Securities Act File No. 333-_____________
Investment Company Act File 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. 32
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, NY 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, NY 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]
If appropriate, check the following box:
[_] This Post-Effective Amendment designates a new effective date for a
previously filed Post-Effective Amendment or Registration Statement.
[_] This Post-Effective Amendment on Form N-2 is filed to register additional
securities for an offering pursuant to Rule 462(b)(1) under the Securities Act
of 1933 and the Securities Act Registration Statement Number of the earlier
effective Registration Statement for the same offering is: _________
Calculation of Registration Fee Under the Securities Act of 1933
Proposed Maximum Proposed Maximum
Title of Securities Amount Being Offering Price Aggregate Amount of
Being Registered Registered per Unit Offering Price Registration Fee
Common Stock
$.50 par value 1,000,000 $18.68 $18,680,000 $1,718.56
The Registration Statement shall become effective hereafter in accordance with
Section 8(a) of the Securities Act of 1933.
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus which is a
part of this Registration Statement is a combined Prospectus relating also to
shares previously registered on Registration Statement No. 333-85926.
TRI-CONTINENTAL CORPORATION
FORM N-2
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
Part A - Prospectus Caption
Item No. Caption
--------------------------------------- ---------------------------------------
1. Outside Front Cover Outside Front Cover of the Prospectus
2. Inside Front and Outside Back Inside Front and Outside Back Cover
Cover Page 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 Investment Plans and Other Services -
Method of Purchase
8. General Description of the Prospectus Summary; The Corporation;
Registrant Investment Objective and Other Policies
and Related Risks; Trading and Net
Asset Value Information
9. Management Management of the Corporation;
Investment Plans and Other Services;
Back Cover Page of Prospectus
10. Capital Stock, Long-Term Debt, and Description of Capital Stock;
Other Securities Description of Warrants; Dividend
Policy and Taxes; Investment Plans and
Other Services; Capitalization at March
31, 2002
11. Defaults and Arrears on Senior Not Applicable
Securities
12. Legal Proceedings Not Applicable
13. Table of Contents of the Statement Table of Contents of the Statement of
of Additional Information Additional Information
TRI-CONTINENTAL CORPORATION
FORM N-2
CROSS REFERENCE SHEET (continued)
Pursuant to Rule 495(a)
Part B - Statement of Additional Information
Item No. Caption
--------------------------------------- ---------------------------------------
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 Directors and Officers - Holdings of
Holders of Securities Preferred Stock, Common Stock and
Warrants
20. Investment Advisory and Other Directors and Officers - Holdings of
Services Preferred Stock, Common Stock and
Warrants; Management of the
Corporation; Custodian, Stockholder
Service Agent and Dividend Paying Agent
and Experts
21. Brokerage Allocation and Other Brokerage Allocation and Other
Practices Practices
22. Tax Status Additional Investment Policies
23. Financial Statements Financial Statements
[TRI-CONTINENTAL CORPORATION LOGO]
an investment you can live with
May 1, 2002
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 Objective and Other Policies and Related
Risks." 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 "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") dated May 1, 2002, 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 2001
Annual Report to Stockholders of the Corporation will be furnished, without
charge, to investors requesting copies of the SAI. The 2001 Annual Report
contains financial statements of the Corporation for the year ended December 31,
2001, 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.
TABLE OF CONTENTS
Page
----
Summary of Corporation Expenses ........................................... 3
Prospectus Summary ........................................................ 4
The Corporation ........................................................... 5
Financial Highlights ...................................................... 6
Capitalization at March 31, 2002 .......................................... 9
Trading and Net Asset Value Information ................................... 9
Investment Objective and Other Policies and Related Risks ................. 10
Management of the Corporation ............................................. 12
Description of Capital Stock .............................................. 14
Description of Warrants ................................................... 15
Computation of Net Asset Value ............................................ 15
Dividend Policy and Taxes ................................................. 16
Investment Plans and Other Services ....................................... 17
Issuance of Shares in Connection with Acquisitions ........................ 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
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.
Stockholder Transaction Expenses
Automatic Dividend Investment and Cash Purchase Plan Fees (1)
Annual Expenses for 2001 (as a percentage of net assets attributable
to Common Stock)
Management Fees .40%
Other Expenses .20%
Total Annual Expenses .60%
----------
(1) Stockholders participating in the Corporation's investment plans pay a
maximum $2.00 fee per transaction. See "Investment Plans and Other
Services--Automatic Dividend (1) 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 "Investment Plans and Other Services--Automatic Dividend
Investment and Cash Purchase Plan."
The following example illustrates the costs you would pay on a $1,000
investment, assuming a 5% annual return:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Tri-Continental Corporation Common Stock $ 6 $ 19 $ 33 $ 75
The example does not represent actual or anticipated costs, which may be
more or less than those shown. Moreover, the Corporation's actual rate of return
may be more or less than the hypothetical 5% return shown in the example.
