<PAGE> 1
Registration No. 333-
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. 29
------------
- -------------------------------------------------------------------------------
Exact Name of Registrant as Specified in Charter:
TRI-CONTINENTAL CORPORATION
- -------------------------------------------------------------------------------
Address of Principal Executive Offices (Number, Street, City, State, Zip Code):
100 Park Avenue, New York, New York 10017
- -------------------------------------------------------------------------------
Registrant's Telephone Number, including Area Code:
(212) 850-1864 or (800) 221-2450
- -------------------------------------------------------------------------------
Name and Address (Number, Street, City, State, Zip Code) of Agent for Service:
Frank J. Nasta, Esq., 100 Park Avenue, New York, New York 10017
- -------------------------------------------------------------------------------
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.
- -------------------------------------------------------------------------------
If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933,
other than securities offered in connection with a dividend reinvestment plan,
check the following box. [X]
Calculation of Registration Fee Under the Securities Act of 1933
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Securities Amount Being Offering Price Aggregate Amount of
Being Registered Registered per Unit Offering Price Registration Fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
$.50 par value 2,000,000 $29.375 $58,750,000 $16,332.50
</TABLE>
The Registration Statement shall become effective hereafter in accordance with
Section 8(a) of the Securities Act of 1933.
<PAGE> 2
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, 1999
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
of Additional Information Additional Information
</TABLE>
<PAGE> 3
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 Policies
18. Management Directors and Officers
19. Control Persons and Principal Holders Directors and Officers - Holdings of Preferred
of Securities Stock, 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> 4
[TRI-CONTINENTAL CORPORATION LOGO]
AN INVESTMENT YOU CAN LIVE WITH
May 1, 1999
100 Park Avenue
New York, NY 10017
New York City Telephone (212) 682-7600
Toll-Free Telephone (800) 874-1092
For Retirement Plan Information -- Toll-Free Telephone (800) 445-1777
Tri-Continental 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 manager is J. & W. Seligman & Co. Incorporated.
This Prospectus applies to all shares of Common Stock purchased under 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 to acquire 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 ("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 1998 Annual Report to
Stockholders of the Corporation will be furnished, without charge, to investors
requesting copies of the SAI. The 1998 Annual Report contains financial
statements of the Corporation for the year ended December 31, 1998 which are
incorporated by reference into the SAI.
THE SECURITIES AND EXCHANGE COMMISSION HAS NEITHER APPROVED NOR DISAPPROVED
THESE SECURITIES, AND IT HAS NOT DETERMINED THIS PROSPECTUS TO BE ACCURATE OR
ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Corporation Expenses....... 2
Prospectus Summary.................... 3
Financial Highlights.................. 5
Capitalization at March 31, 1999...... 8
Trading and Net Asset Value
Information......................... 8
Investment and Other Policies......... 9
Management of the Corporation......... 12
Description of Capital Stock.......... 13
Description of Warrants............... 15
Computation of Net Asset Value........ 15
Dividend Policy and Taxes............. 15
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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 you can expect to bear as a stockholder of the
Corporation.
<TABLE>
<S> <C>
STOCKHOLDER TRANSACTION EXPENSES
Automatic Dividend Investment and Cash Purchase Plan
Fees.................................................. (1)
ANNUAL EXPENSES FOR 1998 (AS A PERCENTAGE OF NET ASSETS
ATTRIBUTABLE TO COMMON STOCK)
Management Fees........................................ .40%
Other Expenses......................................... .18%
---
Total Annual Expenses............................. .58%
===
</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 you in understanding the
various costs and expenses you 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 you 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 $19 $32 $73
</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> 6
PROSPECTUS SUMMARY
The following is qualified in its entirety by the more detailed information
included elsewhere in this Prospectus.
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. There can be no assurance that this
objective will be achieved. 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 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 U.S. registered investment
companies which, together with the Corporation, make up the "Seligman Group."
The aggregate assets of the Seligman Group at March 31, 1999 were approximately
$21.1 billion. The Manager also provides investment management or advice to
institutional and other accounts having a value at March 31, 1999 of
approximately $9.6 billion. The Manager's fee is based in part on the average
daily net assets of the Corporation. The management fee rate for 1998 was
equivalent to .40% of the Corporation's average daily net investment 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.("SDC"), the Plan service agent for Automatic
Dividend Investment and Cash Purchase Plans, Individual Retirement Accounts
("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 Systematic Withdrawal Plans. See "Description
of Investment Plans and Other Services--Automatic Dividend Investment and Cash
Purchase Plan" and "--Systematic 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.
On November 19, 1998, the Board of Directors authorized the Corporation to
repurchase over a 12-month period up to 7.5% of its then outstanding Common
Stock. The shares repurchased under this program are cancelled, increasing the
number of authorized but unissued shares available for issuance to participants
in the Plans. The stock repurchase program seeks, among other things, to
moderate the growth in the number of shares outstanding, increase the net asset
value of the Corporation's outstanding shares, reduce the dilutive impact on
Stockholders who do not take capital gains distributions in additional shares
and increase the liquidity of the Corporation's Common Stock in the marketplace.
Shares acquired by the Corporation from participants in the Systematic
Withdrawal Plan and other stockholder plans are counted towards the 7.5%
repurchase limit under the program. As of March 31, 1999, 1,794,095 shares, or
approximately 1.62% of the shares outstanding on November 19, 1998, had been
repurchased under the program.
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
3
<PAGE> 7
diversified management investment company of the closed-end type. 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 1998 was 277,681 shares. The Corporation's Common Stock has historically
been traded on the market at less than net asset value. As of March 31, 1999,
the Corporation had 116,590,051 shares of Common Stock outstanding and net
assets attributable to Common Stock of $4,057,377,003.
4
<PAGE> 8
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 Corporation's 1998 Annual Report which may be obtained from the
Corporation as provided on the cover page of this Prospectus.
"Per share operating performance" data is designed to allow you to trace
the operating performance, on a per Common share basis, from the beginning net
asset value to the ending net asset value so that you can understand what effect
the individual items have on your 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, using average shares outstanding.
PER SHARE OPERATING PERFORMANCE, TOTAL
(FOR A SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
-------------------------------------------------
1998 1997 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year.......................... $ 32.06 $ 29.28 $ 27.58 $ 23.70
-------- -------- -------- --------
Net investment income....................................... .54 .60 .68 .74
Net realized and unrealized investment gain (loss).......... 7.01 6.94 4.84 6.14
Net realized and unrealized gain (loss) from foreign
currency transactions..................................... (.01) (.17) (.02) .03
-------- -------- -------- --------
Increase (decrease) from investment operations.............. 7.54 7.37 5.50 6.91
Dividends paid on Preferred Stock........................... (.02) (.02) (.02) (.02)
Dividends paid on Common Stock.............................. (.52) (.60) (.66) (.73)
Distribution from net gain realized......................... (4.28) (3.45) (2.72) (2.01)
Issuance of Common Stock in gain distributions.............. (.65) (.52) (.40) (.27)
Issuance of Common Stock from exercise of Rights............ -- -- -- --
Rights offering costs....................................... -- -- -- --
Issuance of Common Stock upon Warrant exercise*............. -- -- -- --
-------- -------- -------- --------
Net increase (decrease) in net asset value.................. 2.07 2.78 1.70 3.88
-------- -------- -------- --------
Net asset value at end of year.............................. $ 34.13 $ 32.06 $ 29.28 $ 27.58
======== ======== ======== ========
Adjusted net asset value at end of year*.................... $ 34.06 $ 31.99 $ 29.22 $ 27.52
Market value, end of year................................... $ 28.50 $ 26.6875 $ 24.125 $ 22.625
TOTAL INVESTMENT RETURN FOR YEAR:
Based upon market value..................................... 26.19% 27.96% 21.98% 27.95%
Based upon net asset value.................................. 25.80% 26.65% 21.45% 30.80%
RATIOS AND SUPPLEMENTAL DATA:**
Expenses to average net investment assets................... .58% .60% .62% .63%
Expenses to average net assets for Common Stock............. .58% .60% .63% .64%
Net investment income to average net investment assets...... 1.59% 1.80% 2.27% 2.71%
Net investment income to average net assets for Common
Stock..................................................... 1.60% 1.82% 2.31% 2.75%
Portfolio turnover rate..................................... 63.39% 83.98% 53.96% 62.28%
Net investment assets, end of year (000s omitted):
For Common Stock.......................................... $4,002,516 $3,391,816 $2,835,026 $2,469,149
For Preferred Stock....................................... $37,637 37,637 37,637 37,637
---------- ---------- ---------- ----------
Total net investment assets................................. $4,040,153 $3,429,453 $2,872,663 $2,506,786
========== ========== ========== ==========
</TABLE>
- ------------
* Assumes the exercise of outstanding warrants. Warrant exercise terms were:
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 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;
5
<PAGE> 9
The total investment return based on market value measures the
Corporation's performance assuming you 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 your shares at the closing market value
per share on the last day of the year. The computation does not reflect any
sales commissions you may incur in purchasing or selling shares of the
Corporation. The total investment return based on net asset value is similarly
computed except that the Corporation's net asset value is substituted for the
corresponding market value.
