625 $19.875 $23.75 $25.50
TOTAL INVESTMENT RETURN FOR YEAR:
Based upon market value................................... 27.95% (5.07)% 3.47% .61%`D'
Based upon net asset value................................ 30.80% (2.20)% 8.95% 7.42%`D'
RATIOS AND SUPPLEMENTAL DATA:***
Expenses to average net assets............................ .63% .64% .66% .67%
Net investment income to average net assets............... 2.71% 3.08% 2.88% 2.86%
Portfolio turnover rate................................... 62.28% 70.38% 69.24% 44.35%
Net investment assets, end of year (000's omitted):
For Common Stock...................................... $2,469,149 $1,994,098 $2,166,212 $2,088,102
For Preferred Stock................................... 37,637 37,637 37,637 37,637
Total net investment assets............................... $2,506,786 $2,031,735 $2,203,849 $2,125,739
</TABLE>
- ------------
* Net investment income per share has been calculated by dividing the
respective actual amounts for the year by average shares outstanding.
** Assumes the exercise of outstanding warrants. Warrant exercise terms were:
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 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
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.
INVESTMENT RETURNS, RATIOS AND SUPPLEMENTAL DATA
OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------
1991 1990 1989 1988 1987 1986
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$24.60 $27.44 $23.55 $23.94 $27.94 $29.78
------ ------ ------ ------ ------ ------
.81 .81 .88 .84 .86 1.02
5.79 (1.05) 6.78 1.01 (.03) 5.16
-- -- -- -- -- --
------ ------ ------ ------ ------ ------
6.60 (.24) 7.66 1.85 .83 6.18
(.03) (.03) (.04) (.04) (.04) (.04)
(.78) (.86) (.84) (.81) (.89) (.97)
(1.80) (1.60) (2.55) (1.25) (3.73) (6.96)
(.02) (.11) (.33) (.14) (.16) (.04)
-- -- -- -- -- --
-- -- -- -- -- --
-- -- (.01) -- (.01) (.01)
------ ------ ------ ------ ------ ------
(3.97) (2.84) 3.89 (.39) (4.00) (1.84)
------ ------ ------ ------ ------ ------
$28.57 $24.60 $27.44 $23.55 $23.94 $27.94
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
$28.48 $24.52 $27.35 $23.47 $23.86 $27.84
$27.75 $21.375 $23.00 $19.25 $20.625 $28.625
42.98% 3.46% 37.96% 3.02% (12.27)% 26.62%
27.91% (.20)% 34.54% 8.58% 3.30% 21.89%
.67% .56% .55% .57% .53% .53%
2.90% 3.01% 3.19% 3.33% 2.66% 3.14%
49.02% 41.23% 59.87% 67.39% 78.99% 51.46%
$1,833,664 $1,500,281 $1,594,505 $1,263,848 $1,237,091 $1,279,718
37,637 37,637 37,637 37,637 37,637 37,637
$1,871,301 $1,537,918 $1,632,142 $1,301,485 $1,274,728 $1,317,355
</TABLE>
$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, December 22, 1994 to December 27, 1995 -- 12.77 shares at
$1.76 per share; and subsequently, 13.54 shares at $1.66 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>
1995................................ 752,740 $ 3,330 $ 50 $33.37
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
</TABLE>
6
<PAGE>
CAPITALIZATION AT MARCH 31, 1996
<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.* 89,180,936 shs. - 0 - shs.
Warrants to purchase
Common Stock.............................................. 14,651 wts 14,651 wts. - 0 - wts.
</TABLE>
- ------------
* 198,375 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 1994.