3
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 preferred stock, debt securities, repurchase
agreements, options, illiquid securities and securities of foreign issuers, each
of which could involve certain risks. See "Investment Objective and Other
Policies and Related Risks."
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 twenty-two other U.S. registered investment
companies which, together with the Corporation, make up the "Seligman Group of
Funds." The aggregate assets of the Seligman Group of Funds at March 31, 2002
were approximately $17.0 billion. The Manager also provides investment
management or advice to institutional and other accounts having a value at March
31, 2002 of approximately $10.1 billion. The Manager's fee is based in part on
the average daily net assets of the Corporation. The management fee rate for
2001 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
"Investment Plans and Other Services." 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 15, 2001, the Board of Directors authorized the renewal of the
Corporation's ongoing share repurchase plan. The program authorizes the
Corporation to repurchase over a 12-month period up to 7.5% of its then
outstanding Common Stock, provided that the excess of net asset value of a share
of Common Stock over its market price remains greater than 10%. 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
4
the marketplace. Shares acquired by the Corporation from participants in the
Systematic Withdrawal Plan and other stockholder plans, as well as shares
purchased for the Corporation in the open market to meet demand under the
Automatic Dividend and Cash Purchase Plan, are counted towards the 7.5%
repurchase limit under the program. As of March 31, 2002, 846,182 shares, or
approximately 0.66% of the shares outstanding on November 16, 2001, had been
repurchased under the program.
THE CORPORATION
The Corporation is a Maryland corporation formed in 1929 by the
consolidation of two predecessor corporations. It is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified
management investment company of the closed-end type. 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 2001 was
362,566 shares. The Corporation's Common Stock has historically been traded on
the market at less than net asset value. As of March 31, 2002, the Corporation
had 130,723,688 shares of Common Stock outstanding and net assets attributable
to Common Stock of $2,832,247,965.
5
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 2001 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
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Per Share Operating Performance:
Net asset value, beginning of year $ 25.87 $ 32.82 $ 34.13 $ 32.06 $ 29.28
Net investment income .32 .35 .48 .54 .60
Net realized and unrealized investment gain (loss) (3.02) (3.25) 2.90 7.01 6.94
Net realized and unrealized gain (loss) from foreign currency
transactions -- -- -- (.01) (.17)
Increase (decrease) from investment operations (2.70) (2.90) 3.38 7.54 7.37
Dividends paid on Preferred Stock (.01) (.02) (.02) (.02) (.02)
Dividends paid on Common Stock (.28) (.33) (.48) (.52) (.60)
Distribution from net gain realized (1.11) (3.30) (3.79) (4.28) (3.45)
Issuance of Common Stock in gain distributions (.08) (.40) (.40) (.65) (.52)
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 (4.18) (6.95) (1.31) 2.07 2.78
Net asset value at end of year $ 21.69 $ 25.87 $ 32.82 $ 34.13 $ 32.06
Adjusted net asset value at end of year* $ 21.65 $ 25.82 $ 32.75 $ 34.06 $ 31.99
Market value, end of year $ 18.75 $ 21.1875 $ 27.875 $ 28.50 $ 26.6875
Total investment return for year:
Based upon market value (5.22)% (11.56)% 12.57% 26.19% 27.96%
Based upon net asset value (10.20)% (8.29)% 10.67% 25.80% 26.65%
Ratios and Supplemental Data:**
Expenses to average net investment assets .59% .54% .56% .58% .60%
Expenses to average net assets for Common Stock .60% .54% .56% .58% .60%
Net investment income to average net investment assets 1.36% 1.10% 1.36% 1.59% 1.80%
Net investment income to average net assets for Common Stock 1.37% 1.11% 1.38% 1.60% 1.82%
Portfolio turnover rate 124.34% 54.13% 42.83% 63.39% 83.98%
Average commission rate paid
Net investment assets, end of year (000s omitted):
For Common Stock $2,873,655 $3,458,009 $4,109,863 $4,002,516 $3,391,816
For Preferred Stock 37,637 37,637 37,637 37,637 37,637
Total net investment assets $2,911,292 $3,495,646 $4,147,500 $4,040,153 $3,429,453
* Assumes the exercise of outstanding warrants. Warrant exercise terms were:
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; 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; December 19, 1998 to June 24,
1999--17.85 shares at $1.26 per share;
6
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)
Year Ended December 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
$ 27.58 $ 23.70 $ 27.49 $ 28.03 $ 28.57
.68 .74 .83 .83 .81
