STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
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, 1998,
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
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Page
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Additional Investment Objectives and
Policies....................................... 2
(See "Investment and other Policies" in the
Prospectus)
Directors and Officers......................... 4
Management..................................... 9
(See "Management of the Corporation" in the
Prospectus)
Experts....................................... 9
Custodian, Stockholder Service Agent
and Dividend Paying Agent................... 9
Brokerage Commissions......................... 9
Incorporation of Financial Statements by
Reference................................... 10
Independent Auditors' Report on
Financial Highlights - Senior Securities -
$2.50 Cumulative Preferred Stock............ 11
Appendix...................................... 12
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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 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,
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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 Manager 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
Manager 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 Manager believes that it is important to have the flexibility to
enter into such forward contracts when it determines that the best interests of
the Corporation will be served.
At the maturity of a forward contract, the Corporation may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of the forward contract.
Accordingly, it may be necessary for the Corporation to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security is less than the
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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 Manager. It also should be realized that this method of hedging against a
decline in the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a rate of exchange at
a future date. Additionally, although such contracts tend to minimize the risk
of loss due to a decline in the value of a hedged currency, at the same time,
they tend to limit any potential gain which might result from an increase in the
value of that currency.
Stockholders should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
are buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Corporation at one rate, while offering a lesser rate of
exchange should the Corporation desire to resell that currency to the dealer.
Investment income received by the Corporation from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Corporation to a reduced rate of such taxes or exemption from taxes
on such income. It is impossible to determine the effective rate of foreign tax
in advance since the amounts of the Corporation's assets to be invested within
various countries is not known.
DIRECTORS AND OFFICERS
A listing of the directors and officers of the Corporation and their business
experience for the past five years follows. An asterisk (*) indicates directors
who are "interested persons" of the Corporation (as defined by the Investment
Company Act of 1940 (the "1940 Act"). Unless otherwise noted, the address of
each director and officer is 100 Park Avenue, New York, NY 10017.
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WILLIAM C. MORRIS* Director, Chairman of the Board, Chief
(60) Executive Officer and Chairman of the Executive
Committee
Chairman, J. & W. Seligman & Co. Incorporated,
investment managers and advisers; Chairman and
Chief Executive Officer, the Seligman Group of
Investment Companies; Chairman, Seligman
Financial Services, Inc., broker/dealer;
Seligman Services, Inc., broker/dealer; and
Carbo Ceramics Inc., ceramic proppants for oil
and gas industry; Director, 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
Advisors, Inc., advisers; Seligman Holdings,
Inc., holding company; Seligman Securities,
Inc., broker/dealer; and J. & W. Seligman Trust
Company, trust company.
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BRIAN T. ZINO* Director, President and Member of the Executive
(45) Committee
Director and President, J. & W. Seligman & Co.
Incorporated, investment managers and 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 Seligman Henderson Co.,
adviser; formerly, Director, Seligman Advisors,
Inc., advisers; Seligman Securities, Inc.,
broker/dealer and J. & W. Seligman Trust
Company, trust company.
RICHARD R. SCHMALTZ* Director and Member of the Executive Committee
(57)
Director and Managing Director, Director of
Investments, J. & W. Seligman & Co.
Incorporated; Director of Seligman Henderson
Co. and Trustee Emeritus of Colby College;
formerly, Director, Investment Research at
Neuberger & Berman from May 1993 to September
1996 and Executive Vice President of McGlinn
Capital from July 1987 to May 1993.
JOHN R. GALVIN Director
(68)
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;
National Committee on U.S.-China Relations,
National Defense University; the Institute for
Defense Analysis; and Raytheon Co.,
electronics; formerly, Director, USLIFE
Corporation, life insurance; Ambassador, U.S.
State Department for negotiations in Bosnia;
Distinguished Policy Analyst at Ohio State
University and Olin Distinguished Professor of
National Security Studies at the United States
Military Academy. From June, 1987 to June,
1992, he was the Supreme Allied Commander,
Europe and the Commander-in-Chief, United
States European Command. Tufts University,
Packard Avenue, Medford, MA 02105.
ALICE S. ILCHMAN Director
(63)
President, Sarah Lawrence College; Director or
Trustee, the Seligman Group of Investment
Companies; and the Committee for Economic
Development; Chairman, The Rockefeller
Foundation, charitable foundation; formerly,
Trustee, The Markle Foundation, philanthropic
organization; and Director, NYNEX, telephone
company; and International Research and
Exchange Board, intellectual exchanges. Sarah
Lawrence College, Bronxville, New York 10708
FRANK A. McPHERSON Director
(65)
Director, various corporations; Director or
Trustee, the Seligman Group of Investment
Companies; Kimberly-Clark Corporation, consumer
products; Bank of Oklahoma Holding Company;
Baptist Medical Center; Oklahoma Chapter of the
Nature Conservancy; Oklahoma Medical Research
Foundation; and National Boys and Girls Clubs
of America; and a Member of the Business
Roundtable and National Petroleum Council;
formerly, Chairman of the Board and Chief
Executive Officer, Kerr-McGee Corporation,
energy; Chairman of Oklahoma City Public
Schools Foundation; and Director, Federal
Reserve System's Kansas City Reserve Bank; and
the Oklahoma City Chamber of Commerce.
123 Robert S. Kerr Avenue, Oklahoma City, OK
73102
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JOHN E. MEROW Director
(68)
Retired Chairman and Senior Partner, Sullivan &
Cromwell, law firm; Director or Trustee, the
Seligman Group of Investment Companies;
Commonwealth Industries, Inc., manufacturer of
aluminum sheet products; the Foreign Policy
Association; the Municipal Art Society of New
York; the U.S. Council for International
Business; and The New York and Presbyterian
Hospital; Chairman, American Australian
Association; and The New York and Presbyterian
Hospital Care Network, Inc.; Vice-Chairman, the
U.S.-New Zealand Council; a Member of the
American Law Institute and the Council on
Foreign Relations. 125 Broad Street, New York,
NY 10004
BETSY S. MICHEL Director
(55)
Attorney; Director or Trustee, the Seligman
Group of Investment Companies; Trustee, The
Geraldine R. Dodge Foundation, charitable
foundation; 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
(71)
Retired Partner, Pitney, Hardin, Kipp & Szuch,
law firm; Director or Trustee, the Seligman
Group of Investment Companies; and Director,
Public Broadcasting Service (PBS); formerly,
Director, Public Service Enterprise Group,
public utility.