<TABLE>
<CAPTION>
(DISCOUNT) OR
PREMIUM TO NET
MARKET PRICE NET ASSET VALUE ASSET VALUE
------------- ---------------- --------------------
1994 HIGH LOW HIGH LOW HIGH LOW
- ----------------------------------- ------------ ------------ ----- ----- -------- --------
<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 23.70 (16.50)% (16.14)%
2nd Q.............................. 23 20 7/8 27.31 25.29 (15.78)% (17.46)%
3rd Q.............................. 24 22 3/8 28.92 27.57 (17.01)% (18.84)%
4th Q.............................. 25 22 1/4 30.13 27.18 (17.03)% (18.14)%
<CAPTION>
1996
- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st Q.............................. 24 1/2 22 5/8 29.58 27.32 (17.17)% (17.19)%
</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 15, 1996 were $29.09, $24.00 and 17.50%, respectively.
7
<PAGE>
THE CORPORATION
The 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, 1995 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
8
<PAGE>
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 1995.
ILLIQUID SECURITIES: The Corporation may invest up to 15% of its net assets
in illiquid securities, including restricted securities (i.e., securities not
readily marketable without registration 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
Manager, acting pursuant to procedures approved by 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
this determination be made, the Manager 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, if and 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 Depositary Receipts
('ADRs'), American Depositary Shares ('ADSs'), European Depositary Receipts
('EDRs') or Global Depositary Receipts ('GDRs') (collectively, 'Depositary
Receipts'). 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
9
<PAGE>
home country share price. EDRs and GDRs are typically issued by foreign banks or
trust companies traded in Europe. Depositary Receipts may be issued under
sponsored or unsponsored programs. In sponsored programs, the issuer has made
arrangements to have its securities traded in the form of a Depositary Receipt.
In unsponsored programs, the issuers may not be directly involved in the
creation of the program. Although regulatory requirements with respect to
sponsored and unsponsored programs are generally similar, the issuers of
securities represented by unsponsored Depositary Receipts are not obligated to
disclose material information in the United States, and therefore, the import of
such information may not be reflected in the market value of such receipts. The
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 Depositary Receipts 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, 1996, 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
0.07% 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... - 10.22% 5.14% - 0.07% 5.00% 10.07%
</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 were approximately $11.9 billion at March 31, 1996. The
Manager also provides investment management or advice to institutional accounts
having a value at March 31, 1996 of approximately $3.9 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 $2 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, Inc., Seligman Income Fund, Inc., and Vice President of Seligman
Portfolios, Inc. ('SPI') and Portfolio Manager of SPI's Seligman Common Stock
Portfolio and Seligman Income Portfolio. 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
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<PAGE>
by the Manager or its affiliates, insurance premiums and extraordinary expenses
such as litigation expenses.
The Management Agreement provides that it will continue in effect until
December 29 of each year if such continuance is approved in the manner required
by the 1940 Act (i.e., by a vote of a majority of the Board of Directors or of
the outstanding voting securities of the Corporation and 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 December 29 of any year 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 will
terminate automatically in the event of its assignment.
THE SUBADVISER: Seligman Henderson Co. (the 'Subadviser') acts as
Subadviser to the Corporation with respect to all or a portion of the
Corporation's investments in foreign securities and Depositary Receipts
('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
Depositary Receipts. 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 (as defined above) 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., and the Global
Portfolio and Global Smaller Companies Portfolio of Seligman Portfolios, Inc.
The address of Seligman Henderson Co. is 100 Park Avenue, New York, NY 10017.
The Subadviser's Global Policy Group has overall responsibility for
directing and overseeing all aspects of foreign investment activity for the
Corporation and provides global investment policy, including country weightings,
asset allocations and industry sector guidelines, as appropriate. Mr. Iain C.
Clark, a Managing Director and Chief Investment Officer of the Subadviser, is
responsible for the day-
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<PAGE>
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
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 $3,518.74 at
March 31, 1996.
(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.
(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
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<PAGE>
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 $22.48 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 13.54 shares of Common Stock at $1.66 per share. There were 14,651
Warrants outstanding at March 31, 1996. 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 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
14
<PAGE>
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 (normally, 4:00 p.m. Eastern 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.
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
15
<PAGE>
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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<PAGE>
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, 1996, 25,311 stockholders, owning 28,137,158 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 by stockholders who may choose to use this service.