4.84 6.14 (1.69) 1.46 1.19
(.02) .03 .02 -- --
5.50 6.91 (.84) 2.29 2.00
(.02) (.02) (.03) (.03) (.03)
(.66) (.73) (.79) (.80) (.78)
(2.72) (2.01) (1.90) (1.80) (.70)
(.40) (.27) (.23) (.19) (.05)
-- -- -- -- (.97)
-- -- -- -- (.01)
-- -- -- (.01) --
1.70 3.88 (3.79) (.54) (.54)
$ 29.28 $ 27.58 $ 23.70 $ 27.49 $ 28.03
$ 29.22 $ 27.52 $ 23.65 $ 27.42 $ 27.95
$ 24.125 $ 22.625 $ 19.875 $ 23.75 $ 25.50
21.98% 27.95% (5.07)% 3.47% .61%+
21.45% 30.80% (2.20)% 8.95% 7.42%+
.62% .63% .64% .66% .67%
.63% .64% .65% .67% .68%
2.27% 2.71% 3.08% 2.88% 2.86%
2.31% 2.75% 3.14% 2.94% 2.92%
53.96% 62.28% 70.38% 69.24% 44.35%
$2,835,026 $2,469,149 $1,994,098 $2,166,212 $2,088,102
37,637 37,637 37,637 37,637 37,637
$2,872,663 $2,506,786 $2,031,735 $2,203,849 $2,125,739
June 25, 1999 to December 16, 1999--18.14 shares at $1.24 per share;
December 17, 1999 to June 21, 2000--19.56 shares at $1.15 per share; June
22, 2000 to December 17, 2000--19.90 shares at $1.13 per share; December
18, 2000 to December 17, 2001--21.63 shares at $1.04 per share; and
subsequently, 22.49 shares at $1.00 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.
7
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.
Year-End Involuntary Average Daily
Asset Liquidation Market
Total Shares Coverage Preference Value
Year Outstanding Per Share Per Share Per Share
---- ------------ --------- ----------- -------------
2001 752,740 $ 3,868 $ 50 $ 37.57
2000 752,740 4,644 50 34.72
1999 752,740 5,510 50 37.31
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
8
CAPITALIZATION AT MARCH 31, 2002
Amount Held
by Registrant
or for its
Title of Class Authorized Outstanding Account
-------------- ---------- ----------- -------------
$2.50 Cumulative Preferred Stock,
$50 par value 1,000,000 shs. 752,740 shs. -0- shs.
Common Stock,
$.50 par value 159,000,000 shs.* 130,723,688 shs. -0- shs.
Warrants to purchase
Common Stock 13,351 wts. 13,351 wts. -0- wts.
* 300,398 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 range of the percentage
discount to net asset value per share for each calendar quarter since the
beginning of 2000.
Discount to Net
Market Price Net Asset Value Asset Value
---------------- --------------- ---------------------
2000 High Low High Low Largest Smallest
---- ---- --- ---- --- ------- --------
1st Q $27 7/16 $22 3/4 $32.54 $29.62 (15.68)% (23.19)%
2nd Q 26 1/8 24 7/16 33.34 30.75 (21.64) (20.53)
3rd Q 27 1/16 25 7/16 33.29 31.02 (18.71) (18.00)
4th Q 26 1/8 21 1/16 31.63 24.73 (17.40) (14.83)
2001
----
1st Q 23.33 19.93 26.69 22.63 (12.59) (11.93)
2nd Q 23.00 20.00 26.07 22.10 (11.78) (9.50)
3rd Q 21.93 16.70 24.60 19.21 (10.85) (13.07)
4th Q 20.40 18.25 23.36 20.64 (12.67) (11.58)
2002
----
1st Q 19.83 18.38 22.21 20.65 (10.72) (10.99)
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 28, 2002 were $19.35, $21.67 and (10.71)%, respectively.
9
INVESTMENT OBJECTIVE AND OTHER POLICIES AND RELATED RISKS
The Corporation invests primarily for the longer term and has no Charter
restrictions with respect to such investments. Over the years, the Corporation's
investment 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, 2001 are shown under "Financial Highlights."
The foregoing investment 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, 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
10
of the underlying securities will be at least equal at all times to the total
amount of the repurchase obligation, including the interest factor. The
Corporation will make payment for such securities only upon physical delivery or
evidence of book transfer to the account of the Corporation's custodian.
Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party, including possible delays or restrictions upon
the Corporation's ability to dispose of the underlying securities. The
Corporation did not enter into repurchase agreements in 2001.
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
11
of securities purchased or in income received in excess of the cost of the
amount borrowed or interest or dividends payable causes the net asset value of
the Corporation's Common Stock or the income available to it to increase more
than otherwise would be the case. Conversely, any decline in the value of
securities purchased or income received on them to below the asset or income
claims of the senior securities or borrowed money causes the net asset value of
the Common Stock or income available to it to decline more sharply than would be
the case if there were no prior claim. Funds obtained through senior securities
or borrowings thus create investment opportunity, but they also increase
exposure to risk. This influence ordinarily is called "leverage." As of March
31, 2002, 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, 2002 asset value, the Corporation's portfolio requires an annual
return of 0.06% 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.