INVESTMENT RETURN, RATIOS AND SUPPLEMENTAL DATA
OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ---------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$ 27.49 $ 28.03 $ 28.57 $ 24.60 $ 27.44 $ 23.55
- -------- -------- -------- -------- -------- --------
.83 .83 .81 .81 .81 .88
(1.69) 1.46 1.19 5.79 (1.05) 6.78
.02 -- -- -- -- --
- -------- -------- -------- -------- -------- --------
(.84) 2.29 2.00 6.60 (.24) 7.66
(.03) (.03) (.03) (.03) (.03) (.04)
(.79) (.80) (.78) (.78) (.86) (.84)
(1.90) (1.80) (.70) (1.80) (1.60) (2.55)
(.23) (.19) (.05) (.02) (.11) (.33)
-- -- (.97) -- -- --
-- -- (.01) -- -- --
-- (.01) -- -- -- (.01)
- -------- -------- -------- -------- -------- --------
(3.79) (.54) (.54) 3.97 (2.84) 3.89
- -------- -------- -------- -------- -------- --------
$ 23.70 $ 27.49 $ 28.03 $ 28.57 $ 24.60 $ 27.44
======== ======== ======== ======== ======== ========
$ 23.65 $ 27.42 $ 27.95 $ 28.48 $ 24.52 $ 27.35
$ 19.875 $ 23.75 $ 25.50 $ 27.75 $ 21.375 $ 23.00
(5.07)% 3.47% .61%+ 42.98% 3.46% 37.96%
(2.20)% 8.95% 7.42%+ 27.91% (.20)% 34.54%
.64% .66% .67% .67% .56% .55%
.65% .67% .68% .69% .57% .56%
3.08% 2.88% 2.86% 2.90% 3.01% 3.19%
3.14% 2.94% 2.92% 2.99% 3.07% 3.25%
70.38% 69.24% 44.35% 49.02% 41.23% 59.87%
$1,994,098 $2,166,212 $2,088,102 $1,833,664 $1,500,281 $1,594,505
37,637 37,637 37,637 37,637 37,637 37,637
- ---------- ---------- ---------- ---------- ---------- ----------
$2,031,735 $2,203,849 $2,125,739 $1,871,301 $1,537,918 $1,632,142
========== ========== ========== ========== ========== ==========
</TABLE>
July 2, 1996 to December 20, 1996--13.79 shares at $1.63 per share; December
21, 1996 to July 1, 1997--14.69 shares at $1.53 per share; July 2, 1997 to
December 19, 1997--14.99 shares at $1.50 per share; December 20, 1997 to June
23, 1998--16.06 shares at $1.40 per share; June 24, 1998 to December 18,
1998--16.78 shares at $1.34 per share; and subsequently, 17.85 shares at
$1.26 per share.
** The ratios of expenses and net investment income to average net investment
assets and to average net assets for Common Stock for the years presented do
not reflect the effect of dividends paid to Preferred Stockholders.
+ 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.
6
<PAGE> 10
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>
YEAR-END INVOLUNTARY AVERAGE DAILY
ASSET LIQUIDATION MARKET
TOTAL SHARES COVERAGE PREFERENCE VALUE
YEAR OUTSTANDING PER SHARE PER SHARE PER SHARE
---- ------------ --------- ----------- -------------
<S> <C> <C> <C> <C>
1998............................. 752,740 $5,367 $50 $40.27
1997............................. 752,740 4,556 50 35.62
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
</TABLE>
7
<PAGE> 11
CAPITALIZATION AT MARCH 31, 1999
<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............................... 129,000,000 shs.* 116,590,051 shs. -0- shs.
Warrants to purchase
Common Stock................................. 13,811 wts. 13,811 wts. -0- wts.
</TABLE>
- ------------
* 246,526 shares of Common Stock were reserved for issuance upon the exercise of
outstanding Warrants.
TRADING AND NET ASSET VALUE INFORMATION
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 1997.
<TABLE>
<CAPTION>
DISCOUNT TO NET
MARKET PRICE NET ASSET VALUE ASSET VALUE
------------- ----------------- -----------------
1997 HIGH LOW HIGH LOW HIGH LOW
- ---- ---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
1st Q.......................... 26 1/8 23 3/4 31.19 29.05 (16.24)% (18.24)%
2nd Q.......................... 28 1/2 23 1/2 34.33 29.45 (16.98) (20.20)
3rd Q.......................... 29 3/4 27 1/16 35.32 33.46 (15.77) (19.12)
4th Q.......................... 30 1/2 24 7/8 36.80 31.41 (17.12) (20.81)
1998
- ----
1st Q.......................... 30 25 1/8 35.94 30.98 (16.53) (18.90)
2nd Q.......................... 30 5/16 27 36.40 33.20 (16.72) (18.67)
3rd Q.......................... 29 23 1/16 35.18 29.25 (17.57) (23.56)
4th Q.......................... 29 13/16 23 3/8 35.78 30.45 (16.67) (23.23)
1999
- ----
1st Q.......................... 29 1/2 27 9/16 35.12 34.11 (16.00) (19.20)
</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, 1999 were $29.00, $34.80 and (16.67)%, respectively.
8
<PAGE> 12
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 achieved. 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 SDC;
(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, 1998 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 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
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<PAGE> 13
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 1998.
ILLIQUID SECURITIES: The Corporation may invest up to 15% of its net
investment 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 Rule 144A of the 1933
Act, and the Corporation's Board of Directors may determine, when appropriate,
that specific Rule 144A securities are liquid and not subject to the 15%
limitation on illiquid securities. Should this determination be made, the Board
of Directors 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. 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 home country share price. EDRs and GDRs
are typically issued by foreign banks or trust companies and 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.
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
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<PAGE> 14
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, 1999, the only senior
securities of the Corporation outstanding were 752,740 shares of its $2.50
Cumulative Preferred Stock, $50 par value. Based on its March 31, 1999 asset
value, the Corporation's portfolio requires an annual return of 0.05% 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............................. -10.14% -5.09% -0.05% 5.00% 10.05%
</TABLE>
The purpose of the table above is to assist you 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.
YEAR 2000: As the millennium approaches, investment companies, financial
and business organizations, and individuals could be adversely affected if their
computer systems do not properly process and calculate date-related information
and data on and after January 1, 2000. Like other investment companies, the
Corporation relies upon service providers and their computer systems for its
day-to-day operations. Many of the Corporation's service providers in turn
depend upon computer systems of their vendors. The Manager and SDC have
established a year 2000 project team. The team's purpose is to assess the state
of readiness of the Manager and SDC and the Corporation's other service
providers and vendors. The team is comprised of several information technology
and business professionals as well as outside consultants. The Project Manager
of the team reports directly to the Administrative Committee of the Manager. The
Project Manager and other members of the team also report to the Board of
Directors of the Corporation and its Audit Committee.
The team has identified the service providers and vendors who furnish
critical services or software systems to the Corporation, including securities
firms that execute portfolio transactions for the Corporation and firms
responsible for shareholder account recordkeeping. The team is working with
these critical service providers and vendors to evaluate the impact year 2000
issues may have on their ability to provide uninterrupted services to the
Corporation. The team will assess the feasibility of their year 2000 plans. The
team has made progress on its year 2000 contingency plans -- recovery efforts
the team will employ in the event that year 2000 issues adversely affect the
Corporation. The team anticipates finalizing these plans in the near future.
The Corporation anticipates the team will implement all significant
components of the team's year 2000 plans by mid-1999, including appropriate
testing of critical systems and receipt of satisfactory assurances from critical
service providers and vendors regarding their year 2000 compliance. The
Corporation believes that the critical systems on which it relies will function
properly on and after the year 2000, but this is not guaranteed. If these
systems do not function properly, or the Corporation's critical service
providers are not successful in implementing their year 2000 plans, the
Corporation's operations may be adversely affected, including pricing,
securities trading and settlement, and the provision of shareholder services.
In addition, the Corporation may hold securities of issuers whose
underlying business leaves them susceptible to year 2000 issues. The Corporation
may also hold securities issued by governmental or quasi-
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<PAGE> 15
governmental issuers, which, like other organizations, are also susceptible to
year 2000 concerns. Year 2000 issues may affect an issuer's operations,
creditworthiness, and ability to make timely payment on any indebtedness and
could have an adverse impact on the value of its securities. If the Corporation
holds these securities, the Corporation's performance could be negatively
affected. The Manager seeks to identify an issuer's state of year 2000 readiness
as part of the research it employs. However, the perception of an issuer's year
2000 preparedness is only one of the many factors considered in determining
whether to buy, sell, or continue to hold a security. Information provided by
issuers concerning their state of readiness may or may not be accurate or
readily available. Further, the Corporation may be adversely affected if the
domestic or foreign exchanges, markets, depositories, clearing agencies, or
government(s) or third parties responsible for infrastructure needs do not
address their year 2000 issues in a satisfactory manner.
SDC has informed the Corporation that it does not expect the cost of its
services to increase materially as a result of the modifications to its computer
systems necessary to prepare for the year 2000. The Corporation will not pay to
remediate the systems of Seligman or bear directly the costs to remediate the
systems of any other service providers or vendors, other than SDC.
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.
The Manager also serves as manager of seventeen other U.S. registered
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.
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<PAGE> 16
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 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 a Vice
President, Investment Officer and was promoted to Senior Vice President, Senior
Investment Officer in August 1992, and to Managing Director in January 1994.
