<PAGE>
<PAGE>
Registration No. 33-
Investment Company Act No. 811-266
U.S. SECURITIES AND EXCHANGE COMMISSION,
Washington, D.C. 20549
FORM N-2
|X| REGISTRATION STATEMENT UNDER SECURITIES ACT OF 1933
|_| Pre-Effective Amendment No. _______
|_| Post-Effective Amendment No. ______
and/or
|X| REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
|X| Amendment No. 26
________________________________________________________________________________
Exact Name of Registrant as Specified in Charter:
TRI-CONTINENTAL CORPORATION
________________________________________________________________________________
Address of Principal Executive Offices (Number, Street, City, State, Zip Code):
100 Park Avenue, New York, New York 10017
________________________________________________________________________________
Registrant's Telephone Number, including Area Code:
(212) 850-1864 or (800) 221-2450
________________________________________________________________________________
Name and Address (Number, Street, City, State, Zip Code) of Agent for Service:
Frank J. Nasta, Esq., 100 Park Avenue, New York, New York 10017
________________________________________________________________________________
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.
________________________________________________________________________________
If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933, other
than securities offered in connection with a dividend reinvestment plan, check
the following box. |X|
Calculation of Registration Fee Under the Securities Act of 1933
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Securities Amount Being Offering Price Aggregate Amount of
Being Registered Registered per Unit Offering Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock
$.50 par value 1,800,000 $24.188 $43,538,400 $13,193.45
</TABLE>
The Registration Statement shall become effective hereafter in accordance with
Section 8(a) of the Securities Act of 1933.
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
<TABLE>
<CAPTION>
Form N-2-Part A Prospectus Caption
Item No.
<S> <C>
1. Outside Front Cover Outside Front Cover of the Prospectus
2. Inside Front and Outside Back Cover Page Inside Front and Outside Back Cover Page of
Prospectus
3. Fee Table and Synopsis Summary of Corporation Expenses; Prospectus Summary
4. Financial Highlights Financial Highlights
5. Plan of Distribution Not Applicable
6. Selling Shareholders Not Applicable
7. Use of Proceeds Description of Investment Plans and Other Services -
Method of Purchase
8. General Description of the Registrant Prospectus Summary; The Corporation; Investment and
Other Policies; Trading and Net Asset Value
Information Concerning Tri-Continental Corporation
Common Stock
9. Management Management of the Corporation; Description of
Investment Plans and Other Services; Back Cover Page
of Prospectus
10. Capital Stock, Long-Term Debt, and Other Description of Capital Stock; Description of
Securities Warrants; Dividend Policy and Taxes; Description of
Investment Plans and Other Services; Capitalization
at March 31, 1996
11. Defaults and Arrears on Senior Securities Not Applicable
12. Legal Proceedings Not Applicable
13. Table of Contents of the Statement Table of Contents of the Statement of Additional
of Additional Information Information
</TABLE>
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
CROSS REFERENCE SHEET (continued)
Pursuant to Rule 495(a)
<TABLE>
<CAPTION>
Form N-2-Part B Statement of Additional Information Caption
Item No.
<S> <C>
14. Cover Page Cover Page of the Statement of Additional Information
15. Table of Contents Cover Page of the Statement of Additional Information
16. General Information and History Appendix
17. Investment Objectives and Policies Additional Investment Objectives and Policies
18. Management Directors and Officers
19. Control Persons and Principal Holders Directors and Officers - Holdings of Preferred Stock,
of Securities Common Stock and Warrants
20. Investment Advisory and Other Services Directors and Officers - Holdings of Preferred
Stock, Common Stock and Warrants; Management;
Experts; Custodian, Stockholder Service Agent and
Dividend Paying Agent
21. Brokerage Allocation and Other Practices Brokerage Commissions
22. Tax Status Additional Investment Objectives and Policies
23. Financial Statements Incorporation of Financial Statements by Reference
</TABLE>
<PAGE>
<PAGE>
[LOGO]
AN INVESTMENT YOU CAN LIVE WITH
May 1, 1997
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 1996 Annual Report to
Stockholders of the Corporation (the '1996 Annual Report') will be furnished,
without charge, to investors requesting copies of the SAI. The 1996 Annual
Report contains financial statements of the Corporation for the year ended
December 31, 1996 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>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Corporation Expenses.................. 2
Prospectus Summary............................... 3
Financial Highlights............................. 4
Capitalization at March 31, 1997................. 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 1996 (AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE
TO COMMON STOCK)
Management Fees.................................................................... .41%
Other Expenses..................................................................... .21%
----
Total Annual Expenses......................................................... .62%
====
</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 $77
</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>
<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 1996 was 325,373 shares. The Corporation's
Common Stock has historically been traded on the market at less than net asset
value. As of March 31, 1997, the Corporation had 96,721,503 shares of Common
Stock outstanding and net assets attributable to Common Stock of $2,865,939,795.
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 seventeen other investment companies which,
together with the Corporation, make up the 'Seligman Group.' The aggregate
assets of the Seligman Group at March 31, 1997 were approximately $14.2 billion.
The Manager also provides investment management or advice to institutional
accounts having a value at March 31, 1997 of approximately $4.2 billion. The
Manager's fee is based in part on the average daily net assets of the
Corporation. The management fee rate for 1996 was equivalent to .41% 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 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>
<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 1996 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 their
investment, assuming it was held throughout the year.
Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item, as disclosed in the financial statements,
to their equivalent per Common share amount. The total investment return
PER SHARE OPERATING PERFORMANCE, TOTAL
(FOR A SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
---------------------------------------
1996 1995 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year.......................... $27.58 $23.70 $27.49 $28.03
------ ------ ------ ------
Net investment income*...................................... .68 .74 .83 .83
Net realized and unrealized investment gain (loss).......... 4.84 6.14 (1.69) 1.46
Net realized and unrealized gain on foreign currency
transactions.............................................. (.02) .03 .02 --
------ ------ ------ ------
Increase (decrease) from investment operations.............. 5.50 6.91 (.84) 2.29
Dividends paid on Preferred Stock........................... (.02) (.02) (.03) (.03)
Dividends paid on Common Stock.............................. (.66) (.73) (.79) (.80)
Distribution from net gain realized......................... (2.72) (2.01) (1.90) (1.80)
Issuance of Common Stock in gain distributions.............. (.40) (.27) (.23) (.19)
Issuance of Common Stock from exercise of Rights............ -- -- -- --
Rights offering costs....................................... -- -- -- --
Issuance of Common Stock upon Warrant exercise**............ -- -- -- (.01)
------ ------ ------ ------
Net increase (decrease) in net asset value.................. 1.70 3.88 (3.79) (.54)
------ ------ ------ ------
Net asset value at end of year.............................. $29.28 $27.58 $23.70 $27.49
====== ====== ====== ======
Adjusted net asset value at end of year**................... $29.22 $27.52 $23.65 $27.42
Market value, end of year................................... $24.125 $22.625 $19.875 $23.75
TOTAL INVESTMENT RETURN FOR YEAR:
Based upon market value..................................... 21.98% 27.95% (5.07)% 3.47%
Based upon net asset value.................................. 21.45% 30.80% (2.20)% 8.95%
RATIOS AND SUPPLEMENTAL DATA:***
Expenses to average net assets.............................. .62% .63% .64% .66%
Net investment income to average net assets................. 2.27% 2.71% 3.08% 2.88%
Portfolio turnover rate..................................... 53.96% 62.28% 70.38% 69.24%
Average commission rate paid................................ $ .0478
Net investment assets, end of year (000s omitted):
For Common Stock........................................ $2,835,026 $2,469,149 $1,994,098 $2,166,212
For Preferred Stock..................................... 37,637 37,637 37,637 37,637
---------- ---------- ---------- ----------
Total net investment assets................................. $2,872,663 $2,506,786 $2,031,735 $2,203,849
========== ========== ========== ==========
</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:
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 $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
4
<PAGE>
<PAGE>
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.
Average commission rate paid represents the average commission paid by the
Corporation to purchase or sell portfolio securities. It is determined by
dividing the total commission dollars paid by the number of shares purchased and
sold during the period for which commissions were paid.
INVESTMENT RETURNS, RATIOS AND SUPPLEMENTAL DATA
(OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------
1992 1991 1990 1989 1988 1987
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
$18.57 $24.60 $27.44 $23.55 $23.94 $27.94
------ ------ ------ ------ ------ ------
.81 .81 .81 .88 .84 .86
1.19 5.79 (1.05) 6.78 1.01 (.03)
-- -- -- -- -- --
------ ------ ------ ------ ------ ------
2.00 6.60 (.24) 7.66 1.85 .83
(.03) (.03) (.03) (.04) (.04) (.04)
(.78) (.78) (.86) (.84) (.81) (.89)
(.70) (1.80) (1.60) (2.55) (1.25) (3.73)
(.05) (.02) (.11) (.33) (.14) (.16)
(.97) -- -- -- -- --
(.01) -- -- -- -- --
-- -- -- (.01) -- (.01)
------ ------ ------ ------ ------ ------
(.54) (3.97) (2.84) 3.89 (.39) (4.00)
------ ------ ------ ------ ------ ------
$28.03 $28.57 $24.60 $27.44 $23.55 $23.94
====== ====== ====== ====== ====== ======
$27.95 $28.48 $24.52 $27.35 $23.47 $23.86
$25.50 $27.75 $21.375 $23.00 $19.25 $20.625
.61%`D' 42.98% 3.46% 37.96% 3.02% (12.27)%
7.42%`D' 27.91% (.20)% 34.54% 8.58% 3.30%
.67% .67% .56% .55% .57% .53%
2.86% 2.90% 3.01% 3.19% 3.33% 2.66%
44.35% 49.02% 41.23% 59.87% 67.39% 78.99%
$2,088,102 $1,833,664 $1,500,281 $1,594,505 $1,263,848 $1,237,091
37,637 37,637 37,637 37,637 37,637 37,637
---------- ---------- ---------- ---------- ---------- ----------
$2,125,739 $1,871,301 $1,537,918 $1,632,142 $1,301,485 $1,274,728
========== ========== ========== ========== ========== ==========
</TABLE>
December 27, 1995 -- 12.77 shares at $1.76 per share; December 28, 1995 to
July 1, 1996 -- 13.54 shares at $1.66 per share; July 2 1996 to December 20,
1996 -- 13.79 shares at $1.63 per share; and subsequently, 14.69 shares at
$1.53 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>
<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>
1996................................ 752,740 $ 3,816 $ 50 $34.28
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
</TABLE>
6
<PAGE>
<PAGE>
CAPITALIZATION AT MARCH 31, 1997
<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.* 96,721,503 shs. - 0 - shs.
Warrants to purchase
Common Stock.............................................. 14,466 wts. 14,466 wts. - 0 - wts.
</TABLE>
- ------------
* 212,506 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 1995.
<TABLE>
<CAPTION>
DISCOUNT TO NET
MARKET PRICE NET ASSET VALUE ASSET VALUE
------------- ---------------- --------------------
1995 HIGH LOW HIGH LOW HIGH LOW
- ----------------------------------- ------------ ------------ ----- ----- -------- --------
<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)%
2nd Q.............................. 25 1/4 23 3/8 30.32 28.65 (16.72)% (18.41)%
3rd Q.............................. 25 22 1/4 30.07 27.75 (16.86)% (19.82)%
4th Q.............................. 27 1/8 23 1/2 32.17 28.65 (15.68)% (17.98)%
<CAPTION>
1997
- -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
1st Q.............................. 26 1/8 23 3/4 31.19 29.05 (16.24)% (18.24)%
</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 March 31, 1997 were $24.50, $29.63 and (17.31)%, respectively.
7
<PAGE>
<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, 1996 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>
<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 1996.
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 Rule 144A
securities will further evolve. 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
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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.
Seligman Henderson Co. (the 'Subadviser') 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, 1997, 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>
<S> <C> <C> <C> <C> <C>
Assumed return on portfolio (net of
expenses).................................. - 10% - 5% 0% 5% 10%
Corresponding return to common stockholder... - 10.20% 5.13% - 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 makes purchases and sales of portfolio securities consistent with
the Corporation's investment objectives and policies.
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The Manager also serves as manager of seventeen 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 Municipal Fund Series, Inc. and Seligman Municipal
Series Trust, Seligman New Jersey Municipal Fund, Inc., Seligman Pennsylvania
Municipal Fund Series, Seligman Portfolios, Inc., Seligman Quality Municipal
Fund, Inc., Seligman Select Municipal Fund, Inc., and Seligman Value Fund
Series, Inc. 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. and 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 the Manager 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.
Odette S. Galli, Vice President of the Manager, has served as Co-Portfolio
Manager of the Corporation since October 1996. She is also Co-Portfolio Manager
of Seligman Common Stock Fund, Inc. and Seligman Common Stock Portfolio of
Seligman Portfolios, Inc. Ms. Galli joined the Manager in 1993 as Vice
President, Investment Officer.
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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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. 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. At December 31, 1996, Net Qualifying Assets were
$315.7 million.
The Subadviser was founded in 1991 as a joint venture between the Manager
and Henderson International, Inc., a controlled affiliate of Henderson plc. The
Subadviser, headquartered in New York, was created to provide international and
global investment advice to institutional and individual investors and
investment companies. The Subadviser currently serves as subadviser to Seligman
Capital Fund, Inc., Seligman Common Stock Fund, Inc., Seligman Communications
and Information Fund, Inc., Seligman Frontier Fund, Inc., Seligman Growth Fund,
Inc., Seligman Henderson Global Fund Series, Inc., Seligman Income Fund, Inc.,
the Seligman Henderson International Portfolio, Seligman Henderson Global Growth
Opportunities Portfolio, Seligman Henderson Global Smaller Companies Portfolio
and Seligman Henderson Global Technology Portfolio of Seligman Portfolios, Inc.
and Seligman Value Fund Series, 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.
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Clark, a Managing Director and Chief Investment Officer of the Subadviser, is
responsible for the day-to-day foreign investment activity of the Corporation.
Mr. Clark, who joined the Subadviser in 1992, has been a Director of Henderson
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 $3,857.34 at
March 31, 1997.
(b) VOTING RIGHTS: The Preferred Stock is entitled to two votes and the
Common Stock is entitled to one vote per share at all meetings of stockholders.
In the event of a default in payments of dividends on the Preferred Stock
equivalent to six quarterly dividends, the Preferred Stockholders are entitled,
voting separately as a class to the exclusion of Common Stockholders, to elect
two additional directors, such right to continue until all arrearages have been
paid and current Preferred Stock dividends are provided for. Notwithstanding any
provision of law requiring any action to be taken or authorized by the
affirmative vote of the holders of a designated portion of all the shares or of
the shares of each class, such action shall be effective if taken or authorized
by the affirmative vote of a majority of the aggregate number of the votes
entitled to vote thereon, except that a class vote of Preferred Stockholders is
also required to approve certain actions adversely affecting their rights. Any
change in the Corporation's fundamental policies may also be authorized by the
vote of 67% of the votes present at a meeting if the holders of a majority of
the aggregate number of votes entitled to vote are present or represented by
proxy.
Consistent with the requirements of Maryland law, the Corporation's Charter
provides that the affirmative vote of two-thirds of the aggregate number of
votes entitled to be cast thereon shall be necessary to authorize any of the
following actions: (i) the dissolution of the Corporation; (ii) a merger or
consolidation of the Corporation (in which the Corporation is not the surviving
corporation) with (a) an open-end investment company or (b) a closed-end
investment company, unless such closed-end investment company's Articles of
Incorporation require a two-thirds or greater proportion of the votes entitled
to be cast by such company's stock to approve the types of transactions covered
by clauses (i) through (iv) of this paragraph; (iii) the sale of all or
substantially all of the assets of the Corporation to any person (as such term
is defined in the 1940 Act); or (iv) any amendment of the Charter of this
Corporation which makes any class of the Corporation's stock a redeemable
security (as such term is defined in the 1940 Act) or reduces the two-thirds
vote required to authorize the actions listed in this paragraph. This could have
the effect of delaying, deferring or preventing changes in control of the
Corporation.
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(c) LIQUIDATION RIGHTS: In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, after payment to the
Preferred Stockholders of an amount equal to $50 per share plus dividends
accrued or in arrears, the Common Stockholders are entitled, to the exclusion of
the Preferred Stockholders, to share ratably in all the remaining assets of the
Corporation available for distribution to stockholders.
(d) OTHER PROVISIONS: Common Stockholders do not have preemptive,
subscription or conversion rights, and are not liable for further calls or
assessments. The Corporation's Board of Directors (other than any directors who
may be elected to represent Preferred Stockholders as described above) are
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 14.69 shares of Common Stock at $1.53 per share. There were 14,466
Warrants outstanding at March 31, 1997. 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 case of
over-the-counter securities, a mean of bid and asked prices. United Kingdom
securities and
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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 invested in additional shares and,
to the extent designated as derived from the Corporation's dividend
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income that would be eligible for the dividends received deduction if the
Corporation were not a regulated investment company, they are eligible, subject
to certain restrictions, for the 70% dividends received deduction for
corporations. Distributions of net capital gain (i.e., the excess of net
long-term capital gains over any net short-term capital losses) are taxable as
long-term capital gain, whether received in cash or invested in additional
shares, regardless of how long shares have been held by the stockholders, but
such distributions are not eligible for the dividends received deduction allowed
to corporate stockholders. Individual stockholders will be subject to federal
income tax on net capital gains at a maximum rate of 28%. Net capital gain of a
corporate stockholder is taxed at the same rate as ordinary income. Assuming
current investment policies remain in effect, taxable income derived from the
holding, sale or exchange of Common or Preferred Stock of the Corporation will
not be adjusted or increased in calculating the alternative minimum taxable
income derived from such holding, sale or exchange.
Any gain or loss realized upon a sale or redemption of Common or Preferred
Stock by a stockholder who is not a dealer in securities will generally be
treated as a long-term capital gain or loss if the shares have been held for
more than one year and otherwise as a short-term capital gain or loss. However,
if shares on which a long-term capital gain distribution has been received are
subsequently sold or redeemed and such shares have been held for six months or
less, any loss realized will be treated as long-term capital loss to the extent
that it offsets the long-term capital gain distribution. No loss will be allowed
on the sale or other disposition of shares of the Fund if, within a period
beginning 30 days before the date of such sale or disposition and ending 30 days
after such date, the holder acquires (such as through the Automatic Dividend
Investment and Cash Purchase Plan), or enters into a contract or option to
acquire, securities that are substantially identical to the shares of the Fund.
The Corporation will generally be subject to an excise tax of 4% on the
amount by which distributions to stockholders fall short of certain required
levels, such that income or gain is not taxable to stockholders in the calendar
year in which it was earned by the Corporation. Furthermore, dividends declared
in October, November or December payable to stockholders of record on a
specified date in such a month and paid in the following January will be treated
as having been paid by the Corporation and received by each stockholder in
December. Under this rule, therefore, stockholders may be taxed in one year on
dividends or distributions actually received in January of the following year.
The tax treatment of the Corporation and of stockholders under the tax laws
of the various states may differ from the federal tax treatment. Stockholders
are urged to consult their own tax advisers regarding specific questions as to
federal, state or local taxes.
THE CORPORATION IS REQUIRED TO WITHHOLD AND REMIT TO THE U.S. TREASURY 31%
OF TAXABLE DIVIDENDS AND OTHER REPORTABLE PAYMENTS PAID ON AN ACCOUNT IF THE
HOLDER OF THE ACCOUNT PROVIDES THE CORPORATION WITH EITHER AN INCORRECT TAXPAYER
IDENTIFICATION NUMBER OR NO NUMBER AT ALL OR FAILS TO CERTIFY THAT THE
STOCKHOLDER IS NOT SUBJECT TO SUCH WITHHOLDING. STOCKHOLDERS SHOULD BE AWARE
THAT, UNDER REGULATIONS PROMULGATED BY THE INTERNAL REVENUE SERVICE, THE
CORPORATION MAY BE FINED $50 ANNUALLY FOR EACH ACCOUNT FOR WHICH A CERTIFIED
TAXPAYER IDENTIFICATION NUMBER IS NOT PROVIDED. THE CORPORATION MAY CHARGE A
SERVICE FEE OF UP TO $50 FOR ACCOUNTS NOT HAVING A CERTIFIED TAXPAYER
IDENTIFICATION NUMBER. CERTIFICATES WILL NOT BE ISSUED UNLESS AN ACCOUNT IS
CERTIFIED.
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DESCRIPTION OF INVESTMENT PLANS AND OTHER SERVICES
AUTOMATIC DIVIDEND INVESTMENT AND CASH PURCHASE PLAN
The Automatic Dividend Investment and Cash Purchase Plan is available for
any Common stockholder who wishes to purchase additional shares of the
Corporation's Common Stock with dividends or other cash payments on shares
owned, with cash dividends paid by other corporations in which is owned 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' below. Funds forwarded by
stockholders under the Plan should be made payable to Tri-Continental
Corporation and mailed to Tri-Continental Corporation, P.O. Box 3947, New York,
NY 10008-3947. Checks for investment must be in U.S. dollars drawn on a domestic
bank. Credit card convenience checks and third party checks, i.e., checks made
payable to a party other than Tri-Continental Corporation may not be used to
purchase shares under this Plan. 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, 1997, 25,114 stockholders, owning 29,836,670 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 their 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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TAX-DEFERRED RETIREMENT PLANS
Shares of the Corporation may be purchased for:
-- Individual Retirement Accounts (IRAs);
-- Savings Incentive Match Plans for Employees (SIMPLE IRAs);
-- Simplified Employee Pension Plans (SEPs);
-- Section 401(k) Plans for corporations and their employees; and
-- Money Purchase 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 MATCHED ACCUMULATION PLAN
The Manager has a Matched Accumulation Plan ('Profit-Sharing 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 Profit-Sharing 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 on the dividend payable date or the Issuance Date 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
ex-dividend 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
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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 or 212-682-7600 outside the 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 (WITHIN THE
CONTINENTAL UNITED STATES) 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-DIV MAY BE ORDERED.
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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 1996, 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.
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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>
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>
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<TABLE>
<S> <C>
[Logo] AUTHORIZATION FORM
an investment you can live with FOR
To: Seligman Data Corp. AUTOMATIC DIVIDEND INVESTMENT
P.O. Box 3947 AND CASH PURCHASE PLAN
New York, New York 10008-3947 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 3947, New York, NY 10008-3947.
[ ] 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.
5/97
23
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<TABLE>
<S> <C>
[Logo] AUTHORIZATION FORM
an investment you can live with FOR
AUTOMATIC CHECK SERVICE
</TABLE>
To start your Automatic Check Service, fill out this form and forward it with an
unsigned bank check from your regular checking account (marked 'void') to:
Seligman Data Corp.
P.O. Box 3947
New York, New York 10008-3947
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>
5/97
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[THIS PAGE INTENTIONALLY LEFT BLANK.]
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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 and distributions, 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 3947, New York, NY 10008-3947.
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 needed 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 a 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
dividend 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.
5/97
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[LOGO]
AN INVESTMENT YOU CAN LIVE WITH
100 Park Avenue
New York, New York 10017
INVESTMENT MANAGER
J. & W. Seligman & Co.
Incorporated
100 Park Avenue
New York, New York 10017
SUBADVISER
Seligman Henderson Co.
100 Park Avenue
New York, New York 10017
STOCKHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, New York 10017
PORTFOLIO SECURITIES CUSTODIAN
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
GENERAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
------------------------------------
Listed on the
New York Stock Exchange
- ------------------------------------------------------
- ------------------------------------------------------
CETRI 1 5/97
- ------------------------------------------------------
- ------------------------------------------------------
[LOGO]
AN INVESTMENT YOU CAN LIVE WITH
A MANAGEMENT TYPE
DIVERSIFIED, CLOSED-END
INVESTMENT COMPANY
------------------------------------
COMMON STOCK
($.50 PAR VALUE)
------------------------------------
PROSPECTUS
MAY 1, 1997
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE>
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1997
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, 1997,
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>
<S> <C> <C> <C>
Page Page
Additional Investment Objectives and Experts...................................... 10
Policies...................................... 2 Custodian, Stockholder Service Agent
(See "Investment and other Policies" in the and Dividend Paying Agent.................. 10
Prospectus) Brokerage Commissions........................ 10
Directors and Officers......................... 4 Incorporation of Financial Statements By
Management..................................... 9 Reference.................................. 11
(See "Management of the Corporation" in the Independent Auditors' Report on
Prospectus) Financial Highlights - Senior Securities -
$2.50 Cumulative Preferred Stock............. 12
Appendix..................................... 13
CETRI1A
</TABLE>
<PAGE>
<PAGE>
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.
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
-2-
<PAGE>
<PAGE>
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
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.
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<PAGE>
<PAGE>
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.
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<PAGE>
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.
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief
Executive Officer and Chairman of the Executive
(58) Committee
Chairman, 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 company.
BRIAN T. ZINO* Director, President and Member of the Executive
Committee
(44)
Director and President, 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, and
Director, Seligman Securities, Inc.,
broker/dealer and J. & W. Seligman Trust
Company, trust company.
JOHN R. GALVIN Director
(67)
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 Corporation, 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.
ALICE S. ILCHMAN Director
(61)
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
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<PAGE>
<PAGE>
FRANK A. McPHERSON Director
(63)
Chairman of the Board and Chief Executive
Officer, Kerr-McGee Corporation, energy;
Kimberly-Clark Corporation, consumer products,
Bank of Oklahoma Holding Company, Oklahoma City
Chamber of Commerce, Baptist Medical Center,
Oklahoma Chapter of the Nature Conservancy,
Oklahoma Medical Research Foundation and
National Boys and Girls Clubs of America;
Chairman of Oklahoma City Public Schools
Foundation; and a Member of the Business
Roundtable and National Petroleum Council.
123 Robert S. Kerr Avenue, Oklahoma City, OK
73102
JOHN E. MEROW* Director
(67)
Retired 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; a Member of the American Law
Institute and the Council on Foreign Relations;
aMember of the Board of Governors of the
Foreign Policy Association and the New York
Hospital.
125 Broad Street, New York, NY 10004
BETSY S. MICHEL Director
(54)
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
DC).
St. Bernard's Road, Gladstone, NJ 07934
JAMES C. PITNEY Director
(70)
Retired 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
(69)
Director, various ; 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
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<PAGE>
<PAGE>
RONALD T. SCHROEDER* Director and Member of the Executive Committee
(49)
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, the
Seligman Group of Investment Companies;
Director, Seligman Holdings, Inc., holding
company; Seligman Financial Services, Inc.,
broker/dealer; Seligman Henderson Co.,
advisers; 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
(64)
Director, various organizations, Director or
Trustee, the Seligman Group of Investment
Companies; and USLIFE Corporation, life
insurance; formerly, Vice President, Pfizer
Inc., pharmaceuticals.;
235 East 42nd Street, New York, NY 10017
JAMES N. WHITSON Director
(62)
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
(40)
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 open-end investment
companies in the Seligman Group of Investment
Companies.
LAWRENCE P. VOGEL Vice President
(40)
Senior Vice President, Finance, J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; Seligman Financial
Services, Inc., broker/dealer; Seligman
Advisors, Inc., advisers; and Seligman Data
Corp., shareholder service agent; Vice
President, the Seligman Group of Investment
Companies and Seligman Services, Inc.,
broker/dealer; 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
(32)
Senior Vice President, Law and Regulation, and
Corporate Secretary, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
Secretary, the Seligman Group of Investment
Companies; Corporate Secretary, Seligman
Advisors, Inc., advisers; 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.
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<PAGE>
<PAGE>
THOMAS G. ROSE Treasurer
(39)
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.
Compensation Table
<TABLE>
<CAPTION>
Pension or
Retirement Benefits
Aggregate Accrued as part of Total Compensation
Compensation Corporation from Corporation and
Name and Position with Corporation from Corporation(1) Expenses Fund Complex(1)(2)
---------------------------------- ------------------- -------- ------------------
<S> <C> <C> <C>
William C. Morris, Director and
Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
Ronald T. Schroeder, Director N/A N/A N/A
Fred E. Brown, Director** N/A N/A N/A
John R. Galvin, Director $18,000.00 N/A $65,000.00
Alice S. Ilchman, Director 18,400.00 N/A 66,000.00
Frank A. McPherson, Director 18,000.00 N/A 65,000.00
John E. Merow, Director 18,400.00(d) N/A 66,000.00(d)
Betsy S. Michel, Director 18,400.00 N/A 66,000.00
James C. Pitney, Director 18,000.00 N/A 65,000.00
James Q. Riordan, Director 18,400.00 N/A 66,000.00
Robert L. Shafer, Director 18,400.00 N/A 66,000.00
James N. Whitson, Director 18,400.00(d) N/A 66,000.00(d)
</TABLE>
- ----------------------
(1) Based on remuneration received by the Directors of the Corporation for the
year ended December 31, 1996.
(2) As defined in the Corporation's prospectus, the Seligman Group of Investment
Companies consists of eighteen investment companies.
** Retired March 20, 1997.
(d) Deferred.
The Corporation 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 Corporation's financial statements. As of
December 31, 1996, the total amounts of deferred compensation (including
interest) payable in respect of the Corporation to Messrs. Merow and Whitson
were $120,449 and $73,612, respectively. As of January 1, 1997, Mr. Merow no
longer defers current compensation. Mr. Pitney no longer defers current
compensation; however, he has accrued deferred compensation in the amount of
$250,862, as of December 31, 1996. The Corporation has applied for, and expects
to receive, exemptive relief that would permit a director who has elected
deferral of his or her fees to choose a rate of return equal to either (i) the
interest rate on short-term Treasury bills, or (ii) the rate of return on the
shares of any of the investment companies advised by the Manager, as designated
by the director. The Corporation may, but is not obligated to, purchase shares
of such investment companies to hedge its obligations in connection with this
deferral arrangement.
Directors and officers of the 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
-8-
<PAGE>
<PAGE>
succeeding such action. The members of the Executive Committee consist of Mr.
William C. Morris, Chairman, Ronald T. Schroeder and Brian T. Zino, President.
HOLDINGS OF PREFERRED STOCK, COMMON STOCK AND WARRANTS:
As of March 31, 1997 holders of record of Preferred Stock totaled 707;
holders of record of Common Stock totaled 45,134; and holders of record of
Warrants totaled 179. Insofar as is known by the Corporation, no person owns or
controls or holds, directly or indirectly, 5% or more of the outstanding equity
securities, except for Cede & Co., a nominee for The Depository Trust Company,
P.O. Box 20, Bowling Green Station, New York, NY 10274 who owns of record 43.07%
of the Corporation's Common Stock and 69.05% of the Corporation's Preferred
Stock.
As of March 31, 1997 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 management
fee amounted to $11,136,312 in 1996, $9,761.731 in 1995, and $9,372,713 in 1994
which was equivalent to annual rates of .41%, .42% and .44%, respectively, of
the average daily net assets of the Corporation.
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. 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. See the
Appendix for a history of the Manager.
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) 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 years ended December 31, 1996 and 1995, the
Subadviser received fees from the Manager of $1,192,207 and $810,796,
respectively, and for the period June 1, 1994 through December 31, 1994, the
Subadviser received a fee from the Manager of $476,716.
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<PAGE>
The Subadviser is a New York general partnership formed by the Manager and
Henderson International, Inc., a controlled affiliate of Henderson plc.
Henderson plc, headquartered in London, is one of the largest independent money
managers in Europe. The firm managed approximately $18 billion in assets as of
December 31, 1996, and is recognized as a specialist in global equity investing.
EXPERTS
Deloitte & Touche LLP, Two World Financial Center, New York, New York 10281
acts as independent auditors for the Corporation and in such capacity audits the
Corporation's annual and semi-annual financial statements and financial
highlights.
The financial information of the Corporation included in the Prospectus under
the caption "Financial Highlights" and the financial statements incorporated by
reference in this Statement of Additional Information have been so included or
incorporated by reference in reliance on the reports of Deloitte & Touche LLP
given upon their authority as experts in auditing and accounting.