Assumed return on portfolio
(net of expenses) -10% -5% 0 5% 10%
Corresponding return to common stockholder -10.20% -5.13% -0.07% 5.00% 10.07%
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.
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 objective and policies.
The Manager also serves as manager of twenty-two other U.S. registered
investment companies of the Seligman Group of Funds. 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 Global Fund
Series, Inc., Seligman High Income Fund Series, Seligman Income Fund, Inc.,
Seligman Investment Grade Fixed Income Fund, Inc., Seligman Municipal Fund
Series, Inc., Seligman Municipal Series Trust, Seligman New Jersey Municipal
Fund, Inc., Seligman New Technologies Fund, Inc., Seligman New Technologies Fund
II, Inc., Seligman Pennsylvania Municipal Fund Series, Seligman Portfolios,
Inc., Seligman Quality Municipal Fund, Inc., Seligman Select Municipal Fund,
Inc., Seligman Tax-Aware Fund, Inc., Seligman Time Horizon/Harvester Series,
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:
12
.45 of 1% of the first $4 billion of Fee Base
.425 of 1% of the next $2 billion of Fee Base
.40 of 1% of the next $2 billion of Fee Base, and
.375 of 1% of the Fee Base in excess of $8 billion.
The term "Fee Base" as of any day means the sum of the net assets at the close
of business on the previous day of each of the investment companies registered
under the 1940 Act for which the Manager or any affiliated company acts as
investment adviser or manager (including the Corporation).
Ben-Ami Gradwohl, Ph.D., a Managing Director of the Manager, has been Vice
President and Co-Portfolio Manager of the Corporation since October 2001. Mr.
Gradwohl is also Vice President and Co-Portfolio Manager of Seligman Common
Stock Fund, Inc., Seligman Income Fund, Inc., and Seligman Tax-Aware Fund, Inc.,
and Vice President of Seligman Portfolios, Inc. ("SPI") and Co-Portfolio Manager
of SPI's Seligman Common Stock Portfolio and Seligman Income Portfolio. Mr.
Gradwohl joined Seligman as a Managing Director in January 2000. From 1996 to
1999, he was a Portfolio Manager at Nicholas-Applegate Capital Management.
During his tenure there, he managed U.S. systematic large-cap portfolios,
tax-efficient strategies, an aggressive U.S. equity offshore fund, a long-short
hedge fund and international equity investments.
David Guy, Ph.D., a Managing Director of the Manager, has been Vice
President and Co-Portfolio Manager of the Corporation since October 2001. Mr.
Guy is also Vice President and Co-Portfolio Manager of Seligman Common Stock
Fund, Inc., Seligman Income Fund, Inc., and Seligman Tax-Aware Fund, Inc., and
Vice President of SPI and Co-Portfolio Manager of SPI's Seligman Common Stock
Portfolio and Seligman Income Portfolio. Mr. Guy joined Seligman as a Managing
Director in January 2000. From 1997 to 1999, he was a Portfolio Manager for U.S.
mid-cap securities in the Systematic Investment Group at Nicholas-Applegate
Capital Management. During the winter semester of 1997, he was a Visiting
Associate Professor with the Department of Statistics at the University of
California, Riverside.
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.
13
DESCRIPTION OF CAPITAL STOCK
(a) Dividend Rights: Common Stockholders are entitled to receive dividends
only if and to the extent declared by the Board of Directors and only after (i)
such provisions have been made for working capital and for reserves as the Board
may deem advisable, (ii) full cumulative dividends at the rate of $.625 per
share per quarterly dividend period have been paid on the Preferred Stock for
all past quarterly periods and have been provided for the current quarterly
period, and (iii) such provisions have been made for the purchase or for the
redemption (at a price of $55 per share) of the Preferred Stock as the Board may
deem advisable. In any event, no dividend may be declared upon the Common Stock
unless, at the time of such declaration, the net assets of the Corporation,
after deducting the amount of such dividend and the amount of all unpaid
dividends declared on the Preferred Stock, shall be at least equal to $100 per
outstanding share of Preferred Stock. The equivalent figure was $3,812.58 at
March 31, 2002.
(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
14
into three equal classes with a maximum three-year term so that the term of one
class of directors expires annually. Such classification provides continuity of
experience and stability of management while providing for the election of a
portion of the Board of Directors each year. Such classification could have the
effect of delaying, deferring or preventing changes in control of the
Corporation.