Rodney D. Collins, a Senior Vice President, Investment Officer of the
Manager, has served as Co-Portfolio Manager of the Corporation since July 1998.
Mr. Collins is also Co-Portfolio Manager of Seligman Common Stock Fund, Inc.,
Seligman Income Fund, Inc., and the Seligman Common Stock and Seligman Income
Portfolios of SPI. Mr. Collins joined the Manager in 1992 as an investment
associate and was promoted to a Vice President, Investment Officer in January
1995, and to Senior Vice President, Investment Officer in January 1999.
The Corporation pays all its expenses other than those assumed by the
Manager, including brokerage commissions, fees and expenses of independent
attorneys and auditors, taxes and governmental fees, cost of stock certificates,
expenses of printing and distributing prospectuses, expenses of printing and
distributing reports, notices and proxy materials to stockholders, expenses of
printing and filing reports and other documents with governmental agencies,
expenses of stockholders' meetings, expenses of corporate data processing and
related services, stockholder record keeping and stockholder account services,
fees and disbursements of transfer agents and custodians, expenses of disbursing
dividends and distributions, fees and expenses of directors of the Corporation
not employed by the Manager or its affiliates, insurance premiums and
extraordinary expenses such as litigation expenses.
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.
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
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<PAGE> 17
declared on the Preferred Stock, shall be at least equal to $100 per outstanding
share of Preferred Stock. The equivalent figure was $5,044.14 at March 31, 1999.
(b) VOTING RIGHTS: The Preferred Stock is entitled to two votes and the
Common Stock is entitled to one vote per share at all meetings of stockholders.
In the event of a default in payments of dividends on the Preferred Stock
equivalent to six quarterly dividends, the Preferred Stockholders are entitled,
voting separately as a class to the exclusion of Common Stockholders, to elect
two additional directors, such right to continue until all arrearages have been
paid and current Preferred Stock dividends are provided for. Notwithstanding any
provision of law requiring any action to be taken or authorized by the
affirmative vote of the holders of a designated portion of all the shares or of
the shares of each class, such action shall be effective if taken or authorized
by the affirmative vote of a majority of the aggregate number of the votes
entitled to vote thereon, except that a class vote of Preferred Stockholders is
also required to approve certain actions adversely affecting their rights. Any
change in the Corporation's fundamental policies may also be authorized by the
vote of 67% of the votes present at a meeting if the holders of a majority of
the aggregate number of votes entitled to vote are present or represented by
proxy.
Consistent with the requirements of Maryland law, the Corporation's Charter
provides that the affirmative vote of two-thirds of the aggregate number of
votes entitled to be cast thereon shall be necessary to authorize any of the
following actions: (i) the dissolution of the Corporation; (ii) a merger or
consolidation of the Corporation (in which the Corporation is not the surviving
corporation) with (a) an open-end investment company or (b) a closed-end
investment company, unless such closed-end investment company's Articles of
Incorporation require a two-thirds or greater proportion of the votes entitled
to be cast by such company's stock to approve the types of transactions covered
by clauses (i) through (iv) of this paragraph; (iii) the sale of all or
substantially all of the assets of the Corporation to any person (as such term
is defined in the 1940 Act); or (iv) any amendment of the Charter of this
Corporation which makes any class of the Corporation's stock a redeemable
security (as such term is defined in the 1940 Act) or reduces the two-thirds
vote required to authorize the actions listed in this paragraph. This could have
the effect of delaying, deferring or preventing changes in control of the
Corporation.
(c) LIQUIDATION RIGHTS: In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, after payment to the
Preferred Stockholders of an amount equal to $50 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,
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<PAGE> 18
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 $22.50 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 17.85 shares of Common Stock at $1.26 per share. There were 13,811
Warrants outstanding at March 31, 1999. 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 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, Monday through
Friday, as of the close of regular trading on 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
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<PAGE> 19
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, and other applicable statutory and
regulatory requirements. Unless SDC is otherwise instructed by you, 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 your Tri-Continental account as
"book credits." Long-term gain distributions ordinarily are paid in shares of
Common Stock, or, at your 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 you 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
you 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 your 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 the Internal Revenue 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 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 you have held your shares. Such distributions are not eligible for the
dividends received deduction allowed to corporate stockholders. If you receive
distributions in the form of additional shares issued by the Corporation you
will be treated for federal income tax purposes as having received a
distribution in an amount equal to the fair market value on the date of
distribution of the shares received. You will be subject to federal income tax
on net capital gains at a maximum rate of 20% if designated as derived from the
Corporation's capital gains from property held by the Corporation for more than
one year.
Any gain or loss you realize upon a sale or redemption of Common or
Preferred Stock if you are not a dealer in securities will generally be treated
as a long-term capital gain or loss if you held your shares for more than one
year and as a short-term capital gain or loss if you held your shares for one
year or less. 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 you realize 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 Corporation if, within a period beginning 30 days before the date of such
sale or disposition and ending 30 days after such date, you acquire (such as
through the Automatic Dividend Investment and Cash Purchase Plan), or enter into
a contract or option to acquire, securities that are substantially identical to
the shares of the Corporation. Net capital gain of a corporate stockholder is
taxed at the same rate as ordinary income.
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<PAGE> 20
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 you in December. Under
this rule, therefore, you 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. You 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 YOUR ACCOUNT IF YOU
PROVIDE THE CORPORATION WITH EITHER AN INCORRECT TAXPAYER IDENTIFICATION NUMBER
OR NO NUMBER AT ALL OR YOU FAIL TO CERTIFY THAT YOU ARE NOT SUBJECT TO SUCH
WITHHOLDING. YOU 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 YOU 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.
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, you appoint the
Corporation as your purchase agent to receive or invest such dividends and cash
funds forwarded by you for your 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 you under the Plan should
be made payable to Tri-Continental Corporation and mailed to Tri-Continental
Corporation, P.O. Box 9766, Providence, RI 02940-9766. 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.
You 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 April 15, 1999, 34,888
stockholders, owning 47,218,276 shares of Common Stock, were using the Plan. You
may choose one or more of the services under the Plan and you may change your
choices (or terminate participation) at any time by notifying Seligman Data
Corp. in writing. The Plan may be amended or terminated by written notice to
Planholders.
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AUTOMATIC CHECK SERVICE
The Automatic Check Service enables you, if you are an Automatic Dividend
Investment and Cash Purchase Planholder, to authorize checks to be drawn on your
regular checking account at regular intervals for fixed amounts to be invested
in additional shares of Common Stock for your account. An Authorization Form to
be used to start the Automatic Check Service is included in this Prospectus.
SHARE KEEPING SERVICE
You may send certificates for shares of the Corporation's Common Stock to
SDC to be placed in your account. Certificates should be sent to Seligman Data
Corp., 4400 Computer Drive, Westborough, MA 01581-5120, with a letter requesting
that they be placed in your account. You should not sign the certificates and
they should be sent by certified or registered mail. Return receipt is
advisable; however, this may increase mailing time. When your certificates are
received by SDC, the shares will be entered in your Tri-Continental account as
"book credits" and shown on the Statement of Account received from SDC. If you
use the Share Keeping Service you should keep in mind that you must have a stock
certificate for delivery to a broker if you wish to sell shares. A certificate
will be issued and sent to you on your written request to SDC, usually within
two business days of the receipt of your request. You should consider the time
it takes for a letter to arrive at SDC and for a certificate to be delivered to
you by mail before you choose to use this service.
TAX-DEFERRED RETIREMENT PLANS
Shares of the Corporation may be purchased for:
-- Individual Retirement Accounts (IRAs) (available to current
stockholders only);
-- 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. The Corporation may register an IRA investment for which an
account application has not been received as on ordinary taxable account.
For more information, write Retirement Plan Services, Seligman Data Corp.,
100 Park Avenue, New York, NY 10017. You may telephone toll-free by dialing
(800) 445-1777 from all 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 Advisors,
Inc. (formerly, Seligman Financial Services, Inc.) and Seligman Services, Inc.
may designate that
18
<PAGE> 22
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
SDC has an Employees' Thrift Plan ("Thrift Plan") which provides a
systematic means by which savings, through payroll deductions, of eligible
employees of SDC 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 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 (1) 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 (2) 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 net proceeds to the Corporation from the sale of any shares of Common
Stock to the Plans 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
19
<PAGE> 23
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.
If you are participating in the Automatic Dividend Investment and Cash
Purchase Plan and your shares are held under the Plan in book credit form you
may terminate your participation in the Plan and receive a certificate for all
or a part of your shares or have all or a part of your shares sold for you by
the Corporation and 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., 4400 Computer
Drive, Westborough, MA 01581-5120. If you elect to have shares sold you 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. All other stockholders of the Corporation must sell shares through a
registered broker/dealer. 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 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.
SYSTEMATIC WITHDRAWAL PLAN
This Plan is available if you wish to receive fixed payments from your
investment in the Common Stock in any amount at specified regular intervals. You
may start a Systematic Withdrawal Plan if your shares of the Corporation's
Common Stock have a market value of $5,000 or more. Shares must be held in your
account as book credits. SDC will act for you, make payments to you in specified
amounts on either the 1st or 15th day of each month, as designated by you, and
maintain your account. There is a charge by the agent of $1.00 per withdrawal
payment for this service. This 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
Withdrawal 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
SDC 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, you should notify SDC immediately, in writing,
of any address changes. If you close your account during any year it is
important that you notify SDC of any subsequent address changes to ensure that
you receive a year-end statement and tax information for that year. You will be
sent reports quarterly regarding the Corporation. General information about the
Corporation may be requested by writing the Corporate Communications/Investor
Relations
20
<PAGE> 24
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 United States. You may call
(212) 850-1864 in New York State and in the greater New York City area.