Park Avenue at Morris County, P.O. Box 1945,
Morristown, NJ 07962-1945
JAMES Q. RIORDAN Director
(70)
Director, various corporations; Director or
Trustee, the Seligman Group of Investment
Companies; The Brooklyn Museum; The Brooklyn
Union Gas Company; The Committee for Economic
Development; and Public Broadcasting Service
(PBS); formerly, Co-Chairman of the Policy
Council of the Tax Foundation; Director and
Vice Chairman, Mobil Corporation; Director,
Tesoro Petroleum Companies; Dow Jones & Co.
Inc.; and Director and President, Bekaert
Corporation. 675 Third Avenue, Suite 3004, New
York, NY 10017
ROBERT L. SHAFER Director
(65)
Director, various organizations, Director or
Trustee, the Seligman Group of Investment
Companies; formerly, Vice President, Pfizer
Inc., pharmaceuticals; and Director, USLIFE
Corporation, life insurance.
235 East 42nd Street, New York, NY 10017
JAMES N. WHITSON Director
(63)
Director, Sammons Enterprises, Inc.; Director
or Trustee, the Seligman Group of Investment
Companies; C-SPAN; and CommScope, Inc.,
manufacturer of coaxial cables; formerly,
Executive Vice President and Chief Operating
Officer, Sammons Enterprises, Inc.; and
Director, Red Man Pipe and Supply Company,
piping and other materials. 5949 Sherry Lane,
Suite 1900, Dallas, TX 75225
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CHARLES C. SMITH, JR. Vice President and Portfolio Manager
(41)
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.
CHARLES W. KADLEC Vice President
(52)
Managing Director, J. & W. Seligman & Co.
Incorporated, investment managers and advisers;
Chief Investment Strategist, Seligman Financial
Services, Inc., broker/dealer.
LAWRENCE P. VOGEL Vice President
(41)
Senior Vice President, Finance, J. & W.
Seligman & Co. Incorporated, investment
managers and advisers; Seligman Financial
Services, Inc., broker/dealer; and Seligman
Data Corp., shareholder service agent; Vice
President, the Seligman Group of Investment
Companies and Seligman Services, Inc.,
broker/dealer; Treasurer, Seligman Henderson
Co., advisers; formerly, Senior Vice President,
Seligman Advisors, Inc., advisers; and
Treasurer, Seligman Holdings, Inc., holding
company.
FRANK J. NASTA Secretary
(33)
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
Financial Services, Inc., broker/dealer;
Seligman Henderson Co., advisers; Seligman
Services, Inc., broker/dealer; and Seligman
Data Corp., shareholder service agent;
formerly, Senior Vice President, Law and
Regulation, and Corporate Secretary, Seligman
Advisors, Inc., advisers; and an attorney at
Seward & Kissel, law firm.
THOMAS G. ROSE Treasurer
(40)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp., shareholder
service agent.
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Compensation Table
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Pension or
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as part of from Corporation and
Name and Position with Corporation from Corporation(1) Corporation Expenses Fund Complex(1)(2)
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William C. Morris, Director and
Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
Richard R. Schmaltz, Director N/A N/A N/A
Fred E. Brown, Director Emeritus** N/A N/A N/A
John R. Galvin, Director $19,600.00 N/A $69,000.00
Alice S. Ilchman, Director 18,000.00 N/A 65,000.00
Frank A. McPherson, Director 18,400.00 N/A 66,000.00
John E. Merow, Director 18,000.00 N/A 65,000.00
Betsy S. Michel, Director 19,600.00 N/A 69,000.00
James C. Pitney, Director 17,600.00 N/A 64,000.00
James Q. Riordan, Director 18,800.00 N/A 67,000.00
Robert L. Shafer, Director 18,800.00 N/A 67,000.00
James N. Whitson, Director 19,200.00(d) N/A 68,000.00(d)
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(1) Based on remuneration received by the Directors of the Corporation for the
year ended December 31, 1997. Effective January 16, 1998, the per meeting
fee for Directors was increased by $1,000, which is allocated among all
Funds in the Fund Complex.
(2) As defined in the Corporation's prospectus, the Seligman Group of Investment
Companies consists of eighteen investment companies.
** Retired as Director and designated Director Emeritus on 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, 1997, the total amount of deferred compensation (including
interest) payable in respect of the Corporation to Mr. Whitson was $97,044.
Messrs. Merow and Pitney no longer defer current compensation; however, they
have accrued deferred compensation in the amounts of $126,735 and $263,955,
respectively, as of December 31, 1997. The Corporation has applied for and
received exemptive relief that would permit a director who has elected deferral
of his or her fees to choose a rate of return equal to either (i) the interest
rate on short-term Treasury bills, or (ii) the rate of return on the shares of
any of the investment companies advised by 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 succeeding such action. The members of the Executive Committee
consist of Mr. William C. Morris, Chairman, Richard R. Schmaltz, and Brian T.
Zino, President.
HOLDINGS OF PREFERRED STOCK, COMMON STOCK AND WARRANTS:
As of March 31, 1998 holders of record of Preferred Stock totaled 630;
holders of record of Common Stock totaled 43,714; and holders of record of
Warrants totaled 147. 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 46.48%
of the Corporation's Common Stock and 74.37% of the Corporation's Preferred
Stock.
As of March 31, 1998 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.
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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 $13,151,570 in 1997, $11,136,312 in 1996 and $9,761.731 in 1995
which was equivalent to annual rates of .40%, .41% and .42%, respectively, of
the average daily net assets of the Corporation. The Manager paid fees to
Seligman Henderson Co., pursuant to a subadvisory contract no longer in effect,
of $1,361,562, $1,192,207 and $810,796 for the years ended December 31, 1997,
1996 and 1995, respectively.