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. Total brokerage
commissions (not including any spreads on principal transactions on a net basis)
paid by the Corporation during the fiscal years ended December 31, 1996, 1995
and 1994 were $4,105,756, $3,825,533, and $3,062,434, respectively.
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<PAGE>
INCORPORATION OF FINANCIAL STATEMENTS BY REFERENCE
The Corporation's financial statements for the year ended December 31, 1996
are herein incorporated by reference to the 1996 Annual Report to Stockholders
of the Corporation (the "1996 Annual Report"), filed with the Commission
pursuant to Section 30(b) of the 1940 Act and the rules and regulations
thereunder. The 1996 Annual Report also contains schedules of the Corporation's
portfolio investments as of December 31, 1996 and certain other financial
information. A copy of the 1996 Annual Report will be sent without charge, to
all investors who request a copy of this Statement of Additional Information.
-11-
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<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, 1996 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, 1996 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
April 21, 1997
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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.
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.
-13-
<PAGE>
<PAGE>
...1950-1989
Develops new open-end investment companies. Today, manages more than 40
mutual fund portfolios.
Helps pioneer state-specific, municipal bond funds, today managing a
national and 18 state-specific municipal 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 to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
Launches Seligman Henderson Global Fund Series, Inc., which today offers
five separate series: Seligman Henderson International Fund, Seligman
Henderson Global Smaller Companies Fund, Seligman Henderson Global
Technology Fund, Seligman Henderson Global Growth Opportunities Fund,
and Seligman Henderson Emerging Markets Growth Fund.
Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap
Value Fund.
-14-
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
67TH ANNUAL REPORT 1996
TRI-CONTINENTAL
CORPORATION
AN INVESTMENT YOU CAN LIVE WITH
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION INVESTS PRIMARILY TO PRODUCE LONG-TERM GROWTH OF
BOTH CAPITAL AND INCOME, WHILE PROVIDING REASONABLE CURRENT INCOME.
TY is Tri-Continental Corporation's symbol for its Common Stock on the New York
Stock Exchange.
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
To the Stockholders: January 31, 1997
Nineteen ninety-six was another rewarding year for Tri-Continental Corporation.
For the year, the Corporation's total return based on net asset value was
21.45%. This investment result lagged only slightly the 22.96% total return of
the Standard & Poor's 500 Composite Stock Price Index (S&P 500) and the 22.26%
total return of the Corporation's competitor universe, as measured by the Lipper
Closed-End Growth & Income Funds Average. The Corporation's total return based
on market price was somewhat higher at 21.98%, reflecting a modest narrowing of
the discount from net asset value.
Nineteen ninety-six was also a strong year for the US equity markets, and the
second consecutive year of well above-average returns. In fact, the S&P 500's
average annual rate of return in the 1995-96 period of 29.8% was the best
two-year result since the economic recovery of 1975-76, when the S&P 500
advanced at an average annual rate of 30.3%. Though 1996's gains were driven by
the outstanding performance of a small number of the largest companies, they
were particularly extraordinary because they took place in the sixth year of an
economic expansion.
A positive economic environment also contributed to the gains in the markets.
In 1996, the real economy grew at an estimated 3.4%, significantly higher than
in 1995. This growth was accompanied by low levels of inflation, as the Consumer
Price Index increased only 3.3% in 1996. At the same time, corporate profits
continued to grow, and in spite of continued corporate downsizing and
restructuring, the unemployment rate fell as low as 5.2% in August and ended the
year at 5.3%, as compared to 5.6% in December 1995. Simply put, the increased
competitiveness of US industry and the low inflation environment provided strong
fundamental support to higher equity prices.
Your Corporation's investment results remain our first priority, and we are
pleased with the continued improvement in this area. Further, the Corporation's
total 1996 per share dividend distribution was maintained for Common
Stockholders who took their December 1995 and July 1996 capital gain
distributions in additional shares. The net realized capital gains paid on July
1 and December 20, 1996, totaled $246,856,282, or $2.722 per share, and the
total dividends distributed to Common Stockholders in 1996 were $59,457,756, or
$0.66 per share.
Important progress was also made in strengthening Tri-Continental's Investor
Relations Program this year. Three major Wall Street brokerage firms are now
covering Tri-Continental Corporation and are recommending the stock.
Additionally, with the approval of your Board of Directors, Tri-Continental has
initiated a program that is designed to promote and strengthen the Corporation's
identity among financial advisors and individual investors in 1997. Our goal
remains the enhancement of the long-term value of being a Tri-Continental
Stockholder.
1
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
Looking ahead, the environment for the US financial markets and investors
remains generally positive, given continued modest economic growth with low
inflation, bipartisan efforts to balance the federal budget without raising
taxes, and progress towards the reduction of the tax rate on capital gains. We
recognize, however, that there could be further short-term volatility, but we
remain positive on the long-term outlook for both the financial markets and your
Corporation.
On a final note, the activity witnessed in the equity markets in 1996, where
large one-day price increases followed abrupt corrections, is not unusual in the
challenging world of investing. We believe the best strategy for growth of
capital is long-term investing, as it is all but impossible for even the most
sophisticated investor to time the market. Time, not timing, is the key to a
successful investment strategy.
We thank you for your continued confidence in Tri-Continental Corporation and
look forward to serving your investment needs in the many years to come.
By order of the Board of Directors,
/s/ William Morris
- -----------------------
William C. Morris
Chairman
/s/ Brian T. Zino
----------------------
Brian T. Zino
President
2
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
- -----------------
[PHOTO]
- -----------------
SELIGMAN GROWTH AND INCOME TEAM: (FROM LEFT)RODNEY COLLINS, MARGARET DOYLE,
JONATHAN ROTH, ODETTE GALLI (CO-PORTFOLIO MANAGER), (SEATED) MELANIE RAVENELL
(ADMINISTRATIVE ASSISTANT), CHARLES C. SMITH, JR. (CO-PORTFOLIO MANAGER), AMY
FUJII.
INTERVIEW WITH YOUR
PORTFOLIO MANAGERS
MR. CHARLES C. SMITH, JR., Managing Director of J. & W. Seligman & Co.
Incorporated, and MS. ODETTE GALLI, Vice President of J. & W. Seligman & Co.
Incorporated, are supported by a group of investment professionals dedicated to
the growth and income investment discipline, and to the objectives of
Tri-Continental Corporation.
WHAT WERE TRI-CONTINENTAL CORPORATION'S INVESTMENT RESULTS IN 1996?
"Tri-Continental Corporation had strong investment results in 1996. The
Corporation's total returns of 21.45% based on net asset value and 21.98% based
on market price slightly lagged the 22.96% total return of the Standard and
Poor's 500 Composite Stock Index (S&P 500). However, on a risk adjusted basis,
as measured by the weighted average beta of the Corporation's holdings,
Tri-Continental's returns were competitive, having a beta less than that of the
S&P 500. Beta measures the volatility of an investment, as compared to that of
the overall market (represented by the S&P 500). The Corporation's investment
results also slightly lagged that of its peer group, as measured by the Lipper
Closed-End Growth & Income Funds Average. Additionally, the Corporation's total
1996 dividend distribution was maintained for Common Stockholders who took their
December 1995 and July 1996 capital gain distributions in additional shares."
WHAT ECONOMIC FACTORS AFFECTED TRI-CONTINENTAL CORPORATION'S INVESTMENT RESULTS
THIS YEAR?
"Throughout 1996, the economy grew at a moderate pace without any noticeable
increase in inflation. This beneficial economic environment led to
stronger-than-expected corporate profits in many industries, and helped most
major equity market indices reach record highs throughout the year.
Tri-Continental's investment results benefited from the positive economic and
financial environment. Tri-Continental's interest-rate-sensitive holdings, which
include financials and utilities, experienced unusual volatility and
underperformed the overall market in the first half of 1996, but an improving
interest rate environment in the later half of 1996 led to strong results in
financial stocks for the year as a whole."
WHAT MARKET FACTORS INFLUENCED THE CORPORATION'S INVESTMENT RESULTS IN THE LAST
12 MONTHS?
"The equity markets continued to reach record levels throughout the year despite
several short-term setbacks. Solid corporate profits and record mutual fund
inflows contributed to a second strong year for the equity markets. However, the
appreciation of a small number of the largest companies in the Dow Jones
Industrial Average and the S&P 500 drove the advances in both benchmarks. The
Corporation's portfolio did well in this market environment because it invests
in larger companies. On the other hand, the convertible market did not keep pace
with the equity markets, and the Corporation's convertible issues, while
providing high current income, underperformed most equity holdings.
"Overseas, the majority of the mature international markets lagged the S&P
500 throughout the year, and the strength of the US Dollar further impaired
investment results. However, in the fourth quarter, exceptional performance in
select European markets, including London, improved the Corporation's overall
results. We remain committed to finding quality investment opportunities
internationally and to seeking a higher potential rate of return over the long
term. We also anticipate that international markets should have better relative
performance in the future."
3
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
- --------------------------------------------------------------------------------
INVESTMENT RESULTS PER COMMON SHARE
TOTAL RETURNS*
FOR PERIODS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AVERAGE ANNUAL
-----------------------------------------
THREE ONE FIVE 10
MONTHS YEAR YEARS YEARS
-------- ---- ----- -------
<S> <C> <C> <C> <C>
MARKET PRICE 5.67% 21.98% 9.05% 10.91%
NET ASSET VALUE 6.62 21.45 12.70 13.35
S&P 500** 8.34 22.96 15.22 15.27
LIPPER CLOSED-END
GROWTH & INCOME
FUNDS AVERAGE** 6.63 22.26 12.91 12.91
</TABLE>
PRICE PER SHARE
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SEPTEMBER 30, 1996 JUNE 30, 1996 MARCH 31, 1996 DECEMBER 31, 1995
--------------- --------------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
MARKET PRICE $24.125 $25.00 $24.00 $23.875 $22.625
NET ASSET VALUE 29.28 30.07 29.57 29.28 27.58
</TABLE>
DIVIDEND AND CAPITAL GAIN INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CAPITAL GAIN
----------------------------------------------
DIVIDENDS PAID'D' PAID REALIZED UNREALIZED'D''D'
----------------- ------------ -------- --------------
<S> <C> <C> <C> <C>
$0.66 $2.722 $2.82 $6.77
</TABLE>
THE NET REALIZED CAPITAL GAIN AND DIVIDEND DISTRIBUTIONS PAID IN 1996 TOTALLED
$3.382. THIS IS EQUAL TO 11.4% OF THE CORPORATION'S AVERAGE END-OF-QUARTER
NET ASSET VALUES.
---------------------------------------------------------------------------
* These rates of return reflect changes in market price or net asset
value, as applicable, and assume that all distributions within the
period are taken in additional shares. The rates of return will vary and
the principal value of an investment will fluctuate. Shares, if
redeemed, may be worth more or less than their original cost. Past
performance is not indicative of future investment results.
** The S&P 500 and the Lipper Closed-End Growth & Income Funds Average are
unmanaged benchmarks that assume investment of dividends. The S&P 500
does not reflect fees and sales charges, and the Lipper Closed-End
Growth & Income Funds Average does not reflect sales charges. Investors
may not invest directly in an index or an average.
'D' Preferred Stockholders were paid dividends totaling $2.50 per share.
'D''D' Represents the per share amount of net unrealized appreciation of
portfolio securities as of December 31, 1996.
- --------------------------------------------------------------------------------
4
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
INTERVIEW WITH YOUR PORTFOLIO MANAGERS (CONTINUED)
WHAT WAS THE INVESTMENT STRATEGY DURING THE YEAR?
"We continued to maintain a broadly diversified portfolio. Investment strategy
focused on purchasing undervalued stocks with potential for long-term
appreciation. Within the portfolio, the most promising opportunities were found
in restructuring companies. We made investments in companies whose managements
were working to improve the corporate balance sheets, increase efficiency, and
therefore enhance profitability. Within this restructuring model, we purchased
General Signal Corporation, Olin Corporation, and Woolworth Corporation, which
all had a strong year as their managements' efforts were rewarded by the
markets. Similarly, we recently purchased Ford Motor Company, which we believe
should benefit from management's efforts to cut costs and improve productivity
and profitability. We also established meaningful positions in AMP Inc. and
Raytheon Company, as we anticipate improving performance from both companies due
to their managements' efforts to improve long-term results in 1997 and beyond."
WHICH SECTORS IN THE PORTFOLIO IMPROVED THE CORPORATION'S INVESTMENT RESULTS
DURING THE YEAR?
"The strength of the economy broadly benefited the capital goods sector. As the
Corporation's portfolio was overweighted in this area, overall investment
results were improved. The strongest capital goods stocks in the portfolio
included United Technologies Corporation, an aerospace company, General Electric
Company, a supplier of electrical equipment, and Illinois Tool Works Inc., a
tool manufacturer."
"Elsewhere, we were able to find good value in the technology market and
purchase selected companies as the sector experienced weakness early in 1996 and
again at mid year. Tri-Continental's technology holdings performed well,
particularly in the fourth quarter. The Corporation's investments in Compaq
Computer Corporation, Intel Corporation, and Microsoft Corporation benefited
stockholders in 1996."
"Early in the year, we were overweighted in consumer cyclical stocks such as
retailers, auto makers, and printers/publishers, whose performance is directly
affected by economic cycles and which benefited from the low inflation levels
and the economy's growth. Stocks such as Liz Claiborne, Inc. a retailer,
Harley-Davidson Inc., an auto and truck manufacturer, and Tribune Co., a
printer/publisher, all contributed to investment results. As several of the
portfolio's retail stocks reached full valuation during the year, we reduced the
portfolio's weighting in the sector, taking profits. Other strong sectors in the
portfolio included banking and financial services, which performed well in the
second half of the year as interest rates declined."
WHICH SECTORS IN THE PORTFOLIO IMPAIRED THE CORPORATION'S INVESTMENT RESULTS IN
1996?
"The portfolio's holdings in basic materials stocks had a lackluster year and
industries affected included the chemicals, paper, and steel industries.
However, we believe the strongest basic materials companies still have good
prospects, and should see improving performance in the coming year. Utilities
also underperformed due to continued problems associated with the deregulation
of the industry. Nonetheless, the Corporation's utility holdings, particularly
its natural gas stocks, outperformed the average of their peers in the overall
market. The Corporation's utility weighting was slowly reduced throughout the
year as prices approached the high end of their historic ranges."
WHAT IS THE OUTLOOK?
"We believe the Corporation is well positioned for 1997. Stock selection will be
crucial in the coming year, as we expect the marketplace to focus increasingly
on fundamentals. Currently, we find the greatest value in cyclical and
restructuring issues, and are overweighted in these areas. We will continue to
take a cautious approach as many companies are trading at historically high
valuations. We will also maintain our rigorous investment discipline, focusing
on companies with strong fundamentals which are selling at attractive
valuations."
5
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
HIGHLIGHTS OF THE YEAR
NET ASSET VALUE of each share of Common Stock was $29.28 at December 31,
compared to $27.58 at the start of the year. If you took the July and December
gain distributions in additional shares, the net asset value of each share you
owned at the beginning of 1996 was equivalent to $32.62 at year end. Assuming
you invested dividends and took the gain distributions in shares, your total
return was 21.45%.
DISTRIBUTION OF REALIZED GAIN
Your Directors declared a distribution of $0.572 per Common share from the
balance of taxable net gains realized from November 1, 1995, through December
31, 1995, consisting of $0.440 from net long-term gains and $0.132 from net
short-term gains, which was paid on July 1, 1996, to Stockholders of record June
21, 1996.
A distribution of $2.15 per Common share from taxable net gains realized
from January 1, 1996, through October 31, 1996, consisting of $2.01 from net
long-term gains and $0.14 from net short-term gains was paid on December 20,
1996, to Stockholders of record December 13, 1996.
The Corporation was required to distribute to Common Stockholders the total
undistributed net capital gains realized through October 31, 1996, to avoid a 4%
federal excise tax. The undistributed net capital gain realized from November 1,
1996, to December 31, 1996, of $0.80 per Common share remains a part of the
underlying market value of Common Stock shares as of December 31, 1996. This
amount will be distributed to Common Stockholders during 1997, at which time
Common Stockholders will be subject to federal income taxes on the amount
distributed.
The number of shares of Common Stock issued to those who took the July and
December payments in shares was determined by dividing the total dollar amount
payable by $24.188 and $24.313, the mean of the high and low market prices on
the New York Stock Exchange on June 19 and December 11, respectively.
Distributions should be taken into account in measuring the results of an
investment in Tri-Continental Common Stock, and should be taken in shares if you
want your investment to benefit from the full effect of compounding. Please
refer to the discussion on page 12.
OPERATING EXPENSES for the year were $16,885,209. The ratio of expenses to the
average value of net assets was 0.62%, down from 1995's expense ratio of 0.63%.
COMMON STOCK DIVIDENDS, paid quarterly, totaled $0.66 per share on an average of
90,088,000 shares, compared to $0.73 in 1995 when, on average, there were
approximately 6,117,000 fewer shares outstanding. Common Stock dividends paid in
1996 with the December 1995 and July 1996 capital gain distributions taken in
additional shares were equivalent to $0.73 per share.
PREFERRED STOCK DIVIDENDS paid each quarter completed 67 years of uninterrupted
payments. Total net investment income available to cover the $2.50 Preferred
Stock dividend was equivalent to $82.13 per Preferred share.
6
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
HIGHLIGHTS OF THE YEAR (CONTINUED)
ASSETS AT YEAR END: 1996 1995
------------ ------------
Total assets ........................... $2,875,674,116 $2,528,405,417
Amounts owed ......................... 3,010,792 21,619,659
-------------- --------------
NET INVESTMENT ASSETS .................. $2,872,663,324 $2,506,785,758
Preferred Stock, at par value .......... 37,637,000 37,637,000
-------------- --------------
Net assets for Common Stock ............ $2,835,026,324 $2,469,148,758
============== ==============
Common shares outstanding .............. 96,836,874 89,512,184
NET ASSETS BEHIND EACH
COMMON SHARE ......................... $29.28 $27.58
With 1996 gain distributions
taken in shares ...................... $32.62 --
TAXABLE GAIN:
Net capital gain realized .............. $ 272,983,871 $ 220,082,721
Per Common share ..................... $2.82 $2.46
Undistributed capital gains, end of year $ 77,104,262 $ 50,976,673
Per Common share, end of year ........ $0.80 $0.57
Unrealized capital gain, end of year ... $ 655,972,946 $ 494,660,634
Per Common share, end of year ........ $6.77 $5.53
DISTRIBUTION OF GAIN:
Per Common share* .................... $2.722 $2.01
INCOME:
Total income earned .................... $ 78,706,060 $ 76,774,096
Expenses ............................. 16,885,209 14,507,036
Preferred Stock dividends ............ 1,881,850 1,881,850
-------------- --------------
Income for Common Stock ................ $ 59,939,001 $ 60,385,210
============== ==============
Expenses to average net assets ......... 0.62% 0.63%
DIVIDENDS PER COMMON SHARE ............. $0.66 $0.73
With December 1995 and July 1996 gain
distributions taken in shares ........ $0.73 --
- ----------
* The Corporation's net capital gain realized for the year 1996 was $2.82 per
share of Common Stock outstanding at December 31, 1996. However, the
Corporation was required to distribute only the total undistributed net
capital gains realized November 1, 1995, through October 31, 1996 ($2.722), to
avoid a 4% federal excise tax. The undistributed net realized capital gain
remains a part of the underlying market value of Common Stock shares as of
December 31, 1996. This amount will be distributed to Common Stockholders
during 1997, at which time Common Stockholders will be subject to federal
income taxes on the amount received.
7
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
DIVERSIFICATION OF ASSETS
The diversification of portfolio holdings by industry on December 31, 1996, was
as follows. Individual securities owned are listed on pages 17 to 25.
<TABLE>
<CAPTION>
PERCENT OF NET
INVESTMENT ASSETS
DECEMBER 31,
------------------
ISSUES COST VALUE 1996 1995
--------- ------------- -------------- --------- -------
<S> <C> <C> <C> <C> <C>
Net Cash and Short-Term
Holdings 2 $ 270,304,248 $ 270,304,248 9.4% 6.9%
--- -------------- -------------- -------- -------
Common Stocks and
Convertible Issues:
Aerospace 5 $ 64,463,552 $ 80,650,000 2.8% 3.7%
Automotive and related 9 102,967,158 113,880,750 4.0 3.4
Basic materials 5 52,158,119 55,890,663 2.0 1.0
Building and construction 1 10,822,199 16,800,000 0.6 1.3
Chemicals 5 60,973,871 76,064,529 2.6 4.3
Communications 10 96,494,844 117,146,301 4.1 4.2
Computer and business services 8 99,772,733 155,659,375 5.4 3.8
Consumer goods and services 15 220,181,567 285,419,458 9.9 12.7
Diversified 6 77,172,942 111,806,250 3.9 4.0
Drugs and health care 12 114,678,333 177,470,704 6.2 6.6
Electric and gas utilities 11 94,440,473 117,265,323 4.1 2.3
Electronics 9 143,870,440 166,130,063 5.8 2.3
Energy 10 112,337,057 183,778,254 6.4 7.7
Entertainment and leisure 4 24,792,631 32,715,665 1.1 1.3
Environmental management 1 18,502,310 15,750,000 0.5 0.3
Finance and insurance 20 216,076,281 355,251,241 12.3 11.1
Manufacturing and
industrial equipment 13 157,327,946 205,266,784 7.2 5.8
Packaging and paper -- -- -- -- 0.1
Paper and forest products 5 77,385,819 88,324,846 3.1 2.7
Publishing 3 24,137,618 37,788,140 1.3 2.2
Real estate investment trusts 5 25,725,615 31,679,057 1.1 1.5
Retail trade 7 88,707,713 108,347,661 3.8 6.3
Steel 1 10,762,500 12,337,500 0.4 1.0
Transportation 4 39,040,939 41,653,581 1.5 2.3
---- -------------- -------------- ------ ------
169 $1,932,792,660 $2,587,076,145 90.1% 91.9%
---- -------------- -------------- ------ ------
Tri-Continental
Financial Division 3 $ 13,593,470 $ 15,282,931 0.5% 1.2%
---- -------------- ------------- ------ ------
NET INVESTMENT ASSETS 174 $2,216,690,378 $2,872,663,324 100.0% 100.0%
==== ============== ============= ====== ======
</TABLE>
8
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
LARGEST PORTFOLIO CHANGES
OCTOBER 1 TO DECEMBER 31, 1996
SHARES
-------------------
HOLDINGS
ADDITIONS INCREASE 12/31/96
-------- --------
COMMON STOCKS
Federal-Mogul Corporation 500,000 500,000
Ford Motor Company 300,000 300,000
Frontier Corporation 400,000 800,000
Great Western Financial
Corporation 400,000 400,000
Hercules, Inc. 300,000 300,000
Ikon Office Solutions Inc. 228,100 228,100
Novellus Systems, Inc. 200,000 200,000
Parker-Hannifin Corporation 325,000 325,000
Raytheon Company 200,000 500,000
Security Capital
US Realty Trust 1,000,000 1,000,000
SHARES
-------------------
HOLDINGS
REDUCTIONS DECREASE 12/31/96
-------- --------
COMMON STOCKS
Coca-Cola Company 300,000 --
Conrail Inc. 200,000 --
Donnelley (R.R.) & Sons
Company 600,000 --
Fleet Financial Group, Inc. 650,000 --
Gillette Company 200,000 --
Philip Morris
Companies, Inc. 150,000 --
Reader's Digest Association,
Inc. Class "A" 400,000 --
Rubbermaid Incorporated 800,000 --
SBC Communications Inc. 400,000 --
Largest portfolio changes are based on cost of purchases or proceeds from sales
of securities.
10 LARGEST HOLDINGS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
INCREASE (DECREASE)
DECEMBER 31, 1996 IN PER SHARE PRICE
--------------------------- ----------------------
COST VALUE FOR SINCE
(000S) (000S) 1996 PURCHASE
---------- ---------- --------- -----------
<S> <C> <C> <C> <C>
General Electric Company $ 12,552 $ 34,606 37.3% 175.7%
General Signal Corporation 26,999 34,200 32.0 26.7
Bank of New York Company, Inc. 16,668 33,750 38.5 102.5
Intel Corporation 14,378 32,734 130.5 127.7
American International
Group, Inc. 10,386 32,475 17.0 212.7
General Re Corporation 25,039 31,550 1.8 26.0
International Flavors &
Fragrances Inc. 32,892 31,500 (4.2)* (4.2)
Motorola Inc. 24,138 30,688 7.7 27.1
AMP Inc. 27,743 29,414 0.0 6.0
Exxon Corporation 15,838 29,400 22.3 85.6
---------- ----------
$ 206,633 $ 320,317
========== ==========
</TABLE>
* From date of purchase.
9
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
Tri-Continental is a closed-end investment company whose stock is listed on the
New York Stock Exchange. Unlike mutual funds, whose shares sell at net asset
value, the market price of Tri-Continental stock is set by the forces of supply
and demand. Therefore, the market price of Tri-Continental's stock can be above
its net asset value, selling at a premium, or below its net asset value, selling
at a discount.
TRI-CONTINENTAL'S CURRENT DISCOUNT IN PERSPECTIVE
The chart below shows Tri-Continental's year-end premium or discount for the 20
years ended December 31, 1996. During this period, the premium was as high as
2.45% at December 31, 1986, and the discount was as wide as 25.12% on December
31, 1980. The median discount was 13.725%. Tri-Continental's year-end 1996
discount of 17.61% is narrower than the 17.97% discount at year-end 1995, and is
within the third quartile of the premium/discount range experienced in the past
20 years.
Tri-Continental's discounts and premiums in the past 20 years are generally
consistent with those of many other closed-end Funds with similar investment
objectives.
[THE FOLLOWING TABLE REPRESENTS A GRAPH IN THE PRINTED PIECE.]
YEAR PREMIUM/DISCOUNT RANGE
END 1977-1996
- ---- ---------
1977 -12%
1978 -22%
1979 -23%
1980 -25%
1981 -20%
1982 -8%
1983 -5%
1984 -2%
1985 -1%
1986 2%
1987 -14%
1988 -18%
1989 -16%
1990 -13%
1991 -3%
1992 -9%
1993 -14%
1994 -16%
1995 -18%
1996 -18%
10
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
A PRUDENT WAY TO PROTECT AND INCREASE ASSETS
Regardless of the changes in the discount or premium, an investment in
Tri-Continental has been a good way to protect and increase assets -- even over
periods as short as five years. The chart below illustrates how a $10,000
investment grew in each five-year period in the past 20 years. The table lists
these periods in order of the greatest widening of the discount to the greatest
narrowing of the discount ("Percentage Point Difference").
<TABLE>
<CAPTION>
PERCENTAGE MARKET VALUE OF COST OF LIVING
5-YEAR PREMIUM/DISCOUNT POINT $10,000 AT END ADJUSTMENT FOR INCREASE IN
HOLDING PERIOD START END DIFFERENCE OF PERIOD* $10,000 BUYING POWER
- --------------- -------- -------- ---------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Dec. 31, 91-96 -2.87% -17.61% -14.74 $15,422 $11,501 $ 3,921
Dec. 31, 84-89 -1.91% -16.18% -14.27 21,063 11,975 9,088
Dec. 31, 83-88 -4.69% -18.26% -13.57 16,128 11,895 4,233
Dec. 31, 85-90 -1.36% -13.11% -11.75 16,169 12,242 3,927
Dec. 31, 82-87 -7.58% -13.85% -6.27 18,826 11,824 7,002
Dec. 31, 86-91 +2.45% -2.87% -5.32 18,262 12,480 5,782
Dec. 31, 90-95 -13.11% -17.97% -4.86 18,079 11,480 6,599
Dec. 31, 89-94 -16.18% -16.14% +0.04 14,618 11,872 2,746
Dec. 31, 76-81 -20.52% -20.44% +0.08 16,660 16,151 509
Dec. 31, 77-82 -12.01% -7.58% +4.43 25,115 15,717 9,398
Dec. 31, 88-93 -18.26% -13.60% +4.66 21,244 12,100 9,144
Dec. 31, 87-92 -13.85% -9.03% +4.82 21,152 12,296 8,856
Dec. 31, 78-83 -21.77% -4.69% +17.08 31,388 14,963 16,425
Dec. 31, 79-84 -22.54% -1.91% +20.63 26,287 13,729 12,558
Dec. 31, 81-86 -20.44% +2.45% +22.89 33,969 11,755 22,214
Dec. 31, 80-85 -25.12% -1.36% +23.76 26,834 12,665 14,169
</TABLE>
* Adjusted for the effect of the 1992 rights offering.
The five-year period ended December 31, 1996, for example, experienced the
greatest widening of the discount of any five-year period back to 1976. Even so,
a $10,000 investment in Tri-Continental at the beginning of this period
(December 31, 1991) would have grown to $15,422 at the end of the period
(December 31, 1996). To keep up with inflation (the Consumer Price Index) in
this five-year period, $10,000 would have had to increase to $11,501. Therefore,
a Tri-Continental investor's buying power would have increased by $3,921
($15,422 - $11,501).
A narrowing of the discount is generally associated with even better results.
The five years ended December 31, 1985, for example, experienced the greatest
narrowing of the discount -- by 23.76 percentage points. A $10,000 investment
made at the beginning of this period (December 31, 1980) was worth $26,834 at
the end of the period (December 31, 1985). To keep up with inflation in this
five-year period, $10,000 would have had to increase to $12,665. Therefore, a
Tri-Continental investor's buying power would have increased by $14,169 ($26,834
- - $12,665).
The information provided is based on past performance, which is no guarantee
of future results, and excludes any commissions or costs associated with the
purchase of Tri-Continental shares. In addition, capital gain and dividend
distributions taken in additional shares are subject to personal income tax in
the year earned. The examples shown do not reflect the effect of such taxes.
THE EXAMPLES IN THE TABLE ASSUME THE INVESTMENT OF BOTH CAPITAL GAIN AND
DIVIDEND DISTRIBUTIONS IN ADDITIONAL SHARES -- BOTH ARE IMPORTANT TO YOUR
PARTICIPATION IN THE FUTURE GROWTH OF BOTH CAPITAL AND INCOME PROVIDED BY
TRI-CONTINENTAL.
11
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
THE WAY TO BUILD YOUR CAPITAL INVESTMENT IN TRI-CONTINENTAL
In order for a Common Stockholder to fully realize the opportunity for capital
appreciation of his or her investment in Tri-Continental, capital gain
distributions must be taken in additional shares. Taking capital gain
distributions in cash, as opposed to taking them in additional shares, is
comparable to an investor selling an individual security at a profit and only
reinvesting the original cost of the investment. Such a strategy would maintain
only the value of the investor's portfolio at the original investment amount. Of
course, the portfolio's value would also reflect any unrealized gains or losses.
The following table illustrates how taking capital gain distributions in
additional shares contributes to the capital appreciation of an investment in
Tri-Continental. As an example of how to use this table, let's look at 1,000
shares of Tri-Continental purchased on December 31, 1976, at a cost of $22.00
per share ($22,000). In 1977, the realized capital gain distribution of $1.19
per share would have been worth $1,190 -- enough to purchase an additional 58.40
shares. Had this process of taking capital gain distributions in additional
shares continued, by the end of 1996 the initial 1,000 share purchase would have
grown to a holding of 6,550.03 shares. At the year-end 1996 market price of
$24.125, the market value of the initial $22,000 investment would have increased
to $158,020. By contrast, had the capital gain distributions not been taken in
additional shares over the 20-year period, the initial investment of $22,000
would be worth only $24,125 (1,000 shares x $24.125) at December 31, 1996.