The Board of Directors may classify or reclassify any unissued stock of any
class with or without par value (including Preferred Stock and Common Stock)
into one or more classes of preference stock on a parity with, but not having
preference or priority over, the Preferred Stock by fixing or altering before
the issuance thereof the designations, preferences, voting powers, restrictions
and qualifications of, the fixed annual dividends on, the times and prices of
redemption, the terms of conversion, the number and/or par value of the shares
and other provisions of such stock to the full extent permitted by the laws of
Maryland and the Corporation's Charter. Stockholder approval of such action is
not required.
DESCRIPTION OF WARRANTS
The Corporation's Charter and Warrant certificates provide that each
Warrant represents the right during an unlimited time to purchase one share of
Common Stock at a price of $22.49 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 22.50 shares of Common Stock at $1.00 per share. There were 13,351
Warrants outstanding at March 31, 2002. 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. 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.
15
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 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
16
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.
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 your own tax advisor regarding specific questions as to federal,
state or local taxes.
The Corporation is required to withhold and remit to the U.S. Treasury a
portion 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 stock is owned 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
17
correspondence concerning the Plan to Seligman Data Corp., 100 Park Avenue, New
York, NY 10017. At present, a service fee of up to a maximum of $2.00 will be
charged for each cash purchase transaction. There is no charge for Automatic
Dividend Investment. As of March 31, 2002, 30,999 stockholders, owning
approximately 50,088,909 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 SDC in writing.
The Plan may be amended or terminated by written notice to Planholders.
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 an 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.
State Street Bank and Trust Company 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
18
distribution made by the Manager to the Profit-Sharing Plan, eligible employees
of the Manager, Seligman Advisors, Inc. and Seligman Services, Inc. may
designate that the payroll deductions and contributions made by the Manager and
invested by the Plan trustee, be invested in certain investment companies for
which the Manager serves as investment adviser. One such fund consists of Common
Stock of the Corporation purchased by the trustee as described under "Method of
Purchase."
Seligman Data Corp. Employees' Thrift Plan
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
19
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 objective and policies, the proceeds will be held in U.S.
Government Securities (which term includes obligations of the United States
Government, its agencies or instrumentalities) and other short-term money market
instruments.
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. As an additional measure to protect you and the
Corporation, SDC may confirm written instructions by telephone before sending
your money when the value of the shares being sold is $25,000 or more, or when
proceeds are directed to be paid to an address or payee different from that on
our records. This will not affect the date on which your instruction to sell
shares is actually processed. 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 Systematic 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.
20
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 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 in the U.S. You may call (212) 850-1864
outside the U.S. 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 telephone by dialing toll-free (800) 874-1092 in the
U.S. or 212-682-7600 outside the U.S. 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 automated telephone access is available by dialing (800) 622-4597
(within the United States) on a touchtone telephone, 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 investment 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 investment 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.
21
TABLE OF CONTENTS OF THE
STATEMENT OF ADDITIONAL INFORMATION
The table of contents of the SAI is as follows:
TABLE OF CONTENTS
Additional Investment Policies ............................................. 2
Directors and Officers ..................................................... 5
Management of the Corporation .............................................. 10
Holding of Preferred Stock, Common Stock and Warrants ...................... 12
Brokerage Allocation and Other Practices ................................... 12
Financial Statements ....................................................... 13
Custodian, Stockholder Service Agent and Dividend
Paying Agent and Experts ................................................ 13
Independent Auditors' Report on Financial Highlights--Senior
Securities--$2.50 Cumulative Preferred Stock ............................ 13
Appendix ................................................................... 14
22
[TRI-CONTINENTAL CORPORATION LOGO] AUTHORIZATION FORM
for
AUTOMATIC DIVIDEND
INVESTMENT
AND CASH PURCHASE PLAN
To: Seligman Data Corp. o AUTOMATIC DIVIDEND INVESTMENT
P.O. Box 9759 o AUTOMATIC INVESTMENT OF OTHER
Providence, Rhode Island 02940-9759 CORPORATIONS' DIVIDENDS
o CASH PURCHASE PLAN
o AUTOMATIC CHECK SERVICE
Date......................................
Gentlemen:
I own shares of Tri-Continental Corporation Common Stock registered as
shown below:
ACCOUNT REGISTRATION
--------------------------------------------------------------------------------
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
* 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 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.
------------------ ----------------------------------------------------------
Date Stockholder's Signature
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.
5/02
23
[LOGO] TRI-CONTINENTAL CORPORATION AUTHORIZATION FORM
for
AUTOMATIC CHECK SERVICE
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.
--------------------------------------------------------------------------------
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
5/02
24
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TERMS AND CONDITIONS
The Automatic Dividend Investment and Cash Purchase Plan provides
Tri-Continental Common stockholders with four ways to add to their investments:
1) with Tri-Continental dividends and distributions, 2) with cash dividends from
other corporations, 3) with cash payments, in any amount at any time, and 4)
with cash provided by pre-authorized checks through the Automatic Check Service.