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.
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, 801 Pennsylvania, 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 Agreement recognizes that in the purchase and sale of
portfolio securities of the Corporation, the Manager 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 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 to
be beneficial to the Corporation. In addition, the Manager is authorized to
place orders with brokers who provide supplemental investment and market
research and security and economic analysis although the use of such brokers may
result in a higher brokerage charge to the 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 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.
9
<PAGE>
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 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 years ended December 31, 1997, 1996 and 1995
were $6,815,388, $4,105,756 and $3,825,533, respectively.
INCORPORATION OF FINANCIAL STATEMENTS BY REFERENCE
The Corporation's financial statements for the year ended December 31, 1997
are herein incorporated by reference to the 1997 Annual Report to Stockholders
of the Corporation (the "1997 Annual Report"), filed with the Commission
pursuant to Section 30(b) of the 1940 Act and the rules and regulations
thereunder. The 1997 Annual Report contains schedules of the Corporation's
portfolio investments as of December 31, 1997 and certain other financial
information. A copy of the 1997 Annual Report will be sent without charge to all
investors who request a copy of this Statement of Additional Information.
10
<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, 1997 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, 1997 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 13, 1998
11
<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 $3 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.
12
<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 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.
13
<PAGE>
HISTORY OF THE CORPORATION
TRI-CONTINENTAL CORPORATION
AN INVESTMENT YOU CAN LIVE WITH
Through nearly seven decades of dramatic economic, political, scientific, and
social change, Tri-Continental Corporation has remained faithful to its
objective of providing a sound investment based primarily on carefully selected
common stocks of well-managed, financially strong companies.
[LOGO]
<PAGE>
TRI-CONTINENTAL CORPORATION IS A DIVERSIFIED CLOSED-END INVESTMENT COMPANY THAT
WAS ESTABLISHED IN 1929. IT INVESTS PRIMARILY TO PRODUCE LONG-TERM GROWTH OF
BOTH CAPITAL AND INCOME, WHILE PROVIDING REASONABLE CURRENT INCOME. ITS COMMON
STOCK IS TRADED ON THE NEW YORK STOCK EXCHANGE UNDER THE SYMBOL TY.
In a dramatically changing world, it's comforting to know that stability,
tradition, and consistent professional service can still be found.
Tri-Continental Corporation, a diversified closed-end investment company
established in 1929, strictly adheres to these values. The Corporation invests
primarily in carefully selected common stocks of well-managed, financially sound
companies. Its investment objective is to produce long-term growth of both
capital and income, while providing reasonable current income.
Tri-Continental Corporation has stayed faithful to this objective during seven
decades of dramatic change, including the country's deepest depression, wars,
and the stagnation and high inflation of the 1970s. Through the passing fads of
the marketplace and new theories of investment management, the Corporation's
management has adapted to the conditions of the day, but never abandoned its
basic philosophy that a sound investment is based on fundamentally solid
investment values.
It is the rich past of Tri-Continental Corporation that is chronicled in the
pages that follow. As you read about the Great Depression, World War II, the
first television, man landing on the moon, the invention of the microprocessor,
the gasoline shortage of the 70s, and more recently, the Dow Jones Industrial
Average breaking through to a remarkable series of new highs, Tri-Continental
Corporation is there every step of the way.
[GRAPHIC OMITTED]
Wall Street, 1864
2
<PAGE>
AS EARLY AS 1925, A JUNIOR EMPLOYEE AT J. & W. SELIGMAN & CO. PROPOSED TO THE
PARTNERS THAT THE FIRM SPONSOR AN INVESTMENT COMPANY -- A COMPANY IN WHICH
INVESTORS POOL THEIR ASSETS FOR PROFESSIONAL MANAGEMENT.
The Partners were used to taking risks on their own account, but taking risks
for thousands of Stockholders was something entirely different. However, by
1929, there were hundreds of investment companies, and the investing public
couldn't seem to get enough of them. Ultimately, the decision was made and
Tri-Continental Corporation was formed.
It was envisioned that the Corporation would invest its assets in the securities
of companies on three continents - North and South America and Europe. The plan
prompted the name Tri-Continental. The new corporation was to be a closed-end
investment company with a diversified portfolio selected to attain a
conservative objective - long-term growth of capital and income and reasonable
current income. As a closed-end fund, Tri-Continental would issue a fixed number
of shares that could be bought and sold primarily on the New York Stock
Exchange.
Tri-Continental was to be significantly different from other closed-end funds
formed in the United States at the time. Generally, these other funds were
sponsored by investment banking firms to earn underwriting fees and sales
commissions, and the investment management was left to one or two staff members
who handled the job along with other duties. Not so at Tri-Continental.
The Corporation would have its own staff of university-trained economists and
investment analysts whose sole responsibility was to study business conditions
and find sound investments for the Corporation's investment portfolio.
'25
Chrysler Motor Corporation founded
The Charleston dance becomes fashionable
[GRAPHIC OMITTED]
'26
Germany admitted to League of Nations
One in six Americans owns a car
Kodak produces first 16mm movie film
[GRAPHIC OMITTED]
'27
Lindbergh flies Spirit of St. Louis from New York to Paris
US wages the highest in the world ($1,280/per year)
Holland Tunnel opens
[GRAPHIC OMITTED]
'28
Amelia Earhart
is first woman
to fly across
the Atlantic
[GRAPHIC OMITTED]
The New York
Times installs
first "moving"
electric sign
around Times
Building in
New York City
[GRAPHIC OMITTED]
'29
First offering
of Tri-Continental
Corporation on
January 12
October 29,
Black Friday.
US securities lose
$26 billion in value
Construction
begins on
Empire State
Building
Bell Laboratories
experiments with
color television
[GRAPHIC OMITTED]
3
<PAGE>
4&5
This was an unprecedented approach to investment management. However,
Tri-Continental stood firmly behind this strategy, carefully selecting
investments on the basis of thorough research and first-hand information.
Investment risk was diversified widely by owning many different securities
representing many different industries and companies. Management's goal was to
have consistency of approach, with flexibility to change with the times.