<TABLE>
<CAPTION>
ENDING
GAIN PAID NEW SHARES NUMBER OF YEAR-END YEAR-END
YEAR PER SHARE PAID SHARES MARKET PRICE MARKET VALUE
---------- ---------- ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
1976 -- -- 1,000.00 $22.000 $ 22,000
1977 $1.19 58.40 1,058.40 20.625 21,830
1978 1.21 69.23 1,127.63 17.625 19,874
1979 1.01 65.31 1,192.94 19.875 23,710
1980 1.08 62.85 1,255.79 23.625 29,668
1981 1.64 100.16 1,355.95 20.750 28,136
1982 2.72 204.90 1,560.85 26.875 41,948
1983 1.48 91.71 1,652.56 29.375 48,544
1984 4.46 314.46 1,967.02 24.875 48,930
1985 2.40 191.71 2,158.73 29.375 63,413
1986 6.96 555.29 2,714.02 28.625 77,689
1987 3.73 461.50 3,175.52 20.625 65,495
1988 1.25 199.72 3,375.24 19.250 64,973
1989 2.55 382.52 3,757.76 23.000 86,428
1990 1.60 271.75 4,029.51 21.375 86,131
1991 1.80 278.97 4,308.48 27.750 119,560
1992 1.67 273.60 4,582.08 25.500 116,843
1993 1.80 350.03 4,932.11 23.750 117,138
1994 1.90 467.08 5,399.19 19.875 107,309
1995 2.01 479.66 5,878.85 22.625 133,009
1996 2.722 671.18 6,550.03 24.125 158,020
</TABLE>
12
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
THE WAY TO INCREASE DIVIDEND INCOME
The following chart compares the year-end annual dividend income paid on 1,000
shares of Tri-Continental purchased on December 31, 1976, at a total price of
$22,000, with and without the capital gain distributions taken in additional
shares.
Although the per-share dividends for these two strategies are identical, the
increase in shares due to the investment of capital gain distributions has a
significant impact on the total yearly dividend income -- an impact that builds
over time. In 1996, the total dividend income was $3,924.53 for the individual
who had taken capital gain distributions in additional shares over the 20-year
period. By contrast, for the individual who failed to take capital gain
distributions in additional shares, the share balance would have remained at
1,000 and just $660.00 in total income would have been produced in 1996.
GROWING DIVIDEND INCOME
[THE FOLLOWING TABLE REPRESENTS A GRAPH IN THE PRINTED PIECE.]
Annual dividend income Annual Dividend Income
WITH capital gains invested WITHOUT capital gains invested
in additional shares.* in additional shares.
---------------------- ---------------------
1976 $ 600 $ 600
1977 $ 1,048 $ 990
1978 $ 1,195 $ 1,060
1979 $ 1,265 $ 1,060
1980 $ 1,432 $ 1,140
1981 $ 1,559 $ 1,150
1982 $ 1,686 $ 1,080
1983 $ 1,801 $ 1,090
1984 $ 2,223 $ 1,130
1985 $ 2,245 $ 1,040
1986 $ 2,387 $ 970
1987 $ 2,418 $ 890
1988 $ 2,572 $ 810
1989 $ 2,835 $ 840
1990 $ 3,232 $ 860
1991 $ 3,143 $ 780
1992 $ 3,395 $ 780
1993 $ 3,666 $ 800
1994 $ 3,896 $ 790
1995 $ 3,941 $ 730
1996 $ 3,925 $ 660
* Adjusted for the effect of the 1992 rights offering.
13
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
THE WAY TO MAXIMIZE VALUE AND FUTURE INCOME
For those individuals who do not need current income, reinvesting dividend
income as well as capital gain distributions produces an even more rapid
accumulation of Tri-Continental shares with a commensurate increase in both
value and future income.
This chart illustrates how a purchase of 1,000 shares of Tri-Continental for
$22,000 in 1976 accumulates over a 20-year period through the investment of
capital gain distributions only, and through the investment of both dividends
and capital gains.
BUILDING WEALTH AND INCOME
[THE FOLLOWING TABLE REPRESENTS A GRAPH IN THE PRINTED PIECE.]
NO INVEST INVEST
INVESTMENT CAPITAL GAINS CAPITAL GAINS
OF DISTRIBUTIONS ONLY* AND DIVIDENDS*
---------------- ------------- --------------
$1,000 $ 6,550.032 $14,536.123
Market Value at December 31, 1996
$24,125.00 $158,019.52 $350,683.97
1996 Dividend Income
$ 660.00 $ 3,924.53 $ 8,570.22
* Adjusted for the effect of the 1992 rights offering.
Had you choosen to take BOTH capital gain and dividend distributions in
additional shares, at the end of 1996 you would have had 14,536.123 shares with
a total market value of $350,638.97, and $8,570.22 in total income would have
been produced in 1996.
14
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
STOCKHOLDER SERVICES
Tri-Continental provides a number of services to make maintaining an investment
in its Common Stock more convenient.
PURCHASES OF COMMON STOCK. Under the Automatic Dividend Investment and Cash
Purchase Plan, and other Stockholder plans, purchases of Common Stock were made
by the Corporation in the open market and from Stockholders participating in
withdrawal plans to satisfy Plan requirements. Those shares are then sold to
Stockholders using the Plan. During 1996, 2,026,442 shares were purchased by
Stockholders through the Plan.
The Corporation may make additional purchases of its Common Stock in the open
market at such prices and in such amounts as the Board of Directors may deem
advisable. No such additional purchases were made during 1996.
INDIVIDUAL RETIREMENT ACCOUNT TRUST (IRA) is available to individuals under age
70 1/2 who have earned income. The maximum annual deductible individual
contribution is $2,000. A married person with a non-working spouse may set aside
$4,000 annually, while a working couple may also shelter up to $4,000 a year. If
your adjusted gross income as a single person exceeds $25,000 a year, or as a
married couple filing jointly exceeds $40,000, and you or your spouse are
participating in an employer's retirement plan, your deduction for the IRA
contribution is reduced or eliminated. To the extent that your deduction for an
IRA contribution is reduced, you will be able to make a non-deductible
contribution, the earnings on which accumulate tax-free. The IRA allows you to
invest for your retirement, to defer taxes on dividend and gain distributions,
and to provide benefits for your spouse, if you wish.
ROLLOVER IRAS. You may be eligible to roll over a distribution of assets
received from another IRA, a qualified employee benefit plan, or tax-deferred
annuity into an IRA with Tri-Continental. To avoid a tax penalty, the transfer
to a Rollover IRA must occur within 60 days of receipt of the qualifying
distribution. However, if you do not make a direct transfer of a distribution
from a qualified employee benefit plan or a tax-deferred annuity to a Rollover
IRA, the payor of the distribution must withhold 20% of the distribution.
RETIREMENT PLANNING -- QUALIFIED PLANS. Unincorporated businesses and the
self-employed may take advantage of the same benefits in their retirement plans
that were previously available only to corporations. Maximum contribution levels
are 25% of earned income (reduced by plan contributions), up to $30,000 per
participant for pension plans, and 15%, up to $30,000, for profit-sharing plans.
For retirement plan purposes, no more than $150,000 may be taken into account as
earned income under the plan in 1996 and future years (subject to adjustments to
reflect cost of living increases). Social Security integration and employee
vesting schedules are also available as options in the Tri-Continental prototype
retirement plans. Although you already may be participating in an employer's
retirement plan, you may be eligible to establish another plan based upon income
from other sources, such as director's fees.
15
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
STOCKHOLDER SERVICES (CONTINUED)
RETIREMENT PLAN SERVICES provides information about our prototype retirement
plans. The toll-free telephone number is (800) 445-1777 in the Continental U.S.
GIFTS FREE OF FEDERAL TAX are often made using Tri-Continental Common Stock. You
may give as much as $10,000 a year to as many individuals as desired free of
federal gift tax, and a married couple may give up to $20,000 a year.
THE AUTOMATIC CASH WITHDRAWAL PLAN enables owners of Common shares with a market
value of $5,000 or more to receive a fixed amount from their investment at
regular intervals. Investors use the plan to supplement current or retirement
income, for educational expenses, or for other purposes.
FEDERAL TAXES
Quarterly dividends paid on both the Preferred and Common Stocks for 1996, and
the distribution from net short-term gain of $0.132 and $0.140 per Common share
paid on July 1 and December 20, respectively, are subject to federal income tax
as "ordinary income." Under the Internal Revenue Code, 73% of such 1996 ordinary
dividend income paid to Common and Preferred Stockholders qualifies for the
dividend received deduction available to corporate stockholders. In order to
claim the dividend received deduction on these distributions, corporate
stockholders must have held the shares for at least 46 days.
The distributions of $0.44 and $2.01 from net long-term gain realized on
investments from November 1 to December 31, 1995, and January 1, 1996, through
October 31, 1996, respectively, were paid to Common Stockholders on July 1 and
December 20, 1996, respectively. The long-term gain is designated as a "capital
gain dividend" for federal income tax purposes and is taxable to stockholders in
1996 as a long-term gain from the sale of capital assets, no matter how long
Tri-Continental Common Stock may have been owned. However, if shares on which a
capital gain distribution was received are subsequently sold, and such shares
have been held for six months or less from date of purchase, any loss would be
treated as long-term to the extent it offsets the long-term gain distribution.
The tax cost basis of shares acquired by investing the July 1 and December 20
capital gain distributions in additional shares was $24.188 and $24.313 per
share, respectively.
16
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
PORTFOLIO OF INVESTMENTS DECEMBER 31, 1996
<CAPTION>
SHARES VALUE
---------------- ----------------
<S> <C> <C>
COMMON STOCKS - 87.0%
AEROSPACE - 2.8%
GENERAL DYNAMICS CORPORATION 200,000 $ 14,100,000
Diversified defense contractor
GENERAL MOTORS CORPORATION CLASS "H" 200,000 11,250,000
Diversified aerospace manufacturer-- missiles, satellites,
and communications systems
LOCKHEED MARTIN CORPORATION 125,000 11,437,500
Manufacturer of missiles and space systems, aeronautical systems,
and provider of technology services
RAYTHEON COMPANY 500,000 24,062,500
Producer of defense and commercial electronics
UNITED TECHNOLOGIES CORPORATION 300,000 19,800,000
Manufacturer of elevators, jet engines, flight systems, and
automotive parts ------------
$ 80,650,000
------------
AUTOMOTIVE AND RELATED - 3.6%
AUTOLIV (ADRS)'D' 70,000 $ 3,045,000
Swedish supplier of safety restraint systems
BORG-WARNER AUTOMOTIVE, INC. 221,300 8,520,050
Manufacturer of automotive powertrain components
ECHLIN INC. 900,000 28,462,500
Manufacturer of brakes and auto replacement parts
FEDERAL-MOGUL CORPORATION 500,000 11,000,000
Manufacturer of transmission products
FORD MOTOR COMPANY 300,000 9,562,500
Manufacturer of automobiles, trucks, and related parts
GENUINE PARTS COMPANY 330,000 14,685,000
Supplier of retail and wholesale auto parts
HARLEY-DAVIDSON INC. 400,000 18,800,000
Motorcycle manufacturer
VOLKSWAGEN AG (ADRS)* 100,000 8,305,700
German manufacturer of automobiles ------------
$102,380,750
------------
BASIC MATERIALS - 2.0%
ALUMINUM COMPANY OF AMERICA 200,000 $ 12,750,000
US aluminum producer
IKON OFFICE SOLUTIONS INC. 228,100 11,775,663
Distributor of paper and office products
NUCOR CORPORATION 200,000 10,200,000
Mini-mill steel producer
POHANG IRON & STEEL (ADSS) 210,000 4,252,500
Korean steel producer
REYNOLDS METALS COMPANY 300,000 16,912,500
Manufacturer of finished aluminum products ------------
$ 55,890,663
------------
BUILDING AND CONSTRUCTION - 0.6%
SHERWIN-WILLIAMS CORPORATION 300,000 $ 16,800,000
Manufacturer of paints and related products ------------
</TABLE>
- ----------
See footnotes on page 25.
17
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
<CAPTION>
SHARES VALUE
------ ----------
CHEMICALS - 2.6%
<S> <C> <C>
BAYER AG 400,000 $ 16,220,779
German producer of specialty chemicals, pharmaceuticals, and plastics
DOW CHEMICAL COMPANY 250,000 19,593,750
Producer of diversified chemicals
HERCULES, INC. 300,000 12,975,000
Manufacturer of specialty chemicals
MORTON INTERNATIONAL, INC. 300,000 12,225,000
Manufacturer and marketer of adhesives, coatings, salt,
and specialty products
OLIN CORPORATION 400,000 15,050,000
Producer of chemicals, defense products, ammunition, and metals -----------
$ 76,064,529
-----------
COMMUNICATIONS - 4.1%
ALCATEL ALSTHOM COMPAGNIE GENERALE D'ELECTRICITE 65,000 $ 5,220,039
French developer of equipment and systems for
public telecommunications
ALLTEL CORPORATION 500,000 15,687,500
Telephone utility
FRONTIER CORPORATION 800,000 18,100,000
Telephone utility
GTE CORPORATION 600,000 27,300,000
Manufacturer of telephone systems and equipment
INDOSAT (ADRS) 84,200 2,304,975
International telecommunications for the Indonesian market
TELE DANMARK (ADSS) 415,000 11,308,750
Provider of domestic and international telephone services
in Denmark
TELECOM ITALIA-DI RISP 2,526,000 4,925,534
Provider of the whole spectrum of
telecommunications services throughout Italy
TELECOM ITALIA MOBILE-DI RISP 2,526,000 3,602,628
Provider of the whole spectrum of mobile
telecommunications services throughout Italy
TELEPORT COMMUNICATIONS GROUP INC. CLASS "A"* 300,000 9,150,000
Provider of telecommunications services
WORLDCOM INC.* 750,000 19,546,875
Telephone utility -----------
$117,146,301
-----------
COMPUTER AND BUSINESS SERVICES - 5.4%
AUTOMATIC DATA PROCESSING, INC. 350,000 $ 15,006,250
Provider of data processing services
COMPAQ COMPUTER CORPORATION* 250,000 18,562,500
Global PCmanufacturer
ELECTRONIC DATA SYSTEMS CORPORATION 450,000 19,462,500
Provider of computer systems and services
FIRST DATA CORPORATION 400,000 14,600,000
Provider of data processing services
HEWLETT-PACKARD COMPANY 300,000 15,075,000
Computers and peripherals
INTEL CORPORATION 250,000 32,734,375
Manufacturer of semiconductors/memory circuits
</TABLE>
- ----------
See footnotes on page 25.
18
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
<CAPTION>
SHARES VALUE
------ ---------
<S> <C> <C>
COMPUTER AND BUSINESS SERVICES (continued)
MICROSOFT CORPORATION* 300,000 $ 24,806,250
Developer of computer software
SUN MICROSYSTEMS, INC.* 600,000 15,412,500
Marketer of networked workstations ------------
$155,659,375
------------
CONSUMER GOODS AND SERVICES - 9.9%
ADIDAS AG 165,960 $ 14,332,909
German manufacturer of sporting equipment and footwear
ALLIED DOMECQ PLC 870,000 6,801,279
International food, drink, and hospitality group in the UK
B.A.T. INDUSTRIES PLC 1,440,000 11,947,770
Provider of financial services and producer of tobacco
products in the UK
COLGATE-PALMOLIVE COMPANY 300,000 27,675,000
Manufacturer and marketer of household and personal care products
CPC INTERNATIONAL INC. 250,000 19,375,000
International food processor
EASTMAN KODAK COMPANY 300,000 24,075,000
Manufacturer and marketer of film and chemicals
GENERAL MILLS, INC. 200,000 12,675,000
Manufacturer and marketer of consumer foods and restaurants
INTERNATIONAL FLAVORS & FRAGRANCES INC. 700,000 31,500,000
Developer and manufacturer of flavor and fragrance products
LIZ CLAIBORNE, INC. 400,000 15,450,000
Designer and distributor of women's apparel
MCDONALD'S CORPORATION 400,000 18,100,000
Franchiser of fast-food restaurants
PEPSICO, INC. 900,000 26,325,000
Manufacturer and marketer of soft drinks and consumer products
PROCTER & GAMBLE COMPANY 200,000 21,500,000
Manufacturer and distributor of household and personal care products
RJR NABISCO HOLDINGS CORPORATION 500,000 17,000,000
Manufacturer of processed foods and consumer products
SARA LEE CORPORATION 600,000 22,350,000
Manufacturer of processed foods and consumer products
SYSCO CORPORATION 500,000 16,312,500
Food distributor ------------
$285,419,458
------------
DIVERSIFIED - 2.9%
ALLIED SIGNAL INC. 300,000 $ 20,100,000
Producer of aerospace and automotive materials
CORNING, INC. 350,000 16,187,500
Manufacturer of specialty glass products
MINNESOTA MINING & MANUFACTURING COMPANY 300,000 24,862,500
Manufacturer of consumer and industrial goods and services
TENNECO, INC. 500,000 22,562,500
Shipbuilder and manufacturer of auto parts, chemicals,
and plastic packaging ------------
$ 83,712,500
------------
DRUGS AND HEALTH CARE - 6.2%
ABBOTT LABORATORIES 300,000 $ 15,225,000
Developer and manufacturer of diversified health care products
</TABLE>
- ----------
See footnotes on page 25.
19
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
<CAPTION>
SHARES VALUE
------ ---------
<S> <C> <C>
DRUGS AND HEALTH CARE (CONTINUED)
AMERICAN HOME PRODUCTS CORPORATION 300,000 $ 17,587,500
Developer and manufacturer of pharmaceuticals, food, and housewares
BAXTER INTERNATIONAL INC. 250,000 10,250,000
Manufacturer and distributor of hospital and laboratory products
BRISTOL-MYERS SQUIBB COMPANY 175,000 19,031,250
Developer and manufacturer of health and personal care products
GUIDANT CORPORATION 275,000 15,675,000
Designer and manufacturer of cardiac rhythm management and
coronary artery disease intervention equipment
MEDTRONIC, INC. 225,000 15,300,000
Manufacturer of pacemakers and related cardiovascular products
MERCK & CO., INC. 300,000 23,775,000
Manufacturer of pharmaceuticals
NOVARTIS AG* 6,800 7,770,704
Swiss manufacturer of pharmaceuticals
PHARMACIA & UPJOHN, INC. 250,000 9,906,250
Swedish manufacturer of pharmaceuticals
SCHERING-PLOUGH CORPORATION 200,000 12,950,000
Manufacturer of pharmaceuticals and health and personal care products
UNITED HEALTHCARE CORPORATION 250,000 11,250,000
Manager of health care services
WARNER-LAMBERT COMPANY 250,000 18,750,000
Manufacturer of pharmaceuticals, toiletries, and food products -----------
$177,470,704
-----------
ELECTRIC AND GAS UTILITIES - 4.1%
BALTIMORE GAS & ELECTRIC COMPANY 400,000 $ 10,700,000
Provider of electric and gas services
BRITISH GAS PLC (ADRS) 115,000 4,370,000
Gas supplier in UK
CENTRAL & SOUTH WEST CORPORATION 500,000 12,812,500
Integrated electric utility holding company
EMPRESA NACIONAL DE ELECTRICIDAD (ADRS) 132,000 9,240,000
Electric utility in Spain
ENTERGY CORPORATION 500,000 13,875,000
Owner of electric utility companies
HONG KONG & CHINA GAS COMPANY LTD. 4,800,000 9,277,911
Producer, distributor, and marketer of natural gas to industrial and
residential customers
HONG KONG & CHINA GAS COMPANY LTD. (WARRANTS)* 400,000 222,380
Producer, distributor, and marketer of natural gas to industrial and
residential customers
HUANENG POWER INTERNATIONAL, INC. (ADRS)* 270,000 6,075,000
Power company in China
SONAT INC. 400,000 20,600,000
Producer of oil and gas
VEBA AG 230,000 13,217,532
Provider of electric energy inGermany
THE WILLIAMS COMPANIES, INC. 450,000 16,875,000
Producer of oil and gas -----------
$117,265,323
-----------
ELECTRONICS - 5.8%
AMP Inc. 766,500 $ 29,414,438
Manufacturer of electronic connectors and systems
</TABLE>
- ----------
See footnotes on page 25.
20
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
<CAPTION>
SHARES VALUE
------ ----------
<S> <C> <C>
ELECTRONICS (continued)
ARROW ELECTRONICS, INC. 400,000 $ 21,400,000
Distributor of electronic components
ATMEL CORPORATION* 200,000 6,650,000
Manufacturer of memory circuits
KEMET CORPORATION* 1,000,000 23,062,500
Manufacturer and supplier of ceramic capacitors
MOTOROLA INC. 500,000 30,687,500
Producer of semiconductors and communications equipment
NOVELLUS SYSTEMS, INC.* 200,000 10,837,500
Manufacturer of chemical vapor deposition equipment
SYNOPSYS, INC.* 250,000 11,500,000
Developer of integrated circuit design software
VISHAY INTERTECHNOLOGY, INC.* 1,000,000 23,375,000
Developer and manufacturer of electronic resistive systems
XILINX, INC.* 250,000 9,203,125
Supplier of field programmable gate arrays ------------
$166,130,063
------------
ENERGY - 6.4%
AMOCO CORPORATION 275,000 $ 22,137,500
Producer of oil and gas
ATLANTIC RICHFIELD COMPANY 125,000 16,562,500
Producer of oil and West Coast marketer
BAKER HUGHES INCORPORATED 500,000 17,250,000
Provider of products and services to explore for,
extract, recover, and process oil and gas
ENRON CORPORATION 500,000 21,562,500
Explorer, transporter, and marketer of natural gas and oil
EXXON CORPORATION 300,000 29,400,000
Explorer and producer of natural gas, oil, and petroleum products
PANENERGY CORPORATION 450,000 20,250,000
Producer of oil and gas
SCHLUMBERGER LTD. 200,000 19,975,000
Worldwide provider of energy services
TEXACO INC. 250,000 24,531,250
Explorer, producer, transporter, refiner, and marketer of
natural gas, oil, and petroleum products
TOTAL S.A. CLASS "B" 76,983 6,259,504
International oil enterprise in France
UNION PACIFIC RESOURCES GROUP INC. 200,000 5,850,000
Explorer, developer, and producer of natural gas ------------
$183,778,254
------------
ENTERTAINMENT AND LEISURE - 1.1%
DISNEY (WALT) COMPANY 250,000 $ 17,406,250
Film entertainment, amusement parks, and
other forms of leisure-related activities
NEWS CORP. LTD. (ADRS) 260,000 5,427,500
Provider of worldwide media and television services
NEWS CORP. LTD. (ADRS--VOTING PREFERENCE SHARES) 130,000 2,291,250
Provider of worldwide media and television services
TELEVISION BROADCAST 1,900,000 7,590,665
TV broadcasting; program production; rental of films; and advertising ------------
$ 32,715,665
------------
</TABLE>
- ----------
See footnotes on page 25.
21
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
<CAPTION>
SHARES VALUE
------ ----------
<S> <C> <C>
ENVIRONMENTAL MANAGEMENT - 0.5%
BROWNING-FERRIS INDUSTRIES, INC. 600,000 $ 15,750,000
Provider of solid and liquid waste management services ------------
FINANCE AND INSURANCE - 12.2%
ABN-AMRO HOLDINGS N.V. 127,717 $ 8,306,076
Worldwide banking operator based in the Netherlands
ACE LIMITED 300,000 18,037,500
Provider of liability insurance
AMERICAN INTERNATIONAL GROUP, INC. 300,000 32,475,000
International insurance holding company
AXA-UAP 166,509 10,587,277
French provider of financial services and insurance
BANKAMERICA CORPORATION 250,000 24,937,500
Commercial banker in California and the Western states
BANK OF NEW YORK COMPANY, INC. 1,000,000 33,750,000
Commercial banker
CITICORP 200,000 20,600,000
Global commercial banker
FEDERAL NATIONAL MORTGAGE ASSOCIATION 600,000 22,350,000
Mortgage financer
GENERAL RE CORPORATION 200,000 31,550,000
Property casualty re-insurer in the US
GREAT WESTERN FINANCIAL CORPORATION 400,000 11,600,000
Savings and loan operator in California and Florida
GRUPO FINANCIERO BANAMEX ACCIVAL, S.A. CLASS "B" 2,176,000 4,542,417
Financial company involved in banking and stockbroking in Mexico
HOUSEHOLD INTERNATIONAL, INC. 200,000 18,450,000
Provider of consumer loans, credit cards, equity loans, and life
insurance
HSBC HOLDINGS PLC 550,000 11,768,699
UK provider of banking and financial services
ING GROEP N.V. 431,093 15,514,659
Provider of banking and insurance services in the Netherlands
IRISH LIFE PLC 1,200,000 5,579,325
UK provider of insurance and related products
KRUNG THAI BANK PUBLIC COMPANY LIMITED 1,100,000 2,122,476
Provider of banking services in Taiwan
MELLON BANK CORPORATION 400,000 28,400,000
Commercial banker
ST. PAUL COMPANIES 400,000 23,450,000
Property and casualty insurer
TRAVELERS INCORPORATED 600,000 27,225,000
Provider of broad-based financial services ------------
$351,245,929
------------
MANUFACTURING AND
INDUSTRIAL EQUIPMENT - 6.7%
ABB AG (ADRS) 97,000 $ 12,028,184
Swedish manufacturer of heavy equipment for electric power
generation and distribution
BTR PLC 1,300,000 6,322,550
Global manufacturer of industrial goods in the UK
COOPER INDUSTRIES, INC. 600,000 25,275,000
Manufacturer of electrical products
EMERSON ELECTRIC CO. 250,000 24,187,500
Manufacturer of electric motors, hand-held tools, and miscellaneous
electrical equipment
</TABLE>
- ----------
See footnotes on page 25.
22
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
<CAPTION>
SHARES VALUE
------ ----------
<S> <C> <C>
MANUFACTURING AND
INDUSTRIAL EQUIPMENT (continued)
GENERAL ELECTRIC COMPANY 350,000 $ 34,606,250
Supplier of electrical equipment and other industrial
and consumer products
GENERAL SIGNAL CORPORATION 800,000 34,200,000
Producer of capital goods
ILLINOIS TOOL WORKS, INC. 200,000 15,975,000
Manufacturer of fasteners, tools, and plastic items
INGERSOLL-RAND COMPANY 300,000 13,350,000
Manufacturer of machinery, equipment, bearings, and tools
MANNESMANN 22,500 9,675,000
German manufacturer of plant and machinery equipment;
automotive technology
PARKER-HANNIFIN CORPORATION 325,000 12,593,750
Manufacturer of motion-control products
PACIFIC DUNLOP LTD. 1,500,000 3,814,800
Diversified Australian manufacturer -------------
$ 192,028,034
-------------
PAPER AND FOREST PRODUCTS - 3.1%
INTERNATIONAL PAPER COMPANY 600,000 $ 24,225,000
Manufacturer of paper, specialty, wood, and timber products
KIMBERLY-CLARK CORPORATION 200,000 19,050,000
Manufacturer of consumer paper products; newsprint
THE MEAD CORPORATION 400,000 23,250,000
Manufacturer of paper, lumber, and wood products
STORA KOPPARBERGS CLASS "B" 550,000 7,474,846
Swedish manufacturer of forestry products
UNION CAMP CORPORATION 300,000 14,325,000
Producer of paper products, building materials, and chemicals -------------
$ 88,324,846
-------------
PUBLISHING - 1.3%
ELSEVIER 650,000 $ 10,981,890
Dutch printer and publisher of professional trade
journals and magazines worldwide
GANNET CO., INC. 200,000 14,975,000
Newspapers, radio and TV broadcasting
TRIBUNE CO. 150,000 11,831,250
Book and newspaper publisher, newsprint operations ------------
$ 37,788,140
------------
REAL ESTATE INVESTMENT TRUSTS - 1.1%
HOMESTEAD VILLAGE, INC.* 50,278 $ 904,997
Owner and manager of extended-stay lodging facilities
HOMESTEAD VILLAGE, INC. (WARRANTS)* 33,730 274,060
Owner and manager of extended-stay lodging facilities
SECURITY CAPITAL INDUSTRIAL TRUST 400,000 8,550,000
REIT operator of shopping centers
SECURITY CAPITAL PACIFIC TRUST 400,000 9,150,000
REIT involved in multi-family residential properties
SECURITY CAPITAL US REALTY TRUST 1,000,000 12,800,000
Book and newspaper publisher, newsprint operations ------------
$ 31,679,057
------------
</TABLE>
- ----------
See footnotes on page 25.
23
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
Shares
of Prin. Amt. Value
------------- ----------
RETAIL TRADE - 3.3%
MAY DEPARTMENT STORES COMPANY 400,000 shs. $ 18,700,000
Department store chain
THE PEP BOYS - MANNY, MOE AND JACK 400,000 12,300,000
Retailer of automotive parts and accessories
TESCO PLC 1,478,000 8,972,661
Food retailer in the UK
TOYS "R" US 300,000 9,000,000
Retailer of toys and children's clothing
WAL-MART STORES, INC. 1,000,000 22,875,000
Discount retailer
WOOLWORTH CORPORATION* 1,000,000 21,875,000
Discount and variety retailer
--------------
$ 93,722,661
--------------
TRANSPORTATION - 1.3%
BURLINGTON NORTHERN SANTA FE 200,000 $ 17,275,000
Operator of freight railroad systems
JURONG SHIPYARD LTD. 425,000 2,140,943
Ship repair company in Singapore
NORFOLK SOUTHERN CORPORATION 200,000 17,500,000
Railroad holding company, motor carrier
--------------
$ 36,915,943
--------------
TOTAL COMMON STOCKS
(COST: $1,851,963,202) $2,498,538,195
--------------
CONVERTIBLE ISSUES - 3.1%
CONVERTIBLE DEBENTURES - 1.6%
AUTOMOTIVE AND RELATED - 0.4%
MAGNA INTERNATIONAL INC., 5%, 10/15/2002 $ 10,000,000 $ 11,500,000
--------------
DIVERSIFIED - 0.4%
MASCOTECH INC., 4 1/2%, 12/15/2003 15,000,000 $ 12,187,500
--------------
FINANCE AND INSURANCE - 0.1%
LIBLIFE INTERNATIONAL, 6 1/2%, 9/30/2004 3,500,000 $ 4,005,312
--------------
MANUFACTURING AND
INDUSTRIAL EQUIPMENT - 0.5%
TECO ELECTRICAL AND MACHINERY, 2 3/4%, 4/15/2004 3,000,000 $ 2,238,750
TRIMAS CORPORATION, 5%, 8/1/2003 10,000,000 11,000,000
--------------
$ 13,238,750
--------------
TRANSPORTATION - 0.2%
NIPPON YUSEN (Japan), 2%, 9/29/2000 505,000,000** $ 4,737,638
--------------
TOTAL CONVERTIBLE DEBENTURES
(COST: $42,489,670) $ 45,669,200
--------------
- ----------
See footnotes on page 25.
24
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (CONTINUED) DECEMBER 31, 1996
Shares
of Prin. Amt. Value
------------- ------------
CONVERTIBLE PREFERRED STOCKS - 1.5%
DIVERSIFIED - 0.6%
CORNING INC. (Delaware), 6% 250,000 shs. $ 15,906,250
--------------
RETAIL TRADE - 0.5%
KMART FINANCING, 7 3/4% 300,000 $ 14,625,000
--------------
STEEL - 0.4%
AK STEEL HOLDINGS CORPORATION, 7% 350,000 $ 12,337,500
--------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST: $38,339,788) $ 42,868,750
--------------
TOTAL CONVERTIBLE ISSUES
(COST: $80,829,458) $ 88,537,950
--------------
TRI-CONTINENTAL FINANCIAL DIVISION'DD' - 0.5%
(COST: $13,593,470) $ 15,282,931
--------------
SHORT-TERM HOLDINGS - 8.8%
CANADIAN IMPERIAL BANK OF COMMERCE,
Grand Cayman,
Fixed Time Deposit, 6 1/2%, 1/2/1997 $ 127,000,000 $ 127,000,000
NATIONAL WESTMINSTER BANK,Nassau,
Fixed Time Deposit, 6 1/2%, 1/2/1997 127,000,000 127,000,000
--------------
TOTAL SHORT-TERM HOLDINGS
(COST: $254,000,000) $ 254,000,000
--------------
TOTAL INVESTMENTS - 99.4%
(COST: $2,200,386,130) $2,856,359,076
OTHER ASSETS LESS LIABILITIES - 0.6% 16,304,248
--------------
NET INVESTMENT ASSETS - 100.0% $2,872,663,324
==============
- ----------
* Non-income producing security.