A Planholder may use any or all of these Services, subject to the following
terms and conditions:
1. Seligman Data Corp. ("SDC"), as Plan service agent, will maintain
accounts and confirm to Planholders, as soon as practicable after each
investment, the number of shares of Common Stock acquired and credited to the
accounts and the cost. Tri-Continental Corporation (the "Corporation"), as
purchase agent, will purchase shares for Planholders. All checks for dividends
payable by other corporations or for cash purchase payments sent by Planholders
for investment in additional shares of Tri-Continental Common Stock should be
drawn to the order of Tri-Continental Corporation and mailed to Seligman Data
Corp., P.O. Box 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 other 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. Shares will be issued under the Plan in accordance with the current
Prospectus.
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.
26
================================================================================
[TRI-CONTINENTAL CORPORATION LOGO]
an investment you can live with
100 Park Avenue
New York, New York 10017
www.tricontinental.com
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
State Street Bank and Trust Company
801 Pennsylvania Avenue
Kansas City, Missouri 64105
GENERAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
----------
Listed on the
New York Stock Exchange
TY
================================================================================
================================================================================
[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, 2002
================================================================================
CETRI 1 5/02
TRI-CONTINENTAL CORPORATION
Statement of Additional Information
May 1, 2002
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 current Prospectus of Tri-Continental Corporation (the
Corporation), dated May 1, 2002 (the Prospectus), and should be read in
conjunction therewith. A copy of the Prospectus may be obtained by writing or
calling the Corporation at the above address or telephone numbers.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission (SEC).
Table of Contents
Additional Investment Policies (See "Investment Objective and
Other Policies and Related Risks" in the Prospectus) ............... 2
Directors and Officers ............................................... 5
Management of the Corporation (See "Management of the
Corporation" in the Prospectus)..................................... 10
Holdings of Preferred Stock, Common Stock and Warrants ............... 12
Brokerage Allocation and Other Practices ............................. 12
Financial Statements ................................................. 13
Custodian, Stockholder Service Agent and
Dividend Paying Agent and Experts .................................. 13
Independent Auditors' Report on Financial Highlights -
-- Senior Securities -- $2.50 Cumulative Preferred Stock ........... 13
Appendix.............................................................. 14
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.
Fundamental Policies
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.
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.
Other Policies
Leverage. When securities are loaned, the Corporation receives from the borrower
the equivalent of dividends or interest paid by the issuer of securities on loan
and, at the same time, makes short-term investments with the cash collateral and
retains the interest earned, after payment to the borrower or placing broker of
a negotiated portion of such interest, or receives from the borrower an agreed
upon rate of interest in the case of loans collateralized by direct obligations
of the United States. The Corporation does not have the right to vote securities
on loan, but would expect to terminate the loan and regain the right to vote if
that were considered important with respect to the investment.
2
Foreign Securities. In order to take advantage of opportunities that may be
provided by debt instruments of foreign issuers, the Corporation may from time
to time invest up to 3% of its assets in debt securities issued or guaranteed by
a foreign government or any of its political subdivisions, authorities, agencies
or instrumentalities and in related forward contracts. The Manager will
determine the percentage of assets invested in securities of a particular
country or denominated in a particular currency in accordance with its
assessment of the relative yield and appreciation potential of such securities
and the relationship of a country's currency to the U.S. dollar. Currently, the
Corporation will invest in securities denominated in foreign currencies or U.S.
dollars of issuers located in the following countries: Australia, Austria,
Belgium, Canada, Denmark, France, Germany, Hong Kong, Italy, Japan, Malaysia,
Mexico, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden,
Switzerland, Thailand and the United Kingdom. An issuer of debt securities
purchased by the Corporation may be domiciled in a country other than the
country in whose currency the instrument is denominated.
The Corporation'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.
Forward Foreign Currency Exchange Contracts. 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.
3
At the maturity of a forward contract, the Corporation may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract obligating it to purchase, on
the same maturity date, the same amount of the foreign currency.
As indicated above, it is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of the forward contract.
Accordingly, it may be necessary for the Corporation to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security is less than the amount of foreign currency the
Corporation is obligated to deliver and if a decision is made to sell the
security and make delivery of the foreign currency. Conversely, it may be
necessary to sell on the spot market some of the foreign currency received upon
the sale of the portfolio security if its market value exceeds the amount of
foreign currency the Corporation is obligated to deliver. However, the
Corporation may use liquid, high-grade debt securities, denominated in any
currency, to cover the amount by which the value of a forward contract exceeds
the value of the securities to which it relates.