Information about your 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 United
States or 212-682-7600 outside the United States. For information about a
retirement account, call Retirement Plan Services toll-free at (800) 445-1777 or
write Retirement Plan Services, Seligman Data Corp. at the above address. SDC
may be telephoned Monday through Friday (except holidays) between the hours of
8:30 a.m. and 6:00 p.m. Eastern time, your call will be answered by a service
representative.
24-HOUR TELEPHONE ACCESS IS AVAILABLE BY DIALING (800) 622-4597 (WITHIN THE
UNITED STATES) ON A TOUCHTONE PHONE, WHICH PROVIDES INSTANT ACCESS TO PRICE,
ACCOUNT BALANCE, MOST RECENT TRANSACTION AND OTHER INFORMATION. IN ADDITION, YOU
MAY REQUEST ACCOUNT STATEMENTS AND FORM 1099-DIV.
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 1998, the Corporation had transactions in the ordinary course of
business with firms and companies of which one or more directors and officers
was a director and/or officer of the Corporation, and it is expected that the
Corporation will continue to have transactions of such nature during the current
year.
21
<PAGE> 25
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 Policies.............................. 2
Directors and Officers...................................... 4
Management.................................................. 8
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
</TABLE>
22
<PAGE> 26
<TABLE>
<S> <C>
[TRI-CONTINNENTAL CORPORATION LOGO] AUTHORIZATION FORM
To: Seligman Data Corp. FOR
P.O. Box 9759 AUTOMATIC DIVIDEND INVESTMENT
Providence, Rhode Island 02940-9759 AND CASH PURCHASE PLAN
- AUTOMATIC DIVIDEND
INVESTMENT
- AUTOMATIC INVESTMENT OF
OTHER CORPORATIONS'
DIVIDENDS
- CASH PURCHASE PLAN
- AUTOMATIC CHECK SERVICE
</TABLE>
Date ______________________
Gentlemen:
I own shares of Tri-Continental Corporation Common Stock registered as shown
below:
ACCOUNT REGISTRATION
<TABLE>
<CAPTION>
<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 9766, Providence, Rhode Island
02940-9766.
[ ] 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 9766, Providence, Rhode Island
02940-9766.
[ ] 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.
5/99
23
<PAGE> 27
<TABLE>
<S> <C>
[TRI-CONTINENTAL CORPORATION LOGO] AUTHORIZATION FORM
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 9759
Providence, Rhode Island 02940-9759
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>
5/99
24
<PAGE> 28
(This page intentionally left blank)
25
<PAGE> 29
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 9766, Providence, Rhode Island 02940-9766.
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.
5/99
26
<PAGE> 30
[TRI-CONTINENTAL CORPORATION 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
STOCKHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, New York 10017
PORTFOLIO SECURITIES CUSTODIAN
Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
GENERAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
------------------
Listed on the
New York Stock Exchange
[TRI-CONTINENTAL CORPORATION LOGO]
AN INVESTMENT YOU CAN LIVE WITH
A MANAGEMENT TYPE
DIVERSIFIED, CLOSED-END
INVESTMENT COMPANY
------------------
COMMON STOCK
($.50 PAR VALUE)
------------------
PROSPECTUS
MAY 1, 1999
CEIRI 1 5/99
<PAGE> 31
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1999
TRI-CONTINENTAL CORPORATION
100 Park Avenue
New York, New York 10017
New York City Telephone: (212) 682-7600
Toll-Free Telephone: (800) 874-1092 all United States
For Retirement Plan Information - Toll-Free Telephone: (800) 445-1777
This Statement of Additional Information ("SAI") is not a prospectus.
This SAI relates to the Prospectus dated May 1, 1999, and should be read in
conjunction therewith. A copy of the Prospectus may be obtained from
Tri-Continental 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").
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Additional Investment Policies.........................2
(See "Investment and other Policies" in the
Prospectus)
Directors and Officers..................................4
Management..............................................8
(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
</TABLE>
<PAGE> 32
ADDITIONAL INVESTMENT 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> 33
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'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
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<PAGE> 34
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 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.
WILLIAM C. MORRIS* Director, Chairman of the Board, Chief
(61) Executive Officer and Chairman of the
Executive Committee
Chairman, J. & W. Seligman & Co. Incorporated;
Chairman and Chief Executive Officer, the
Seligman Group of Investment Companies;
Chairman, Seligman Advisors, Inc.; Seligman
Services, Inc.; and Carbo Ceramics Inc.,
ceramic proppants for oil and gas industry;
Director, Seligman Data Corp.; Kerr-McGee
Corporation, diversified energy company; and
Sarah Lawrence College. Formerly, Director,
Daniel Industries Inc., manufacturer of oil
and gas metering equipment.
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<PAGE> 35
BRIAN T. ZINO* Director, President and Member of the Executive
Committee
(46)
Director and President, J. & W. Seligman & Co.
Incorporated; President (with the exception of
Seligman Quality Municipal Fund, Inc. and
Seligman Select Municipal Fund, Inc.) and
Director or Trustee, the Seligman Group of
investment companies; Chairman, Seligman Data
Corp.; Member of the Board of Governors of the
Investment Company Institute; and Director,
ICI Mutual Insurance Company, Seligman
Advisors, Inc., and Seligman Services, Inc.
RICHARD R. SCHMALTZ* Director and Member of the Executive Committee
(58)
Director and Managing Director, Director of
Investments, J. & W. Seligman & Co.
Incorporated; Director or Trustee, the
Seligman Group of investment companies (except
Seligman Cash Management Fund, Inc.);
Director, Seligman Henderson Co., and Trustee
Emeritus of Colby College. Formerly,
Director, Investment Research at Neuberger &
Berman from May 1993 to September 1996.
JOHN R. GALVIN Director
(69)
Dean, Fletcher School of Law and Diplomacy at
Tufts University; Director or Trustee, the
Seligman Group of Investment Companies;
Chairman Emeritus of the American Council on
Germany; a Governor of the Center for Creative
Leadership; Director, the National Defense
University; the Institute for Defense
Analyses; 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 02155.
ALICE S. ILCHMAN Director
(64)
Retired President, Sarah Lawrence College;
Director or Trustee, the Seligman Group of
Investment Companies; Trustee, the Committee
for Economic Development; Chairman, The
Rockefeller Foundation, charitable foundation.
Formerly, Trustee, The Markle Foundation,
philanthropic organization; and Director, New
York Telephone Company, and International
Research and Exchange Board, intellectual
exchanges. Sarah Lawrence College, Bronxville,
New York 10708
FRANK A. McPHERSON Director
(66)
Retired Chairman of the Board and Chief
Executive Officer, Kerr-McKee Corporation;
Director or Trustee, the Seligman Group of
Investment Companies; Director, 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 President of the Oklahoma
Foundation for Excellence in Education.
Formerly, Chairman of the Oklahoma City
Chamber of Commerce, and the Oklahoma City
Public Schools Foundation; a Director, Federal
Reserve System's Kansas City Reserve Bank; and
a Member of the Business Roundtable. 2601
Northwest Expressway, Suite 805E,Oklahoma
City, OK 73112
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<PAGE> 36
JOHN E. MEROW Director
(69)
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; and the United States Council for
International Business; Chairman, American
Australian Association; Chairman of the New
York Presbyterian Healthcare Network, Inc. and
a Trustee of the New York Presbyterian
Hospital; Vice-Chairman, the U.S.-New Zealand
Council; and a Member of the American Law
Institute and the Council on Foreign
Relations. 125 Broad Street, New York, NY
10004
BETSY S. MICHEL Director
(56)
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).
P.O. Box 449, Gladstone, NJ 07934
JAMES C. PITNEY Director
(72)
Retired Partner, Pitney, Hardin, Kipp & Szuch,
law firm; Director or Trustee, the Seligman
Group of Investment Companies. 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
(71)
Director, various organizations; Director or
Trustee, the Seligman Group of Investment
Companies; The Brooklyn Museum; KeySpan Energy
Corporation;; 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 and Dow Jones &
Company Inc.; and Director and President,
Bekaert Corporation. 675 Third Avenue, Suite
3004, New York, NY 10017
ROBERT L. SHAFER Director
(66)
Retired Vice President, Pfizer Inc.; Director
or Trustee, the Seligman Group of Investment
Companies. Formerly, Director, USLIFE
Corporation, life insurance.
235 East 42nd Street, New York, NY 10017
JAMES N. WHITSON Director
(64)
Retired Executive Vice President and Chief
Operating Officer, Sammons Enterprises, Inc.;
Director or Trustee, the Seligman Group of
Investment Companies; Consultant to and
Director of Sammons Enterprises, Inc.; and
Director, C-SPAN and CommScope, Inc.,
manufacturer of coaxial cables. Formerly,
Director, Red Man Pipe and Supply Company,
piping and other materials. 5949 Sherry Lane,
Suite 1900, Dallas, TX 75225
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<PAGE> 37
CHARLES C. SMITH, JR. Vice President and Portfolio Manager
(42)
Managing Director, J. & W. Seligman & Co.