** Principal amount reported in Japanese Yen.
'D' Rule 144A security.
'DD' Restricted securities.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
25
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1996
ASSETS:
<S> <C> <C>
Investments at value:
Common stocks (cost--$1,851,963,202) ....................... $2,498,538,195
Convertible issues (cost--$80,829,458) ..................... 88,537,950
Tri-Continental Financial Division
(cost--$13,593,470) ....................................... 15,282,931
Short-term holdings (cost--$254,000,000) ................... 254,000,000 $2,856,359,076
--------------
Cash ........................................................ 10,804,773
Receivable for dividends and interest ....................... 6,679,014
Receivable for securities sold .............................. 900,575
Investment in, and expenses prepaid to, stockholder
service agent .............................................. 447,795
Other ....................................................... 482,883
--------------
TOTAL ASSETS ................................................ $2,875,674,116
--------------
Liabilities:
Dividends payable ........................................... $ 470,463
Accrued expenses, taxes, and other .......................... 2,540,329
--------------
TOTAL LIABILITIES ........................................... $ 3,010,792
--------------
NET INVESTMENT ASSETS ....................................... $2,872,663,324
Preferred Stock, at $50 par value ......................... 37,637,000
--------------
NET ASSETS FOR COMMON STOCK ................................. $2,835,026,324
==============
Net Assets per share of Common Stock
(market value--$24.125) ................................... $29.28
======
STATEMENT OF CAPITAL STOCK AND SURPLUS DECEMBER 31, 1996
CAPITAL STOCK:
$2.50 Cumulative Preferred Stock, $50 par value,
asset coverage per share--$3,816.28
Shares authorized--1,000,000; issued
and outstanding--752,740 .................................. $ 37,637,000
Common Stock, $.50 par value:
Shares authorized--99,000,000; issued
and outstanding--96,836,874 ............................... 48,418,437
SURPLUS:
Capital surplus ............................................ 2,052,146,885
Undistributed net investment income ........................ 1,361,782
Undistributed net realized gain ............................ 77,104,262
Net unrealized appreciation of investments ................. 654,159,615
Net unrealized appreciation on translation of assets
and liabilities denominated in foreign currencies* ........ 1,835,343
--------------
$2,872,663,324
==============
</TABLE>
- ----------
* Includes unrealized appreciation on translation of investments denominated in
foreign currencies of $1,813,331.
See Notes to Financial Statements.
26
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
<S> <C> <C>
INVESTMENT INCOME:
Dividends .................................................. $ 64,767,679
Interest ................................................... 13,778,905
------------
TOTAL INVESTMENT INCOME (NET OF FOREIGN TAXES
WITHHELD OF $760,915) ..................................... $ 78,546,584
EXPENSES:
Management fee ............................................. $ 11,136,312
Stockholder account and
registrar services ........................................ 3,227,431
Custody and related services ............................... 911,000
Stockholder reports and
communications ............................................ 715,541
Stockholders' meeting ...................................... 311,685
Directors' fees and expenses ............................... 186,994
Auditing and legal fees .................................... 180,021
Registration ............................................... 81,898
Miscellaneous .............................................. 134,327
------------
TOTAL EXPENSES .............................................. 16,885,209
------------
NET INVESTMENT INCOME ....................................... $ 61,661,375*
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain on investments ........................... $273,265,510
Net realized loss from foreign
currency transactions ..................................... (122,163)
Net change in unrealized appreciation
of investments ............................................ 163,203,213
Net change in unrealized appreciation
on translation of assets and liabilities
denominated in foreign currencies ......................... (1,863,034)
------------
NET GAIN ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS ...................................... 434,483,526
------------
INCREASE IN NET INVESTMENT ASSETS
FROM OPERATIONS ............................................ $496,144,901
============
</TABLE>
- ------------
* Net investment income available for Common Stock is $59,939,001, which is net
of Preferred Stock dividends of $1,881,850, and includes a portion of the net
realized gain from foreign currency transactions of $159,476 which is taxable
as ordinary income.
See Notes to Financial Statements.
27
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995
-------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................ $ 61,661,375 $ 62,231,561
Net realized gain on investments ............................. 273,265,510 219,387,584
Net realized gain (loss) from foreign
currency transactions ...................................... (122,163) 730,636
Net change in unrealized appreciation
of investments ............................................. 163,203,213 301,589,307
Net change in unrealized appreciation on
translation of assets and liabilities
denominated in foreign currencies .......................... (1,863,034) 1,694,560
-------------- --------------
Increase in net investment
assets from operations ..................................... $ 496,144,901 $ 585,633,648
-------------- --------------
DISTRIBUTIONS TO STOCKHOLDERS:
Net investment income:
Preferred Stock (per share: $2.50 and $2.50) ............... $ (1,881,850) $ (1,881,850)
Common Stock (per share: $.66 and $.73) .................... (59,457,756) (61,298,938)
-------------- --------------
$ (61,339,606) $ (63,180,788)
Net realized gain on investments
Common Stock (per share: $2.722 and $2.01) ................. (246,856,282) (169,106,048)
-------------- --------------
Decrease in net investment assets
from distributions ......................................... $ (308,195,888) $ (232,286,836)
-------------- --------------
CAPITAL SHARE TRANSACTIONS:
Value of shares of Common Stock issued
at market price in gain distributions
(7,302,117 and 5,310,869 shares) ........................... $ 177,343,090 $ 120,158,419
Value of shares of Common Stock issued
for investment plans (2,026,442 and 1,890,436 shares) ...... 49,236,168 42,080,503
Cost of shares purchased
for investment plans (2,017,316 and 1,837,697 shares) ...... (48,673,006) (40,543,318)
Net proceeds from issuance of shares of
Common Stock upon exercise of
Warrants (13,447 and 4,470 shares) ......................... 22,301 7,866
-------------- --------------
Increase in net investment assets
from capital share transactions ............................ $ 177,928,553 $ 121,703,470
-------------- --------------
Increase in net investment assets ............................ $ 365,877,566 $ 475,050,282
NET INVESTMENT ASSETS:
Beginning of year ............................................ 2,506,785,758 2,031,735,476
-------------- --------------
End of year (including undistributed
net investment income of $1,361,782
and $880,537) .............................................. $2,872,663,324 $2,506,785,758
============== ==============
</TABLE>
- ------------
See Notes to Financial Statements.
28
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies followed, all in conformity with generally
accepted accounting principles, are given below:
a. Investments in stocks, bonds, limited partnership interests, and short-term
holdings maturing in more than 60 days are valued at current market values
or, in their absence, fair value determined in accordance with procedures
approved by the Board of Directors. Securities traded on national exchanges
are valued at last sales prices or, in their absence and in the case of
over-the-counter securities, a mean of bid and asked prices. Short-term
holdings maturing in 60 days or less are valued at amortized cost.
b. The books and records of the Corporation are maintained in US dollars. The
market value of investment securities and other assets and liabilities
denominated in foreign currencies are translated into US dollars at the
closing daily rate of exchange as reported by a pricing service. Purchases
and sales of investment securities, income, and expenses are translated into
US dollars at the rate of exchange prevailing on the respective dates of such
transactions.
The Corporation separates that portion of the results of operations
resulting from changes in the foreign exchange rates from the fluctuations
arising from changes in the market prices of securities held in the
portfolio. Similarly, the Corporation separates the effect of changes in
foreign exchange rates from the fluctuations arising from changes in the
market prices of portfolio securities sold during the period.
c. The Corporation may enter into forward currency contracts in order to hedge
its exposure to changes in foreign currency exchange rates on its foreign
portfolio holdings, or other amounts receivable or payable in foreign
currency. A forward contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated forward rate. Certain risks may
arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts. The contracts are valued
daily at current exchange rates and any unrealized gain or loss is included
in net unrealized appreciation or depreciation on translation of assets and
liabilities denominated in foreign currencies and forward currency contracts.
The gain or loss, if any, arising from the difference between the settlement
value of the forward contract and the closing of such contract is included in
net realized gain or loss from foreign currency transactions.
d. There is no provision for federal income or excise tax. The Corporation has
elected to be taxed as a regulated investment company and intends to
distribute substantially all taxable net income and net gain realized.
e. Investment transactions are recorded on trade dates. Identified cost of
investments sold is used for both financial statements and federal income tax
purposes. Dividends receivable and payable are recorded on ex-dividend dates.
Interest income is recorded on the accrual basis.
f. The treatment for financial statement purposes of distributions made during
the year from net investment income or net realized gains may differ from
their ultimate treatment for federal income tax purposes. These differences
are caused primarily by differences in the timing of the recognition of
certain components of income, expense or capital gain, and the
recharacterization of foreign exchange gains or losses to either ordinary
income or realized capital gain for federal income tax purposes. Where such
differences are permanent in nature, they are reclassified in the components
of net investment assets based on their ultimate characterization for federal
income tax purposes. Any such reclassification will have no effect on net
assets, results of operations, or net asset value per share of the
Corporation.
29
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
2. Under the Corporation's Charter, dividends on the Common Stock cannot be
declared unless net assets, after such dividends and dividends on Preferred
Stock, equal at least $100 per share of Preferred Stock outstanding. The
Preferred Stock is subject to redemption at the Corporation's option at any time
on 30 days' notice at $55 per share (or a total of $41,400,700 for the shares
outstanding) plus accrued dividends, and entitled in liquidation to $50 per
share plus accrued dividends.
The Corporation, in connection with its Automatic Dividend Investment and
Cash Purchase Plan and other Stockholder plans, acquires and issues shares of
its own Common Stock, as needed, to satisfy Plan requirements. For the year
ended December 31, 1996, 2,017,316 shares were purchased from Plan participants
at a cost of $48,673,006, which represented a weighted average discount of
17.31% from the net asset value of those acquired shares. A total of 2,026,442
shares were issued to Plan participants during the year for proceeds of
$49,236,168, a discount of 17.61% from the net asset value of those shares.
At December 31, 1996, 212,711 shares of Common Stock were reserved for
issuance upon exercise of 14,480 Warrants, each of which entitled the holder to
purchase 14.69 shares of Common Stock at $1.53 per share. Assuming the exercise
of all Warrants outstanding at December 31, 1996, net investment assets would
have increased by $325,448 and the net asset value of the Common Stock would
have been $29.22 per share. The number of Warrants exercised during the years
1996 and 1995 was 992 and 350, respectively.
3. Purchases and sales of portfolio securities, excluding USGovernment
obligations and short-term investments, amounted to $1,361,048,511 and
$1,526,999,673, respectively. At December 31, 1996, the cost of investments for
federal income tax purposes was substantially the same as the cost for financial
reporting purposes, and the tax basis gross unrealized appreciation and
depreciation of portfolio securities, including the effects of foreign currency
translations, amounted to $691,971,062 and $35,998,116, respectively.
4. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Corporation and provides necessary personnel and facilities. Compensation of
all officers of the Corporation, all directors of the Corporation who are
employees or consultants of the Manager, and all personnel of the Corporation
and the Manager is paid by the Manager. The Manager receives a fee, calculated
daily and payable monthly, equal to a percentage of the Corporation's daily net
assets at the close of business on the previous business day. The management fee
rate is calculated on a sliding scale of 0.45% to 0.375%, based on average daily
net assets of all the investment companies managed by the Manager. The
management fee for the year ended December 31, 1996, was equivalent to an annual
rate of 0.41% of the average daily net assets of the Corporation. Seligman
Henderson Co. (the "Subadviser"), an entity owned 50% each by the Manager and
Henderson plc, is entitled to a portion of the Manager's fee for acting as
Subadviser for certain of the international investments of the Corporation.
Seligman Data Corp., owned by the Corporation and certain associated
investment companies, charged the Corporation at cost $3,196,856 for stockholder
account services. The Corporation's investment in Seligman Data Corp. is
recorded at a cost of $43,681.
Certain officers and directors of the Corporation are officers or directors
of the Manager, the Subadviser, and/or Seligman Data Corp.
Fees of $85,000 were incurred by the Corporation for legal services of
Sullivan & Cromwell, a member of which firm is a director of the Corporation.
30
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
The Corporation has a compensation arrangement under which directors who
receive fees may elect to defer receiving such fees. Interest is accrued on the
deferred balances. The annual cost of such fees and interest is included in
directors' fees and expenses, and the accumulated balance thereof at December
31, 1996, of $444,923 is included in other liabilities. Deferred fees and the
related accrued interest are not deductible for federal income tax purposes
until such amounts are paid.
5. At December 31, 1996, the Tri-Continental Financial Division of the
Corporation was comprised of three investments that were purchased through
private offerings and cannot be sold without prior registration under the
Securities Act of 1933 or pursuant to an exemption therefrom. These investments
are valued at fair value as determined in accordance with procedures approved by
the Board of Directors of the Corporation. The acquisition dates of investments
in the limited partnerships and stock, along with their cost and values at
December 31, 1996, are as follows:
<TABLE>
<CAPTION>
INVESTMENTS ACQUISITION DATE(S) COST VALUE
- ---------------------------------- ------------------ ---------- ----------
<S> <C> <C>
Water Street Corporate Recovery
Fund I, L.P. 10/9/90 to 7/22/96 $ 918,502 $ 916,794
WCAS Capital Partners II, L.P. 12/11/90 to 12/16/96 7,497,768 7,456,904
Whitney Subordinated Debt Fund, L.P. 7/12/89 to 12/30/96 5,177,200 6,909,233
----------- -----------
Total $13,593,470 $15,282,931
=========== ===========
</TABLE>
6. Following is a summary of unaudited quarterly results of operations, in
thousands of dollars except for per share amounts:
<TABLE>
<CAPTION>
For Quarters Ended in the Year 1996
------------------------------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
--------- -------- -------- -------
<S> <C> <C> <C> <C>
Total investment income ...... $ 17,998 $22,596 $ 20,659 $ 17,294
Net investment income for
Common Stock ................ $ 13,578 $17,969 $ 15,951 $ 12,282
Per Common share ............ $0.15 $0.20 $0.18 $0.13
Net realized and unrealized
investment gain ............. $151,454 $74,655 $ 53,426 $154,949
Per Common share ............ $1.68 $0.83 $0.59 $1.72
</TABLE>
<TABLE>
<CAPTION>
For Quarters Ended in the Year 1995
------------------------------------------------------------------
March 31 June 30 Sept. 30 Dec. 31
--------- ------- -------- --------
<S> <C> <C> <C> <C>
Total investment income ...... $ 18,606 $ 20,059 $ 17,445 $20,629
Net investment income for
Common Stock ............... $ 14,661 $ 15,906 $ 13,331 $16,452
Per Common share ........... $0.17 $0.19 $0.16 $0.20
Net realized and unrealized
investment gain ............ $132,012 $159,391 $118,105 $113,894
Per Common share ........... $1.56 $1.88 $1.39 $1.34
</TABLE>
31
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS
The Corporation's financial highlights are presented below. The per share
operating performance data is designed to allow investors to trace the operating
performance, on a per Common share basis, from the Corporation's beginning net
asset value to the ending net asset value so that they can understand what
effect the individual items have on their investment, assuming it was held
throughout the year. Generally, the per share amounts are derived by converting
the actual dollar amounts incurred for each item, as disclosed in the financial
statements, to their equivalent per Common share amounts.
The total investment return based on market value measures the
Corporation's performance assuming investors purchased shares of the Corporation
at the market value as of the beginning of the period, invested dividends and
capital gains paid as provided for in the Corporation's Prospectus and Automatic
Dividend Investment and Cash Purchase Plan, and then sold their shares at the
closing market value per share on the last day of the period. The total
investment return based on net asset value is similarly computed except that the
Corporation's net asset value is substituted for the corresponding market value.
The total investment return computations do not reflect any sales commissions
investors may incur in purchasing or selling shares of the Corporation.
Average commission rate paid represents the average commission paid by the
Corporation to purchase or sell portfolio securities. It is determined by
dividing the total commission dollars paid by the number of shares purchased and
sold during the period for which commissions were paid. This rate is provided
for the period beginning January 1, 1996.
The ratios of expenses to average net assets and net investment income to
average net assets for the years presented do not reflect the effect of
dividends paid to Preferred Stockholders.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of year .................... $27.58 $23.70 $27.49 $28.03 $28.57
------ ------ ------ ------ ------
Net investment income ................. .68 .74 .83 .83 .81
Net realized and unrealized
investment gain (loss) ............... 4.84 6.14 (1.69) 1.46 1.19
Net realized and unrealized gain (loss)
on foreign currency transactions ..... (.02) .03 .02 -- --
------ ------ ------ ------ ------
Increase (decrease) from
investment operations ................ 5.50 6.91 (.84) 2.29 2.00
Dividends paid on Preferred Stock ..... (.02) (.02) (.03) (.03) (.03)
Dividends paid on Common Stock ........ (.66) (.73) (.79) (.80) (.78)
Distribution from net gain realized ... (2.72) (2.01) (1.90) (1.80) (.70)
Issuance of Common Stock
in gain distributions ................ (.40) (.27) (.23) (.19) (.05)
Issuance of Common Stock
upon Warrant exercise ................ -- -- -- (.01) --
Issuance of Common Stock
from exercise of Rights .............. -- -- -- -- (.97)
Rights offering costs ................. -- -- -- -- (.01)
------ ------ ------ ------ ------
Net increase (decrease)
in net asset value ................... 1.70 3.88 (3.79) (.54) (.54)
------ ------ ------ ------ ------
Net asset value,
end of year .......................... $29.28 $27.58 $23.70 $27.49 $28.03
====== ====== ====== ====== ======
Adjusted net asset value,
end of year* ........................ $29.22 $27.52 $23.65 $27.42 $27.95
Market value, end of year ............. $24.125 $22.625 $19.875 $23.75 $25.50
</TABLE>
- ----------
See page 33 for footnotes.
32
<PAGE>
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
Total Investment Return:
Based upon market value ....... 21.98% 27.95% (5.07)% 3.47% .61%'D'
Based upon net asset value .... 21.45% 30.80% (2.20)% 8.95% 7.42%'D'
Ratios/Supplemental Data:
Expenses to average
net assets .................. .62% .63% .64% .66% .67%
Net investment income to
average net assets .......... 2.27% 2.71% 3.08% 2.88% 2.86%
Portfolio turnover rate ....... 53.96% 62.28% 70.38% 69.24% 44.35%
Average commission rate paid .. $ .0478
Net investment assets,
end of period (000s omitted):
For Common Stock ............ $2,835,026 $2,469,149 $1,994,098 $2,166,212 $2,088,102
For Preferred Stock ......... 37,637 37,637 37,637 37,637 37,637
---------- ---------- ---------- ---------- ----------
Total net investment assets ... $2,872.663 $2,506,786 $2,031,735 $2,203,849 $2,125,739
========== ========== ========== ========== ==========
</TABLE>
- ----------
* Assumes the exercise of outstanding warrants.
'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.
See Notes to Financial Statements.
33
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SECURITY HOLDERS,
Tri-Continental Corporation:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, and the statement of capital stock and surplus of
Tri-Continental Corporation as of December 31, 1996, the related statements of
operations for the year then ended and of changes in net investment assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the Corporation's custodians. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Tri-Continental
Corporation as of December 31, 1996, the results of its operations, the changes
in its net investment assets, and the financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
January 31, 1997
34
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
BOARD OF DIRECTORS
FRED E. BROWN
DIRECTOR AND CONSULTANT,
J. & W. Seligman & Co.
Incorporated
JOHN R. GALVIN (2,4)
DEAN, Fletcher School of Law and
Diplomacy at Tufts University
DIRECTOR, USLIFE Corporation
ALICE S. ILCHMAN (3,4)
PRESIDENT, Sarah Lawrence College
TRUSTEE, Committee for Economic
Development
DIRECTOR, NYNEX
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON (2,4)
CHAIRMAN AND CEO, Kerr-McGee
Corporation
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW
SENIOR PARTNER, Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Aluminum
Corporation
BETSY S. MICHEL (2,4)
DIRECTOR OR TRUSTEE,
Various Organizations
WILLIAM C. MORRIS (1)
CHAIRMAN
CHAIRMAN OF THE BOARD,
J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY (3,4)
PARTNER, Pitney, Hardin, Kipp & Szuch,
Law Firm
DIRECTOR, Public Service Enterprise Group
JAMES Q. RIORDAN (3,4)
DIRECTOR, The Brooklyn Union Gas
Company
TRUSTEE, Committee for Economic
Development
DIRECTOR, Dow Jones & Co., Inc.
DIRECTOR, Public Broadcasting Service
RONALD T. SCHROEDER (1)
MANAGING DIRECTOR, J. & W. Seligman & Co.
Incorporated
ROBERT L. SHAFER (3,4)
DIRECTOR OR TRUSTEE,
Various Organizations
JAMES N. WHITSON (2,4)
EXECUTIVE VICE PRESIDENT AND DIRECTOR,
Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, Red Man Pipe and Supply
Company
BRIAN T. ZINO (1)
PRESIDENT
PRESIDENT AND MANAGING DIRECTOR,
J. & W. Seligman & Co. Incorporated
CHAIRMAN AND PRESIDENT, Seligman Data Corp.
- ----------
Member:
(1) Executive Committee
(2) Audit Committee
(3) Director Nominating Committee
(4) Board Operations Committee
35
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
EXECUTIVE OFFICERS
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
CHARLES W. KADLEC
VICE PRESIDENT
CHARLES C. SMITH, JR.
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT
THOMAS G. ROSE
TREASURER
FRANK J. NASTA
SECRETARY
- --------------------------------------------------------------------------------
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
SUBADVISER
Seligman Henderson Co.
100 Park Avenue
New York, NY 10017
STOCKHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) TRI-1092 Stockholder
Services
(800) 445-1777 Retirement Plan
Services
(800) 622-4597 24-Hour Automated
Telephone Access Service
36
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
MANAGED BY
[LOGO]
J. & W. SELIGMAN & CO.
INCORPORATED
INVESTMENT MANAGERS AND ADVISORS
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
This report is intended only for the information of stockholders or those who
have received the current prospectus covering shares of Common Stock of
Tri-Continental Corporation, which contains information about management fees
and other costs.
CETRI2 12/96
<PAGE>
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
1. Financial Statements:
Part A: Financial Highlights for the ten years ended December 31,
1996.
Part B: The required financial statements are included in the
Corporation's 1996 Annual Report, which is incorporated by reference
into the Statement of Additional Information. These statements
include: Portfolio of Investments at December 31, 1996; Statement of
Assets and Liabilities at December 31, 1996; Statement of Capital
Stock and Surplus, December 31, 1996; Statement of Operations for
the year ended December 31, 1996; Statement of Changes in Net
Investment Assets for the years ended December 31, 1996 and 1995;
Table for the ten years ended December 31, 1996 under the caption
"Senior Securities - $2.50 Cumulative Preferred Stock" in the
Prospectus; Notes to Financial Statements; Financial Highlights for
the ten years ended December 31, 1996; Report of Independent
Auditors.
2. Exhibits: All Exhibits have been previously filed and are
incorporated herein except those marked with an asterisk (*) which are
filed herewith.
a. Amended and Restated Charter of Registrant.*
b. Restated By-laws of the Registrant.*
d(1) Specimen certificates of Common Stock.
(Incorporated by Reference to Registrant's Post-Effective
Amendment #1 filed on March 6, 1981.)
d(2) Specimen certificates of $2.50 Cumulative Preferred Stock.
(Incorporated by Reference to Registrant's Post-Effective
Amendment #1 filed on March 6, 1981.)
d(3) Specimen of Warrant of the Registrant.
(Incorporated by Reference to Registrant's Post-Effective
Amendment #1 filed on March 6, 1981.)
d(4) Form of Subscription Certificate - Subscription Right for shares
of Common Stock.
(Incorporated by Reference to Registrant's Registration Statement
filed on September 17, 1992.)
d(5) The Registrant's Charter is the constituent instrument defining
the rights of the $2.50 Cumulative Preferred Stock, par value
$50, and the Common Stock of the Registrant. A copy of the
Charter as now in effect is filed herewith.
e. Registrant's Automatic Dividend Investment and Cash Purchase Plan
is set forth in Registrant's prospectus which is filed as Part A
of this Registration Statement.
g(1) Amended Management Agreement between Registrant and J. & W.
Seligman & Co. Incorporated.
(Incorporated by Reference to Registrant's Registration Statement
filed April 13, 1995.)
g(2) Form of Subadvisory Agreement between the Manager and Seligman
Henderson Co.
(Incorporated by Reference to Registrant's Registration Statement
filed April 13, 1995.)
<PAGE>
<PAGE>
i(1) Matched Accumulation Plan of J. & W. Seligman & Co. Incorporated.
(Incorporated by reference to Exhibit 7 of Post-Effective
Amendment No. 21 to the Registration Statement of Seligman
Frontier Fund, Inc. (No. 2-92487), filed on January 28, 1997.)
i(2) Deferred Compensation Plan for Directors of Seligman Group of
Funds.*
j Form of Custodian Agreement between Registrant and Investors
Fiduciary Trust Company.*
l. Opinion and Consent of Counsel.*
n. Consent of Independent Auditors.*
q(1) The Seligman IRA Plan Agreement and Disclosure Statement.
(Incorporated by reference to Exhibit 14 of Pre-Effective
Amendment No. 2 to the Registration Statement of Seligman Value
Fund Series, Inc. (No. 333-20621), filed on April 17, 1997.)
q(2) The Seligman Simple IRA Plan documents for employers
(Incorporated by reference to Exhibit 14 of Pre-Effective
Amendment No. 2 to the Registration Statement of Seligman Value
Fund Series, Inc. (No. 333-20621), filed on April 17, 1997.)
q(3) The Seligman Simple IRA Plan Agreement and Disclosure Statement
for participants. (Incorporated by reference to Exhibit 14 of
Pre-Effective Amendment No. 2 to the Registration Statement of
Seligman Value Fund, Series (No. 333-20621), filed on April 17,
1997.)
r. Financial Data Schedule meeting the requirements of Rule 483
under the Securities Act of 1933.*
Other Exhibits: Powers of Attorney*
Item 25. Marketing Arrangements: Not Applicable
Item 26. Other Expenses of Issuance and Distribution:
Registration fees $13,193.45
NYSE listing fees -0-
Registrar fees -0-
Legal fees -0-
Accounting fees -0-
Miscellaneous (mailing, etc.) -0-
Item 27. Persons Controlled by or Under Common Control with Registrant:
Seligman Data Corp., a New York Corporation, is owned by the
Registrant and certain associated investment companies. The
Registrant's investment in Seligman Data Corp. is recorded at a cost
of $43,681.
Item 28. Number of Holders of Securities
As of March 31, 1997:
Title of Class Number of Recordholders
-------------- -----------------------
$2.50 Cumulative Preferred 707
Common Stock 45,134
Warrants 179
<PAGE>
<PAGE>
Item 29. Indemnification:
Reference is made to the provisions of Article Eleventh of
Registrant's Amended and Restated Charter filed as an exhibit to this
Registration Statement and Article II, Section 14 of Registrant's
Restated By-laws filed as an exhibit to this Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised by the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 30. Business and Other Connections of Investment Adviser: J. & W. Seligman
& Co. Incorporated, a Delaware corporation ("Manager"), is the
Registrant's investment manager. The Manager also serves as investment
manager to seventeen associated investment companies. They are
Seligman Capital Fund, Inc., Seligman Cash Management Fund, Inc.,
Seligman Common Stock Fund, Inc., Seligman Communications and
Information Fund, Inc., Seligman Frontier Fund, Inc., Seligman Growth
Fund, Inc., Seligman Henderson Global Fund Series, Inc., Seligman High
Income Fund Series, Seligman Income Fund, Inc., Seligman Municipal
Fund Series, Inc., Seligman Municipal Series Trust, Seligman New
Jersey Municipal Fund, Inc., Seligman Pennsylvania Municipal Fund
Series, Seligman Portfolios, Inc., Seligman Quality Municipal Fund,
Inc., Seligman Select Municipal Fund, Inc., and Seligman Value Fund
Series, Inc.
Seligman Henderson Co. (the "Subadviser") also serves as subadviser to
nine other associated investment companies. They are Seligman Capital
Fund, Inc., Seligman Common Stock Fund, Inc., Seligman Communications
and Information Fund, Inc., Seligman Frontier Fund, Inc., Seligman
Growth Fund, Inc., Seligman Henderson Global Fund Series, Inc.,
Seligman Income Fund, Inc., certain portfolios of Seligman
Portfolios, Inc., and Seligman Value Fund Series, Inc.
The Manager and Subadviser have an advisory service division which
provides investment management or advice to private clients. The list
required by this Item 28 of officers and directors of the Manager and
the Subadviser, respectively, together with information as to any
other business, profession, vocation or employment of a substantial
nature engaged in by such officers and directors during the past two
years, is incorporated by reference to Schedules A and D of Form ADV,
filed by the Manager and the Subadviser, respectively, pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-15798 and SEC File
No. 801-40670, filed on August 7, 1996 and October 2, 1996,
respectively).
Item 31. Location of Accounts and Records:
Custodian: Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105
AND
Tri-Continental Corporation
100 Park Avenue
New York, New York 10017
<PAGE>
<PAGE>
Item 32. Management Services: Seligman Data Corp. ("SDC"), the Registrant's
shareholder service agent, has an agreement with First Data Investor
Services Group ("FDISG") pursuant to which FDISG provides a data
processing system for certain shareholder accounting and recordkeeping
functions performed by SDC, which commenced in July 1990. For the last
three years ended December 31, 1996, the approximate cost of these
services on a yearly basis were as follows:
1996 1995 1994
---- ---- ----
Tri-Continental Common Stock $249,000 $252,000 $250,773
Tri-Continental Preferred Stock 3,900 3,900 4,597
Tri-Continental Warrants 1,100 1,100 1,351
Tri-Continental Rights -0- -0- -0-
Item 33. Undertakings:
I. The Registrant undertakes to suspend the offering of shares until
the prospectus is amended if (1) subsequent to the effective date of
its registration statement, the net asset value declines more than ten
percent from its net asset value as of the effective date of the
registration statement.
II. The Registrant undertakes:
(a) to file, during any period in which offers or sales are being
made, a post-effective amendment to the registration statement:
(1) to include any prospectus required by Section 10(a)(3) of
the 1933 Act;
(2) to reflect in the prospectus any facts or events after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement; and
(3) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(b) that, for the purpose of determining any liability under the
1933 Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities
offered therein, and the offering of those securities at that
time shall be deemed to be the initial bona fide offering
thereof.
III. The Registrant undertakes to send by first class mail or other
means designed to ensure equally prompt delivery within two business
days of receipt of a written or oral request, the Registrant's
Statement of Additional Information.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 23rd day of
April, 1997.
TRI-CONTINENTAL CORPORATION
--------------------------------
(Registrant)
By: /s/ William C. Morris
--------------------------------
William C. Morris, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on April 23, 1997.
Signature Title
--------- -----
/s/ William C. Morris Chairman of the Board
- -----------------------------
William C. Morris* (Principal executive officer) and Director
/s/ Brian T. Zino Director and President
- -----------------------------
Brian T. Zino
/s/ Thomas G. Rose Treasurer
- -----------------------------
Thomas G. Rose
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, Director )
John E. Merow, Director )
Betsy S. Michel, Director ) /s/ Brian T. Zino
James C. Pitney, Director ) -------------------------------------
James Q. Riordan, Director ) * Brian T. Zino, Attorney-in-fact
Ronald T. Schroeder, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION
EXHIBIT INDEX
-------------
Form N-2 Item No. Description
- ----------------- -----------
24.2.a Amended and Restated Charter
24.2.b Restated By-laws
24.2.i(2) Deferred Compensation Plan for Directors
24.2.j Form of Custodian Agreement
24.2.l Opinion and Consent of Counsel
24.2.n Consent of Independent Auditors
24.2.r Financial Data Schedule
Other Exhibits Powers of Attorney
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as......... `D'
The double dagger symbol shall be expressed as.. `DD'
<PAGE>
<PAGE>
AMENDED AND RESTATED
CHARTER
of
TRI-CONTINENTAL CORPORATION
<PAGE>
<PAGE>
TRI-CONTINENTAL CORPORATION, a Maryland corporation, having its
principal office in the State of Maryland at First National Bank Building, Light
and Redwood Streets, Baltimore, Maryland (hereinafter called the Corporation),
hereby certifies to the State Department of Assessments and Taxation of the
State of Maryland that:
FIRST: The Corporation desires to restate its Charter as in
effect on the date hereof.