If the Corporation retains the portfolio security and engages in offsetting
transactions, the Corporation will incur a gain or a loss (as described below)
to the extent that there has been movement in forward contract prices. If the
Corporation engages in an offsetting transaction, it may subsequently enter into
a new forward contract to sell the foreign currency. Should forward prices
decline during the period between the Corporation's entering into a forward
contract for the sale of a foreign currency and the date it enters into an
offsetting contract for the purchase of the foreign currency, the Corporation
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should forward
prices increase, the Corporation will suffer a loss to the extent the price of
the currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell.
The Corporation's dealing in forward foreign currency exchange contracts will be
limited to the transactions described above. Of course, the Corporation is not
required to enter into forward contracts with regard to its foreign
currency-denominated securities and will not do so unless deemed appropriate by
the 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.
Portfolio Turnover.
The Corporation's portfolio turnover rate for the years ended December 31, 2001
and 2000 were 124.34% and 54.13%, respectively. Portfolio turnover for the year
ended December 31, 2001 increased significantly from 2000 due to the
repositioning of securities holdings (1) in anticipation of a rebound in the US
economy and (2) as a result of the change in Portfolio Management and the
emphasis on quantitative investment techniques.
4
DIRECTORS AND OFFICERS
Board of Directors
The Board of Directors provides broad supervision over the affairs of the
Corporation.
Management Information
Information with respect toDirectors and officers of the Corporation and their
business experience for the past five years is shown below.. Unless otherwise
noted, their addresses are 100 Park Avenue, New York, NY 10017.
Term of Number of Other
Office Portfolios Directorships
and in Fund Held By Director
Length of Complex Not Disclosed
Name, (Age), Position(s) Time Principal Occupation(s) During Past 5 Years and Other Overseen Under Principal
With Corporation Served* Information by Director Occupation(s)
--------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
John R. Galvin (72) 2000-2003; Dean Emeritus, Fletcher School of Law and Diplomacy at 61 None
Director 1995 to Date Tufts University; Director or Trustee of each of the
investment companies of the Seligman Group of Funds**;
Chairman Emeritus, American Council on
Germany; Director, Raytheon Co., defense
and commercial electronics, National
Defense University and the Institute for
Defense Analyses. Formerly, Director,
USLIFE Corporation, life insurance;
Governor of the Center for Creative
Leadership; 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.
Alice S. Ilchman (67) 2001-2004; President Emeritus, Sarah Lawrence College; Director or 61 None
Director 1990 to Date Trustee of each of the investment companies of the
Seligman Group of Funds**; Director, Jeannette K.
Watson Fellowship; Trustee, the Committee for Economic
Development; Director, Public Broadcasting Service
(PBS); and Court of Governors, London School of
Economics. Formerly, Chairman, The Rockefeller
Foundation, charitable foundation; Trustee, The Markle
Foundation, philanthropic organization; and Director,
New York Telephone Company and International Research
and Exchange Board, intellectual exchanges.
Frank A. McPherson (69) 20001-2004; Retired Chairman of the Board and Chief Executive 61 None
Director 1995 to Date Officer of Kerr-McGee Corporation, diversified energy
company; Director or Trustee of each of the investment
companies of the Seligman Group of Funds**; Director,
Conoco Inc, oil and gas exploration and production,
Intergis Health, owner of various hospitals, BOK
Financial, bank holding company, Oklahoma
Chapter of the Nature Conservancy,
Oklahoma Medical Research Foundation,
Boys and Girls Clubs of Oklahoma,
Oklahoma City Public Schools Foundation
and Oklahoma Foundation for Excellence in
Education. Formerly, Chairman, Oklahoma
City Chamber of Commerce, Intergis Health
and Oklahoma City Public Schools
Foundation; Director, Kimberly-Clark
Corporation, consumer products and the
Federal Reserve System's Kansas City
Reserve Bank; and Member of the Business
Roundtable.
5
Term of Number of Other
Office Portfolios Directorships
and in Fund Held By Director
Length of Complex Not Disclosed
Name, (Age), Position(s) Time Principal Occupation(s) During Past 5 Years and Other Overseen Under Principal
With Corporation Served* Information by Director Occupation(s)
--------------------------------------------------------------------------------------------------------------------------------
John E. Merow (72) 1999-2002; Retired Chairman and Senior Partner, Sullivan & 61 None
Director 1991 to Date Cromwell, law firm; Director or Trustee of each of the
investment companies of the Seligman Group of Funds**;
Director, Commonwealth Industries, Inc., manufacturers
of aluminum sheet products, the Foreign Policy
Association, Municipal Art Society of New York, the
U.S. Council for International Business and New
York-Presbyterian Hospital; Vice Chairman, New
York-Presbyterian Healthcare System, Inc.; and Member
of the American Law Institute and Council on Foreign
Relations.
Betsy S. Michel (59) 1999-2002; Attorney; Director or Trustee of each of the investment 61 None
Director 1985 to Date companies of the Seligman Group of Funds**; Trustee,
The Geraldine R. Dodge Foundation, charitable
foundation and World Learning, Inc. Formerly, Chairman
of the Board of Trustees of St. George's School
(Newport, RI) and Director, the National Association of
Independent Schools (Washington, DC).