Incorporated; Vice President and Portfolio
Manager, three open-end investment companies
in the Seligman Group of Investment Companies.
CHARLES W. KADLEC Vice President
(53)
Managing Director, J. & W. Seligman & Co.;
Chief Investment Strategist, Seligman
Advisors, Inc.
LAWRENCE P. VOGEL Vice President
(42)
Senior Vice President, Finance, J. & W.
Seligman & Co. Incorporated, Seligman
Advisors, Inc., and Seligman Data Corp.; Vice
President, the Seligman Group of Investment
Companies and Seligman Services, Inc.; Vice
President and Treasurer, Seligman
International, Inc.;
and Treasurer, Seligman Henderson Co.
FRANK J. NASTA Secretary
(34)
General Counsel, Senior Vice President, Law
and Regulation, and Corporate Secretary, J. &
W. Seligman & Co. Incorporated; Secretary, the
Seligman Group of Investment Companies; and
Corporate Secretary, Seligman Advisors, Inc.,
Seligman Henderson Co., Seligman Services,
Inc., Seligman International, Inc. and
Seligman Data Corp.
THOMAS G. ROSE Treasurer
(41)
Treasurer, the Seligman Group of Investment
Companies; and Seligman Data Corp.,
shareholder service agent.
Compensation Table
------------------
<TABLE>
<CAPTION>
Pension or
Aggregate Retirement Benefits
Compensation Accrued as part of Total Compensation
from Corporation Corporation from Corporation and
Name and Position with 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
Richard R. Schmaltz, Director N/A N/A N/A
John R. Galvin, Director $24,800.00 N/A $79,000.00
Alice S. Ilchman, Director 22,400.00 N/A 73,000.00
Frank A. McPherson, Director 24,800.00 N/A 79,000.00
John E. Merow, Director 24,000.00 N/A 77,000.00
Betsy S. Michel, Director 24,800.00 N/A 79,000.00
James C. Pitney, Director 23,200.00 N/A 75,000.00
James Q. Riordan, Director 23,200.00 N/A 75,000.00
Robert L. Shafer, Director 23,200.00 N/A 75,000.00
James N. Whitson, Director 24,800.00(3) N/A 79,000.00(3)
</TABLE>
- ----------------------
(1) Based on remuneration received by the Directors of the Corporation for the
year ended December 31, 1998. 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.
(3) Deferred.
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<PAGE> 38
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, 1998, the total amount of deferred compensation (including
interest) payable in respect of the Corporation to Mr. Whitson was $132,346.
Messrs. Merow and Pitney no longer defer current compensation; however, they
have accrued deferred compensation in the amounts of $124,695 and $222,487,
respectively, as of December 31, 1998. 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, 1999 holders of record of Preferred Stock totaled 572;
holders of record of Common Stock totaled 42,861; and holders of record of
Warrants totaled 138. 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 10274-0020 who owns of record
47.61% of the Corporation's Common Stock outstanding and 76.01% of the
Corporation's Preferred Stock outstanding.
As of March 31, 1999 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 $14,754,214 in 1998, $13,151,570 in 1997, and $11,136,312 in
1996, which was equivalent to annual rates of .40%, .40%, and .41%,
respectively, of the average daily net assets of the Corporation.
Prior to March 31, 1998, the Manager was party to a Subadvisory Agreement
with Seligman Henderson Co. pursuant to which Seligman Henderson Co. agreed to
provide investment advisory services to the Corporation in respect of foreign
assets to the extent requested by the Manager. On March 30, 1998, the
Subadvisory Agreement was terminated in accordance with its terms. The Manager
has no present plans to enter into similar arrangements in respect of the
Corporation. The Manager paid fees to Seligman Henderson Co., pursuant to the
Subadvisory Agreement, of $1,361,562 and $1,192,207 for the years ended
December 31, 1997 and 1996. For the period January 1, 1998 to March 30, 1998,
the Manager paid fees of $279,293 to Seligman Henderson Co.
As part of its services to the Corporation, the Manager provides the
Corporation with such office space, administrative
8
<PAGE> 39
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.
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.
9
<PAGE> 40
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, 1998, 1997,
and 1996 were $5,013,846, $6,815,388, and $4,105,756, respectively.
INCORPORATION OF FINANCIAL STATEMENTS BY REFERENCE
The Corporation's financial statements for the year ended December 31, 1998
are incorporated into this SAI by reference to the 1998 Annual Report to
Stockholders of the Corporation, filed with the Commission pursuant to Section
30(b) of the 1940 Act and the rules and regulations thereunder. The 1998 Annual
Report contains schedules of the Corporation's portfolio investments as of
December 31, 1998 and certain other financial information. A copy of the 1998
Annual Report will be sent to you without charge if you request a copy of this
SAI.
10
<PAGE> 41
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, 1998 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 7 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, 1998 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 19, 1999
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<PAGE> 42
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.
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<PAGE> 43
...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.
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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> 45
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> 46
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> 47
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> 48
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> 49
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> 50
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> 51
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> 52
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> 53
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> 54
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> 55
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> 56
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> 57
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> 58
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> 59
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> 60
[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.
<PAGE> 61
Tri-Continental Corporation
Portfolio of Investments December 31, 1998
<TABLE>
<CAPTION>
Shares Value
--------- ------------
<S> <C> <C>
COMMON STOCKS - 90.8%
AEROSPACE - 0.6%
General Dynamics Corporation 400,000 $ 23,450,000
Diversified defense contractor ------------
AUTOMOTIVE AND RELATED - 3.8%
DaimlerChrysler Corporation* 849,999 $ 81,653,029
Manufacturer of automobiles, trucks, and related parts
Dana Corporation 575,000 23,503,125
Manufacturer and distributor of products and
systems for automotive and related markets
Ford Motor Company 800,000 46,950,000
Manufacturer and distributor of automobiles, trucks, and related parts ------------
$152,106,154
------------
BASIC MATERIALS - 0.5%
Alcoa Inc. 275,000 $ 20,504,687
Manufacturer of containers ------------
CAPITAL GOODS - 0.8%
Crown Cork & Seal Company, Inc. 1,100,000 $ 33,893,750
Manufacturer of packaging products ------------
CHEMICALS - 0.8%
duPont (E.I.) de Nemours and Company 595,000 $ 31,572,187
Producer of chemicals ------------
COMMUNICATIONS - 8.5%
AT&TCorp 985,000 $ 74,121,250
Provider of communications services and products
Ameritech Corporation 955,000 60,523,125
Provider of telecommunications services
GTE Corporation 1,190,000 80,250,625
Provider of telephone services, systems, and equipment
MCI WorldCom, Inc.* 1,220,000 87,573,125
Provider of telecommunications services
SBC Communications, Inc. 800,000 42,900,000
Provider of telephone services ------------
$345,368,125
------------
COMMUNICATION EQUIPMENT - 1.0%
Lucent Technologies Inc. 365,000 $ 40,150,000
Manufacturer of communications equipment
------------
COMPUTER AND BUSINESS SERVICES - 11.2%
Cisco Systems, Inc.* 425,000 $ 39,458,594
Manufacturer of computer network products
Dell Computer Corporation 315,000 23,063,906
International provider of computer systems and services
Electronic Data Systems Corporation 900,000 45,225,000
Provider of management consulting and technology services
</TABLE>
- ----------
See footnotes on page 19.
16
<PAGE> 62
Tri-Continental Corporation
Portfolio of Investments (continued) December 31, 1998
<TABLE>
<CAPTION>
Shares Value
--------- ------------
<S> <C> <C>
COMPUTER AND BUSINESS SERVICES (continued)
Intel Corporation 640,000 $ 75,860,000
Manufacturer of semiconductors and memory circuits
International Business Machines Corporation 490,000 90,527,500
Manufacturer of micro and personal computers
Microsoft Corporation* 875,000 121,214,844
Provider of computer software products
Xerox Corporation 490,000 57,820,000
Developer, manufacturer, and marketer of office automation products ------------
$453,169,844
------------
CONSUMER GOODS AND SERVICES - 11.6%
Anheuser-Busch Companies, Inc. 1,180,000 $ 77,437,500
Brewery; theme park operator; manufacturer and
recycler of aluminum beverage containers
Coca-Cola Company (The) 770,000 51,493,750
Manufacturer of soft drinks and consumer products
ConAgra, Inc. 2,500,000 78,750,000
Developer and manufacturer of prepared foods and agricultural products
General Mills, Inc. 520,000 40,430,000
Manufacturer and marketer of consumer food products
PepsiCo, Inc. 1,190,000 48,715,625
Manufacturer and marketer of soft drinks and consumer products
Philip Morris Companies, Inc. 1,530,000 81,855,000
Manufacturer of tobacco products, food, and beverages
Procter & Gamble Company (The) 375,000 34,242,187
Manufacturer and distributor of household and personal care products
Sara Lee Corporation 1,950,000 54,965,625
Manufacturer of processed foods and consumer products ------------
$467,889,687
------------
DIVERSIFIED - 1.3%
AlliedSignal Inc. 1,180,000 $ 52,288,750
Producer of aerospace and automotive materials ------------
DRUGS AND HEALTH CARE - 11.0%
Abbott Laboratories 1,080,000 $ 52,920,000
Developer and manufacturer of diversified health care products
American Home Products Corporation 1,300,000 73,206,250
Developer and manufacturer of pharmaceuticals, food, and housewares
Baxter International Inc. 400,000 25,725,000
Manufacturer and distributor of hospital and laboratory products
Bristol-Myers Squibb Company 635,000 84,970,938
Developer and manufacturer of health and personal care products
Johnson & Johnson 650,000 54,518,750
Developer and manufacturer of health care products
Merck & Co., Inc. 515,000 76,059,063
Developer and manufacturer of pharmaceuticals
Pfizer Inc. 345,000 43,275,938
Manufacturer of health care consumer products and specialty chemicals
Schering-Plough Corporation 600,000 33,150,000
Manufacturer of pharmaceuticals and health and personal care products ------------
$443,825,939
------------
</TABLE>
- ----------
See footnotes on page 19.