SECOND: The Charter of the Corporation, as heretofore amended,
supplemented and restate, is hereby restated in its entirety, as
follows:
<PAGE>
<PAGE>
CHARTER
of
TRI-CONTINENTAL CORPORATION
By virtue of an Agreement of Consolidation received for record and
approved December 31, 1929, by the State Tax Commission of Maryland,
Tri-Continental Corporation and Tri-Continental Allied Company Incorporated were
consolidated into a single corporation, which was a new corporation under the
laws of the State of Maryland, the Charter of which is and shall be as follows:
FIRST. The name of the corporation (hereinafter referred to as the
Corporation) is TRI-CONTINENTAL CORPORATION.
SECOND. The Corporation possesses each and all of the rights,
privileges, powers and franchises previously vested in Tri-Continental
Corporation and Tri-Continental Allied Company Incorporated; and in particular,
the purpose or purposes for which the Corporation is formed and the business or
objects to be carried on and promoted by it, are as follows:
(1) To purchase or otherwise acquire, underwrite, hold, mortgage, pledge,
sell, exchange or otherwise dispose of, and generally to deal in, full or part
paid securities (which term "securities" shall for the purposes of this Article
SECOND, without limitation of the generality thereof, be deemed to include any
stocks, shares, bonds, debentures, notes, mortgages or other obligations, and
any certificates, receipts, warrants or other instruments representing rights to
receive, purchase or subscribe for the same, or representing any other rights or
interests therein or in any property or assets) created or issued by any
persons, firms, associations, corporations, syndicates, governments or
subdivisions thereof; to issue in exchange therefor or in payment thereof in any
lawful manner its own securities, or to make payment therefor by any other
lawful means whatsoever; and to exercise, as owner or holder of any securities,
all rights, powers and privileges in respect thereof.
(2) To acquire by purchase, exchange or otherwise, all, or any part of, or
any interest in, the properties, assets, businesses and good will of any
persons, firms, associations, corporations or syndicates, engaged in any
businesses for which a corporation may now or hereafter be organized under the
laws of Maryland; to pay for the same in cash, property or its own or other
securities; to hold, operate, reorganize, liquidate, mortgage, pledge, sell,
exchange or in any manner dispose of the whole or any part thereof; and in
connection therewith, to assume or guarantee
-3-
<PAGE>
<PAGE>
performance of any liabilities, obligations or contracts of such persons, firms,
associations, corporations or syndicates, and to conduct in any lawful manner
the whole or any part of any business thus acquired.
(3) To the extent now or hereafter permitted by the laws of Maryland, to lend
its uninvested funds from time to time to such extent, to such persons, firms,
associations, corporations, syndicates, governments or subdivisions thereof, and
on such terms and on such security, if any, as its Board if Directors may
determine.
(4) To promote, organize, aid or assist, financially or otherwise, persons,
firms, assocations, corporations or syndicates engaged in any business
whatsoever, to the extent now or hereafter permitted by the laws of the State of
Maryland; and to a like extent to assume, guarantee or underwrite their
securities, or the principal, interest, dividends or sinking fund obligations in
respect thereof, or the performance of all or any of their other obligations.
(5) To acquire, hold, use or dispose of, in any manner, any franchises,
licenses, grants, concessions, patents, trade-marks, copyrights, trade-names or
inventions, granted by, or existing under the laws of, any government or
subdivision thereof.
(6) To borrow money for any of the purpose of the Corporation, from time to
time, and without limit as to amount; to issue and sell its own securities in
such amounts, on such terms and conditions, for such purposes and for such
prices, now or hereafter permitted by the laws of the state of Maryland and by
this Charter as its Board of Directors may determine; to secure such securities,
to the extent now or hereafter permitted by the laws of said State and by this
Charter, by mortgage upon, or the pledge of, or the conveyance or assignment in
trust of, the whole or any part of the properties, assets, business and good
will of the Corporation, then owned or thereafter acquired; and to acquire,
hold, dispose of, transfer, reissue or cancel its own securities (including
shares of its capital stock of any class), in any manner and to the extent now
or hereafter permitted by the laws of said State and not prohibited by this
Charter.
(7) To conduct its business in all its branches at one or more offices in the
State of Maryland and elsewhere in any part of the world, without restriction or
limit as to extent, and to acquire, use, hold, and dispose of, in any manner and
for any purpose now or hereafter permitted by the laws of said State, any real
or personal property, or any rights or interests therein, in said State or
elsewhere, subject to the laws of the state or country in which located.
(8) To carry out all or any of the foregoing objects and purposes as
principal or agent, and alone or with associates or, to the extent now or
hereafter permitted by the laws of the State of Maryland, as a member of, or as
the owner or holder of any stock of, or shares or interest in, any firm,
association, corporation, trust or syndicate; and in connection therewith to
make or enter into such deeds or contracts with any persons, firms,
associations, corporations, syndicates, governments or subdivisions thereof, and
to do such acts and things and to exercise such powers, as a natural person
could lawfully make, enter into, do or exercise.
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(9) To do any and all such further acts and things and to exercise any and
all such further powers as may be necessary, appropriate, or desirable for the
accomplishment, carrying out, or attainment of all or any of the foregoing
purposes or objects.
The foregoing objects and purposes shall, except where otherwise expressed,
be in no way limited or restricted by reference to, or inference from, the terms
of any other clause of this or any other Article of this Charter, and shall each
be regarded as independent, and construed as powers as well as objects and
purposes.
The Corporation shall be authorized to exercise and enjoy all of the powers,
rights and privileges granted to or conferred upon, corporations of a similar
character by the General Laws of the State of Maryland now or hereafter in
force, and the enumeration of the foregoing powers shall not be deemed to
exclude or waive any powers, rights or privileges so granted or conferred;
provided, however, that the Corporation shall not have the power to carry on
within the State of Maryland any business whatsoever, the carrying on of which
would disentitle it to be classified as an ordinary business corporation under
the laws of said State; nor shall it carry on any business, or exercise any
powers, in any other state, territory, district or country except to the extent
that a similar corporation organized under the laws thereof could carry on or
exercise the same.
THIRD. The post-office address and the place at which the principal office of
the Corporation in the State of Maryland will be located is First National Bank
Building, Light and Redwood Streets, Baltimore, Maryland.
The name of the Corporation's resident agent is the Corporation Trust
Incorporated and its post-office address is First National Bank Building, Light
and Redwood Streets, Baltimore, Maryland. Said resident agent is a corporation
of the State of Maryland.
FOURTH. The number of directors is thirteen and the names of those at the
time in office are:
Elliott V. Bell David H. McAlpin
Thurston P. Blodgett Frederick W. Page
Henry C. Breck Carl W. Painter
Fred E. Brown Bayard F. Pope
Howard S. Bunn Cyril J. C. Quinn
Lewis A. Lapham Frances F. Randolph
W. Paul Stillman
FIFTH. The total amount of authorized capital stock of the Corporation is
100,000,000 shares, having an aggregate per value of $99,500,000, of which
1,000,000 shares of the per value of $50 each, amounting in the aggregate to
$50,000,000, are $2.50 Cumulative Preferred Stock (hereinafter called the
preferred stock) and $99,000,000 shares of the par value of $0.50 each,
amounting in the aggregate to $49,500,000, are Common Stock (hereinafter called
the common stock). Any of such capital stock may, from time to time before the
issuance thereof, be classified or reclassified by the Board of Directors as
hereinafter in Article SEVENTH provided.
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SIXTH. A description of each class of stock of the Corporation with the
preferences, voting powers, restrictions and qualifications of each class is as
follows:
1. Out of the surplus or net profits of the Corporation the holders of the
preferred stock shall be entitled to receive, when and as declared by the Board
of Directors, dividends in cash at the rate of Two Dollars and fifty Cents
($2.50) per share per annum and no more, payable quarterly on the first days of
January, April, July and October in each year, accruing from April 1, 1963, if
issued on or before July 1, 1963, or if issued after July 1, 1963, from the
first day of the quarterly dividend period in which issued, before any sum or
sums shall be set apart for or applied to the purchase or redemption of
preferred stock and before any dividend shall be declared or paid upon or set
apart for, or any other distribution shall be ordered or made in respect of, the
common stock; and such dividends shall be cumulative (whether or not in any
dividend period or periods there shall be surplus or net profits available for
the payment of such dividends), so that if in any year or years dividends upon
the outstanding preferred stock at said rate shall not have been paid, dividends
to the amount of such deficiency shall be paid or declared and set apart for
payment before any sum or sums shall be set aside for or applied to the purchase
or redemption of preferred stock and before any dividend shall be declared or
paid upon or set apart for, or any other distribution shall be ordered or made
in respect of, the common stock.
2. Out of any surplus or net profits of the Corporation remaining after
making such provision for working capital and for reserves for any purpose as
the Board of Directors of the Corporation may deem advisable, and after full
cumulative dividends as aforesaid upon the preferred stock shall have been paid
for all past quarterly dividend periods, and after or concurrently with making
payment of or provision for full dividends on the preferred stock for the
current quarterly dividend period, and after making such provision for the
purchase or redemption of preferred stock as the Board of Directors may deem
advisable, then, and not otherwise, the holders of the common stock shall be
entitled to receive, to the exclusion of the holders of the preferred stock,
such dividends, payable in cash, stock of any class or otherwise, as may from
time to time be declared by the Board of Directors; provided, however, that as
long as any of the preferred stock shall be outstanding, no dividend shall de
declared upon the common stock, unless at the time such dividend is do declared
the net assets of the Corporation as determined by the Board of Directors (whose
determination in the absence of fraud shall be conclusive) remaining after
deducting the amount of such dividend and the amount of any unpaid dividends
there to fore or then to be declared on any other class of stock shall be at
least two hundred per cent. (200%) of the aggregate amount (exclusive of any
dividends accrued or in arrears) to which all shares of the preferred stock and
all shares of stock on a parity with the preferred stock, then outstanding,
shall be entitled as a preference over the common stock, in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation.
3. The preferred stock shall be preferred over the common stock as to both
earnings and assets, and in the event of any voluntary or involuntary
liquidation or dissolution or winding up of the Corporation, the holders of the
preferred stock shall be entitled to receive out of the assets of the
Corporation available for distribution to its stockholders, whether from
capital, surplus or earnings, an amount equal to the per value thereof, with all
dividends accrued or in arrears, before any distribution of the assets shall be
made to the holders of the common stock; but the
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holders of the common stock shall be entitled, to the exclusion of preferred
stock, to share ratably according to the number of shares held by each in all
the assets of the Corporation remaining after such distribution to the holders
of the preferred stock, and any required distribution of assets to the holders
of all other shares entitled to a preference over the common stock in the event
of any such liquidation, dissolution or winding up. If the assets distributable
as aforesaid among the holders of the preferred stock shall be insufficient to
permit the payment to such preferred stockholders of the preferential amounts
aforesaid, then the entire assets of the Corporation to be distributed shall be
distributed ratably among the holders of the preferred stock according to the
number of shares held by each.
4. The terms "dividends accrued or in arrears" and "full cumulative
dividends" whenever used in this Charter with reference to shares of the
preferred stock shall be deemed to mean (whether or not in any dividend period
or any part thereof in respect of which such terms are used there shall have
been net profits or surplus available for the payment of such dividends) that
amount which shall be equal to cumulative dividends at the rate of Two Dollars
and fifty Cents ($2.50) per annum to date from the date on which such dividends
became cumulative (including an amount of equal to a dividend at such rate for
the elapsed portion of the current dividend period) less, in each case, the
amount of all cumulative dividends paid, or deemed paid upon such shares.
5. The preferred stock at any time outstanding may be redeemed by the
Corporation, in whole at any time or in part from time to time, at its election
expressed by resolution of the Board of Directors, upon not less than thirty
(30) days' prior notice to the holders of record of the preferred stock to be
redeemed, given as hereinafter provided, at the price (herein called the
redemption price) of Fifth-five Dollars ($55) per share and dividends accrued or
in arrears to the redemption date; provided, however, that if less then all the
outstanding preferred stock is to be redeemed such redemption may be made only
after full cumulative dividends upon all the outstanding preferred stock shall
have been paid for all past quarterly dividend periods and after or concurrently
with making payment of, or declaring and setting apart for payment, full
dividends on the then outstanding preferred stock not so to be redeemed to the
end of the current dividend period; and provided further that the preferred
stock shall not be redeemable by the Corporation on or prior to May 1, 1968, in
connection with a refunding involving the issuance of preference stock bearing
an annual dividend rate lower than that of the preferred stock. If less than all
the outstanding preferred stock is to be redeemed, the redemption may be made
either by lot or pro rata, in such manner as may be prescribed by resolution of
the Board of Directors. Notice of such redemption shall be by publication at
least once in one newspaper printed in the English language and published and of
general circulation in the Borough of Manhattan, The City of New York, not less
than thirty (30) not more than sixty (60) days prior to the redemption date. A
similar notice shall be mailed by th eCorporation postage prepaid not less than
thirty (30) nor more than sixty (60) days prior to such redemption date to the
respective holders of record of the preferred stock to be redeemed at their
respective record addresses, but the mailing of such notice shall not be a
condition precedent to such redemption. From and after the date fixed in any
such notice as the date of redemption (unless default shall be made by the
Corporation in providing moneys for the payment of the redemption price pursuant
to such notice), or, if the Corporation shall so elect, from and after a date
(hereinafter called the date of deposit and which shall be prior to the date
fixed as the date of redemption) on which the
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Corporation shall provide moneys for the payment of the redemption price by
depositing the amount thereof for account of the holders of the preferred stock
entitled thereto with a bank or trust company doing business in the Borough of
Manhattan, in the City of New York, and having capital and surplus of at least
Five Million Dollars ($5,000,000) pursuant to notice of such election included
in the notice of redemption specifying the date on which such deposit will be
made, all dividends on the preferred stock thereby called for redemption shall
cease to accrue and all rights of the holders thereof as stockholders of the
Corporation, except the right to receive the redemption price as hereinafter
provided, shall cease and terminate. After the deposit of such amount with such
bank or trust company, the respective holders of record of the preferred stock
to be redeemed shall be entitled to receive the redemption price at any time
upon actual delivery to such bank or trust company of certificates for the
number of shares to be redeemed properly stamped for transfer (if required) and
duly endorsed in blank or accompanied by proper instruments of assignment and
transfer thereof duly endorsed in blank. Any moneys deposited with such a bank
or trust company for the payment of the redemption price which shall remain
unclaimed by the holders of the preferred stock at the end of six (6) years
after the redemption date, together with any interest thereon which shall be
allowed by the bank of trust company with which the deposits shall have been
made, shall be paid by such bank or trust company to the Corporation. Preferred
stock redeemed, or acquired for retirement, under any provision of this Charter
shall not be reissued by the Corporation.
6. The Corporation shall not, without the affirmative vote of at lease two
thirds in amount of such of the preferred stock as may be present in person or
by proxy and voting at a meeting of the preferred stockholders called for the
purpose or the written consent of the holders of at least two-thirds in amount
of the preferred stock at the time outstanding, so long as any preferred stock
shall be outstanding
(a) create any shares of stock having preference or priority over the
preferred stock;
(b) issue any shares of stock on a prity with the preferred stock, unless
immediately after the issue thereof, the net assets of the Corporation as
determined by the Board of Directors (whose determination in the absence of
fraud shall be conclusive) shall be equal to at least two hunder per cent.
(200%) of the aggregate amount (exclusive of any dividends accrued or in
arrears) to which all shares of the preferred stock, and all shares of such
stock on a parity with the preferred stock, then outstanding, shall be entitled
as a preference over the common stock in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation;
(c) issue, assume or guarantee any bonds, notes, or other evidence of
indebtedness, whether secured or unsecured, maturing more than one year from the
issue, assumption or guaranty thereof, if immediately after the date of the
issue, assumption or guaranty thereof, the aggregate principal amount of all
bonds, notes or other evidences of indebtedness issued, assumed or guaranteed by
the Corporation and maturing more than one year from such date shall exceed one
hundred and fifty per cent. (150%) of the capital and surplus of the
Corporation;
(d) amend this Charter so as to change or alter the provisions thereof
relating to the preferences, voting powers, restrictions and qualifications of
the preferred stock.
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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
Investment Company Act of 1940); or (iv) any amendment of this Charter which
makes any class of the Corporation's stock a redeemable security (as such term
is defined in the Investment Company Act of 1940) or reduces the two-thirds vote
required to authorize the actions listed in this paragraph.
7. Subject to the provisions of the by-laws of the Corporation, as from time
to time amended, with respect to the closing of the transfer books and the
fixing of a record date for the determination of stockholders entitled to vote,
at each meeting of the stockholders each holder of record of the preferred stock
shall be entitles to two votes for each shares of preferred stock standing in
his name on the books of the Corporations and each holder of record of the
common stock shall be entitled to one vote for each share of common stock
standing in his name on the books of the Corporation; provided, however, that if
and whenever a default in preferred dividends, as hereinafter defined, shall
exist, the holders of the outstanding preferred stock, in addition to their
right to vote with the holders of the common stock in the election of the
remaining directors, shall have the right, voting separately as a class, to
elect two directors at the annual meeting of stockholders of the Corporation for
the election of directors next succeeding the occurrence of such default, and at
each such annual meeting thereafter as long, but only as long, as such default
shall exist. The term of office of each such director elected by the holders of
the preferred stock as aforesaid shall continue until the next annual meeting of
stockholders of the Corporation for the election of directors, notwithstanding
that prior to the end of such term the default in preferred dividends shall
cease to exist. If, prior to the end of the term, a vacancy in the office of any
such director shall occur by reason of his death, resignation, removal or
disability, or for any other cause, such vacancy shall be filled for the
remainder of the term in the manner provided in the by-laws of the Corporation,
provided that, if such vacancy shall be filled by election by the stockholders
at a meeting thereof, the holders of the then outstanding preferred stock shall
have the right, voting separately as a class, to fill such vacancy for the
remainder of the term, unless at the time of such election no default in
preferred dividends shall exist. At any meeting of stockholders at which the
holders of the preferred stocks shall be entitled to vote for the election of a
director or directors as aforesaid, the holders of twenty-five percent. (25%) of
the then outstanding preferred stock present in person or by proxy shall be
sufficient to constitute a quorum for the election of such director or
directors, and the vote of the holders of the majority of such preferred stock
so present at such meeting at which there shall be a quorum, shall be sufficient
to elect such director or directors. For the purpose of this paragraph 7, a
"default in preferred dividends" shall be deemed to have occurred whenever, on a
dividend payment date, the amount of unpaid full cumulative dividends upon the
preferred stock shall be equivalent to six (6) quarterly dividends thereon or
more, and, having so occurred, such default
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shall be deemed to exist thereafter until, but only until, full cumulative
dividends on all shares of preferred stock then outstanding to the end of the
last preceding dividend period shall have been paid and the fulldividend thereon
to the end of the then current dividend period shall have been paid or declared
and a sum sufficient for the payment thereof set aside for such payment. Nothing
herein contained shall be deemed to prevent an amendment of the by-laws of the
Corporation, in the manner therein provided, which shall increase the number of
directors of the Corporation so as to provide as additional places on the Board
of Directors either or both the directorships to be filled by the two directors
so to be elected by the holders of the preferred stock, or to prevent any other
change in the number of directors of the Corporation.
8. Notwithstanding any provision of law requiring any action to be taken or
authorized by the affirmative vote of the holders of a majority or other
designated proportion of the shares or of the shares of each class, or to be
otherwise taken or authorized by vote of the stockholders, such action shall be
effective and valid if taken or authorized by the affirmative vote of a majority
of the aggregate number of the votes entitled to be cast thereon, except as
provided in this Charter.
9. No holder of the common stock and no holder of the preferred stock shall,
as such holder, have any right to purchase or subscribe for any shares of the
capital stock of the Corporation of any class or any warrant or warrants, option
or options or other instruments or instruments, that shall confer upon the
holder or holders thereof the right to subscribe for or purchase or receive from
the Corporation any shares of the capital stock of the Corporation of any class,
which it may issue or sell (whether or not such shares of capital stock shall be
exchangeable for any shares of capital stock of the Corporation of any class and
whether or not such shares of capital stock shall be out of unissued shares
authorized by this Charter or out of any shares of capital stock of the
Corporation acquired by it after the issue thereof), or any right to purchase or
subscribe for any obligation which the Corporation may issue or sell that shall
be convertible into, or exchangeable for, any shares of the capital stock of the
Corporation of any class, or to which shall be attached or appertain any warrant
or warrants, option or options or other instrument or instruments that shall
confer upon the holder or holders of such obligation the right to subscribe for
or purchase or receive from the Corporation any shares of its capital stock of
any class, other than such right, if any, as the Board of Directors, in its
discretion, may determine.
SEVENTH. A. The Board of Directors is hereby expressly authorized and
empowered to classify or reclassify any unissued stock of any class of the
Corporation with or without par value (including preferred stock and the 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
in any one or more specified respects, from time to time before the issuance of
such stock, 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 now or hereafter
permitted by the laws of the State of Maryland, but subject to the limitations
or restrictions set forth in this Charter. Pursuant to the authority hereby
granted to and vested in the Board of Directors, but without limiting the
generality of the foregoing, the Board of Directors may, in connection with the
creation of each such class of preference stock (by the classification or
reclassification of any unissued stock of the Corporation as aforesaid), fix and
determine, by
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the resolution or resolutions providing for such classification or
reclassification, the matters in respect of such class of stock set forth in the
following subdivisions (a) to (i) inclusive:
(a) The designation of the stock of such class, which shall be distinctive
from the designation of the stock of any other class or classes and which may
contain the words "preferred stock" and/or any other descriptive words, letters
or figures;
(b) The rate of fixed annual dividends on the stock of such class, which in
the case of stock having a par value, shall not exceed six per cent. (6%) per
share per annum upon the par value thereof, or, in the case of stock without par
value, shall not exceed six per cent. (6%) per share per annum upon the amount
per share to which the stock of such class is entitled as a preference over the
common stock out of the assets available for distribution to the stockholders,
whether from capital, surplus or earnings, in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation; and
whether or not the dividends on the stock of such class shall be cumulative or
non-cumulative and, if cumulative, the date on or after which such dividends
shall be so cumulative, provided, however, that such date shall not be prior to
the first day of the dividend period during which the first stock of such class
is issued; and whether or not such dividends shall be payable quarterly,
half-yearly or yearly, and the dates or date in each year on which such
dividends shall be so payable;
(c) Whether or not the stock of such class shall be subject to redemption,
either in whole or in part, and either separately or together with all or any
part of the preferred stock or the stock of any one or more other classes of
preference stock, and if so subject, the manner in which such redemption shall
be effected and the redemption price per share, provided that such price shall
not, in the case of stock having a par value, exceed one hundred and ten
percent. (110%) of the par value thereof, or in the case of stock without par
value, shall not exceed one hundred and ten percent. (110%) of the amount per
share to which the stock of such class is entitled as a preference over the
common stock out of the assets available for distribution to the stockholders,
whether from capital, surplus or earnings, in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, plus, if
dividends thereon are cumulative, an amount equal to all dividends accrued or in
arrears in respect of such stock, or, if dividends thereon are non-cumulative,
an amount equal to all dividends declared and unpaid in respect of such stock;
(d) The preference of the stock of such class over the common stock out of
the assets available for distribution to the stockholders, whether from capital,
surplus or earnings, in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, provided that such preference
shall not exceed, in the case of stock having a par value, an amount equal to
one hundred per cent. (100%) of the par value thereof, or, in the case of stock
without par value, shall not exceed the sum of one hundred dollars ($100) per
share, plus, if dividends thereon are cumulative, an amount equal to all
dividends accrued or in arrears in respect of such stock, or, if dividends
thereon are non-cumulative, an amount equal to all dividends declared and unpaid
in respect of such stock;
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(e) Whether or not the stock of such class shall be entitled to the benefit
of a sinking fund to be applied to the purchase and/or redemption thereof, and
if so entitled, the amount of such fund and the manner of its application;
(f) Whether or not the stock of such class shall be convertible into, or
exchangeable for, stock of the Corporation of any other class or classes, and if
so convertible or exchangeable, the conversion price or prices, or the rates of
exchange, and the adjustments, if any, to be made, in case of any such
conversion or exchange;
(g) Whether or not the issue of any additional stock of such class or the
creation and/or issue of any other class or classes of stock of the Corporation
shall be subject to any limitations or restrictions, and if so, the nature and
extent of such limitations or restrictions;
(h) Whether or not and to what extent the holders of the stock of such class
shall be entitled to vote.
(i) Whether or not the shares of stock of such class shall have any other
rights, privileges, terms or provisions differing in any respect from the
rights, privileges, terms and provisions of the preferred stock or any other
class or classes of preference stock of the Corporation, and if so, the nature
and extent of such differences.
B. All current dividends on the preferred stock and on each class of
preference stock which shall be payable on the same date shall be declared and
paid pro rata, so that the amounts of such current dividends declared and paid
in respect of each share of preferred stock and each share of each class of
preference stock shall in all cases bear to each other the same proportions as
the respective maximum dividend rates on such respective classes of stock bear
to each other; but the Board of Directors may declare dividends on the preferred
stock or any class of preference stock which shall be payable on a particular
date, without declaring or making provision for dividends on the preferred stock
or any other class or preference stock which shall be payable upon a later date
or dates. If at any time there shall be any dividends accrued and in arrears on
the preferred stock or on any class or classes of preference stock, no current
dividend shall be paid upon the preferred stock or on any class or classes of
preference stock unless the current dividends on the preferred stock and on each
class of preference stock to the end of the respective current dividend periods
of the several classes of stock shall have been declared and set apart for
payment. No payments shall be made on account of any dividends which may be
accrued and in arrears on the preferred stock or on any class or classes of
preference stock, unless the current dividends on the preferred stock and on
each class of preference stock to the end of the respective current dividend
periods of the several classes of stock shall have been declared and set apart
for payment; and all payments made on account of dividends which may be accrued
and in arrears on the preferred stock and on any class or classes of preference
stock shall be made pro rata in amounts proportionate to the maximum dividend
rates on the respective classes of stock, and not in proportion to the amounts
of dividends accrued and in arrears on such respective classes of stock. The
resolution or resolutions creating any class or classes of preference stock
shall contain such appropriate provisions, with respect to the payment of
dividends thereon in relation to the payment of dividends on the preferred stock
or on any other class or classes of preference stock,
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as the Board of Directors shall determine to be necessary and proper to give
effect to the foregoing provisions of this paragraph.
C. If the assets available for distribution to the stockholders, whether from
capital, surplus or earnings, in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, shall be insufficient
to permit the payment in full of the preferential amounts payable in respect of
the shares of preferred stock and the shares of each calls of preference stock
outstanding, then the entire assets of the Corporation so distributable among
the stockholders shall be distributed pro rata among such holders of preferred
stock and each class of preference stock, according to the respective amounts
which would be payable to them in respect of the shares held by them upon such
distribution, if all amounts payable on or with respect to the stock of all such
classes were paid in full.
D. The provisions of sub-paragraphs 8 and 9 of Article SIXTH shall apply with
respect to the stock of any class or classes into which any of the preferred
stock or common stock of the Corporation may be classified or reclassified by
the Board of Directors pursuant to the authority granted by this Article SEVENTH
in the same manner and to the same extent that the provisions of said
sub-paragraphs 8 and 9 are applicable with respect to the preferred stock and
the common stock of the Corporation.
E. Whenever the Board of Directors shall from time to time create any class
or classes of stock by classifying or reclassifying any unissued stock of the
Corporation by fixing or altering 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, pursuant to the authority
conferred by this Article SEVENTH, and before any such stock shall be issued, a
further description of such stock, with the designations, preferences, voting
powers, restrictions and qualifications thereof, the fixed annual dividends
thereon, the times and prices of redemption, the terms of conversion, the number
and/or par value of the shares and other provisions thereof, as so fixed or
altered by the Board of Directors, shall be set forth in a certificate or
articles supplementary to the Charter of the Corporation which shall be
executed, verified, acknowledged, filed and recorded in any manner required or
permitted by the laws of the State of Maryland, and thereupon the provisions of
any such certificate or articles supplementary shall become a part of the
Charter of the Corporation as amended and shall be subject to amendment to the
same extent provided herein for amendments to this Charter.
EIGHTH: The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
1. Subject to the provisions of paragraph 3 of this Article EIGHTH, the Board
of Directors of the Corporation is hereby empowered from time to time to
authorize the issue and sale or warrants, in bearer or registered form, or other
instruments, for the purchase of shares of the stock of any class of the
Corporation within such period of time, or without limit as to time, to such
aggregate number of shares, and at such price or prices per share, as the Board
of Directors may determine. Such warrants or other instruments may be issued
separately or in connection
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with the issue of any bonds, debentures, notes or other evidences of
indebtedness or shares of the capital stock of any class of the Corporation and
for such consideration and on such terms and conditions as the Board of
Directors of the Corporation in its discretion may determine.
2. There are issued and outstanding warrants, in registered form, entitling
the registered holders thereof, upon presentation and surrender of the warrants,
to purchase at any time without limit as to the time shares of the common stock
at the price of $22.50 per share, subject to the increase of such number of
shares and the adjustment of such price as hereinafter provided.
The warrants referred to in this paragraph 2 shall be subject to the following
terms and conditions:
(a) The warrant purchase price shall be twenty-two dollars and fifty cents
($22.50) per share, provided in the event that, and whenever prior to the
expiration of the warrants by exercise thereof, the Corporation shall issue any
shares of the common stock, in excess of 2,020,150 shares, at a price less than
the warrant purchase price in effect immediately prior to such issue (such
excess shares issued from time to time at such price or prices being hereinafter
collectively called "additional shares"), the warrant purchase price shall
thereupon be adjusted, and if more than one such issue shall be made,
successively adjusted, as follows: (i) if such issue of additional shares shall
not be pursuant to the reclassification or subdivision of the outstanding common
stock into a greater number of shares or the payment of a dividend upon, or the
making of any distribution in respect of, any stock of the Corporation paid in
common stock or in stock convertible into or exchangeable for common stock, the
adjusted warrant purchase price shall be determined by multiplying 2,020,150 by
$22.50 and adding to the product thereby obtained a sum equal to the aggregate
amount of money in dollars, or the fair value in dollars of the property or
other consideration, if any, received by the Corporation upon the issue of all
additional shares then or at any time theretofore issued, and dividing the
resulting total by the product of (a) 2,020,105 increased by the number of all
such additional shares issued or deemed to be or to have been issued otherwise
than pursuant to any such reclassification, subdivision, dividend or
distribution multiplied by (b) a number equal to one plus the cumulative number
of additional shares and fractions thereof (calculated to the nearest
one-hundredth of a share) which a holder of one share of common stock would have
received pursuant to all such reclassifications, subdivisions, dividends or
distributions theretofore made, and the resulting quotient shall be the adjusted
warrant purchase price per share and (ii) if such issue of additional shares
shall be pursuant to such a reclassification, subdivision, dividend or
distribution (including the reclassification or subdivision effected
simultaneously with the effectiveness of this clause(ii)), the adjusted warrant
purchase price shall be determined by multiplying the number of shares of common
stock outstanding immmediatly prior to such issuance by the then existing
warrant purchase price and dividing the product thereby obtained by the number
of shares of common stock outstanding immediately after such issuance, and the
resulting quotient shall be the adjusted warrant purchase price per share.. Upon
each adjustment of the warrant purchase price pursuant to clause (i) above, the
holder of each warrant shall thereafter be entitled, instead of purchasing the
number of shares specified in his warrant at the price of $22.50 per share, to
purchase at the adjusted warrant purchase price per share the number of shares
calculated to the nearest one-hundredth of a share, obtained by multiplying
$22.50 by the number of shares stated
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to be purchasable on the face of the warrant and dividing the product so
obtained by the adjusted warrant purchase price per share. Upon each adjustment
of the warrant purchase price pursuant to clause (ii) above, the holder of each
warrant shall thereafter be entitled to purchase, at the warrant purchase price
resulting from such adjustment, the number of shares, calculated to the nearest
one-hundredth of a share, obtained by multiplying the warrant purchase price in
effect immediately prior to such adjustment by the number of shares purchaseable
pursuant to such warrant immediately prior to such adjustment and dividing the
product thereof by the warrant purchase price resulting from such adjustment.