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<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
The Manager 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
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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 the 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 Stockholders. To insure prompt delivery of checks,
account statements and other information, Stockholders should 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 at (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 at (800) 445-1777 or write Pension Plan
Services, Seligman Data Corp. at the above 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. Eastern time, and calls will be answered by a service
representative.
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 1995, 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...................................................................................................... 10
Custodian, Stockholder Service Agent 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>
TRI-CONTINENTAL CORPORATION
<TABLE>
<S> <C>
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 Stock 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 made payable to the order of Tri-Continental Corporation and
be mailed to Seligman Data Corp., P.O. Box 3936, New York, NY
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, NY 10008-3936.
[ ] AUTOMATIC CHECK SERVICE
I have completed the 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.
5/96
23
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<S> <C>
AUTHORIZATION FORM
an investment you can live with FOR
AUTOMATIC CHECK SERVICE
</TABLE>
To start your Automatic Check Service, fill out this 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>
5/96
24
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
25
<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, 2) with cash dividends from other
corporations, 3) with cash payments, 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 confirm 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 on shares purchased. 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 dishonored or if the value of shares held by SDC in an
account falls below the required minimum, the Service may be suspended. The
Service may be reinstated upon written request by the Planholder including an
indication that the cause of the interruption has been corrected.
If a Planholder's check is not honored by the Planholder's 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 by other means will
participate automatically in each of the Plan services elected.
5/96
26
<PAGE>
- ------------------------------------------------------
- ------------------------------------------------------
TRI-CONTINENTAL CORPORATION
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 4/96
- ------------------------------------------------------
- ------------------------------------------------------
TRI-CONTINENTAL CORPORATION
AN INVESTMENT YOU CAN LIVE WITH
A MANAGEMENT TYPE
DIVERSIFIED, CLOSED-END
INVESTMENT COMPANY
------------------------------------
COMMON STOCK
($.50 PAR VALUE)
------------------------------------
PROSPECTUS
MAY 1, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
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, 1996,
and should be read in conjunction therewith. A copy of the Prospectus may be
obtained from Tri-Continental Corporation (the "Corporation") at 100 Park
Avenue, New York, NY 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
<TABLE>
<CAPTION>
Page Page
---- ----
<S> <C>
Certain Transactions Of The Corporation...2 Experts......................................10
(See "The Corporation" in the Prospectus) Custodian, Stockholder Service Agent And
Additional Investment Objectives And Dividend Paying Agent......................10
Policies.................................2 Brokerage Commissions........................10
(See "Investment and Other Policies" in the Incorporation Of Financial Statements By
Prospectus) Reference..................................11
Directors And Officers....................4 Independent Auditors' Report on
Management................................9 Financial Highlights - Senior Securities-
(See "Management of the Corporation" in the $2.50 Cumulative Preferred Stock...........12
Prospectus) Appendix.....................................13
</TABLE>
CETRI1A
<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 U.S.
dollar value of a security it has agreed to buy or sell for the period between
the date the trade was entered into and the date the security is delivered and
paid for, or, to hedge the U.S. dollar value of securities it owns.
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 U.S. 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 to forward contracts in excess of the
value of the Corporation's portfolio securities or other assets denominated in
-3-
<PAGE>
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.
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<PAGE>
<TABLE>
<S> <C>
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief
(57) Executive Officer and Chairman of the Executive
Committee
Managing Director, Chairman and President, J. &
W. Seligman & Co. Incorporated, investment
managers and advisers; and Seligman Advisors,
Inc., advisers; Chairman and Chief Executive
Officer, the Seligman Group of Investment
Companies; Chairman, Seligman Financial
Services, Inc., broker/dealer; Seligman
Holdings, Inc., holding company; Seligman
Services, Inc., broker/dealer; and Carbo
Ceramics Inc., ceramic proppants for oil and
gas industry; Director or Trustee, Seligman
Data Corp. shareholder service agent;
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; and J. & W. Seligman Trust
Company, trust compapny.