17
<PAGE> 63
Tri-Continental Corporation
Portfolio of Investments (continued) December 31, 1998
<TABLE>
<CAPTION>
Shares Value
--------- ------------
<S> <C> <C>
ELECTRIC AND GAS UTILITIES - 3.3%
DQE Inc. 1,000,000 $ 43,937,500
Electric energy supplier
Unicom Corporation 1,155,000 44,539,687
Electric utility
Williams Companies, Inc. (The) 1,400,000 43,662,500
Transporter and producer of natural gas, telecommunications provider ------------
$132,139,687
------------
ELECTRONICS - 1.4%
Raytheon Company Class "B" 1,100,000 $ 58,575,000
Producer of defense and commercial electronics ------------
ENERGY - 8.1%
BP Amoco plc (ADRs) (United Kingdom) 725,000 $ 64,978,125
Explorer, producer, refiner, and retailer of petroleum products
Chevron Corporation 480,000 39,810,000
Explorer, developer, and producer of crude oil and natural gas
Exxon Corporation 1,275,000 93,234,375
Explorer and producer of natural gas, oil, and petroleum products
Mobil Corporation 630,000 54,888,750
International oil enterprise
Royal Dutch Petroleum Company (Netherlands) 1,030,000 49,311,250
Provider of international oil services
Schlumberger Ltd. 525,000 24,215,625
Worldwide provider of energy services ------------
$326,438,125
------------
FINANCE AND INSURANCE - 14.4%
American General Corporation 1,000,000 $ 78,000,000
Diversified financial services provider
American International Group, Inc. 765,000 73,918,125
International insurance holding company
Bank of New York Company, Inc. 2,160,000 86,940,000
Commercial bank
BankAmerica Corporation 850,000 51,106,250
Commercial bank
Chubb Corporation (The) 625,000 40,546,875
International holding company specializing in property and casualty insurance
Citigroup Inc. 1,310,000 64,845,000
Provider of investment services and life insurance
Fannie Mae 720,000 53,280,000
Provider of mortgage financing
Mellon Bank Corporation 750,000 51,562,500
Provider of financial services
J.P. Morgan & Co. Incorporated 300,000 31,518,750
Provider of financial services
Washington Mutual, Inc. 1,344,000 51,324,000
Provider of diversified financial services ------------
$583,041,500
------------
MANUFACTURING AND
INDUSTRIAL EQUIPTMENT - 6.2%
GATX Corporation 760,000 $ 28,785,000
Railcar leasing; equipment financing
General Electric Company 1,169,800 119,392,712
Supplier of electrical equipment and other industrial and consumer products
</TABLE>
- ----------
See footnotes on page 19.
18
<PAGE> 64
Tri-Continental Corporation
Portfolio of Investments (continued) December 31, 1998
<TABLE>
<CAPTION>
Shares Value
--------- --------------
<S> <C> <C>
MANUFACTURING AND
INDUSTRIAL EQUIPMENT (continued)
United Technologies Corporation 935,000 shs. $ 101,681,250
Manufacturer of elevators, jet engines, flight systems, and
automotive parts --------------
$ 249,858,962
--------------
PAPER AND FOREST PRODUCTS - 2.2%
Fort James Corporation 1,415,000 $ 56,600,000
Producer of paper and related products
Mead Corporation (The) 1,080,000 31,657,500
Manufacturer of paper, lumber, and wood products --------------
$ 88,257,500
--------------
PUBLISHING - 0.7%
Gannet Company, Inc. 400,000 $ 26,475,000
Newspapers; radio and television broadcasting --------------
RETAIL TRADE - 2.6%
May Department Stores Company 795,000 $ 47,998,125
Department store operator
Wal-Mart Stores, Inc. 705,000 57,413,438
Discount retailer --------------
$ 105,411,563
--------------
TRANSPORTATION - 0.8%
Norfolk Southern Corporation 1,055,000 $ 33,430,313
Railroad holding company --------------
TOTAL COMMON STOCKS
(Cost: $2,402,430,603) $3,667,846,773
--------------
US GOVERNMENT SECURITIES - 7.3%
US Treasury Notes:
45/8%, 11/30/2000 $ 50,000,000 $ 50,046,900
63/8%, 9/30/2001 50,000,000 52,187,500
53/4%, 8/15/2003 25,000,000 26,101,575
65/8%, 5/15/2007 125,000,000 140,625,000
51/4%, 11/15/2028 25,000,000 25,632,825
--------------
TOTAL U.S. GOVERNMENT SECURITIES
(Cost $294,228,516) $ 294,593,800
--------------
TRI-CONTINENTAL FINANCIAL DIVISION+ - 0.4%
(Cost: $15,384,559) $ 16,475,678
--------------
SHORT-TERM HOLDINGS - 1.3%
(Cost: $51,500,000) $ 51,500,000
--------------
TOTAL INVESTMENTS - 99.8%
(Cost: $2,763,543,678) $4,030,416,251
OTHER ASSETS LESS LIABILITIES - 0.2% 9,737,247
--------------
NET INVESTMENT ASSETS - 100.0% $4,040,153,498
==============
</TABLE>
- ----------
* Non-income producing security.
+ Restricted security.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
19
<PAGE> 65
Tri-Continental Corporation
Statement of Assets and Liabilities December 31, 1998
<TABLE>
<S> <C> <C>
Assets:
Investments at value:
Common stocks (cost--$2,402,430,603) ................... $ 3,667,846,773
US Government securities (cost--$294,228,516) .......... 294,593,800
Tri-Continental Financial Division
(cost --$15,384,559) .................................. 16,475,678
Short-term holdings (cost--$51,500,000) ................ 51,500,000 $ 4,030,416,251
---------------
Cash ....................................................................... 3,432,028
Receivable for dividends and interest ...................................... 8,945,501
Investment in, and expenses prepaid to, stockholder
service agent ............................................................ 492,295
Receivable for securities sold ............................................. 35,654
Other ...................................................................... 492,397
---------------
Total Assets ............................................................... $ 4,043,814,126
---------------
Liabilities:
Dividends payable .......................................................... $ 470,463
Payable for Common Stock repurchased ....................................... 445,305
Accrued expenses, taxes, and other ......................................... 2,744,860
---------------
Total Liabilities .......................................................... $ 3,660,628
---------------
Net Investment Assets ...................................................... $ 4,040,153,498
Preferred Stock, at $50 par value .......................................... 37,637,000
---------------
Net Assets for Common Stock ................................................ $ 4,002,516,498
===============
Net Assets per Share of Common Stock
(market value--$28.50) ................................................... $ 34.13
===============
Statement of Capital Stock and Surplus December 31, 1998
Capital Stock:
$2.50 Cumulative Preferred Stock, $50 par value,
asset coverage per share--$5,367.26
Shares authorized--1,000,000; issued
and outstanding--752,740 ................................................. $ 37,637,000
Common Stock, $0.50 par value:
Shares authorized--129,000,000; issued
and outstanding--117,276,903 ............................................. 58,638,452
Surplus:
Capital surplus ........................................................... 2,597,551,600
Distribution in excess of net investment income ........................... (382,192)
Undistributed net realized gain ........................................... 79,836,065
Net unrealized appreciation of investments ................................ 1,266,872,573
---------------
$ 4,040,153,498
===============
</TABLE>
- ----------
See Notes to Financial Statements.
20
<PAGE> 66
Tri-Continental Corporation
Statement of Operations For the Year Ended December 31, 1998
<TABLE>
<S> <C>
Investment Income:
Dividends .................................. $ 68,963,367
Interest ................................... 11,178,644
-------------
Total Investment Income (net of foreign taxes
withheld of $469,003) ...................... $ 80,142,011
Expenses:
Management fee ............................. $ 14,754,214
Stockholder account and registrar services . 3,849,834
Stockholder reports and communications ..... 1,291,266
Custody and related services ............... 522,000
Auditing and legal fees .................... 258,186
Directors' fees and expenses ............... 245,941
Stockholders' meeting ...................... 227,639
Registration ............................... 90,577
Miscellaneous .............................. 136,634
-------------
Total Expenses .............................. 21,376,291
-------------
Net Investment Income ....................... $ 58,765,720*
Net Realized and Unrealized Gain (Loss)
On Investments and Foreign
Currency Transactions:
Net realized gain on investments ........... $ 356,343,038
Net realized loss from foreign
currency transactions ..................... (9,753,590)
Net change in unrealized appreciation
of investments ............................ 401,764,341
Net change in unrealized depreciation
on translation of assets and liabilities
denominated in foreign currencies ......... 7,774,454
-------------
Net Gain on Investments and Foreign
Currency Transactions ...................... 756,128,243
-------------
Increase in Net Investment Assets
From Operations ............................ $ 814,893,963
=============
</TABLE>
- ----------
* Net investment income available for Common Stock is $56,300,727, which is
net of Preferred Stock dividends of $1,881,850, and includes a portion of
the net realized loss from foreign currency transactions of $583,143, which
is a reduction to ordinary income.