On January 12, 1929, Tri-Continental opened for business with a capitalization
of $52 million, consisting of $25 million of Preferred Stock with warrants
attached, and 1 million shares of Common Stock with an initial net asset value
of $27 per share. The securities sold quickly. With heavy demand for investment
company shares and Tri-Continental's success, a second $50 million investment
company, Tri-Continental Allied Corporation, was brought to market just eight
months later on August 15, 1929.
Less than three months later, the great bull market of the 1920s came to an
abrupt halt. What had seemed to be a world of insatiable demand for common
stocks quickly turned to one of almost unlimited supply. However,
Tri-Continental's faith in the investment business never faltered. Despite the
nationwide financial crisis that was only just beginning, morale was diligently
maintained, and the research team focused on the task at hand.
THE DECADE AHEAD MARKED MAJOR CHANGES AT TRI-CONTINENTAL.
The Corporation entered into a contract to furnish investment advice and service
to Selected Industries Incorporated, a leveraged closed-end investment company.
Later, as the entire investment industry began to consolidate, many competing
investment companies were either forced into liquidation or found it impractical
to continue. Consequently, some
'30
Congress creates
Veterans Administration
Bank of United States fails
Britain, Japan, France, Italy, and US
sign treaty on naval disarmament
[GRAPHIC OMITTED]
'31
European currency system collapses in summer
Record 2,293 US bank failures
TY purchases assets of Wedgewood Investing Corporation
TY enters into contract with Selected Industries Incorporated
6% Cumulative $100 par Preferred Stock changes to $6 Cumulative $0 par Preferred
Stock
TY retires 32% of Preferred Stock
'32
Franklin D.
Roosevelt
elected
President
US stock prices hit crisis lows. Dow Jones Industrial Average at 63.11
US unemployment hits 23.6%
TY acquires certain assets of Investors Equity Corporation
TY enters into contract with Broad Street Management Corporation to assist in
the management of Capital Administration Company Ltd. and Broad Street Investing
Co. Inc., which today is known as the Seligman Common Stock Fund.
[GRAPHIC OMITTED]
'33
US unemployment hits 25%
US goes off gold standard
US Securities Act passed
Japan withdraws from League of Nations
TY purchases substantially all the assets of Graymur Corporation
[GRAPHIC OMITTED]
'34
The Securities and
Exchange Act
becomes law
Hitler declares
himself Fuhrer
[GRAPHIC OMITTED]
<PAGE>
investment-company sponsors turned to Tri-Continental for help. The Corporation
acquired more assets and also provided portfolio management assistance to
several sponsors of investment management companies and their respective funds.
Still, times were hard, and to lower expenses and dividend liability,
Tri-Continental reduced its payroll by 20% and bought back 11.5% of its
outstanding Preferred Stock. Even so, by the end of 1932, Tri-Continental's net
asset value was negative.
Entering 1933, Tri-Continental's investment policy was based on the belief that
the outlook for American business was improving, and that security prices,
especially those of common stocks, should reflect this improvement. Even though
many of its securities yielded little or no return, the portfolio was positioned
by the end of the year with 70% invested in common stocks to take full advantage
of the anticipated recovery. Tri-Continental's action proved correct: the
market, as measured by the Dow Jones Industrial Average (DJIA), began recovering
in 1933, and by March 1937 had regained nearly half of the losses experienced
during the beginning of the decade. In the summer of 1938, a rapid recovery of
business activity began. By September 1938, Tri-Continental Corporation had
formed a new corporate subsidiary, Union Securities Corporation, to originate,
underwrite, and distribute securities.
The decade ended with World War II just around the corner. Production lines
reached record levels, consumer incomes and retail sales substantially improved,
and industrial profits and dividends rose while a flurry of consumer
"stockpiling" began.
'35
Social Security Act passed
Wealth Tax Act passed
Radar equipment to detect aircraft built
TY retires 12% of Preferred Stock
'36
Dow Jones Industrial Average hits
p/e ratio high of 43
Franklin D. Roosevelt re-elected President
First dividend paid to TY Common Stock
TY redeems 35% of Preferred Stock
TY retires 7% of
Preferred Stock
Hoover Dam is opened
[GRAPHIC OMITTED]
'37
Hindenburg disaster
Golden Gate Bridge
opens
Nylon created for
du Pont
[GRAPHIC OMITTED]
'38
Franklin D. Roosevelt sends appeal
to Hitler and Mussolini to settle
European problems amicably
40 hour work week established in US
Howard Hughes flies around the world
TY forms Union Securities Corporation
to originate, underwrite, and distribute
securities
2% of Preferred Stock retired
[GRAPHIC OMITTED]
'39
World War II--FDR
declares US neutral
DDT synthesized
Baseball game is first
televised in US
[GRAPHIC OMITTED]
<PAGE>
6&7
IN 1940, MUCH OF THE WORLD WAS AT WAR. AS THE US ECONOMY SHIFTED TO WAR-TIME
PRODUCTION, THERE WERE WIDE FLUCTUATIONS IN BUSINESS ACTIVITY AND SECURITIES
MARKETS.
During this time, the management of Tri-Continental maintained a diversified
portfolio of sound companies with adequate income and, most important, remained
committed to a long-term approach to investing. At the same time, Union Service
Corporation was organized to take over the investment, research, and
administrative services of Tri-Continental, and to provide such services to
Tri-Continental, and to the funds previously served by the Corporation, under a
joint, cost-sharing arrangement. Prior to this arrangement, Tri-Continental's
staff had provided the investment research and administrative functions to the
other investment companies managed by J. & W. Seligman & Co. on a fee basis.
This arrangement had worked very well, but as the investment companies grew in
size, the fairness of having one company pay fees to another came into question.
As a result, the concept of mutual ownership and mutual sharing made it possible
for Tri-Continental to continue to benefit from the country's largest and
best-trained professional investment organization.
By the time the United States declared war, the prices of common stocks had
fallen considerably, with the DJIA declining 6.5% between December 6 (the day
before the attack on Pearl Harbor) and December 10. At year-end 1941,
Tri-Continental's net asset value stood at only seven cents per share.