For the purposes of this sub-paragraph (a):
(1) The term "common stock" shall be deemed to mean and include not only the
28,000,000 shares of common stock authorized by this Chapter, but also the
shares of common stock of any class hereafter authorized which shall not be
limited to a fixed sum or percentage in respect to the right of the holders
thereof to participate in dividends, or in the distribution of assets upon a
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation.
(2) Shares of common stock issued as a stock dividend shall be treated as
additional shares but shall not be deemed to have be issued for money or cash
value, and the excess number of shares of the common stock at any time issued in
exchange for shares of common stock theretofore issued over the number of shares
thereof surrendered on any such exchange, shall be deemed to have been issued as
a stock dividend. If at any time the Corporation shall declare a cash dividend
on any of the common stock and shall contemporaneously or within three months
after the date of payment of such dividend give to the holders thereof the right
to subscribe for additional common stock at a price which shall net the
Corporation in the aggregate substantially the amount of such cash dividend so
declared, such common stock so issued in respect of any such subscription shall
be deemed to have been issued as a stock dividend.
(3) In case the Corporation shall issue any stock of any class or other
securities convertible into common stock at a price for such common stock less
than the warrant purchase price (determined as in this paragraph 2 provided) in
effect immediately prior to such issue, or in case the Corporation shall issue
any warrants or other instruments for the purchase of common stock at a price
for such common stock less than the warrant purchase price (determined as in
this paragraph 2 provided) in effect immediately prior to such issue, the
maximum total number of shares of the common stock which will be issuable upon
the conversion of such convertible securities or upon the exercise of such
warrants or other instruments shall be treated as additional shares and deemed,
for all purposes of this Article EIGHTH, to have been issued at the date of
issue of such convertible securities or such warrants or other instruments, as
the case may be, for the consideration received by the Corporation for such
convertible securities or for the purchase price for common stock specified in
such warrants or other instruments, as the case may be. Shares of common stock
issuable upon the conversion of such convertible securities or upon the exercise
of such warrants or other instruments as deemed to have been issued as above
provided shall not be recounted when and if such shares are actually issued.
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(4) In case the Corporation shall issue any additional shares for property or
services, the value of such property or services shall, for the purposes hereof,
be conclusively determined by the Board of Directors of the Corporation.
(5) In determining the amount received by the Corporation upon the issue of
additional shares, such determination shall be made without the deduction of any
reasonable commission, discount or expenses paid for underwriting or marketing,
or in connection with the sale thereof.
(b) The warrant purchase price shall never exceed twenty-two dollars and
fifty cents ($22.50) per share and having at any time been reduced by adjustment
as above provided shall never thereafter be increased above the amount to which
so reduced notwithstanding the subsequent issue of shares of common stock at a
price exceeding such reduced warrant purchase price.
(c) If at any time while any of the warrants are outstanding, the Corporation
shall be consolidated with, or merged into, any other corporation or
corporations, or shall sell all, or substantially all, of its property, assets,
business and good will, as an entirety, to another corporation or other
corporations, lawful provision shall be made, as part of the terms of each such
consolidation, merger or sale, that the holder of each warrant shall thereafter
be entitled to purchase, in lieu of each share of the common stock otherwise
purchasable upon the exercise of such warrant, but at the warrant purchase price
in effect at the time of such consolidation, merger or sale, the same kind and
amount of securities (including in such term, stock of any class or classes) or
assets as may be issuable, distributable or payable upon such consolidation,
merger or sale with respect to each share of the common stock. Lawful provision
having been so made, from and after such consolidation, merger or sale, all
rights of the holders of the warrants shall cease and determine (including the
right to purchase shares of the common stock and all rights with respect to
further adjustments of the warrant purchase price and the number of shares of
common stock purchasable upon the exercise thereof) except the right to purchase
during the life of the warrants such securities or assets as above provided.
(d) If the number of shares of the common stock purchasable upon the exercise
of the warrants shall be required to be increased and the warrant purchase price
required to be adjusted, or securities or assets other than shares of the common
stock shall become purchasable in lieu of shares of the common stock upon the
exercise of the warrants, then and in each such case the Corporation shall
forthwith (1) file with each Warrant Agent appointed by the Corporation a
certificate executed by the President or a Vice-President and attested by the
Secretary or an Assistant Secretary of the Corporation, stating the increased
number of shares, or specifying the kind and amount of the securities or assets,
so purchasable upon the exercise of the warrants, and setting forth in
reasonable detail the method of calculation and the facts (including the amount
in dollars, or the fair value in dollars as determined by the Board of
Directors, of any consideration received or deemed to have been received for any
additional shares or convertible securities) upon which such calculation is
based, and (2) cause a notice stating the fact of such increase in the number of
shares so purchasable or the fact that such kind and amount of securities or
assets are purchasable in lieu of each share of common stock, to be published at
least once in one daily newspaper printed in the English language and published
and of general circulation in the Borough of Manhattan, The City of New York. No
Warrant Agent shall be under any duty to
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make any investigation or inquiry as to the comments contained in any such
certificate or as to the manner in which any computation was made, but may
accept such certificate or report as conclusive evidence of the statements
therein contained, and shall be fully protected with respect to any and all acts
done or actions taken or suffered by it in reliance thereon.
(e) If the Corporation shall fix a record date or close the transfer books
for the determination of the holders of the common stock entitled to receive the
initial dividend or any subsequent dividend at a rate in excess of that
theretofore established, or any special stock dividend or extraordinary
distribution, with respect to the common stock, or to receive any rights to
purchase or subscribe to additional stock of any class, or securities
convertible into stock of any class of the Corporation, it shall, at least
twenty days prior to such record date or such date on which the transfer books
are to be closed, as the case may be, cause a notice thereof to be published at
least once in one daily newspaper printed in the English language and published
and of general circulation in the Borough of Manhattan, The City of New York,
and shall also cause a notice thereof to be mailed to the registered holders, if
any, of warrants, at their respective record addresses appearing on the books of
the Corporation, except that such notice need not to be published if on such
record date or such date on which the transfer books are to be closed, as the
case may be, no warrants other than registered warrants shall be outstanding.
The words "special stock dividend" and "extraordinary distribution" as used
in this sub-section (e) shall be deemed to mean any dividend or distribution in
excess of dividends declared pursuant to the regular dividend policy at the time
established by the Board of Directors, whether the same be in cash, stock or
otherwise.
(f) A warrant shall be deemed to have been exercised and the person
exercising the same to have become a common stockholder of record of the
Corporation for the purposes of receiving dividends and for all other purposes
whatsoever as of the date when the warrant is presented and surrendered to the
Corporation in accordance with its terms, accompanied by payment in cash of the
purchase price called for thereby.
(g) Upon each increase of the number of shares of common stock of the
Corporation purchasable upon the exercise of the warrants, the increased number
of shares so purchasable shall be calculated only to the nearest hundredth of
one share. No fractional shares of common stock shall be issued upon the
exercise of the warrants but in lieu thereof the Corporation shall issue scrip
certificates in bearer or registered form representing one one-hundredth of the
right to receive one share and multiples thereof and exchangeable, when
surrendered together with other scrip certificates of like tenor representing in
the aggregate the right to receive one or more full shares, for certificates for
one or more full shares of the common stock and scrip certificates of like tenor
for any excess fractions of a share. Such scrip certificates shall be issued in
such form and shall be exchangeable on or before such date as the Board of
Directors may determine, except that the bearers thereof shall no be entitled to
vote, to receive dividends, or to exercise any other rights of a stockholder
until and only to the extent that such scrip certificates are exchanged for
certificates for common stock.
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(h) In the event that a meeting of stockholders shall be called to consider
and take action on a proposal for the voluntary dissolution of the Corporation,
other than in connection with a consolidation, merger or sale of all, or
substantially all, of its property, assets, business and good will as an
entirety, then and in that event the Corporation shall cause a notice thereof to
be published at least once in one daily newspaper printed in the English
language and published and of general circulation in the Borough of Manhattan,
The City of New York, at lease twenty days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to vote at such meeting, and shall also cause a notice
thereof to be mailed to the registered holders, if any, of the warrants, but
such notice need not be published if on such record date or date of closing the
transfer books no warrants other than registered warrants shall be outstanding.
If such notice shall have been so given and if such voluntary dissolution shall
be authorized at such meeting or any adjournment thereof, then from and after
the date on which such voluntary dissolution shall have been duly authorized by
the stockholders, the purchase rights represented by the warrants and all other
rights with respect thereto shall cease and determine.
3. Of the authorized common stock, an amount sufficient to provide for the
exercise of any warrants and other instruments for the purpose thereof issued
and then outstanding pursuant to this Charter shall at all times be reserved for
such purpose. Neither any common stock nor any warrants or other instruments for
the purchase of the common stock shall at any time be issued unless and until
(a) the amount of the authorized unissued common stock shall at least equal the
amount thereof required, after such issue of the common stock or warrants or
other instruments, to be reserved for the purpose of providing for the exercise
of all warrants and other instruments for the purpose of common stock then
outstanding and (b) the Corporation shall have taken effective corporate action
to provide for the issue of such reserved common stock upon the exercise of all
such warrants and other instruments.
4. Subject to such limitations and restrictions as may be set forth in the
by-laws of the Corporation, the Board of Directors of the Corporation, is
hereby empowered to authorize the issue from time to time of
(a) all or any part of the total authorized number of shares of stock of the
Corporation of any class, and any securities convertible into shares of its
stock of any class, in each case for such consideration as the Board of
Directors may from time to time deem advisable subject to the provisions of
paragraph 3 of this Article EIGHTH;
(b) the number of shares of stock of any class called for by any warrants or
other instruments for the purchase thereof issued and outstanding pursuant to
this Charter, at the price per share (not less than par for stock having a par
value) determined as provided in such warrants or other instruments and upon the
exercise thereof in accordance with the terms thereof.
5. The Board of Directors may determine by resolution prior to the issue of
any shares of the capital stock of the Corporation without par value that only a
part of the consideration or of the value thereof to be received for such shares
shall be contributed as capital and that the excess shall be surplus; and, on
payment for such shares, the part of such consideration or of the value
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thereof so contributed as capital shall be capital and the excess shall be
surplus. Against any such surplus there may be charged any losses at any time
incurred by the Corporation, and also any dividends or other distributions made
to the holders of its stock of any class except as provided in paragraph 2 of
Article SIXTH. The capital of the Corporation may be increased and its surplus
decreased from time to time by resolution of the Board of Directors transferring
the whole or any part of the surplus to the capital account.
6. The by-laws of the Corporation may fix the number of directors at a number
greater or less than that named in this Charter, provided that in no case shall
the number of directors be less than three, and may authorize the Board of
Directors, by the vote of a majority of the entire Board of Directors, to
increase the number of directors fixed by this Charter or by the by-laws within
a limit specified in the by-laws, and to fill the vacancies created by any such
increase in the number of directors. Unless otherwise provided by the by-laws of
the Corporation, the directors of the Corporation need not be stockholders
therein.
7. The Board of Directors shall have power, if authorized by the by-laws, to
designate by resolution or resolutions adopted by a majority of the whole Board
of Directors, one or more committees, each committee to consist of two or more
of the directors of the Corporation, which, to the extent provided in said
resolutions or in the by-laws of the Corporation and permitted by the laws of
Maryland, shall have and may exercise any or all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation, and
may have power to authorize the seal of the Corporation to be affixed to all
papers which may require it.
8. The Board of Directors shall, subject to the laws of Maryland, have power
to determine from time to time whether and to what extent and at what time and
places and under what conditions and regulations any accounts and books of the
Corporation, or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any account or
book or document of the Corporation, except as conferred by the laws of
Maryland, unless and until authorized so to do by resolution of the Board of
Directors, or of the stockholders.
9. Any director, or any officer elected or appointed by the Board of
Directors or by any committee of said Board or by the stockholders or otherwise,
may be removed at anytime, with or without cause, in such lawful manner as may
be provided in the by-laws of the Corporation.
10. If the by-laws so provide, the Board of Directors of the Corporation
shall have power to hold their meetings, to have an office or offices and,
subject to the provisions of the laws of Maryland, to keep the books of the
Corporation, outside of said State at such places as may from time to time be
designated by them.
11. Subject to the provisions of sub-paragraph (c) of paragraph 6 of article
SIXTH, the Board of Directors shall have power to borrow or raise money, from
time to time and without limit, and upon any terms, for any corporate purposes;
and, subject to the laws of the State of Maryland, to authorize the creation,
issue, assumption or guaranty of bonds, notes or other evidences of indebtedness
for moneys to borrowed, to include therein such provisions as to redeemability,
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convertibility or otherwise, as the Board of Directors, in its sole discretion,
may determine and to secure the payment of principal, interest or sinking fund
in respect thereof by mortgage upon, or the pledge of, or the conveyance or
assignment in trust of, the whole or any part of the properties, assets and good
will of the Corporation then owned or thereafter acquired.
12. In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the Board of Directors may exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the express provisions of the laws of
Maryland, of this Charter, and of the by-aws of the Corporation.
13. Shares of stock in other corporation shall be voted by such officer or
officers of the Corporation as the Board of Directors shall designate for that
purpose, or by a proxy or proxies thereunto duly authorized by the Board of
Directors, except as otherwise ordered by vote of the holders of a majority of
the shares of the capital stock of the Corporation outstanding and entitled to
vote in respect thereto.
14. Any director individually, or any firm of which any director may be a
member, or any corporation of which any director may be an officer, director, or
holder of any amount of its capital stock, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or transaction of the
Corporation, and in the absence of fraud no contract or other transaction shall
be thereby affected or invalidated; provided that in case a director, or a firm
of which a director is a member, is so interested, such fact shall be disclosed
or shall have been known to the Board of Directors or a majority thereof. Any
director of the Corporation who is also a director or officer or holder of any
amount of the capital stock of such other corporation or who, or the firm of
which he is a member, is so interested, may be counted in determining the
existence of a quorum at any meeting of the Board of Directors of the
Corporation which shall authorize any such contract or transaction, and may vote
thereat to authorize any such contract or transaction, with like force and
effect as if he were not such director, or officer, or holder of the capital
stock of such other corporation, or not so interested or a member of a firm so
interested.
15. Any contract, transaction or act of the Corporation or of the directors
which shall be ratified by stockholders present and entitled to exercise a
majority of the voting power exercised at any annual meeting or at any special
meeting called for such purpose, a quorum being present, shall so far as
permitted by law be as valid and as binding as though ratified by every
stockholder of the Corporation.
NINTH. From time to time any of the provision of this Charter (including,
without limiting the generality of the foregoing, any of the terms of any of the
outstanding stocks of the Corporation by classification, reclassification or
otherwise, and any of the terms of the outstanding warrants) may be amended,
altered or repealed, and other provisions authorized by the statutes of the
State of Maryland at the time in force may be added or inserted in the manner at
the time prescribed by said statutes or authorized by this Charter, and all
rights at any time conferred upon the stockholders or warrant holders of the
Corporation by this Charter are granted subject to the provisions of this
Article NINTH, provided, however, that without the consent of the holders of a
majority in amount of the warrants at the time outstanding of the class
affected,
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given in the manner hereinbelow provided, no such amendment may alter, amend or
repeal the provisions of Paragraph 2 of Article EIGHTH with respect to any
warrants then outstanding, but this provision shall not be deemed to require the
consent of the holders of outstanding warrants to any amendment of any provision
of this Charter other than so specified.
The consent of such holders of warrants to such amendment either may be
given in writing without a meeting or may be given at a meeting of such warrant
holders called for the purpose, of which notice shall have been given by
publication in one daily newspaper of general circulation published in the
Borough of Manhattan, the City of New York, and one newspaper of general
circulation published in the City of Baltimore, Maryland, once a week for two
successive weeks, the first publication to be not less than ten days nor more
than thirty days prior to the date of such meeting, but such notice need not be
published if at the time no warrants other than registered warrants shall be
outstanding. A copy of such notice shall also be mailed not less than ten days
before the date of such meeting to each holder of any registered warrant at his
last address, if any, appearing on the registry books.
TENTH A director or officer of the Corporation shall not be liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a Director or Officer, except to the extent such exemption from
liability or limitation thereof is not permitted by law (including the
Investment Company Act of 1940) as currently in effect or as the same may
hereafter be amended).
No amendment, modification or repeal of this Article Tenth shall
adversely affect any right or protection of a director or officer that exists at
the time of such amendment modification or repeal.
ELEVENTH Indemnification of Director, Officers and Employees. The Corporation
shall indemnify to the fullest extent permitted by law (including the Investment
Company Act of 1940) as currently in effect or as the same may hereafter be
amended, any person made or threatened to be made a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that such person or such person's testator or intestate is or was a
Director, Officer or employee of the Corporation or serves or served at the
request of the Corporation any other enterprise as a Director, Officer or
employee. To the fullest extent permitted by law (including the Investment
Company Act of 1940) as currently in effect or as the same may hereafter be
amended, expenses incurred by any such person in defending any such action, suit
or proceeding shall be paid or reimbursed by the Corporation promptly upon
receipt by it of an undertaking of such person to repay such expenses if it
shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation. The rights provided to any person by this
Article shall be enforceable against the Corporation by such person who shall be
presumed to have relied upon it in serving or continuing to serve as a Director,
Officer or employee as provided above. No amendment of this Article Thirteenth
shall impair the rights of any person arising at any time with respect to events
occurring prior to such amendment. For purposes of this Article Thirteenth, the
term "Corporation" shall include any predecessor of the Corporation and any
constituent corporation (including any constituent of a constituent)
absorbed by the Corporation in a consolidation or merger; the term "other
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enterprise" shall include any corporation, partnership, joint venture, trust or
employee benefit plan; service "at the request of the Corporation" shall include
service as a Director, Officer or employee of the Corporation which imposes
duties on, or involves services by, such Director, Officer or employee with
respect to an employee benefit plan, its participants or beneficiaries; any
excise taxes assessed on a person with respect to an employee benefit plan shall
be deemed to be indemnifiable expenses; and action by a person with respect to
any employee benefit plan which such person reasonably believes to be in the
interest of the participants and beneficiaries of such plan shall be deemed to
be action not opposed to the best interests of the Corporation.
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THIRD: The foregoing restated Charter contains all of the
provisions of the Charter of the Corporation as in effect on the date
hereof.
FOURTH: The Board of Directors of the Corporation, at a meeting
thereof duly convened and held on August 13, 1963, duly adopted a
resolution restating the Charter of the Corporation as set forth in
Paragraph SECOND above, by a vote of the majority of the entire Board of
Directors.
FIFTH: No amendment of the Charter of the Corporation is being
affected by these Articles of Restatement of the Charter except as
permitted by section 13 of the Maryland Corporations Law.
IN WITNESS WHEREOF, TRI-CONTINENTAL CORPORATION has caused these
presents to be signed in its name and on its behalf by its President or one of
its Vice-Presidents and its corporate seal to be hereunto affixed and duly
attested by its Secretary, on October 22, 1963.
TRI-CONTINENTAL CORPORATION,
by
/s/ Thurston P. Blodgett
_________________________
(Corporate seal)
Attest:
/s/ H. M. Baird Voorhis
________________________
H. M. Baird Voorhis
Secretary
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STATE OF NEW YORK, ]
] ss.:
COUNTY OF NEW YORK, ]
I HEREBY CERTIFY that on October 22, 1963, before me the
subscriber, a notary public of the State of New York in and for the County of
New York, personally appeared THURSTON P. BLODGETT, Vice-President of
Tri-Continental Corporation, a Maryland corporation, and in the name and on
behalf of said corporation acknowledged the foregoing Articles of Restatement of
the Charter of Tri-Continental Corporation to be the corporate act of said
corporation; and at the same time personally appeared H. M. BAIRD VOORHIS who
made oath in due form of law that he was secretary of the meeting of the Board
of Directors of said corporation at which the adoption of said Articles of
Restatement was approved, and that the matters of fact set forth therein are
true to the best of his knowledge, information and belief.
WITNESS my hand and notorial seal, the day and year first above
written.
/s/ Edward W. Servio
______________________
Notary Public
EDWARD W. SERVIO
Notary Public, State of New York
No. 30-8923950
Qualified in Nassau County
Certificate filed with N. Y. Co. Clerk
Commission Expires March 30, 1964
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RESTATEMENT
OF THE
BY-LAWS
OF
TRI-CONTINENTAL CORPORATION
ARTICLE I.
SECTION 1. PLACE OF HOLDING MEETINGS: All meetings of the stockholders
shall be held at the principal office of the Corporation at Baltimore, in the
State of Maryland, or at such other place in the United States as the Board of
Directors may designate.
SECTION 2. QUORUM; ADJOURNMENT OF MEETINGS: The presence in person or by
proxy of stockholders entitled to cast a majority in number of votes shall
constitute a quorum at all meetings of the stockholders except as otherwise
provided by law or by the Charter of the Corporation. If less than a quorum
shall be in attendance at the time for which the meeting shall have been called,
the meeting, may, after the lapse of at least half an hour, be adjourned from
time to time by the vote of a majority in number of votes of the stockholders
present in person or by proxy at such meeting, for a period not exceeding one
month for any one adjournment, without any notice or call other than by
announcement at the meeting of the time and place of the holding of the
adjourned meeting quorum shall attend. Any meeting or adjournment thereof at
which a quorum is present may also be adjourned by a like majority vote, for
such time without notice or call, or upon such notice or call as may be
determined by such majority vote. At any adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted if the meeting had been held as originally called.
SECTION 3. ANNUAL MEETINGS; ELECTION OF DIRECTORS: An annual meeting of
the stockholders for the election of directors, and the transaction of general
business shall be held during the 31-day period commencing April 15 of each year
on such day and at such hour as may be fixed by the Board of Directors.
SECTION 4. SPECIAL MEETINGS: Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board or by a
majority of the Board of Directors or by a majority of the Executive Committee
and shall be called by the Secretary upon the written request of the holders of
shares entitled to not less than twenty-five per cent of all the votes entitled
to be cast at such meeting. Such request shall state the purpose or purposes of
such meeting and the matters proposed to be acted on thereat. The Secretary
shall inform such stockholders of the reasonably estimated cost of preparing and
mailing such notice of the meeting, and upon payment to the Corporation of such
costs the Secretary shall give notice stating the purpose or purposes of the
meeting, as required by Section 5 of this Article I, to all stockholders
entitled to vote at such meeting. No special meeting need be called upon the
request of the holders of shares entitled to cast less than a majority of all
votes entitled to be cast at such meeting, to consider any matter which is
substantially the same as a matter voted upon at any special meeting of
stockholders held during the preceding twelve months.
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SECTION 5. NOTICE OF STOCKHOLDERS MEETINGS: Written notice stating the
place and time of the meeting, and in case of a special meeting the purpose or
purposes for which the meeting is called, shall be given by the Secretary to
each stockholder entitled to vote thereat at his post office address as it
appears on the records of the Corporation, at least ten and not more than ninety
days prior to the meeting.
No business other than that stated in the notice shall be transacted at
any special meeting.
SECTION 6. VOTING; ELECTIONS; INSPECTORS; VOTES BY BALLOT: At each
meeting of stockholders every stockholder of any class entitled to vote at such
meeting, of record at the close of business on the date fixed for the
determination of stockholders entitled to vote thereat, shall, unless otherwise
provided in these By-Laws or in the Charter of the Corporation, have one vote
for each share of such stock standing in his name on the books of the
Corporation at the close of business on said date, or, if no such date shall
have been fixed and the books of the Corporation shall have been closed against
transfers of stock as in Section 3 of Article V hereof provided, every
stockholder of record of any class entitled to vote thereat shall, unless
otherwise provided in these By-Laws or in the Charter of the Corporation, have
one vote for each share of such stock standing in his name on the books of the
Corporation at the close of business on the day on which notice of the meeting
is mailed or the day 30 days before the meeting, whichever is the closer date to
the meeting, in each case either in person or by proxy appointed by instrument
in writing subscribed by such stockholder or his duly authorized attorney. No
proxy which shall be dated more than three months before the meeting at which it
is offered shall be accepted, unless such proxy shall, on its face, name a
longer period for which it is to remain in force.
All elections shall be had and all questions decided by a majority vote
of the votes cast at a duly constituted meeting, except as otherwise provided
for in these By-Laws or in the Charter of the Corporation or by some specific
statutory provision superseding the restrictions and limitations contained in
the Charter of the Corporation.
At any election of directors, the Chairman of the meeting may, and upon
the request of the holders of ten per cent (10%) of the stock present and
entitled to vote at such election shall, appoint two inspectors of election who
shall subscribe an oath or affirmation to execute faithfully the duties of
inspectors at such election with strict impartiality and according to the best
of their ability and shall canvass the votes and make and sign a certificate of
the result thereof. No candidate for the office of director shall be appointed
as such inspector.
The Chairman of the meeting may cause a vote by ballot to be taken upon
any election or matter, and such vote by ballot shall be taken upon the request
of the holders of ten per cent (10%) of the stock present and entitled to vote
on such election or matter.
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SECTION 7. CONDUCT OF STOCKHOLDER MEETINGS: Each meeting of the
stockholders shall be presided over by the Chairman of the Board, or if he is
not present, by the President or if neither of them is present, by an executive
officer of the Corporation designated by the Chairman of the Board or by the
President to act as chairman of such meeting, or if the Chairman of the Board
and the President are not present and if no such officer shall have been so
designated and be present, by a chairman to be elected at the meeting. The
Secretary of the Corporation, if present, shall act as secretary of such
meeting, or if he is not present, an Assistant Secretary shall so act; if
neither the Secretary nor an Assistant Secretary is present then a secretary
shall be elected at the meeting.
SECTION 8. CONCERNING VALIDITY OF PROXIES, BALLOTS, ETC.: At every
meeting of the stockholders, all proxies and all ballots shall be canvassed by
the secretary of the meeting who shall decide all questions touching the
qualification of voters, the validity of the proxies, and the acceptance or
rejection of votes, unless inspectors of election shall have been appointed by
the chairman of the meeting, in which event such inspectors of election shall
decide all such questions.
SECTION 9. DEFINITION OF "STOCKHOLDER": The term "stockholder" as used
in this Article, shall mean and include only such holders of record of the
issued and outstanding shares of the capital stock of the Corporation as are, by
virtue of the provisions of the Charter of the Corporation or of some specific
statutory provision superseding the restrictions and limitations contained in
the Charter of the Corporation entitled to vote upon any matter, resolution or
business to be submitted to the meeting of the stockholders at the time in
question; and nothing in this Article contained shall give or be construed as
giving to any holder of issued and outstanding shares of the capital stock of
the Corporation any voting rights other than those, if any, given to such holder
by the Charter of the Corporation.
ARTICLE II.
DIRECTORS.
SECTION 1. ELECTION OF DIRECTORS: At all meetings of the stockholders
for the election of directors at which a quorum is present, the persons
receiving the greatest number of votes shall be the directors.
SECTION 2. FIRST MEETING: The newly-elected directors may hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of the
stockholders, and notice of such meeting need not be given. Such first meeting
may be held at any other time which may be specified in a notice given as
hereinafter provided for special meetings of the Board of Directors or in a
consent and waiver of notice thereof signed by all the directors.
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SECTION 3. REGULAR MEETING: Regular meetings of the directors may be
held without notice at such places and times as may be fixed from time to time
by resolution of the directors.
SECTION 4. SPECIAL MEETINGS; HOW CALLED: Special meetings of the Board
may be called by the Chairman of the Board, or in case of a vacancy in that
office, by the President, or on the written request of the Chairman of the Board
or in case of vacancy in that office, of the President, or of any two directors,
by the Secretary, in each case on at least twenty-four hours' written, oral or
telegraphic notice to each director. Such notice, or any waiver thereof pursuant
to Section 2 of Article VIII hereof, need not state the business to be
transacted at, or the purpose of, such meeting.
SECTION 5. PLACE OF MEETING: The directors may hold their meetings, have
one or more offices, and keep the books of the Corporation, outside the State of
Maryland, at any office or offices of the Corporation, or at any other place, as
they may from time to time by resolution determine.
SECTION 6. NUMBER, CLASSIFICATION, TERMS OF OFFICE AND QUORUM: The
number of directors (exclusive of the class of directors which may be elected by
the holders of the preferred stock as provided in Section 7 of this Article II,
hereinafter called preferred stock directors) shall be thirteen, subject,
however, to being increased or decreased in accordance with Section 7 of this
Article. The directors, exclusive of the preferred stock directors, shall be
divided into four classes at the annual stockholders' meeting in 1993 and into
three classes at all annual stockholders' meetings thereafter, each class
consisting as nearly as possible of one-fourth or one-third of the entire Board
of Directors as is consistent with the number of classes of directors and each
class to hold office for the term of a maximum of four years until the 1994
stockholders' meetings and three years thereafter, so that the term of office of
one class of directors shall expire in each year, but each director, of whatever
class (other than preferred stock directors) and whenever elected, shall hold
office until his successor shall have been elected and shall qualify, or until
his death or until he shall resign or shall have been removed in the manner
hereinafter provided. A majority of the Board of Directors, but not less than
two directors, shall constitute a quorum for the transaction of business.
Directors or nominees for election as directors are required to be stockholders.
Preferred stock directors, if and when elected, shall hold office in accordance
with the terms of paragraph 7 of Article VI of the Charter of the Corporation as
restated.
SECTION 7. INCREASE AND DECREASE IN NUMBER OF DIRECTORS: The Board of
Directors may at any time or from time to time increase the number of directors
fixed by the Charter or the By-Laws of the Corporation to not more than twenty,
and, by action of a majority of the entire Board of Directors, fill the
vacancies created by any such increases in the number of directors. The Board of
Directors may also at any time or from time to time decrease the number of
directors fixed by the Charter or the By-Laws of the Corporation to not less
than five, any such decrease to become effective at the time of the next
succeeding annual meeting of stockholders, unless there shall be vacancies in
the Board of Directors, in
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which case such decrease may become effective at any time prior to the next
succeeding annual meeting of stockholders to the extent of the number of such
vacancies; provided that the tenure of office of a director shall not be
affected by any such decrease. Each such increase in the number of directors and
each such decrease in the number thereof shall be made by an amendment of these
By-Laws or by making, altering or repealing an additional or supplementary
By-Law in accordance with the provisions of Article IX of the By-Laws; provided,
however, that the favorable vote of a majority of the entire Board of Directors
as at the time constituted shall be necessary to authorize the adoption of such
additional or supplementary By-Law.
In case of any increase in the number of directors, the increased number
shall be allocated to one or more classes in such manner that after such
increase each class shall consist as nearly as possible of one-fifth of the
entire Board of Directors, exclusive of preferred stock directors. In the case
of any decrease in the number of directors, the decreased number shall be taken
from one or more classes in such manner that after any such decrease each class
shall consist as nearly as possible of one-fifth of the entire Board of
Directors, exclusive of preferred stock directors, provided, however, that in no
event shall the number of directors in any class be less than two.