BRIAN T. ZINO* Director, President and Member of the Executive
(43) Committee
Director and Managing Director (formerly, Chief
Administrative and Financial Officer), J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; and Seligman Advisors,
Inc., advisers; Director or Trustee, the
Seligman Group of Investment Companies;
President, the Seligman Group of Investment
Companies, except Seligman Quality Municipal
Fund, Inc. and Seligman Select Municipal Fund,
Inc; Chairman, Seligman Data Corp., shareholder
service agent; Director, Seligman Financial
Services, Inc., broker/dealer; Seligman
Services, Inc., broker/dealer; and Senior Vice
President, Seligman Henderson Co., adviser;
formerly, Director and Secretary, Chuo Trust -
JWS Advisors, Inc., advisers; and Director,
Seligman Securities, Inc., broker/dealer and J.
& W. Seligman Trust Company, trust company.
FRED E. BROWN* Director
(82)
Director and Consultant, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
and Seligman Advisors, Inc., advisers; Director
or Trustee, the Seligman Group of Investment
Companies; Seligman Financial Services, Inc.,
broker/dealer; Seligman Services, Inc.,
broker/dealer; Trudeau Institute, 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.
JOHN R. GALVIN Director
(66)
Dean, Fletcher School of Law and Diplomacy at
Tufts University; Director or Trustee, the
Seligman Group of Investment Companies;
Chairman of the American Council on Germany; a
Governor of the Center for Creative Leadership;
Director of USLIFE, insurance; National
Committee on U.S.-China Relations, National
Defense University; the Institute for Defense
Analysis; and Raytheon Co., electronics;
Formerly, Ambassador, U.S. State Department;
Distinguished Policy Analyst at Ohio State
University and Olin Distinguished Professor of
National Security Studies at the United States
Military Academy. From June, 1987 to June,
1992, he was the Supreme Allied Commander,
Europe and the Commander-in-Chief, United
States European Command. Tufts University,
Packard Avenue, Medford, MA 02105.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
ALICE S. ILCHMAN Director
(60)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment
Companies; Chairman, The Rockefeller
Foundation, charitable foundation; and
Director, NYNEX, telephone company, 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
FRANK A. McPHERSON Director
(62)
Chairman of the Board and Chief Executive
Officer, Kerr-McGee Corporation, energy and
Kimberly-Clark Corporation, consumer products,
Bank of Oklahoma Holding Company, American
Petroleum Institute, Oklahoma City Chamber of
Commerce, Baptist Medical Center, Oklahoma
Chapter of the Nature Conservancy, Oklahoma
Medical Research Foundation and United Way
Advisory Board; Chairman of Oklahoma City
Public Schools Foundation; and Member of the
Business Roundtable and National Petroleum
Council. 123 Robert S. Kerr Avenue, Oklahoma
City, OK 73102
JOHN E. MEROW* Director
(66)
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
(53)
Attorney; Director or Trustee, the Seligman
Group of Investment Companies; and Chairman of
the Board of Trustees of St. George's School
(Newport, RI); formerly, Director the National
Association of Independent Schools (Washington,
D.C.) St. Bernard's Road, Gladstone, NJ 07934
JAMES C. PITNEY Director
(69)
Partner, Pitney, Hardin, Kipp & Szuch, law
firm; Director or Trustee, the Seligman Group
of Investment Companies; and Public Service
Enterprise Group, public utility. Park Avenue
at Morris County, P.O. Box 1945, Morristown, NJ
07962-1945
JAMES Q. RIORDAN Director
(68)
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.; and Public
Broadcasting Service, Inc.; formerly,
Co-Chairman of the Policy Council of the Tax
Foundation; Director and Vice Chairman, Mobil
Corporation; Director, Tesoro Petroleum
Companies and Director and President, Bekaert
Corporation. 675 Third Avenue, Suite 3004, New
York, NY 10017
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
RONALD T. SCHROEDER* Director and Member of the Executive Committee
(48)
Director, Managing Director and Chief
Investment Officer, Institutional J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; and Seligman Advisors,
Inc., advisers; Director or Trustee, Seligman
Group of Investment Companies; Director
Seligman Holdings, Inc., holding company;
Seligman Financial Services, Inc., distributor;
; Seligman Henderson Co., advisors; and
Seligman Services, Inc., broker/dealer
formerly, President the Seligman Group of
Investment Companies, except Seligman Quality
Municipal Fund, Inc. and Seligman Select
Municipal Fund, Inc., Director, J. & W.