Nonetheless, the wisdom of taking a long-term view was demonstrated in the years
that followed. By the time World War II ended in 1945, the Corporation's net
asset value had risen to $13.07 per share. Management's investment
'40
Investment Company Act of 1940 becomes law
Franklin D. Roosevelt re-elected for third term
Fall of France
First successful helicopter flight
Union Service Corporation formed
[GRAPHIC OMITTED]
'41
Japan bombs Pearl Harbor
Grand Coulee Dam starts operation
US declares war on Japan, Italy, and Germany
"Manhattan Project" begins
[GRAPHIC OMITTED]
'42
Dow Jones Industrial Average
hits low for the year
of 92.92
Americans defeat Japanese at Midway
Largest US budget in history: $59 billion ($53
billion for defense)
National Investors Corporation, which today is known as the Seligman Growth
Fund, enters into agreement with Union Service Corporation for investment
research and other services
'43
Franklin D. Roosevelt freezes wages, salaries, and prices
Penicillin successfully
used in treatment of disease
Meat and cheese
rationed in US
Pay-as-you-go income
tax system instituted
[GRAPHIC OMITTED]
'44
[GRAPHIC OMITTED]
Allies invade Normandy
Franklin D. Roosevelt
re-elected for fourth term
Cost of living in US
rises almost 30%
<PAGE>
focus on the long-term, post-war outlook and its inclusion in the portfolio of
smaller companies with unusual investment opportunities provided handsome
returns for Tri-Continental's Stockholders.
Once the US began to adjust to peace-time activity, common stocks again
declined. Political uncertainty in Europe and fears of a business recession
caused investors to maintain a conservative appraisal of earnings and dividends.
By the end of the decade, however, common stock prices again rose sharply, and
Tri-Continental's net asset value followed suit, as the portfolio had been fully
invested for most of the period.
[GRAPHIC OMITTED]
'45
Franklin D. Roosevelt dies, succeeded by Harry S. Truman
"VE Day" ends WW II in Europe
Atomic bombs dropped on Hiroshima and Nagasaki
"VJ Day"
International Monetary Fund and World Bank established
Empire State Building struck by B-25 Bomber
[GRAPHIC OMITTED]
'46
Atomic Energy Commission established
Xerography process invented
US population hits 140 million
United Nations created
[GRAPHIC OMITTED]
'47
Transistor invented
[GRAPHIC OMITTED]
Marshall Plan called for
Cold War begins
US airplane flies at supersonic speed
More than one million veterans enroll
in college under GI bill
'48
Truman elected President
Truman approves Marshall Plan
US government seizes railroads to avert strike
Berlin airlift begins
General Shareholdings
Corporation merges
into TY
[GRAPHIC OMITTED]
'49
North Atlantic
Treaty signed:
NATO established
First Levittown
house built on
Long Island
[GRAPHIC OMITTED]
<PAGE>
8&9
THE NINETEEN FIFTIES BEGAN WITH THE CONTINUED ADJUSTMENT TOWARD PEACETIME
OPERATIONS.
Confidence was growing, industrial production rising, commodity prices firming,
and the prices of common stocks soaring. However, the sudden shock of the Korean
conflict and the fear of another world war temporarily brought stock prices
down. By 1951, the US economy was dominated by a shift from peacetime to
"garrison-state" conditions, which supported high levels of business activity in
the war industries. The wide variations in equity prices demanded the careful
investment selection of Tri-Continental's approach.
The fifties also marked important milestones in Tri-Continental's history.
Selected Industries merged with Tri-Continental, culminating the business
relationship begun more than 20 years prior, and increasing Tri-Continental's
assets to more than $127 million. In 1951, Tri-Continental established a regular
quarterly dividend distribution policy. Most significant, the Corporation became
the country's largest, diversified, publicly traded closed-end investment
company in 1951 - a distinction Tri-Continental still holds today. Nineteen
fifty-six marked the first year in which Tri-Continental's dividend payments to
both Preferred and Common Stockholders passed the $10 million mark.
Also in 1956, Union Securities Corp., the wholly-owned securities underwriting
subsidiary of Tri-Continental, transferred the portion of the
'50
[GRAPHIC OMITTED]
McCarthy's list starts "Red Scare"
North Korea invades South Korea
Assassination attempt on Truman
'51
Color television first introduced
Merger of Selected Industries into TY -- TY becomes largest diversified
closed-end investment company
TY begins to pay dividends quarterly
[GRAPHIC OMITTED]
'52
Truman orders seizure of
steel mills to avert strike
Eisenhower elected
President
First US H-bomb
tested
TY sells all its
interest in
Globe and
Rutgers
Fire
Insur-
ance Company
(acquired in early 30's)
[GRAPHIC OMITTED]
'53
All price controls removed
Capital Administration Company, Ltd.
merges into TY
TY participates in NYSE's "Monthly
Investment Plan"
[GRAPHIC OMITTED]
'54
Dow Jones Industrial
Average moves to new
highs for first time
since 1929
The McCarthy hearings
are nationally televised
29 million US homes
have a television
TY $6 Preferred Stock called, or exchanged, tax-free, for two shares of $2.70
Cumulative Preferred Stock
[GRAPHIC OMITTED]
<PAGE>
business involved in securities underwriting and distribution to the firm
Eastman, Dillon, thereafter known as Eastman, Dillon, Union Securities & Co. The
intermediate financing portion of the business was retained, and Union
Securities Corp. was renamed Tri-Continental Financial Corporation.
Tri-Continental Financial Corporation's focus was on intermediate financing and
the acquisition of interests, often illiquid, in situations that required
holding the investments for extended periods to realize the profit potential. In
this business, Tri-Continental was a pioneer in what is an active area of the
financial world today.