See Notes to Financial Statements.
21
<PAGE> 67
Tri-Continental Corporation
Statements of Changes in Net Investment Assets
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
Operations:
Net investment income ................................. $ 58,765,720 $ 58,712,421
Net realized gain on investments ...................... 356,343,038 463,458,808
Net realized loss from foreign currency transactions .. (9,753,590) (6,633,164)
Net change in unrealized appreciation
of investments ...................................... 401,764,341 210,948,617
Net change in unrealized appreciation/depreciation
on translation of assets and liabilities
denominated in foreign currencies ................... 7,774,454 (9,609,797)
--------------- ---------------
Increase in net Investment
Assets from Operations .............................. $ 814,893,963 $ 716,876,885
--------------- ---------------
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: $0.52 and $0.60) ........... (56,195,184) (58,603,778)
--------------- ---------------
$ (58,077,034) $ (60,485,628)
Net realized gain on investments:
Common Stock (per share: $4.275 and $3.447) ......... (463,498,251) (338,654,348)
--------------- ---------------
Decrease in Net Investment Assets
from Distributions .................................. $ (521,575,285) $ (399,139,976)
--------------- ---------------
Capital Share Transactions:
Value of shares of Common Stock issued
at market price in gain distributions
(11,748,613 and 9,018,136 shares) ................... $ 325,650,732 $ 240,732,759
Value of shares of Common Stock issued
for investment plans (1,894,263 and 1,805,903 shares) 52,067,826 48,297,075
Cost of shares of Common Stock purchased from
investment plan participants
(1,921,433 and 1,864,646 shares) .................... (53,367,830) (49,978,136)
Cost of shares of Common Stock purchased in the open
market (251,900 shares) ............................. (6,982,882) --
Net proceeds from issuance of shares of
Common Stock upon exercise of
Warrants (10,446 and 647 shares) .................... 14,054 989
--------------- ---------------
Increase in Net Investment Assets
from Capital Share Transactions ..................... $ 317,381,900 $ 239,052,687
--------------- ---------------
Increase in Net Investment Assets ..................... $ 610,700,578 $ 556,789,596
Net Investment Assets:
Beginning of year ..................................... 3,429,452,920 2,872,663,324
--------------- ---------------
End of Year (including distributions in excess of
net investment income of $382,192 and $339,509,
respectively) ....................................... $ 4,040,153,498 $ 3,429,452,920
=============== ===============
</TABLE>
- ----------
See Notes to Financial Statements.
22
<PAGE> 68
Tri-Continental Corporation
Notes to Financial Statements
1. Significant Accounting Policies -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Corporation:
a. Security Valuation -- Investments in stocks, 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 an exchange are valued at last sales
prices or, in their absence and in the case of over-the-counter
securities, at the mean of bid and asked prices. Short-term holdings
maturing in 60 days or less are valued at amortized cost.
b. Foreign Currency Transactions -- The books and records of the
Corporation are maintained in US dollars. The market value of
investment securities, other assets and liabilities denominated in
foreign currencies are translated into US dollars at the 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. Forward CurrencyContracts -- 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. Federal Taxes -- There is no provision for federal income 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. Security Transactions and Related Investment Income -- 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, except that certain dividends from foreign
securities where the ex-dividend dates may have passed are recorded as
soon as the Corporation is informed of the dividend. Interest income
is recorded on the accrual basis.
f. Distributions to Stockholders -- 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.
23
<PAGE> 69
Tri-Continental Corporation
Notes to Financial Statements (continued)
2. Capital Stock Transactions -- 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, 1998, 1,921,433 shares were purchased from Plan participants
at a cost of $53,367,830, which represented a weighted average discount of
17.66% from the net asset value of those acquired shares. A total of 1,894,263
shares were issued to Plan participants during the year for proceeds of
$52,067,826, a discount of 17.86% from the net asset value of those shares.
For the year ended December 31, 1998, the Corporation purchased 251,900
shares of its Common Stock in the open market at an aggregate cost of
$6,982,882, which represented a weighted average discount of 15.37% from the net
asset value of those acquired shares.
At December 31, 1998, 246,526 shares of Common Stock were reserved for
issuance upon exercise of 13,811 Warrants, each of which entitled the holder to
purchase 17.85 shares of Common Stock at $1.26 per share. Assuming the exercise
of all Warrants outstanding at December 31, 1998, net investment assets would
have increased by $310,623 and the net asset value of the Common Stock would
have been $34.06 per share. The number of Warrants exercised during the years
1998 and 1997, was 625 and 44, respectively.
3. Purchases and Sales of Securities -- Purchases and sales of portfolio
securities, excluding USGovernment obligations and short-term investments,
amounted to $1,863,893,226 and $2,167,939,276, respectively; purchases and sales
of USGovernment obligations amounted to $403,779,297 and $257,492,291,
respectively. At December 31, 1998, 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 amounted to $1,284,426,674 and $17,554,101, respectively.
4. Short-Term Investments -- At December 31, 1998, the Corporation owned
short-term investments which matured in less than seven days.
5. Management Fee,Administrative Services, and Other Transactions -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the
Corporation and provides for the 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, 1998,
was equivalent to an annual rate of 0.40% of the average daily net assets of the
Corporation.
Prior to March 31, 1998, Seligman Henderson Co., an entity owned 50% each
by the Manager and Henderson International, Inc., a subsidiary of Henderson plc,
supervised and directed all or a portion of the Corporation's foreign
investments. For this service, the Manager paid Seligman Henderson Co. a monthly
fee.
Seligman Data Corp., owned by the Corporation and certain associated
investment companies, charged the Corporation at cost $3,724,175 for stockholder
account services. The Corporation's investment in Seligman Data Corp. is
recorded at a cost of $43,681.
24
<PAGE> 70
Tri-Continental Corporation
Notes to Financial Statements (continued)
Certain officers and directors of the Corporation are officers or directors
of the Manager and/or Seligman Data Corp.
The Corporation has a compensation arrangement under which directors who
receive fees may elect to defer receiving such fees. Directors may elect to have
their deferred fees accrue interest or earn a return based on the performance of
the Corporation or other funds in the Seligman Group of Investment Companies.
The cost of such fees and earnings accrued thereon is included in directors'
fees and expenses, and the accumulated balance thereof at December 31, 1998, of
$479,528 is included in other liabilities. Deferred fees and related accrued
earnings are not deductible for federal income tax purposes until such amounts
are paid.
6. Restricted Securities -- At December 31, 1998, the Tri-Continental Financial
Division of the Corporation was comprised of two 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, along with their cost and values at
December 31, 1998, are as follows:
<TABLE>
<CAPTION>
Investments Acquisition Date(s) Cost Value
- ------------------------------------ ------------------- ----------- -----------
<S> <C> <C> <C>
WCAS Capital Partners II, L.P. 12/11/90 to 3/24/98 $ 6,951,702 $ 7,396,611
Whitney Subordinated Debt Fund, L.P. 7/12/89 to 11/10/98 8,432,857 9,079,067
----------- -----------
Total $15,384,559 $16,475,678
=========== ===========
</TABLE>
25
<PAGE> 71
Tri-Continental Corporation
Financial Highlights
The Corporation's financial highlights are presented below. "Per share
operating performance" data is designed to allow investors to trace the
operating performance, on a per Common share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. 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, using
average shares outstanding.
"Total investment return" measures the Corporation's performance assuming
that investors purchased shares of the Corporation at the market value or net
asset 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 or net asset value per share on the last day of the period.
The computations do not reflect any sales commissions investors may incur in
purchasing or selling shares of the Corporation.
The ratios of expenses and net investment income to average net investment
assets and to average net assets for Common Stock, for the years presented do
not reflect the effect of dividends paid to Preferred Stockholders.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value,
Beginning of Year .................... $ 32.06 $ 29.28 $ 27.58 $ 23.70 $ 27.49
-------- -------- -------- -------- --------
Net investment income ................. 0.54 0.60 0.68 0.74 0.83
Net realized and unrealized
investment gain (loss) ............... 7.01 6.94 4.84 6.14 (1.69)
Net realized and unrealized gain (loss)
from foreign currency transactions ... (0.01) (0.17) (0.02) 0.03 0.02
-------- -------- -------- -------- --------
Increase (Decrease) from
Investment Operations ................ 7.54 7.37 5.50 6.91 (0.84)
Dividends paid on Preferred Stock ..... (0.02) (0.02) (0.02) (0.02) (0.03)
Dividends paid on Common Stock ........ (0.52) (0.60) (0.66) (0.73) (0.79)
Distributions from net gain realized .. (4.28) (3.45) (2.72) (2.01) (1.90)
Issuance of Common Stock
in gain distributions ................ (0.65) (0.52) (0.40) (0.27) (0.23)
-------- -------- -------- -------- --------
Net Increase (Decrease)
in Net Asset Value ................... 2.07 2.78 1.70 3.88 (3.79)
-------- -------- -------- -------- --------
Net Asset Value,
End of Year .......................... $ 34.13 $ 32.06 $ 29.28 $ 27.58 $ 23.70
======== ======== ======== ======== ========
Adjusted Net Asset Value,
End of Year* ........................ $ 34.06 $ 31.99 $ 29.22 $ 27.52 $ 23.65
Market Value, End of Year ............. $ 28.50 $26.6875 $ 24.125 $ 22.625 $ 19.875
</TABLE>
- ----------
See footnotes on page 27.