Notwithstanding any provision of Section 6 or this Section 7 of this
Article II, the number of directors of the Corporation during any period when by
the terms of the Charter of the Corporation the preferred stockholders, voting
separately as a class, shall be entitled to elect two directors, shall be
automatically increased by two over the number of directors fixed as provided in
said Section 6 and the two vacancies in the Board thus created shall be filled
by vote of the preferred stockholders as required by the terms of the Charter.
Commencing with the date of the annual meeting of stockholders at which the
holders of the preferred stock are by their terms of the Charter of the
Corporation no longer entitled, by voting separately as a class, to elect two
members of the Board, the number of directors of the Corporation shall be
automatically decreased by two.
SECTION 8. RESIGNATIONS: Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the Chairman of the Board or the Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
SECTION 9. REMOVAL OF DIRECTORS: Any director, except a preferred stock
director, may be removed either with or without cause, at any time, by the vote
of the stockholders voting the majority of all of the issued and outstanding
shares of the capital stock of the Corporation entitled to vote, given at any
meeting of stockholders, called for the purpose, at which a quorum is present.
Any preferred stock director may be removed, either with or without cause, at
any time, by the vote of the majority of all the issued and outstanding
preferred stock of the Corporation, given at any meeting of preferred
stockholders, called for the purpose and at which a quorum is present.
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SECTION 10. FILLING OF VACANCIES: Any vacancy occurring in the Board of
Directors, for any cause other than by reason of an increase in the number of
directors, may be filled by a majority of the remaining members of the Board,
although such majority is less than a quorum. A director elected by the Board to
fill a vacancy shall be elected to hold office until the next annual meeting of
stockholders or until his successor shall be duly elected and shall qualify. If
the office of any member becomes vacant, such vacancy may be filled by the Board
of Directors. Any person so appointed to fill any vacancy shall hold office for
the unexpired term and until his successor shall be duly chosen and shall
qualify.
SECTION 11. POWERS OF DIRECTORS: The Board of Directors shall exercise
all of the powers of the Corporation subject to the restrictions imposed by law,
by the Charter of the Corporation, or by these By-Laws.
SECTION 12. COMPENSATION OF DIRECTORS: Neither the Directors nor the
members of any committee of the Board of Directors, provided for by these
By-Laws or otherwise provided for by resolutions of the Board, shall receive any
stated salary for their services as such directors or members, but by resolution
of the Board a fixed fee and expenses of attendance may be allowed for
attendance at each meeting of the Board of such committee; provided that nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity as an officer, agent or otherwise, and
receiving compensation therefor.
SECTION 13. APPROVAL OR RATIFICATION OF ACTS OR CONTRACTS BY
STOCKHOLDERS: The Board of Directors in its discretion may submit any act or
contract for approval or ratification at any annual meeting of the stockholders,
or at any special meeting of the stockholders called for the purpose of
considering any such act or contract, and any act or contract that shall be
approved or be ratified by the vote of the stockholders holding a majority of
the issued and outstanding shares of the capital stock of the Corporation
entitled to vote and present in person or by proxy at such meeting (provided
that a quorum be present) shall be as valid and as binding upon the Corporation,
and upon all the stockholders as though it had been approved or ratified by
every stockholder of the Corporation.
SECTION 14. INDEMNIFICATION: (A) every person (and the heirs and legal
representatives of such person) who is or was a director, officer or employee of
the Corporation, or any other corporation which he serves or served as such at
the request of the Corporation, may, in accordance with paragraph (b) of this
Section 14 and except as prohibited by law, be indemnified by the Corporation
against any and all liability and reasonable expense that may be incurred by him
in connection with or resulting from any claim, action, suit or other proceeding
(whether brought by or in the right of the Corporation or such other corporation
or otherwise), civil, criminal, administrative or investigative, including any
appeal relating thereto, in which he may become involved, as a party or
otherwise, by reason of his being or having been a director, officer or employee
of the Corporation or such other corporation, or by reason of any action taken
or not taken in his capacity as such director, officer or employee whether or
not he continues to be such at the
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time such liability or expense shall have been incurred, if such person acted in
good faith for a purpose he reasonable believed to be in or not opposed to the
best interests of the Corporation or such other corporation, as the case may be,
and, in addition, in any criminal action or proceedings had no reasonable cause
to believe that his conduct was unlawful; provided, however, that in the case of
a claim, action, suit or other proceeding brought by or in the right of the
Corporation to procure a judgment in its favor, such indemnification shall not
include any amount payable by such person to the Corporation in settling or
otherwise disposing of a pending or threatened action and shall not include
expenses incurred in defending such a claim, action, suit or other proceeding if
such person has been adjudged to be liable for negligence or misconduct in the
performance of his duty of the Corporation unless and except to the extent that
a court shall determine that in view of all the circumstances such person is
fairly and reasonably entitled to indemnification for such expenses; and
provided further, that in no event shall anything therein contained be so
construed as to authorize indemnification of a director, officer or employee
against any liability to the Corporation or to its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. As used in this Section 14, the terms "liability" and "expense" shall
include, but shall not be limited to, counsel fees and disbursements and amounts
of judgments, fines or penalties against, and amounts paid in settlement by,
such person. The termination of any claim, action, suit or other proceeding, by
judgment, settlement (whether with or without court approval) or conviction or
upon a plea of guilty or nolo contendere, or its equivalent, shall not create a
presumption that such person did not meet the standards of conduct set forth in
this paragraph (a).
(B) Every person (and the heirs and legal representatives of such
person) referred to in paragraph (a) of this Section 14 shall, to the extent
such person has been successful, on the merits or otherwise, with respect to any
claim, action, suit or other proceeding of the character described in said
paragraph (a), be entitled to indemnification as provided in said paragraph (a)
as of right. Except as provided in the preceding sentence, any indemnification
under said paragraph (a) shall be made if either (i) the Board of Directors, by
a majority vote of a quorum consisting of directors who are not parties to (or
who have been wholly successful with respect to) such claim, action, suit or
other proceeding, shall find that such person has met the standards of conduct
set forth in said paragraph (a) or (ii) independent legal counsel (who may be
regular counsel of the Corporation) shall deliver to the Corporation their
written advice that, in their opinion, such person has met such standards.
(C) Expenses incurred with respect to any claim, action, suit or other
proceeding of the character described in paragraph (a) of this Section 14 may be
advanced by the Corporation prior to the final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount unless
it is ultimately determined that he is entitled to indemnification under this
Section 14.
(D) The rights of indemnification provided in this Section 14 shall be
in addition to any rights to which any person (or the heirs or legal
representatives of such person) referred to in
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paragraph (a) of this Section 14 may otherwise be entitled by contract or as a
matter of law and shall be available whether or not the claim asserted against
such person is based on matters which antedate the adoption of this Section 14.
SECTION 15. TELEPHONE MEETINGS: Members of the Board of Directors or a
committee of the Board of Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by these means constitutes presence in person at the meeting.
ARTICLE III.
COMMITTEES.
SECTION 1. BOARD OPERATIONS COMMITTEE: The Board of Directors may
appoint those of its members who are not interested persons (as defined in the
Investment Company Act of 1940) of the Corporation as a Board Operations
Committee, which committee shall have the authority generally to direct the
operations of the Board of Directors including (a) the nomination for
appointment by the Board from among the members of the Board Operations
Committee of the members of the Audit Committee, the Director Nominating
Committee and the Portfolio Transactions Committee, (b) the nomination for
appointment by the Board of such other committees, if any, as the Board
Operations Committee shall determine, (c) the power of the Board to select legal
counsel for the Corporation, (d) the recommendation to the Board of (i) matters
to be submitted to the stockholders of the Corporation for consideration and
(ii) the recommendations to be made to the stockholders with respect thereto,
and (e) control of the agenda for meetings or other action of the Board.
SECTION 2. AUDIT COMMITTEE: The Board of Directors may appoint those of
its members nominated by the Board Operations Committee for that purpose as an
Audit Committee, such committee to be composed of two or more directors. The
Audit Committee shall (a) recommend independent public accountants for selection
by the Board, (b) review the scope of audit, accounting and financial internal
controls and the quality and adequacy of the accounting staff of the Corporation
with the independent public accountants and such other persons as may be deemed
appropriate, (c) review with the accounting staff and independent public
accountants the compliance of transactions of the Corporation with J. & W.
Seligman & Co. Incorporated or any other manager of the affairs of the
Corporation and with any affiliate of such firm or manager with the financial
terms of applicable agreements, (d) review reports of the independent public
accountants and comment to the Board when warranted, (e) report to the Board at
least once each year and at such other times as the committee deems desirable,
and (f) be directly available at all times to the independent public accountants
and responsible officers of the Corporation for consultation on audit,
accounting and related financial matters.
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SECTION 3. DIRECTOR NOMINATING COMMITTEE. The Board of Directors may
appoint those of its members nominated by the Board Operations Committee for
that purpose as a Director Nominating Committee, such committee to be composed
of two or more directors. The Director Nominating Committee shall recommend to
the Board a slate of persons to be nominated for election as directors by the
stockholders at each annual meeting of stockholders and a person to be elected
to fill any vacancy occurring for any reason in the Board.
SECTION 4. PORTFOLIO TRANSACTIONS COMMITTEE: The Board of Directors may
appoint those of its members nominated by the Board Operations Committee for
that purpose as a Portfolio Transactions Committee, such committee to be
composed of two or more directors. The Portfolio Transactions Committee shall
maintain familiarity with, report to the Board concerning, and make such
recommendations to the Board as it may deem appropriate with respect to, the
procedures and practices followed in the handling of orders to buy and sell
portfolio securities for the Corporation and the commissions or other
compensation paid in respect of portfolio transactions.
SECTION 5. OTHER COMMITTEES: The Board of Directors may appoint from
among its members other committees composed of two or more directors which shall
have such powers as may be delegated or authorized by the resolution appointing
them.
SECTION 6. COMMITTEE PROCEDURES: The Board of Directors may at any time,
in conformity with the recommendations of the Board Operations Committee, change
the members of any committee, fill vacancies or discharge any committee.
In the absence of any member of any committee, the member or members
thereof present at any meeting, whether or not they constitute a quorum, may
appoint to act in the place of such absent member a member of the Board who,
except in the case of any committee appointed pursuant to Section 5 of this
Article, is not an interested person (as defined in the Investment Company Act
of 1940) of the Corporation.
Each committee may fix its own rules of procedure and may meet as and
when provided by those rules.
A majority of the members of the Board Operations Committee, and two or
more members of any other committee, shall constitute a quorum unless the Board
shall otherwise provide.
Copies of the minutes of all meetings of committees other than the
Nominating Committee shall be distributed to the Board unless the Board shall
otherwise provide.
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ARTICLE IV.
OFFICERS.
SECTION 1. OFFICERS: The executive officers of the Corporation shall be
the Chairman of the Board, the President, one or more Vice Presidents (the
number thereof to be determined by the Board of Directors), the Treasurer and
the Secretary, all of whom shall be elected by the Board of Directors.
The Board of Directors may appoint one or more Assistant Vice
Presidents, one or more Assistant Treasurers, one or more Assistant Secretaries
and such other officers as they, may deem necessary, who shall have such
authority and shall perform such duties as from time to time may be prescribed
by the Board of Directors.
Any two of the above officers, except those of Chairman of the Board and
Vice President and those of President and Vice President, may be held by the
same person, but no person shall execute, acknowledge or verify any instrument
in more than one capacity, if such instrument is required by law, the Charter or
these By-Laws to be executed, acknowledged or verified by two or more officers.
SECTION 2. POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD: The Chairman
of the Board shall be the chief executive officer of the Corporation. When
present, he shall preside at all meetings of the stockholders and of the Board
of Directors. Subject to the Board of Directors, he shall have general charge
and supervision over the business and affairs of the Corporation, and may
execute and deliver all authorized bonds, notes, contracts, agreements or other
obligations or instruments in the name of the Corporation. He may execute with
the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary and may deliver all certificates for shares of the capital stock of
the Corporation and any or all warrants evidencing the right to subscribe to
shares of the capital stock of the Corporation of any class. He shall annually
prepare a full and true statement of the affairs of the Corporation which shall
be submitted at the annual meeting of stockholders and filed within twenty days
thereafter at the principal office of the Corporation in the State of Maryland,
where it shall, during the usual business hours of every business day, be open
for the inspection of every stockholder of the Corporation. In general, he shall
have and perform all powers and duties incident to the office of chief executive
officer of a corporation and such other powers and duties as from time to time
may be assigned or delegated to him by the Board of Directors.
In the absence or disability or failure to act as the Chairman of the
Board, or in case of a vacancy in that office, the President shall, subject to
the further provisions of these By-Laws, have and perform all of the duties of
the Chairman of the Board and, shall have all the powers of, and be subject to
all the restrictions upon, the Chairman of the Board.
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SECTION 3. POWERS AND DUTIES OF THE PRESIDENT: The President shall have
such powers and duties as are delegated to him by these By-Laws and the laws of
Maryland and such other powers and duties as the Board of Directors may from
time to time determine. He may execute with the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary and deliver any or all
certificates for shares of the capital stock of the Corporation and any or all
warrants evidencing the right to subscribe to shares of the capital stock of the
Corporation of any class. When authorized by the Board of Directors, he may
execute and deliver in the name of the Corporation all authorized bonds, notes,
contracts, agreements or other obligations or instruments in the name of the
Corporation.
SECTION 4. VICE PRESIDENTS AND ASSISTANT VICE PRESIDENTS: Any Vice
President (unless otherwise provided by resolution of the Board of Directors)
may execute and deliver all authorized bonds, notes, contracts, agreements, or
other obligations or instruments in the name of the Corporation, and with the
Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer,
may sign all certificates for shares of the capital stock of the Corporation and
all warrants evidencing the right to subscribe to shares of the capital stock of
the Corporation of any class. Each Vice President shall have such other powers
and shall perform such other duties as may be assigned to him by the Board of
Directors, or the Chairman of the Board. Each Assistant Vice President shall
have such powers and shall perform such duties as may be assigned to him by the
Board of Directors, or the Chairman of the Board.
SECTION 5. THE SECRETARY: The Secretary shall be sworn to the faithful
discharge of his duties; shall keep or cause to be kept in books provided for
the purpose the minutes of all meetings of the stockholders, of the Board of
Directors; shall see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law; shall be custodian of the
records and of the seal of the Corporation and see that the seal is affixed to
all documents the execution and delivery of which on behalf of the Corporation
under its seal is duly authorized in accordance with the provisions of these
By-Laws; may sign with the Chairman of the Board, the President or a Vice
President any or all certificates for shares of the capital stock of the
Corporation and all warrants evidencing the right to subscribe to shares of the
capital stock of the Corporation of any class; shall see that the books,
reports, statements, certificates and all other documents and records required
by law are properly kept and filed; and in general the Secretary shall perform
all duties incident to the office of Secretary and such other duties as may from
time to time, be assigned to him by the Board of Directors, or the Chairman of
the Board.
SECTION 6. ASSISTANT SECRETARIES: At the request of the Secretary or in
his absence or disability or failure to act, an Assistant Secretary shall
perform all the duties of the Secretary, and, when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the Secretary. The
Assistant Secretaries shall perform such other duties as from time to time may
be assigned to them by the Board of Directors, the Chairman of the Board, or the
Secretary, and shall be sworn to the faithful discharge of their duties.
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SECTION 7. TREASURER: The Treasurer shall have the custody of all funds,
securities, evidences of indebtedness and other valuable documents of the
Corporation; he shall receive and give or cause to be given, receipts and
acquittances for moneys paid in on account of the Corporation, and shall pay out
of the funds on hand all just debts of the Corporation of whatever nature upon
maturity of the same; he shall enter or caused to be entered in books of the
Corporation to be kept for that purpose full and accurate accounts of all moneys
received and paid out on account of the Corporation, and, whenever required by
the Board of Directors, or the Chairman of the Board, he shall render a
statement of his cash accounts; he shall keep or cause to be kept such other
books as will show the true record of the expenses, losses, gains, assets and
liabilities of the Corporation; he may sign with the Chairman of the Board, the
President or a Vice President any or all certificates for shares of the capital
stock of the Corporation and all warrants evidencing the right to subscribe to
shares of the capital stock of the Corporation of any class; and in general he
shall perform all of the duties incident to the office of Treasurer and such
other duties as may be assigned to him by the Board of Directors, or the
Chairman of the Board.
SECTION 8. ASSISTANT TREASURERS: At the request of the Treasurer or in
his absence or disability or failure to act, an Assistant Treasurer shall
perform all the duties of the Treasurer, and when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the Treasurer. The
Assistant Treasurers shall perform such other duties as from time to time may be
assigned to them by the Board of Directors, the Chairman of the Board or the
Treasurer.
SECTION 9. SALARIES: The salaries or other compensation of the officers
shall be fixed from time to time by the Board of Directors, and no officer shall
be prevented from receiving such salary or other compensation by reason of the
fact that he is also a director of the Corporation.
SECTION 10. REMOVAL OF OFFICERS: Any officer may be removed either with
or without cause, if an executive officer, by the vote of a majority of the
entire Board of Directors, or if not an executive officer, by the vote of a
majority of a quorum of the Board of Directors.
ARTICLE V.
CAPITAL STOCK.
SECTION 1. CERTIFICATES OF STOCK: The Chairman of the Board, the
President or a Vice President shall cause to be issued to each stockholder one
or more certificates under the seal of the Corporation or a facsimile thereof
and signed by, or bearing the facsimile signatures of, the Chairman of the
Board, the President or a Vice President and the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, certifying the number of
shares and the class or classes of such shares owned by such stockholder of the
Corporation.
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The stock record books, including an original or duplicate stock ledger
containing the names and addresses of all stockholders and the number of shares
of each class held by each stockholder, and the blank stock certificate books
shall be kept by the Secretary at the office of the Corporation in the City of
New York, or in Jersey City, New Jersey, or at the offices of such transfer
agent or transfer agents in the City of New York and Jersey City, as the Board
of Directors may from time to time by resolution determine.
SECTION 2. TRANSFER OF SHARES: The shares of stock of the Corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the Corporation by the delivery
thereof to the Secretary or the transfer agent for said shares of stock, or to
such other person as the Board of Directors may designate, by whom such old
certificates shall be canceled, and new certificates shall thereupon be issued.
A record shall be made of each transfer.
SECTION 3. CLOSING BOOKS: The Board of Directors may fix the time, not
exceeding twenty days preceding the date of any meeting of stockholders, any
dividend payment date or any date for the allotment of rights, during which the
books of the Corporation shall be closed against transfers of stock; or, in lieu
thereof, the directors may fix a date, not exceeding such period as may from
time to time be prescribed by Maryland law, preceding the date of any meeting of
stockholders, any dividend payment date or any date for the allotment of rights,
as a record date for the determination of the stockholders entitled to notice of
and to vote at said meeting, or entitled to receive such dividends or such
rights, as the case may be, and only stockholders of record on such date shall
be entitled to notice of and to vote at such meeting or to receive such
dividends or rights as the case may be.
SECTION 4. LOST OR DESTROYED CERTIFICATES: The Board of Directors may
determine the conditions upon which a new certificate of stock or a warrant
evidencing the right to subscribe for shares of the capital stock of the
Corporation of any class or a scrip certificate representing a fraction of the
right to receive a certificate of stock or warrant may be issued in place of a
certificate or warrant or scrip certificate which is alleged to have been lost
or destroyed; and may, in their discretion, require the owner of such
certificate or warrant or scrip certificate or his legal representative to give
bond, with sufficient surety to the Corporation and each transfer or warrant
agent, to indemnify it and each transfer or warrant agent against any and all
loss or claims which may arise by reason of the issue of a new certificate or
warrant or scrip certificate in the place of the one so lost or destroyed.
ARTICLE VI.
CORPORATE SEAL.
The Board of Directors shall provide a suitable corporate seal, in such
form and bearing such inscriptions as it may determine.
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ARTICLE VII.
CHECKS
All checks and notes of the Corporation shall be signed by such officer
or officers as the Board of Directors may from time to time designate.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS.
SECTION 1. FISCAL YEAR: The fiscal year of the Corporation shall be
fixed by the Board of Directors.
SECTION 2. NOTICE AND WAIVER OF NOTICE: Any notice required or permitted
to be given in writing under these By-Laws shall be deemed to be sufficient if
given by mailing the same or a copy thereof, postage prepaid, to the person
entitled thereto, addressed to him at his post office address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given when deposited in the United States mail. Whenever any notice of the time,
place or purpose of any meeting of stockholders, directors or committee is
required to be given under some specific statutory provision or under the
provisions of the Charter or these By-Laws, a waiver thereof in writing, signed
by the person or persons entitled to such notice and filed with the records of
the meeting, whether before or after the holding thereof, or actual attendance
at the meeting in person or by proxy, shall be deemed equivalent to the giving
of such notice to such persons.
SECTION 3. VOTING UPON STOCKS: Unless otherwise ordered by the Board of
Directors, the Chairman of the Board, or in his absence or disability or failure
to act, the President, shall have full power and authority on behalf of the
Corporation to attend and to act and to vote at any meetings of stockholders of
any corporation in which the Corporation may hold stock, and at any such meeting
shall possess, and may exercise, any and all rights, and powers incident to the
ownership of such stock, and which, as the owner thereof, the Corporation may
possess or be entitled to exercise. The Board of Directors, by resolution, from
time to time may confer like powers upon any other person or persons.
SECTION 4. DEFINITION OF "CHARTER OF THE CORPORATION": The term of the
"Charter of the Corporation" whenever used in these By-Laws shall be deemed to
mean the Agreement of Consolidation filed December 31, 1929, forming the
Corporation, and all amendments thereof and all articles supplementary thereto.
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ARTICLE IX.
AMENDMENTS.
The stockholders shall have full power to alter or repeal these By-Laws,
or any provision thereof, at any stated meeting as part of the general business
of such meeting, or at any special meeting where notice of the proposed
alteration or repeal has been given. The Board of Directors may alter or repeal
By-Laws or make by-laws but any by-laws of the Corporation may be altered or
repealed by the stockholders.
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DEFERRED COMPENSATION PLAN FOR DIRECTORS
OF EACH OF:
<TABLE>
<S> <C>
Seligman Capital Fund, Inc. Seligman Income Fund, Inc.
Seligman Cash Management Fund, Inc. Seligman Municipal Fund Series, Inc.
Seligman Common Stock Fund, Inc. Seligman Muncipal Series Trust
Seligman Communications & Seligman New Jersey Municipal Fund, Inc.
Information Fund, Inc. Seligman Pennsylvania Municipal Fund Series
Seligman Frontier Fund, Inc. Seligman Portfolios, Inc.
Seligman Growth Fund, Inc. Seligman Quality Municipal Fund, Inc.
Seligman Henderson Global Fund Series, Inc. Seligman Select Municipal Fund, Inc.
Seligman High Income Fund Series Seligman Value Fund Series, Inc.
Tri-Continental Corporation
</TABLE>
1. Election to Defer Payments. Any member of the Board of
Directors/Trustees of the Fund/Series may elect to have payment of
the director's/trustees' annual retainer or meeting fees or both for
Board service deferred as provided in this Plan. The election shall
be made in writing prior to, and to take effect from, the beginning
of a calendar year, or for any director/trustee in the year in which
this Plan is adopted or for a person elected a director/trustee in
other than the last calendar quarter of a year, prior to, and to take
effect from, the beginning of the calendar quarter next ensuing after
that event. Elections shall continue in effect until terminated in
writing, any such termination to take effect on the first day of the
calendar year beginning after receipt of the notice of termination.
An election shall be irrevocable as to payments deferred in
conformity with that election.
2. Deferred Payment Account. Each deferred retainer or fee shall be
credited at the time when it otherwise would have been payable to an
account to be established in the name of the director/trustee on the
books of the Fund/Series. All amounts in such account, including
interest credited thereto, shall bear interest at a rate equivalent
to the rate of return earned on 90-day Treasury Bills in each
calendar quarter. Such interest shall be credited to the account
quarterly at the end of each calendar quarter. Amounts in the account
shall not be evidenced by any note or other security, funded or
secured in any way.
3. Payment of Deferred Amounts. All amounts credited to an account
pursuant to any election by the director/trustee made as provided in
(1) above shall be paid to the director/trustee.
(a) in, or beginning in, the calendar year following the calendar
year in which the director/trustee ceases to be a
director/trustee of the Fund/Series, or
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(b) in, or beginning in, the calendar year following the earlier
of the calendar year in which the director/trustee ceases to
be a director/trustee of the Fund/Series or attains age 70,
and shall be paid
(c) in a lump sum payable on the first day of the calendar year
in which payment is to be made, or
(d) in 10 or fewer installments, payable on the first day of each
year commencing with the calendar year in which payment is to
begin,
all as the director/trustee shall specify in making the election. If
the payment is to be made in installments, the amount of each
installment shall be equal to a fraction of the total of the amounts
in the account at the date of the payment, the numerator of which
shall be one and the denominator of which shall be the then remaining
number of unpaid installments (including the installment then to be
paid). If the director/trustee dies at any time before all amounts in
the account have been paid, such amounts shall be paid at that time
in a lump sum to the estate of the director/trustee.
4. Assignment. No deferred amount or unpaid portion thereof may be
assigned or transferred by the director/trustee except by will or the
laws of descent and distribution.
5. Withholding Taxes. The Fund/Series shall deduct from all payments any
federal, state or local taxes and other charges required by law to be
withheld with respect to such payments.
6. Amendments and Acceleration. The Board of Directors/Trustees of the
Fund/Series may at any time at its sole discretion accelerate the
payment of any unpaid amount for any or all directors/trustees or
terminate this Plan, provided that no such amendment or termination
shall adversely affect the right of directors/trustees to receive
deferred amounts credited to their account.
Revised: March 19, 1992
March 20, 1997
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CUSTODY AGREEMENT
-----------------
THIS AGREEMENT made the ______ day of ____________ , 19__, by and between
INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of
the state of Missouri, having its trust office located at 127 West 10th Street,
Kansas City, Missouri 64105 ("Custodian"), and TRI-CONTINENTAL CORPORATION, a
Maryland corporation, having its principal office and place of business at One
Bankers Trust Plaza, New York, New York 10006 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
Custodian and Recordkeeper of the securities and monies of Fund and its now
existing and future established portfolios (individually referred to herein as
Portfolio); and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints Custodian as
custodian of the Fund which is to include:
A. Appointment as custodian of the securities and monies at any time owned
by each Portfolio of the Fund; and
B. Appointment as agent to perform certain accounting and recordkeeping
functions required of a duly registered investment company in
compliance with applicable provisions of federal, state, and local
laws, rules and regulations including, as may be required:
1. Providing information necessary for Fund and each Portfolio to file
required financial reports; maintaining and preserving required
books, accounts and records as the basis for such reports; and
performing
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certain daily functions in connection with such accounts and
records, and
2. Calculating daily net asset value of each Portfolio of the Fund,
and
3. Acting as liaison with independent auditors.
2. DELIVERY OF CORPORATE DOCUMENTS. Fund has delivered or will deliver to
Custodian prior to the effective date of this Agreement, copies of the
following documents and all amendments or supplements thereto, properly
certified or authenticated:
A. Resolutions of the Board of Directors of Fund appointing Custodian as
custodian hereunder and approving the form of this Agreement; and
B. Resolutions of the Board of Directors of Fund designating certain
persons to give instructions on behalf of Fund to Custodian and
authorizing Custodian to rely upon such instructions.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
Fund will deliver or cause to be delivered to Custodian on the
effective date of this Agreement, or as soon thereafter as practicable,
and from time to time thereafter, all portfolio securities acquired by
it and monies then owned by it (except as permitted by the Investment
Company Act of 1940) or from time to time coming into its possession
during the time this Agreement shall continue in effect. Custodian
shall have no responsibility or liability whatsoever for or on account
of securities or monies not so delivered. All securities so delivered
to Custodian (other than bearer securities) shall be registered in the
name of Fund or its nominee, or of a nominee of Custodian, or shall be
properly endorsed and in form for transfer satisfactory to Custodian.
B. Delivery of Accounts and Records
Fund shall turn over to Custodian all of the Fund's relevant accounts
and records previously maintained by it. Custodian shall be entitled to
rely conclusively on the completeness and correctness of the accounts
and records turned over to it by Fund, and Fund shall indemnify and
hold Custodian harmless of and from any and all expenses, damages and
losses whatsoever arising out of or in connection with any error,
omission, inaccuracy or other deficiency of such accounts and records
or in the failure of Fund to provide any portion of
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such or to provide any information needed by the Custodian
knowledgeably to perform its function hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the assets of Fund
delivered to it from time to time and the assets of each Portfolio
segregated in a separate account. Custodian will not deliver, assign,
pledge or hypothecate any such assets to any person except as permitted
by the provisions of this Agreement or any agreement executed by it
according to the terms of section 3.S. of this Agreement. Upon delivery
of any such assets to a subcustodian pursuant to Section 3.S. of this
agreement, Custodian will create and maintain records identifying those
assets which have been delivered to the subcustodian as belonging to
the applicable Portfolio of the Fund. The Custodian is responsible for
the safekeeping of the securities and monies of Fund only until they
have been transmitted to and received by other persons as permitted
under the terms of this Agreement, except for securities and monies
transmitted to United Missouri Bank of Kansas City, N.A. (UMBKC),
United Missouri Trust Company of New York (UMBTC), First National Bank
of Chicago (FNBC) for which Custodian remains responsible. Custodian
shall also be responsible for the monies and securities of Fund(s) held
by eligible foreign subcustodians to the extent the domestic custodian
with which the Custodian contracts is responsible to Custodian.
Custodian may participate directly or indirectly through a subcustodian
in the Depository Trust Company, Treasury/Federal Reserve Book Entry
System, Participant Trust Company or other depository approved by the
Fund (as such entities are defined at 17 CFR Section 270.17f-4(b)).
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D. Registration of Securities
Custodian will hold stocks and other registerable portfolio securities
of Fund registered in the name of Fund or its nominee or in the name of
any nominee of Custodian for whose fidelity and liability Custodian
will be fully responsible, or in street certificate form, so-called,
with or without any indication of fiduciary capacity. Unless otherwise
instructed, Custodian will register all such portfolio securities in
the name of its authorized nominee, as defined in the Internal Revenue
Code and any Regulations of the Treasury Department issued thereunder
or in any provision of any subsequent Federal tax law exempting such
transaction from liability for stock transfer taxes. All securities,
and the ownership thereof by a Portfolio of the Fund, which are held by
Custodian hereunder, however, shall at all times be identifiable on the
records of the Custodian. The Fund agrees to hold Custodian and its
nominee harmless for any liability as a record holder of securities
held in custody.
E. Exchange of Securities
Upon receipt of instructions as defined herein in Section 4.A,
Custodian will exchange, or cause to be exchanged, portfolio securities
held by it for the account of the applicable Portfolio of the Fund for
other securities or cash issued or paid in connection with any
reorganization, recapitalization, merger, consolidation, split-up of
shares, change of par value, conversion or otherwise, and will deposit
any such securities in accordance with the terms of any reorganization
or protective plan. Without instructions, Custodian is authorized to
exchange securities held by it in temporary form for securities in
definitive form, to effect an exchange of shares when the par value of
the stock is changed, and, upon receiving payment therefor, to
surrender bonds or other securities held by it at maturity or when
advised of an earlier mandatory call for redemption, except that
Custodian shall receive instructions prior to surrendering any
convertible security. Pursuant to this paragraph, the Custodian will
inform the Fund of such corporate actions and capital changes when it
is informed of them through the publications it subscribes to.
F. Purchases of Investments of the Fund
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Fund will, on each business day on which a purchase of securities shall
be made by it, deliver to Custodian instructions which shall specify
with respect to each such purchase:
1. The name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;
3. The number of shares or the principal amount purchased, and accrued
interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission, taxes and
other expenses payable in connection with the purchase;
7. The total amount payable upon such purchase; and
8. The name of the person from whom or the broker or dealer through
whom the purchase was made.