'55
[GRAPHIC OMITTED]
AFL and CIO merge
Stock market plunges on news of Eisenhower
heart attack
Germany becomes NATO
member
'56
[GRAPHIC OMITTED]
Eisenhower re-elected President
Egypt seizes Suez Canal
Transatlantic cable telephone service inaugurated
896,590 Warrants exercised, resulting in TY issuing 1,138,669 new Common Stock
shares. Largest exercise of Warrants in history of Corporation
The securities underwriting and distribution
businesses of Union Securities Corporation
transferred to Eastman, Dillon
Dividends paid on Common and Preferred
Stocks passed $10 million mark
'57
Sputnik launched by USSR
Brooklyn Dodgers and NY
Giants move to California
[GRAPHIC OMITTED]
'58
US troops in Lebanon
Integrated circuit introduced
[GRAPHIC OMITTED]
'59
Alaska becomes 49th State
Hawaii becomes 50th State
[GRAPHIC OMITTED]
Fidel Castro takes
power in Cuba
Formation of European
Common Market and
Free Trade Area
'60
[GRAPHIC OMITTED]
Kennedy elected President
85 million televisions in
the US
U-2 spy plane shot down
over USSR
TY's Automatic Dividend Investment Plan made available for owners of common
stock - a first for
a stock listed on The New York Stock Exchange
[GRAPHIC OMITTED]
<PAGE>
10&11
THE BEGINNING OF THE SIXTIES BROUGHT WITH IT A MILD RECESSION, DESPITE THE FACT
THAT THE ECONOMY WAS REACHING NEW HEIGHTS.
The forces that characterized the post-war period were largely exhausted:
shortages no longer existed; accumulated consumer wants and needs were largely
satisfied; domestic and foreign competition was more intense; inflationary
pressures subsided; and the business community was cautious. Even though the
prices of common stocks fell in 1960, the goal of Tri-Continental's management
was to continue the tradition of carefully managed, thoroughly researched
investments that would produce good capital and income results. For the next
five years, Tri-Continental's strategy proved rewarding as business activity was
strong, and the stock market, though subject to periodic corrections, continued
its upward march. At the same time, income taxes were staggering, the Cold War
was getting colder, and the fight for civil rights was dividing the nation. If
ever there was a time for prudent, active management, this was certainly one of
them.
Part of the Corporation's effort to keep up with the times was the establishment
of a new company to provide up-to-date electronic data processing and
shareholder services. In 1966, Tri-Continental and its associated companies
formed Union Data Service Center, known today as Seligman Data Corp. At the
time, Tri-Continental was believed to be the first diversified, publicly traded
investment company to undertake the role of having its own electronic data
processing organization.
'61
[GRAPHIC OMITTED]
Peace Corps established
Berlin Wall constructed
First men in space (USSR and US)
[GRAPHIC OMITTED]
'62
[GRAPHIC OMITTED]
World population hits 3.1 billion
Cuban missile crisis
[GRAPHIC OMITTED]
'63
[GRAPHIC OMITTED]
President Kennedy assassinated
South Vietnam government overthrown
Martin Luther King, Jr. addresses the Freedom
Marchers that descend on Washington
[GRAPHIC OMITTED]
$2.70 Preferred exchanged for one share of new
$2.50 ($50 par) Preferred
'64
Lyndon B. Johnson elected President
Lyndon B. Johnson
signs $11.5 billion
tax cut
Civil Rights Act
passed
[GRAPHIC OMITTED]
'65
[GRAPHIC OMITTED]
Watts riots
Winston Churchill dies
Great blackout affects
30 million people in
Northeastern United
States
<PAGE>
Seligman Data Corp. remains Tri-Continental's Stockholder Service agent today.
By 1967, the country reached the seventh year in the longest period of sustained
economic expansion since the end of World War II. Tri-Continental's net asset
value hit a new high of $37.55, dividend distributions had increased for four
consecutive years, and the net unrealized and realized gains were the largest to
date.
This large amount of net realized capital gain was paid to Stockholders in 1967
- - the first time Tri-Continental Corporation made a capital gain distribution to
Stockholders. Previously, the policy had been to retain net realized capital
gains to build net assets. With this change in policy came the strong caution
that capital gain distributions must be taken in additional shares if a
Stockholder wished to keep the full amount of an investment at work to produce
future income and growth of capital value. It was also in 1967 that
Tri-Continental's Annual Meetings began to be held around the country in order
to give as many Stockholders as possible the opportunity to meet the managers of
their investment. This tradition continues today.
Despite the nation's prosperity, the decade ended on a slower note as investors
took a wait-and-see attitude, influenced by economic uncertainty, an escalating
war in Southeast Asia, and the first hints that the international monetary
system, with the US dollar at its core, was in danger of collapsing. Amid
mounting social and environmental concerns, and rising inflation and interest
rates, the prices of common stocks declined substantially.
'66
Bear Market. Dow Jones Industrial Average
down 25.2%
US bombs Hanoi
Union Data Service Center (now Seligman
Data Corp.) opens
Automatic Cash Withdrawal Service begins
'67
Lyndon B. Johnson asks
for tax increase to
finance Vietnam War
Race riots in Cleveland,
Newark, and Detroit
100 million telephones
in service in the US
TY Annual Meetings
begin to be held around
the country
"An investment you can
live with" first used
[GRAPHIC OMITTED]
'68
Senator Robert F. Kennedy assassinated
Martin Luther King, Jr. assassinated
Tet offensive
Nixon elected President
[GRAPHIC OMITTED]
'69
Saturday Evening Post
suspends publication
Neil Armstrong walks
on moon
[GRAPHIC OMITTED]
'70
Student protest at
Kent State University
US troops in
Cambodia
<PAGE>
12&13
THE MANAGEMENT OF TRI-CONTINENTAL VIEWED THE BEGINNING OF THE SEVENTIES AS AN
OPPORTUNITY TO STRENGTHEN THE PORTFOLIO'S INVESTMENT HOLDINGS.
Through 1972, the economy recovered slowly, and the DJIA closed the year at a
record 1020. It was clear that economic and social problems still existed, but
Tri-Continental's management was optimistic that the stocks of companies that
would improve earnings as business conditions improved would produce favorable
results.