Seligman Trust Company, Seligman Data Corp.,
shareholder service agent and Seligman
Securities, Inc., broker/dealer.
ROBERT L. SHAFER Director
(63)
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
JAMES N. WHITSON Director
(61)
Executive Vice President, Chief Operating
Officer and Director, Sammons Enterprises,
Inc., Director or Trustee, the Seligman Group
of Investment Companies; Red Man Pipe and
Supply Company, piping and other materials and
C-SPAN. 300 Crescent Court, Suite 700, Dallas,
TX 75202
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 advisers; Vice President and
Portfolio Manager, three other open-end
investment companies in the Seligman Group of
Investment Companies.
LAWRENCE P. VOGEL Vice President
(39)
Senior Vice President, Finance, J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; Seligman Financial
Services, Inc., broker/dealer; and Seligman
Advisors, Inc., advisers; Vice President, the
Seligman Group of Investment Companies; Senior
Vice President, Finance (formerly, Treasurer),
Seligman Data Corp., shareholder service agent;
Treasurer, Seligman Holdings, Inc., holding
company; and Seligman Henderson Co., advisers;
formerly, Senior Vice President, Seligman
Securities, Inc., broker/dealer; and Vice
President, Finance, J. & W. Seligman Trust
Company, trust company.
FRANK J. NASTA Secretary
(31)
Senior Vice President, Law and Regulation, and
Corporate Secretary, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
and Seligman Advisors, Inc., advisers;
Corporate Secretary, the Seligman Group of
Investment Companies, Seligman Financial
Services, Inc., broker/dealer; Seligman
Henderson Co., advisers; Seligman Services,
Inc., broker/dealer; and Seligman Data Corp.,
shareholder service agent; formerly, Secretary,
J. & W. Seligman Trust Company, trust company;
and attorney, Seward & Kissel, law firm.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
THOMAS G. ROSE Treasurer
(38)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent; formerly, Treasurer, American
Investors Advisors, Inc. and the American
Investors Family of Funds.
</TABLE>
<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 and Chairman N/A N/A N/A
Brian T. Zino, Director and President 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
John R. Galvin, Director $11,534.07 N/A $41,252.75
Alice S. Ilchman, Director 19,200.00 N/A 68,000.00
Frank A. McPherson, Director 11,534.07 N/A 41,252.75
John E. Merow, Director 18,400.00(d) N/A 66,000.00(d)
Betsy S. Michel, Director 18,000.00 N/A 67,000.00
Douglas R. Nichols, Jr., Director* 6,865.93 N/A 24,747.25
James C. Pitney, Director 19,200.00 N/A 68,000.00
James Q. Riordan, Director 19,200.00 N/A 70,000.00
Herman J. Schmidt, Director* 6,865.93 N/A 24,747.25
Robert L. Shafer, Director 19,200.00 N/A 70,000.00
James N. Whitson, Director 18,400.00(d) N/A 68,000.00(d)
</TABLE>
- ----------------------
(1) Based on remuneration received by the Directors of the Fund for the year
ended December 31, 1995.
(2) As defined in the Fund's Prospectus, the Seligman Group of Investment
Companies consists of seventeen investment companies.
* Retired May 18, 1995.
(d) Deferred. As of December 31, 1995, the total amounts of deferred
compensation (including interest) payable to Messrs. Merow, Pitney and Whitson
were $96,695, $238,571 and $52,153, 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, 1996 holders of record of Preferred Stock totaled 777;
holders of record of Common Stock totaled 46,424; and holders of record of
Warrants totaled 197. Insofar as is known by the Corporation, no person owns or
controls
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<PAGE>
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 41% of the
Corporation's Common Stock. As of March 31, 1996 all directors and officers of
the Corporation, as a group, owned less than 1% of the Corporation's Common
Stock. As of that date, no directors or officers owned any of the Corporation'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.