In accordance with such instructions, Custodian will pay for out of
monies held for the account of such named Portfolio, but only insofar
as monies are available therein for such purpose, and receive the
portfolio securities so purchased by such named Portfolio, except that
Custodian may in its sole discretion advance funds to the Fund which
may result in an overdraft because the monies held by the Custodian on
behalf of the Fund are insufficient to pay the total amount payable
upon such purchase. Such payment will be made only upon receipt by
Custodian of the securities so purchased in form for transfer
satisfactory to Custodian. Custodian agrees to promptly inform Fund of
any failures by sellers to make proper deliveries of securities
purchased by the Fund.
G. Sales and Deliveries of Investments of the Fund - Other than Options
and Futures
Fund will, on each business day on which a sale of investment
securities of Fund has been made, deliver to Custodian instructions
specifying with respect to each such sale:
1. The name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares or principal amount sold, and accrued interest,
if any;
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4. The date on which the securities sold were purchased or other
information identifying the securities sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or
other expenses payable in connection with such sale;
8. The total amount to be received by Fund upon such sale; and
9. The name and address of the broker or dealer through whom or person
to whom the sale was made.
In accordance with such instructions, Custodian will deliver or cause
to be delivered the securities thus designated as sold for the account
of such Portfolio to the broker or other person specified in the
instructions relating to such sale, such delivery to be made only upon
receipt of payment therefor in such form as is satisfactory to
Custodian, with the understanding that Custodian may deliver or cause
to be delivered securities for payment in accordance with the customs
prevailing among dealers in securities. Custodian agrees to promptly
inform Fund of any failures of purchasers to make proper payment for
securities sold by Fund.
H. Purchases or Sales of Security Options, Options on Indices and Security
Index Futures Contracts
Fund will, on each business day on which a purchase or sale of the
following options and/or futures shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase or sale
1. The name of the Portfolio making such purchase or sale;
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
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f. Whether the transaction is an opening, exercising, expiring or
closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer through whom the sale or
purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising, expiring or
closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased;
j. The name and address of the broker or dealer through whom the
sale or purchase was made, or other applicable settlement
instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the contract and, when
available, the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of Custodian,
Fund shall deliver a substantially complete and executed
custodial safekeeping account and
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procedural agreement which shall be incorporated by reference
into this Custody Agreement); and
f. The name and address of the futures commission merchant through
whom the sale or purchase was made, or other applicable
settlement instructions.
5. Option on Index Future Contracts
a. The underlying index futures contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising, expiring
or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. Securities Pledged or Loaned
If specifically allowed for in the prospectus of the applicable
Portfolio of the Fund:
1. Upon receipt of instructions, Custodian will release or cause to be
released securities held in custody to the pledgee designated in
such instructions by way of pledge or hypothecation to secure any
loan incurred by a Portfolio of the Fund; provided, however, that
the securities shall be released only upon payment to Custodian of
the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, further
securities may be released or caused to be released for that purpose
upon receipt of instructions. Upon receipt of instructions,
Custodian will pay, but only from funds available for such purpose,
any such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing such loan.
2. Upon receipt of instructions, Custodian will release securities held
in custody to the borrower designated in such instructions;
provided, however, that the securities
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will be released only upon deposit with Custodian of full cash
collateral as specified in such instructions, and that Fund will
retain the right to any dividends, interest or distribution on such
loaned securities. Upon receipt of instructions and the loaned
securities, Custodian will release the cash collateral to the
borrower.
J. Routine Matters
Custodian will, in general, attend to all routine and mechanical
matters in connection with the sale, exchange, substitution, purchase,
transfer, or other dealings with securities or other property of Fund
except as may be otherwise provided in this Agreement or directed from
time to time by the Board of Directors of Fund.
K. Deposit Account
Custodian will open and maintain a special purpose deposit account(s)
in the name of Custodian on behalf of each Portfolio (Accounts),
subject only to draft or order by Custodian upon receipt of
instructions. All monies received by Custodian from or for the account
of a Portfolio shall be deposited in said Accounts. Barring events not
in the control of the Custodian such as strikes, lockouts or labor
disputes, riots, war or equipment or transmission failure or damage,
fire, flood, earthquake or other natural disaster, action or inaction
of governmental authority or other causes beyond its control, at 9:00
a.m., Kansas City time, on the second business day after deposit of any
check into Fund's Account, Custodian agrees to make Fed Funds available
to the appropriate Portfolio of the Fund in the amount of the check.
Deposits made by Federal Reserve wire will be available to the Fund
immediately and ACH wires will be available to the Fund on the next
business day. Income earned on the portfolio securities will be
credited to the applicable Portfolio of the Fund based on the schedule
attached as Exhibit A, except that income earned on portfolio
securities held by domestic subcustodians other than UMBKC, UMBTC, Bank
of New York (previously Irving Trust Company and hereinafter referred
to as BONY) and Morgan Guaranty and Trust Company (MGT) will be
credited when received. The Custodian will be entitled to reverse any
credited amounts where credits have been made and monies are not
finally collected. If monies are collected after such reversal, the
Custodian will credit the applicable Portfolio in that amount.
Custodian may open and maintain an Account in
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such other banks or trust companies as may be designated by it and by
properly authorized resolution of the Board of Directors of Fund, such
Account, however, to be in the name of Custodian on behalf of the
applicable portfolio of the Fund and subject only to its draft or
order.
L. Income and other Payments to Fund
Custodian will:
1. Collect, claim and receive and deposit for the Account of each
Portfolio of the Fund all income and other payments which become due
and payable on or after the effective date of this Agreement with
respect to the securities deposited under this Agreement, and credit
the account of the applicable Portfolio of the Fund in accordance
with the schedule attached hereto as Exhibit A, except that income
earned on portfolio securities held by domestic subcustodians other
than UMBKC, UMBTC, BONY, and MGT will be credited when received.
Income from foreign securities and assets held by eligible foreign
subcustodians shall be credited by Custodian upon receipt of income
from the domestic subcustodian contracting with the foreign eligible
subcustodians. If, for any reason, the Fund is credited with income
that is not subsequently collected, Custodian may reverse that
credited amount;
2. Execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in connection
with:
a. the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for
payment of:
1. all coupons and other income items requiring presentation; and
2. all other securities which may mature or be called, redeemed,
retired or otherwise become payable and regarding which the
Custodian has actual knowledge, or notice of which is
contained in publications of the type to which a custodian for
investment companies normally subscribes for such purpose; and
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b. the endorsement for collection, in the name of the applicable
Portfolio of the Fund, of all checks, drafts or other
negotiable instruments.
Custodian, however, will not be required to institute suit or take
other extraordinary action to enforce collection except upon receipt of
instructions and upon being indemnified to its satisfaction against the
costs and expenses of such suit or other actions. Custodian will
receive, claim and collect all stock dividends, rights and other
similar items and will deal with the same pursuant to instructions.
Unless prior instructions have been received to the contrary, Custodian
will, without further instructions, sell any rights held for the
account of Fund on the last trade date prior to the date of expiration
of such rights.
M. Payment of Dividends and other Distributions
On the declaration of any dividend or other distribution on the shares
of Capital Stock of any Portfolio ("Portfolio Shares") by the Board of
Directors of Fund, Fund shall deliver to Custodian instructions with
respect thereto, including a copy of the Resolution of said Board of
Directors certified by the Secretary or an Assistant Secretary of Fund
wherein there shall be set forth the record date as of which
shareholders entitled to receive such dividend or other distribution
shall be determined, the date of payment of such dividend or
distribution, and the amount payable per share on such dividend or
distribution. Except if the ex-dividend date and the reinvestment date
of any dividend are the same, in which case funds shall remain in the
Custody Account, on the date specified in such Resolution for the
payment of such dividend or other distribution, Custodian will pay out
of the monies held for the account of the applicable Portfolio of the
Fund, insofar as the same shall be available for such purposes, and
wire to the account of the Dividend Disbursing Agent for Fund, such
amount as may be necessary to pay the amount per share payable in cash
on Portfolio Shares issued and outstanding on the record date
established by such Resolution.
N. Shares of Fund Purchased by Fund
Whenever any Portfolio Shares are repurchased or redeemed by Fund, Fund
or its agent shall advise Custodian of the aggregate dollar amount to
be paid for such shares and shall confirm such advice in writing. Upon
receipt of such advice, Custodian shall charge such aggregate dollar
amount to the Account of Portfolio and either deposit the same in the
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account maintained for the purpose of paying for the repurchase or
redemption of Portfolio Shares or deliver the same in accordance with
such advice.
Custodian shall not have any duty or responsibility to determine that
Fund Shares have been removed from the proper shareholder account or
accounts or that the proper number of such shares have been canceled
and removed from the shareholder records.
O. Shares of Fund Purchased from Fund
Whenever Portfolio Shares are purchased from Fund, Fund will deposit or
cause to be deposited with Custodian the amount received for such
shares. Custodian shall not have any duty or responsibility to
determine that Portfolio Shares purchased from Fund have been added to
the proper shareholder account or accounts or that the proper number of
such shares have been added to the shareholder records.
P. Proxies and Notices
Custodian will promptly deliver or mail or have delivered or mailed to
Fund all proxies properly signed, all notices of meetings, all proxy
statements and other notices, requests or announcements affecting or
relating to securities held by Custodian for Fund and will, upon
receipt of instructions, execute and deliver or cause its nominee to
execute and deliver or mail or have delivered or mailed such proxies or
other authorizations as may be required. Except as provided by this
Agreement or pursuant to instructions hereafter received by Custodian,
neither it nor its nominee will exercise any power inherent in any such
securities, including any power to vote the same, or execute any proxy,
power of attorney, or other similar instrument voting any of such
securities, or give any consent, approval or waiver with respect
thereto, or take any other similar action.
Q. Disbursements
Custodian will pay or cause to be paid insofar as funds are available
for the purpose, bills, statements and other obligations of Fund
(including but not limited to obligations in connection with the
conversion, exchange or surrender of securities owned by Fund, interest
charges, dividend disbursements, taxes, management fees, custodian
fees, legal fees, auditors' fees, transfer agents' fees, brokerage
commissions, compensation to personnel, and other operating expenses of
Fund) pursuant to instructions of Fund setting
12
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<PAGE>
forth the name of the person to whom payment is to be made, the amount
of the payment, and the purpose of the payment.
R. Daily Statement of Accounts
Custodian will, within a reasonable time, render to Fund as of the
close of business on each day, a detailed statement of the amounts
received or paid and of securities received or delivered for the
account of Fund during said day. Custodian will, from time to time,
upon request by Fund, render a detailed statement of the securities and
monies held for Fund under this Agreement, and Custodian will maintain
such books and records as are necessary to enable it to do so and will
permit such persons as are authorized by Fund including Fund's
independent public accountants, access to such records or confirmation
of the contents of such records; and if demanded, will permit federal
and state regulatory agencies to examine the securities, books and
records. Upon the written instructions of Fund or as demanded by
federal or state regulatory agencies, Custodian will instruct any
subcustodian to give such persons as are authorized by Fund including
Fund's independent public accountants, access to such records or
confirmation of the contents of such records; and if demanded, to
permit federal and state regulatory agencies to examine the books,
records and securities held by subcustodian which relate to Fund. Fund
will be entitled to receive reports produced by the Custodian's
portfolio accounting system, including without limitation, those listed
on Exhibit C hereof.
S. Appointment of Subcustodians
1. Notwithstanding any other provisions of this Agreement, all of or
any of the monies or securities of Fund may be held in Custodian's
own custody or in the custody of one or more other banks or trust
companies selected by Custodian and approved by the Fund's Board of
Directors. Any such subcustodian must have the qualifications
required for custodian under the Investment Company Act of 1940, as
amended. The subcustodian may participate directly or indirectly in
the Depository Trust Company, Treasury/Federal Reserve Book Entry
System, Participant Trust Company or other depository approved by
the Fund (as such entities are defined at 17 CFR Sec. 270.17f-4(b)).
The appointment of UMBKC or
13
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<PAGE>
any other subcustodian, depository or clearing agency used by the
Custodian and approved by the Fund will not relieve Custodian of any
of its obligations hereunder except as provided in Section 3.C
hereof. The Custodian will comply with Section 17f-4 of the
Investment Company Act of 1940, as amended, as to depositories and
clearing agencies used by Custodian and approved the Fund. The
Custodian will not be entitled to reimbursement by Fund for any fees
or expenses of any subcustodian, depository or clearing agency.
2. Notwithstanding any other provisions of this Agreement, Fund's
foreign securities (as defined in Rule 17f-5(c)(1) under the
Investment Company Act of 1940) and Fund's cash or cash equivalents,
in amounts reasonably necessary to effect Fund's foreign securities
transactions, may be held in the custody of one or more banks or
trust companies acting as subcustodians, according to Section 3.S.1;
and thereafter, pursuant to a written contract or contracts as
approved by Fund's Board of Directors, may be transferred to an
account maintained by such subcustodian with an eligible foreign
custodian, as defined in Rule 17f-5(c)(2), provided that any such
arrangement involving a foreign custodian shall be in accordance
with the provisions of Rule 17f-5 under the Investment Company Act
of 1940 as that Rule may be amended from time to time.
T. Accounts and Records
Custodian, with the direction and as interpreted by the Fund, Fund's
accountants and/or other tax advisors, will prepare and maintain as
complete, accurate and current all accounts and records required to be
maintained by Fund under the Internal Revenue Code of 1986 ("Code") as
amended and under the general Rules and Regulations under the
Investment Company Act of 1940 ("Rules") as amended, and as agreed upon
between the parties and will preserve said records in the manner and
for the periods prescribed in said Code and Rules, or for such longer
period as is agreed upon by the parties.
Custodian relies upon Fund to furnish, in writing, accurate and timely
information to complete Fund's records and perform daily calculation of
the Fund's net asset value, as provided in Section 3.W. below.
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<PAGE>
Custodian shall incur no liability and Fund shall indemnify and hold
harmless Custodian from and against any liability arising from any
failure of Fund to furnish such information in a timely and accurate
manner, even if Fund subsequently provides accurate but untimely
information. It shall be the responsibility of Fund to furnish
Custodian with the declaration, record and payment dates and amounts of
any dividends or income and any other special actions required
concerning each of its securities when such information is not readily
available from generally accepted securities industry services or
publications.
U. Accounts and Records Property of Fund
Custodian acknowledges that all of the accounts and records maintained
by Custodian pursuant to this Agreement are the property of Fund, and
will be made available to Fund for inspection or reproduction within a
reasonable period of time, upon demand. Custodian will assist Fund's
independent auditors, or upon approval of Fund, or upon demand, any
regulatory body having jurisdiction over the Fund or Custodian, in any
requested review of Fund's accounts and records but shall be reimbursed
for all expenses and employee time invested in any such review outside
of routine and normal periodic reviews. Upon receipt from Fund of the
necessary information, Custodian will supply necessary data for Fund's
completion of any necessary tax returns, questionnaires, periodic
reports to Shareholders and such other reports and information requests
as Fund and Custodian shall agree upon from time to time.
V. Adoption of Procedures
Custodian and Fund may from time to time adopt procedures as they agree
upon, and Custodian may conclusively assume that no procedure approved
by Fund, or directed by Fund, conflicts with or violates any
requirements of its prospectus, "Articles of Incorporation", Bylaws, or
any rule or regulation of any regulatory body or governmental agency.
Fund will be responsible to notify Custodian of any changes in
statutes, regulations, rules or policies which might necessitate
changes in Custodian's responsibilities or procedures.
W. Calculation of Net Asset Value
15
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<PAGE>
Custodian will calculate Fund's net asset value, in accordance with
Fund's prospectus, once daily. Custodian will prepare and maintain a
daily evaluation of securities for which market quotations are
available by the use of outside services normally used and contracted
for this purpose; all other securities will be evaluated in accordance
with Fund's instructions. Custodian will have no responsibility for the
accuracy of the prices quoted by these outside services or for the
information supplied by Fund or upon instructions.
X. Overdrafts
If Custodian shall in its sole discretion advance funds to the account
of the Fund which results in an overdraft because the monies held by
Custodian on behalf of the Fund are insufficient to pay the total
amount payable upon a purchase of securities as specified in Fund's
instructions or for some other reason, the amount of the overdraft
shall be payable by the Fund to Custodian upon demand and shall bear an
interest rate determined by Custodian from the date advanced until the
date of payment. Custodian shall have a lien on the assets of the Fund
in the amount of any outstanding overdraft.
16
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<PAGE>
4. INSTRUCTIONS.
A. The term "instructions", as used herein, means written or facsimile
instructions or advice to Custodian from two designated representatives
of Fund. Certified copies of resolutions of the Board of Directors of
Fund naming two or more designated representatives to give instructions
in the name and on behalf of Fund, may be received and accepted from
time to time by Custodian as conclusive evidence of the authority of
any two designated representatives to act for Fund and may be
considered to be in full force and effect (and Custodian will be fully
protected in acting in reliance thereon) until receipt by Custodian of
notice to the contrary. Unless the resolution delegating authority to
any person to give instructions specifically requires that the approval
of anyone else will first have been obtained, Custodian will be under
no obligation to inquire into the right of the person giving such
instructions to do so. Notwithstanding any of the foregoing provisions
of this Section 4. no authorizations or instructions received by
Custodian from Fund, will be deemed to authorize or permit any
director, trustee, officer, employee, or agent of Fund to withdraw any
of the securities or similar investments of Fund upon the mere receipt
of such authorization or instructions from such director, trustee,
officer, employee or agent.
Notwithstanding any other provision of this Agreement, Custodian, upon
receipt (and acknowledgement if required at the discretion of
Custodian) of the instructions of any two designated representatives of
Fund, will undertake to deliver for Fund's account monies, (provided
such monies are on hand or available) in connection with Fund's
transactions and to wire transfer such monies to such broker, dealer,
subcustodian, bank or other agent specified in such instructions.
B. If oral instructions are permitted pursuant to Section 4.A. hereunder,
no later than the next business day immediately following such oral
instruction the Fund will send Custodian written confirmation of such
oral instruction. At Custodian's sole discretion, Custodian may record
on tape, or otherwise, any oral instruction whether given in person or
via telephone, each such recording identifying the parties, the date
and the time of the beginning and ending of such oral instruction.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
17
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<PAGE>
A. Custodian shall hold harmless and indemnify Fund from and against any
loss or liability arising out of Custodian's failure to comply with the
terms of this Agreement or arising out of Custodian's negligence or bad
faith. Custodian may request and obtain the advice and opinion of
counsel for Fund, or of its own counsel with respect to questions or
matters of law, and it shall be without liability to Fund for any
action taken or omitted by it in good faith, in conformity with such
advice or opinion. If Custodian reasonably believes that it could not
prudently act according to the instructions of the Fund or the Fund's
counsel, it may in its discretion, with notice to the Fund, not act
according to such instructions.
B. Custodian may rely upon the advice of Fund and upon statements of
Fund's public accountants and other persons believed by it in good
faith, to be expert in matters upon which they are consulted, and
Custodian shall not be liable for any actions taken, in good faith,
upon such statements.
C. If Fund requires Custodian in any capacity to take, with respect to any
securities, any action which involves the payment of money by it, or
which in Custodian's opinion might make it or its nominee liable for
payment of monies or in any other way, Custodian, upon notice to Fund
given prior to such actions, shall be and be kept indemnified by Fund
in an amount and form satisfactory to Custodian against any liability
on account of such action.
D. Custodian shall be protected in acting as custodian hereunder upon any
instructions, advice, notice, request, consent, certificate or other
instrument or paper reasonably appearing to it to be genuine and to
have been properly executed and shall, unless otherwise specifically
provided herein, be entitled to receive as conclusive proof of any fact
or matter required to be ascertained from Fund hereunder, a certificate
signed by the Fund's President, or other officer specifically
authorized for such purpose.
E. Without limiting the generality of the foregoing, Custodian shall be
under no duty or obligation to inquire into, and shall not be liable
for:
1. The validity of the issue of any securities purchased by or for
Fund, the legality of the purchase thereof or evidence of ownership
required by Fund to be received by Custodian, or the propriety of
the decision to purchase or amount paid therefor;
18
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<PAGE>
2. The legality of the sale of any securities by or for Fund, or the
propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any shares of the Capital Stock
of Fund, or the sufficiency of the amount to be received therefor;
4. The legality of the repurchase or redemption of any Fund Shares, or
the propriety of the amount to be paid therefor; or
5. The legality of the declaration of any dividend by Fund, or the
legality of the issue of any Fund Shares in payment of any stock
dividend.
F. Custodian shall not be liable for, or considered to be Custodian of,
any money represented by any check, draft, wire transfer, clearing
house funds, uncollected funds, or instrument for the payment of money
received by it on behalf of Fund, until Custodian actually receives
such money, provided only that it shall advise Fund promptly if it
fails to receive any such money in the ordinary course of business, and
use its best efforts and cooperate with Fund toward the end that such
money shall be received.
G. Custodian shall not be responsible for loss occasioned by the acts,
neglects, defaults or insolvency of any broker, bank, trust company, or
any other person with whom Custodian may deal in the absence of
negligence, or bad faith on the part of Custodian, except as provided
in Section 3.S.1 hereof.
H. Notwithstanding anything herein to the contrary, Custodian may, and
with respect to any foreign subcustodian appointed under Section 3.S.2.
must, provide Fund for its approval, agreements with banks or trust
companies which will act as subcustodians for Fund pursuant to Section
3.S of this Agreement.
6. COMPENSATION. Fund will pay to Custodian such compensation as is stated in
the Fee Schedule attached hereto as Exhibit B which may be changed from
time to time as agreed to in writing by Custodian and Fund. Custodian may
charge such compensation against monies held by it for the account of Fund.
Custodian will also be entitled, notwithstanding the provisions of Sections
5.C. or 5.D. hereof, to charge against any monies held by it for the
account of Fund the amount of any loss, damage, liability, advance, or
expense for which it shall be entitled to reimbursement under the
provisions of this Agreement including fees or expenses due to Custodian
for other services
19
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<PAGE>
provided to the Fund by the Custodian. Custodian will not be entitled to
reimbursement by Fund for any loss or expenses of any subcustodian.
7. TERMINATION. Either party to this Agreement may terminate the same by
notice in writing, delivered or mailed, postage prepaid, to the other party
hereto and received not less than ninety (90) days prior to the date upon
which such termination will take effect. If the Custodian terminates this
Agreement, the Fund may extend the effective date of the termination ninety
(90) days by written request to the Custodian thirty (30) days prior to the
end of the initial ninety (90) days notice period unless the Custodian in
good faith could not perform the duties hereunder. Upon termination of this
Agreement, Fund will pay to Custodian such compensation for its
reimbursable disbursements, costs and expenses paid or incurred to such
date and Fund will use its best efforts to obtain a successor custodian.
Unless the holders of a majority of the outstanding shares of "Capital
Stock" of Fund vote to have the securities, funds and other properties held
under this Agreement delivered and paid over to some other person, firm or
corporation specified in the vote, having not less the Two Million Dollars
($2,000,000) aggregate capital, surplus and undivided profits, as shown by
its last published report, and meeting such other qualifications for
custodian as set forth in the Bylaws of Fund, the Board of Directors of
Fund will, forthwith upon giving or receiving notice of termination of this
Agreement, appoint as successor custodian a bank or trust company having
such qualifications. Custodian will, upon termination of this Agreement,
deliver to the successor custodian so specified or appointed, at
Custodian's office, all securities then held by Custodian hereunder, duly
endorsed and in form for transfer, all funds and other properties of Fund
deposited with or held by Custodian hereunder, or will co-operate in
effecting changes in book-entries at the Depository Trust Company or in the
Treasury/Federal Reserve Book-Entry System pursuant to 31 CFR Sec. 306.118.
In the event no such vote has been adopted by the stockholders of Fund and
no written order designating a successor custodian has been delivered to
Custodian on or before the date when such termination becomes effective,
then Custodian will deliver the securities, funds and properties of Fund to
a bank or trust company at the selection of Custodian and meeting the
qualifications for custodian, if any, set forth in the Bylaws of Fund and
having not less that Two Million Dollars ($2,000,000) aggregate capital,
surplus and undivided profits, as shown by its last published report. Upon
either such delivery to a successor custodian, Custodian will have no
20
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<PAGE>
further obligations or liabilities under this Agreement. Thereafter such
bank or trust company will be the successor custodian under this Agreement
and will be entitled to reasonable compensation for its services. In the
event that no such successor custodian can be found, Fund will submit to
its shareholders, before permitting delivery of the cash and securities
owned by Fund to anyone other than a successor custodian, the question of
whether Fund will be liquidated or function without a custodian.
Notwithstanding the foregoing requirement as to delivery upon termination
of this Agreement, Custodian may make any other delivery of the securities,
funds and property of Fund which is permitted by the Investment Company Act
of 1940, Fund's Certificate of Incorporation and Bylaws then in effect or
apply to a court of competent jurisdiction for the appointment of a
successor custodian.
8. NOTICES. Notices, requests, instructions and other writings received by
Fund at One Bankers Trust Plaza, New York, New York 10006 such other
address as Fund may have designated to Custodian in writing, will be deemed
to have been properly given to Fund hereunder; and notices, requests,
instructions and other writings received by Custodian at its offices at 127
West 10th Street, Kansas City, Missouri 64105, or to such other address as
it may have designated to Fund in writing, will be deemed to have been
properly given to Custodian hereunder.
9. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of Missouri and
shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective successor
and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any
manner except by a written agreement properly authorized and executed
by both parties hereto.
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
E. This Agreement shall become effective at the close of business on the
_____ day of ______________ , 19__ .
21
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<PAGE>
F. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the courts held
to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be
construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be illegal or invalid.
H. Custodian will not release the identity of Fund to an issuer which
requests such information pursuant to the Shareholder Communications
Act of 1985 for the specific purpose of direct communications between
such issuer and Fund unless the Fund directs the Custodian otherwise.
I. This Agreement may not be assigned by either party without prior
written consent of the other party.
J. If any provision of the Agreement, either in its present form or as
amended from time to time, limits, qualifies, or conflicts with the
Investment Company Act of 1940 and the rules and regulations
promulgated thereunder, such statutes, rules and regulations shall be
deemed to control and supersede such provision without nullifying or
terminating the remainder of the provisions of this Agreement.
22
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly respective authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
-------------------------------
Gerard P. Dipoto, Jr.
Senior Vice President
ATTEST:
- ---------------------------
Cheryl J. Naegler
Assistant Secretary
TRI-CONTINENTAL CORPORATION
By:
------------------------------
Title:
---------------------------
ATTEST:
- ---------------------------
Secretary
23
<PAGE>
<PAGE>
April 23, 1997
Tri-Continental Corporation,
100 Park Avenue,
New York, New York 10017.
Dear Sirs:
In connection with the registration under the Securities Act
of 1933, as amended (the "Act"), of 1,800,000 shares (the "Securities") of
Common Stock, par value $0.50 per share, of Tri-Continental Corporation, a
Maryland corporation (the "Corporation"), we, as your counsel, have examined
such corporate records, certificates and other documents, and such questions of
law, as we have considered necessary or appropriate for the purposes of this
opinion.
Upon the basis of such examination, we advise you that, in our
opinion, when the registration statement relating to the Securities (the
"Registration Statement") has become effective under the Act, the terms of the
sale of the Securities have been duly established in conformity with
Corporation's Articles of Incorporation and By-Laws, and the Securities have
been duly issued and sold as contemplated by the Registration Statement, the
Securities will be validly issued, fully paid and nonassessable.
<PAGE>
<PAGE>
Tri-Continental Corporation - 2 -
The foregoing opinion is limited to the Federal laws of the
United States and the General Corporation Law of the State of Maryland, and we
are expressing no opinion as to the effect of the laws of any other
jurisdiction.
We have relied as to certain matters on information obtained
from public officials, officers of the Corporation and other sources believed by
us to be responsible.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act.
Very truly yours,
/SULLIVAN & CROMWELL/
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
Tri-Continental Corporation:
We consent to the use in Amendment No. 26 to Registration Statement No. 33-02583
of our report dated January 31, 1997, appearing in the Annual Report to
Shareholders for the year ended December 31, 1996, incorporated by reference in
the Statement of Additional Information, and to the reference to us under the
caption "Financial Highlights" in the Prospectus, which is also part of such
Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
New York, New York
April 21, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 2200386
<INVESTMENTS-AT-VALUE> 2856359
<RECEIVABLES> 7983
<ASSETS-OTHER> 11332
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2875674
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3011
<TOTAL-LIABILITIES> 3011
<SENIOR-EQUITY> 37637
<PAID-IN-CAPITAL-COMMON> 2100565
<SHARES-COMMON-STOCK> 96837
<SHARES-COMMON-PRIOR> 89512
<ACCUMULATED-NII-CURRENT> 1362
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 77104
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 655995
<NET-ASSETS> 2872663
<DIVIDEND-INCOME> 64768
<INTEREST-INCOME> 13779
<OTHER-INCOME> 159
<EXPENSES-NET> (16885)
<NET-INVESTMENT-INCOME> 61821
<REALIZED-GAINS-CURRENT> 272984
<APPREC-INCREASE-CURRENT> 161340
<NET-CHANGE-FROM-OPS> 496145
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (61339)
<DISTRIBUTIONS-OF-GAINS> (246857)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1286
<NUMBER-OF-SHARES-REDEEMED> (2017)
<SHARES-REINVESTED> 8056
<NET-CHANGE-IN-ASSETS> 365878
<ACCUMULATED-NII-PRIOR> 880
<ACCUMULATED-GAINS-PRIOR> 50977
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11136
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16885
<AVERAGE-NET-ASSETS> 2711983
<PER-SHARE-NAV-BEGIN> 27.58
<PER-SHARE-NII> .68
<PER-SHARE-GAIN-APPREC> 4.42
<PER-SHARE-DIVIDEND> (.68)
<PER-SHARE-DISTRIBUTIONS> (2.72)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 29.28
<EXPENSE-RATIO> .62
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 20th day of March, 1997.
/s/ John R. Galvin (L.S.)
------------------
John R. Galvin
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, her
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in her name and stead, in her capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 20th day of March, 1997.
/s/ Alice S. Ilchman (L.S.)
--------------------
Alice S. Ilchman
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 20th day of March, 1997.
/s/ Frank A. McPherson (L.S.)
----------------------
Frank A. McPherson
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 20th day of March, 1997.
/s/ John E. Merow (L.S.)
-----------------
John E. Merow
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, her
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in her name and stead, in her capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 20th day of March, 1997.
/s/ Betsy S. Michel (L.S.)
-------------------
Betsy S. Michel
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 1st day of April, 1997.
/s/ William C. Morris (L.S.)
---------------------
William C. Morris
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 31st day of March, 1997.
/s/ James C. Pitney (L.S.)
-------------------
James C. Pitney
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 20th day of March, 1997.
/s/ James Q. Riordan (L.S.)
--------------------
James Q. Riordan
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 1st day of April, 1997.
/s/ Ronald T. Schroeder (L.S.)
-----------------------
Ronald T. Schroeder
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 20th day of March, 1997.
/s/ Robert L. Shafer (L.S.)
--------------------
Robert L. Shafer
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 20th day of March, 1997.
/s/ James N. Whitson (L.S.)
--------------------
James N. Whitson
<PAGE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of TRI-CONTINENTAL
CORPORATION, a Maryland corporation, which proposes to file with the Securities
and Exchange Commission an Amendment to Registration Statement on Form N-1A and
further amendments thereto, as necessary, under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, hereby constitutes and appoints
William C. Morris and Brian T. Zino, and each of them individually, his
attorneys-in-fact and agent, with full power of substitution and resubstitution,
for in his name and stead, in his capacity as such director, to sign and file
such Amendment to Registration Statement or further amendments thereto, and any
and all applications or other documents to be filed with the Securities and
Exchange Commission pertaining thereto, with full power and authority to do and
perform all acts and things requisite and necessary to be done on the premises.
Executed this 1st day of April, 1997.
/s/ Brian T. Zino (L.S.)
-----------------
Brian T. Zino
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