Unfortunately, in 1973, numerous events, including the collapse of the world's
monetary system and a four-fold increase in the price of oil, sent the economy
into the deepest recession since the Great Depression. The prices of common
stocks also suffered sharp declines. The equity market's problems worsened in
1974 as rising unemployment, double-digit inflation, and the political crisis
surrounding Watergate left policy makers befuddled. Between January 1973 and
September 1974, the market fell 42.6% - its worst performance since the 1930s.
The Corporation concentrated on ensuring that the securities in the portfolio
were those of strong companies that represented reasonable risks. Less promising
holdings were reduced or eliminated.
'71
[GRAPHIC OMITTED]
Nixon stops convertability of dollars for
gold and devalues dollar
Nixon announces 90-day freeze on wages
and prices
Intel invents microprocessor
TY offers two new retirement plans -
Self-employed and Prototype Pension and
Profit Sharing for use by corporations
'72
Dow Jones Industrial
Average closes above 1,000
for the first time on
November 14
Nixon re-elected President
Military draft is phased out
in the US
TY's Warrants delist from
American Stock Exchange
and move to over-the-
counter trading
[GRAPHIC OMITTED]
'73
[GRAPHIC OMITTED]
Energy Crisis: Oil embargo begins
US Dollar devalued for second time in two years
Watergate begins
Vietnam War ends
Automatic Dividend Investment and Cash Purchase Plan is expanded to allow direct
investments of up to $1,000 per month. Stockholders also may invest dividends
from other corporations
Share Deposit Service available - Stockholders may send their stock certificates
to UDSC for deposit and safe keeping
'74
[GRAPHIC OMITTED]
Year-round Daylight Savings Time adopted
President Richard Nixon resigns
Gerald Ford becomes President
Automatic Check Service created - pre-autho- rized checks can be directly drawn
from the bank for the purchase of TY Common Stock
Gasoline shortages in US
[GRAPHIC OMITTED]
'75
Unemployment at 9.2%,
highest since 1941
Two assassination
attempts on
President Ford
Individual Retirement
Accounts in TY
established
[GRAPHIC OMITTED]
<PAGE>
The investment decisions that were made in the first half of the decade were
rewarded in the second half, which was a period of improving economic
conditions, more optimistic investor sentiment, rising corporate profits, and a
stronger equity market. However, as the decade drew to a close, and
Tri-Continental entered its 50th year, evidence of another recession developed
and inflation accelerated. Interest rates rose to new highs, with the prime rate
charged by banks soaring to more than 20%.
'76
Jimmy Carter elected President
OPEC announces price increases
US celebrates bicentennial
[GRAPHIC OMITTED]
'77
[GRAPHIC OMITTED]
Apple II Computer goes on sale
Alaska Pipeline completed
[GRAPHIC OMITTED]
'78
[GRAPHIC OMITTED]
First test-tube baby
born in England
April 17: NYSE has record single-day
trading volume of 63.5 million shares
US dollar plunges to record
low against yen, mark, and
Swiss franc
'79
US and USSR sign Salt-2 arms limitation
Iran seizes US embassy
Three-Mile Island nuclear scare
[GRAPHIC OMITTED]
'80
Ronald
Reagan
elected
President
[GRAPHIC OMITTED]
TY enters into a new
management agreement
with J. & W. Seligman &
Co. Incorporated
Consumer Price inflation
peaks at 14.7% (highest
since 1947)
Prime rate at record
21.5% on December 15
Mount St. Helen's
erupts
<PAGE>
14&15
IN 1981, CHANGE WAS TAKING PLACE AT TRI-CONTINENTAL.
As part of a corporate reorganization, J. & W. Seligman & Co. Incorporated
succeeded the Seligman partnership that began operations in 1864, and assumed
the responsibility for the investment management activities of Union Services
Corporation. Since then, Seligman has been directly responsible for providing
investment management and other services to Tri-Continental. This arrangement
with J. & W. Seligman & Co. Incorporated remains in effect today. Meanwhile, the
nation's economy was in a deep recession which curbed corporate profits and cast
a shadow on the outlook for the future.
A reversal took place in the third quarter of 1982, and both stocks and bonds
did very well. Tri-Continental reaped the benefits of its earlier positioning of
the portfolio and continued to cautiously purchase more common stocks through
the end of the year. The positive trend in the equity market continued into 1983
and beyond. Business activity began to slow in 1986; nonetheless,
Tri-Continental's management remained optimistic about the economy, and
maintained a long-term investment focus.
Nineteen eighty-seven, however, turned out to be more challenging than anyone
had expected. The first eight months of the year saw soaring equity prices, but
the market corrected a record 22.6% in one day on October 19. Fears of an
economic downturn, rising interest rates, and renewed inflation dominated, while
panic took hold of individual investors. As many open-end mutual funds were
scrambling to sell investments to cash out fearful investors, Tri-Continental's
'81
25% across-the-board personal income
tax rate cut is approved
Oil prices decontrolled
Space shuttle Columbia returns from
maiden voyage
[GRAPHIC OMITTED]
'82
[GRAPHIC OMITTED]
NYSE volume more than 100 million
shares for first time
Unemployment at 10.8%
AT&T breakup ordered
'83
[GRAPHIC OMITTED]
US invades Grenada
Reagan dubs USSR the "Evil Empire" and
proposes "Star Wars" - Strategic Defense
Initiative - deploys Intermediate Range
Nuclear Missile in Europe
OPEC lowers oil prices for first time in history
'84
AT&T breaks up
By year-end, more than 70 US banks fail
Reagan re-elected President
[GRAPHIC OMITTED]
'85
US officially
becomes world's
largest debtor
nation
US and USSR begin
arms control talks
Gorbachev
becomes General
Secretary of USSR
TY's net assets pass
$1 billion
<PAGE>
closed-end structure allowed it to purchase common stocks at very attractive
prices and to remain focused on the long-term investment objectives of its
Stockholders. And, by the end of the decade, the equity markets hit new highs.
IN 1990, WHEN IRAQ SUDDENLY INVADED KUWAIT, BOTH THE STOCK AND BOND MARKETS
DROPPED SIGNIFICANTLY AND FEARS OF A RECESSION QUICKLY HEIGHTENED.