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 $9,761.731 in 1995, $9,372,713 in 1994 and
$9,484,255 in 1993.
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 of each year if (1) 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.
For the period June 1, 1994 through December 31, 1994, the Subadviser
received a fee of $476,716. For the year ended December 31, 1995, the Subadviser
received a fee of $810,796.
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 $19 billion in assets, and is recognized as a
specialist in global equity investing.
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<PAGE>
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.
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:
<TABLE>
<CAPTION>
Brokerage
Year Total Commissions
Ended Brokerage Paid to
December 31 Commissions (1) Seligman Securities, Inc. (2)
----------- --------------- -----------------------------
<S> <C> <C>
1995 $ 3,825,533 N/A
1994 3,062,434 N/A
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Brokerage
Year Total Commissions
Ended Brokerage Paid to
December 31 Commissions (1) Seligman Securities, Inc. (2)
----------- -------------- -----------------------------
<S> <C> <C>
1993 2,268,428 $ 251,559
</TABLE>
- -------------------
(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.
INCORPORATION OF FINANCIAL STATEMENTS BY REFERENCE
The Corporation's financial statements for the year ended December 31, 1995
are herein incorporated by reference from the 1995 Annual Report to Stockholders
of the Corporation (the "1995 Annual Report"), filed with the Commission
pursuant to Section 30(b) of the 1940 Act and the rules and regulations
thereunder. The 1995 Annual Report also contains schedules of the Corporation's
portfolio investments as of December 31, 1995 and certain other financial
information. A copy of the 1995 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, 1995 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, 1995 is fairly stated, in all
material respects, in relation to the financial statements from which it has
been derived.
DELOITTE & TOUCHE LLP
New York, New York
February 2, 1996
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<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, the Seligman Complex played a
major role in the geographical expansion and industrial development of the
United States.
<TABLE>
<S> <C>
The Seligman Complex:
.... Prior to 1900
Helps finance America's fledgling railroads through underwriting.
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.
Becomes a prominent underwriter of corporate securities, including New
York Mutual Gas Light Company, later part of Consolidated Edison.
Provides financial assistance to Mary Todd Lincoln and urges the Senate to award her a pension.
Is appointed U.S. Navy fiscal agent by President Grant.
Becomes a leader in raising capital for America's industrial and urban development.
...1900-1910
Helps Congress finance the building of the Panama Canal.
...1910s
Participates in raising billions for Great Britain, France and Italy, helping to finance World
War I.
...1920s
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.
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
Assumes management of Broad Street Investing Co. Inc., its first mutual fund, today known as
Seligman Common Stock Fund, Inc.
Establishes Investment Advisory Service.
...1940s
Helps shape the Investment Company Act of 1940.
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.
Assumes management of National Investors Corporation, today Seligman Growth Fund, Inc.
Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
...1950-1989
Develops new open-end investment companies. Today, manages more than 40 mutual fund
portfolios.
Helps pioneer state-specific, tax-exempt municipal bond funds, today
managing a national and 18 state-specific tax-exempt funds.
Establishes J. & W. Seligman Trust Company, and J. & W. Seligman Valuations Corporation.
Establishes Seligman Portfolios, Inc., an investment vehicle offered through variable annuity
products.
...1990s
Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality Municipal Fund, Inc., two
closed-end funds that invest in high-quality municipal bonds.
In 1991 establishes a joint venture with Henderson Administration Group
plc, of London, known as Seligman Henderson Co., to offer global
investment products.
Introduces Seligman Frontier Fund, Inc., a small capitalization mutual fund.
Launches Seligman Henderson Global Fund Series, Inc., which today offers four separate series:
Seligman Henderson International Fund, Seligman Henderson Global Smaller Companies Fund,
Seligman Henderson Global Technology Fund and Seligman Henderson Global Growth Opportunities
Fund.
</TABLE>
-14-