26
<PAGE> 72
Tri-Continental Corporation
Financial Highlights (continued)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Total Investment Return:
Based upon market value .......... 26.19% 27.96% 21.98% 27.95% (5.07)%
Based upon net asset value ....... 25.80% 26.65% 21.45% 30.80% (2.20)%
Ratios/Supplemental Data:
Expenses to average net
investment assets .............. 0.58% 0.60% 0.62% 0.63% 0.64%
Expenses to average net assets for
Common Stock ................... 0.58% 0.60% 0.63% 0.64% 0.65%
Net investment income to
average net investment assets .. 1.59% 1.80% 2.27% 2.71% 3.08%
Net investment income to average
net assets for Common Stock .... 1.60% 1.82% 2.31% 2.75% 3.14%
Portfolio turnover rate .......... 63.39% 83.98% 53.96% 62.28% 70.38%
Net Investment Assets,
End of Year (000s omitted):
For Common Stock ................. $ 4,002,516 $ 3,391,816 $ 2,835,026 $ 2,469,149 $ 1,994,098
For Preferred Stock .............. 37,637 37,637 37,637 37,637 37,637
------------- ------------- ------------- ------------- -------------
Total Net Investment Assets ...... $ 4,040,153 $ 3,429,453 $ 2,872,663 $ 2,506,786 $ 2,031,735
============= ============= ============= ============= =============
</TABLE>
- ----------
* Assumes the exercise of outstanding warrants.
See Notes to Financial Statements.
27
<PAGE> 73
Tri-Continental Corporation
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, 1998, 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, 1998, by correspondence with the Corporation's custodian. 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, 1998, 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 29, 1999
<PAGE> 74
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
1. Financial Statements:
Part A: Financial Highlights for the ten years ended December 31,
1998; Table for the ten years ended December 31, 1998 under the
caption "Senior Securities - $2.50 Cumulative Preferred Stock."
Part B: The required financial statements are included in the
Corporation's 1998 Annual Report, which is incorporated by
reference into the Statement of Additional Information. These
statements include: Portfolio of Investments at December 31, 1998;
Statement of Assets and Liabilities at December 31, 19987;
Statement of Capital Stock and Surplus at December 31, 1998;
Statement of Operations for the year ended December 31, 1998;
Statements of Changes in Net Investment Assets for the years ended
December 31, 1998 and 1997; Notes to Financial Statements;
Financial Highlights for the five years ended December 31, 1998;
Report of Independent Auditors.
2. Exhibits: All Exhibits have been previously filed and are incorporat-
ed herein, except those marked with an asterisk (*) which are filed
herewith.
a. Amended and Restated Charter of Registrant. (Incorporated by
Reference to Registrant's Form N-2 filed on April 16, 1998).
b. Amended and Restated By-laws of the Registrant. (Incorporated by
Reference to Registrant's Amendment No. 28 to the Registration
Statement on Form N-2 filed on September 29, 1998).
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 as Exhibit a to this Registration
Statement.
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.)
<PAGE> 75
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 Tri-Continental
Corporation. (Incorporated by Reference to Registrant's Form N-2
filed on April 16, 1998.)
j. Form of Custodian Agreement between Registrant and Investors
Fiduciary Trust Company. (Incorporated by Reference to
Registrant's Form N-2 filed on April 23, 1997.)
l. Opinion and Consent of Counsel.*
n. Consent of Independent Auditors.*
q(1) The Seligman Roth/Traditional IRA Information Kit. (Incorporated
by Reference to Registrant's Form N-2 filed on April 16, 1998.)
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, Inc. (No. 333-20621), filed on April
17, 1997.)
q(4) Qualified Plan and Trust Basic Plan Document. (Incorporated by
Reference to Registrant's Form N-2 filed on April 16, 1998.)
q(5) Flexible Standardized 401(k) Profit Sharing Plan Adoption
Agreement. (Incorporated by Reference to Registrant's Form N-2
filed on April 16, 1998.)
q(6) Flexible Nonstandardized Safe Harbor 401(k) Profit Sharing Plan
Adoption Agreement. (Incorporated by Reference to Registrant's
Form N-2 filed on April 16, 1998.)
r. Financial Data Schedule meeting the requirements of Rule 483 under
the Securities Act of 1933.*
Other Exhibits: Power of Attorney for Richard R. Schmaltz (Incorporated
by Reference to Registrant's Form N-2 filed on April 16, 1998.)
Item 25. Marketing Arrangements: Not Applicable
<PAGE> 76
Item 26. Other Expenses of Issuance and Distribution:
Registration fees $17,570.97
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, 1999:
Title of Class Number of Recordholders
$2.50 Cumulative Preferred 572
Common Stock 42,861
Warrants 138
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 the
Registration Statement filed on April 23, 1997.
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.
<PAGE> 77
The Manager has 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, 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, pursuant to the Investment Advisers
Act of 1940 (SEC File No. 801-15798) which was filed on March
31, 1999.
Item 31. Location of Accounts and Records:
Custodian: Investors Fiduciary Trust Company
801 Pennsylvania
Kansas City, Missouri 64105
AND
Tri-Continental Corporation
100 Park Avenue
New York, New York 10017
Item 32. Management Services: Not Applicable
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> 78
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 21st day of April, 1999.
TRI-CONTINENTAL CORPORATION
---------------------------
(Registrant)
By: /s/ William C. Morris
---------------------------------------
William C. Morris, Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on April 21, 1999.
Signature Title
--------- -----
/s/ Brian T. Zino Chairman of the Board
- -------------------------- (Principal executive officer) and Director
William C. Morris* Director and President
/s/ Brian T. Zino
- --------------------------
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 ) * Brian T. Zino, Attorney-in-fact
James Q. Riordan, Director )
Richard R. Schmaltz, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
<PAGE> 79
TRI-CONTINENTAL CORPORATION
EXHIBIT INDEX
-------------
Form N-2 Item No. Description
- ----------------- -----------
24.2.1 Opinion and Consent of Counsel
24.2.n Consent of Independent Auditors
24.2.r Financial Data Schedule
<PAGE> 1
Tri-Continental Corporation -1-
April 19, 1999
Tri-Continental Corporation,
100 Park Avenue,
New York, New York 10017.
Dear Sirs:
In connection with the registration under the Securities Act of 1933, as
amended (the "Act"), of 2,000,000 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
<PAGE> 2
Tri-Continental Corporation -2-
the Registration Statement, the Securities will be validly issued, fully paid
and nonassessable.
The foregoing opinion is limited to the Federal laws of the United States
and the General Corporation Law of 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> 1
CONSENT OF INDEPENDENT AUDITORS
Tri-Continental Corporation:
We consent to the use in Amendment No. 29 to Investment Company Act No.
811-266 of our report dated January 29, 1999, appearing in the Annual Report to
Security Holders for the year ended December 31, 1998, incorporated by
reference in the Statement of Additional Information, and to the reference to
us under the captions "Financial Highlights" in the Prospectus and "Experts" in
the Statement of Additional Information which are also part of such
Registration Statement.
DELOITTE & TOUCHE LLP
New York, New York
April 19, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 2763544
<INVESTMENTS-AT-VALUE> 4030416
<RECEIVABLES> 9474
<ASSETS-OTHER> 3924
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4043814
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3661
<TOTAL-LIABILITIES> 3661
<SENIOR-EQUITY> 37637
<PAID-IN-CAPITAL-COMMON> 2656190
<SHARES-COMMON-STOCK> 117277
<SHARES-COMMON-PRIOR> 105797
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (382)
<ACCUMULATED-NET-GAINS> 79836
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1266872
<NET-ASSETS> 4040153
<DIVIDEND-INCOME> 68963
<INTEREST-INCOME> 11179
<OTHER-INCOME> (583)
<EXPENSES-NET> (21376)
<NET-INVESTMENT-INCOME> 20793
<REALIZED-GAINS-CURRENT> 347172
<APPREC-INCREASE-CURRENT> 409539
<NET-CHANGE-FROM-OPS> 814894
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (58077)
<DISTRIBUTIONS-OF-GAINS> (463498)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 10
<NUMBER-OF-SHARES-REDEEMED> (2173)
<SHARES-REINVESTED> 13643
<NET-CHANGE-IN-ASSETS> 610701
<ACCUMULATED-NII-PRIOR> (488)
<ACCUMULATED-GAINS-PRIOR> 196162
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 14754
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 21376
<AVERAGE-NET-ASSETS> 3706134
<PER-SHARE-NAV-BEGIN> 32.06
<PER-SHARE-NII> .54
<PER-SHARE-GAIN-APPREC> 6.35
<PER-SHARE-DIVIDEND> (.54)
<PER-SHARE-DISTRIBUTIONS> (4.28)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 34.13
<EXPENSE-RATIO> .58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