In response to this investment environment, Tri-Continental Corporation used a
two-pronged investment strategy, raising the portfolio's cash position to 11.2%
and increasing the weightings in selected sectors such as energy.
In 1991, Operation Desert Storm was in full swing, the USSR disintegrated, and
the equity markets resumed their upward march. However, in 1994, the Federal
Reserve Board increased interest rates six times and the DJIA posted a meager
total return of 5.02%. Nonetheless, the long-term outlook was improving as
interest rates peaked in late 1994, and Congress and the
'86
Ivan Boesky
pleads guilty to
insider trading
[GRAPHIC OMITTED]
Space Shuttle
Challenger
explodes
Nation's debt hits $2 trillion
Oil hits low of $10.77
a barrel
Nuclear accident at
Chernobyl
[GRAPHIC OMITTED]
'87
Dow Jones Industrial Average passes 2000 for first
time on January 8
Black Monday on Wall Street, Dow Jones Industrial Average falls by 508 points
(-23%) on 604 million shares. Sharpest one-day drop in history
US and USSR sign
first missiles
reduction treaty
[GRAPHIC OMITTED]
'88
[GRAPHIC OMITTED]
George Bush elected President
McDonald's opens 20 restaurants
in Moscow
[GRAPHIC OMITTED]
Unemployment rate at eight-year low
Oliver North indicted in Iran-Contra Affair
'89
[GRAPHIC OMITTED]
Berlin wall comes down
Cold War ends
Michael Milken is
indicted for fraud
[GRAPHIC OMITTED]
Exxon Valdez causes the
world's largest oil spill
[GRAPHIC OMITTED]
'90
Iraq invades Kuwait
Taxes raised by Bush
Hubble spacecraft launched
[GRAPHIC OMITTED]
'91
Dow Jones Industrial
Average tops 3000
on April 17
USSR breaks up
Strategic Air Command
"Stands Down"
Operation Desert
Storm in Persian Gulf
[GRAPHIC OMITTED]
<PAGE>
16&17
nation had turned the corner toward a more balanced budget.
Tri-Continental's management increased the equity weighting in the portfolio to
obtain both current income and capital appreciation. The portfolio was broadly
diversified as the valuations of large-capitalized stocks soared, and stocks
with reasonable value and strong long-term potential were aggressively sought.
This strategy proved to be on the mark in 1996 and 1997, as investors witnessed
strong economic growth, low inflation, increasing competitiveness of the United
States, and the DJIA breaking the 6000, 7000, and 8000 marks.
Overall, the 1990s have been a decade of great importance for the United States:
The country successfully completed the transition from a high interest rate and
inflation environment to one of low rates and little inflationary pressure. It
also has been the decade of technology, when networking and semiconductors
became well-known terms.
What the 21st century has in store is unknown, but there is comfort in knowing
that while times change, values endure, and Tri-Continental Corporation will
stay true to its long-term investment objective. Tri-Continental: an investment
you can live with.
'92
Dow Jones Industrial Average reaches
high of 3413.21 on June 1
Maastricht Treaty approved,
paving way for single European
Currency
TY's net assets pass $2 billion
Bill Clinton
elected
President
[GRAPHIC OMITTED]
'93
[GRAPHIC OMITTED]
World Trade Center bombing
NAFTA passes
Dow Jones Industrial Average reaches
all-time high of 3794.33 on
December 29
'94
Six rate hikes by Federal Reserve Board
Republicans capture the majority of both
the House and Senate
Baseball's World Series cancelled
'95
Dow Jones Industrial Average
breaks 4000 on February 23
Dow Jones Industrial Average breaks
5000 on November 21
US federal budget impasse
Oklahoma City bombing
[GRAPHIC OMITTED]
'96
Dow Jones Industrial Average tops 6000 on October 14
Bill Clinton re-elected President
[GRAPHIC OMITTED]
'97
[GRAPHIC OMITTED]
Hong Kong reverts to
Chinese sovereignty
Dow Jones Industrial
Average tops 7000 on
February 13 and 8000
on July 16
Currency turmoil
produces Asian
economic crisis
Dolly the sheep cloned
[GRAPHIC OMITTED]
Pathfinder explores Mars
TY's net assets pass
$3 billion
<PAGE>
[GRAPHIC OMITTED]
Established in 1864, J. & W. Seligman's more than 130 years of providing
financial services have been marked not by fanfare, but rather by a quiet and
firm adherence to managing investments and giving prudent financial advice.
Seligman is proud of its distinctive past and traditional values, which continue
to shape its business decisions and investment judgment.
Seligman's beginnings date back to 1837 when Joseph Seligman, the oldest of
eight brothers, arrived in the United States from Germany. Nearly 30 years
later, in 1864, after achieving success as international bankers, the Seligmans
established the investment firm of J. & W. Seligman & Co.
In the years that followed, Seligman played a major role in the geographical
expansion and industrial development of the United States. It helped finance the
westward path of the railroads and the building of the Panama Canal. In the late
1800s, and early 1900s, the firm was instrumental in financing the fledgling
American automobile and steel industries.
Throughout the first quarter of this century, Seligman participated in hundreds
of successful underwritings, including those for some of the country's most
important companies: United Artists Theatre Circuit, Dodge Brothers, General
Motors, Victor Talking Machine, Minneapolis-Honeywell Regulator, and Maytag, to
name just a few. In 1929, Seligman organized its first investment company,
Tri-Continental Corporation, today the nation's largest, diversified, publicly
traded closed-end investment company, with more than $3.7 billion in assets as
of June 30, 1998. In the following year, the firm began managing its first
mutual fund, Broad Street Investing Co. Inc., now known as Seligman Common Stock
Fund.
Today, Seligman manages institutional accounts - including some of the nation's
largest public funds, endowments, and foundations and offers individual
investors a full range of investment products. The Seligman Group of Funds
includes more than 50 investment portfolios, several closed-end municipal bond
funds that trade on the New York Stock Exchange, and a range of offshore
investment funds available for non-US residents.