James C. Pitney (75) 1999-2002; Retired Partner, Pitney, Hardin, Kipp & Szuch, law firm; 61 None
Director 1981 to Date Director or Trustee of each of the investment companies
of the Seligman Group of Funds**. Formerly, Director,
Public Service Enterprise Group, public utility.
Leroy C. Richie (60) 2001-2004; Chairman and Chief Executive Officer, Q Standards 60 None
Director 2000 to Date Worldwide, Inc., library of technical standards;
Director or Trustee of each of the investment companies
of the Seligman Group of Funds** (except Seligman Cash
Management Fund, Inc.); Director, Kerr-McGee
Corporation, diversified energy company and Infinity,
Inc., oil and gas services and exploration; Chairman,
Highland Park Michigan Economic Development Corp;
Trustee, New York University Law Center Foundation; and
Vice Chairman, Detroit Medical Center. Formerly,
Chairman and Chief Executive Officer, Capital Coating
Technologies, Inc., applied coating technologies; and
Vice President and General Counsel, Automotive Legal
Affairs, Chrysler Corporation.
James Q. Riordan (74) 2000-2003; Director or Trustee of each of the investment companies 61 None
Director 1989 to Date of the Seligman Group of Funds**; Director or Trustee,
The Houston Exploration Company, oil exploration, The
Brooklyn Museum, KeySpan Corporation, diversified
energy and electric company and the Committee for
Economic Development. Formerly, Co-Chairman of the
Policy Council of the Tax Foundation; Director, Tesoro
Petroleum Companies, Inc., Dow Jones & Company, Inc., a
business and financial news company and Public
Broadcasting Service (PBS); Director and President,
Bekaert Corporation, high-grade steel cord, wire and
fencing products; and Vice Chairman, Exxon Mobil
Corporation, petroleum and petrochemicals company.
Robert L. Shafer (69) 2000-2003; Retired Vice President, Pfizer Inc., pharmaceuticals; 61 None
Director 1991 to Date Director or Trustee of each of the investment companies
of the Seligman Group of Funds**. Formerly, Director,
USLIFE Corporation, life insurance.
6
Term of Number of Other
Office Portfolios Directorships
and in Fund Held By Director
Length of Complex Not Disclosed
Name, (Age), Position(s) Time Principal Occupation(s) During Past 5 Years and Other Overseen Under Principal
With Corporation Served* Information by Director Occupation(s)
--------------------------------------------------------------------------------------------------------------------------------
James N. Whitson (67) 1999-2002; Retired Executive Vice President and Chief Operating 61 None
Director 1993 to Date Officer, Sammons Enterprises, Inc., a diversified
holding company; Director or Trustee of each of the
investment companies of the Seligman Group of Funds**;
Director, C-SPAN, cable television networks and
CommScope, Inc., manufacturer of coaxial cable.
INTERESTED DIRECTORS AND PRINCIPAL OFFICERS
--------------------------------------------------------------------------------------------------------------------------------
William C. Morris*** (64) 2000-2003; Chairman, J. & W. Seligman & Co. Incorporated, Chairman 61 None
Director, Chairman of the 1988 to Date and Chief Executive Officer of each of the investment
Board and Chief Executive companies of the Seligman Group of Funds**; Chairman,
Officer Seligman Advisors, Inc. and Seligman Services, Inc.;
Chairman, Carbo Ceramics Inc., manufacturer of ceramic
proppants for oil and gas industry; and Director,
Seligman Data Corp. and Kerr-McGee Corporation, a
diversified energy company. Formerly, Director, Daniel
Industries Inc., manufacturer of oil and gas metering
equipment.
Brian T. Zino*** (49) 2001-2004; Director and President, J. & W. Seligman & Co. 61 None
Director and President Dir.: 1993 Incorporated; President of each of the investment
to Date companies of the Seligman Group of Funds (with the
Pres.: 1995 exception of Seligman Quality Municipal Fund, Inc. and
to Date Seligman Select Municipal Fund, Inc.) and Director or
Trustee of each of the investment companies of the
Seligman Group of Funds**; Director, Seligman Advisors,
Inc. and Seligman Services, Inc.; Chairman, Seligman
Data Corp.; Member of the Board of Governors of the
Investment Company Institute; and Vice Chairman, ICI
Mutual Insurance Company.
Ben-Ami Gradwohl (43) 2001 to Date Managing Director, J. & W. Seligman & Co. Incorporated N/A N/A
Vice President and since January 2000; Vice President and Co-Portfolio
Co-Portfolio Manager Manager of Seligman Common Stock Fund, Inc., Seligman
Income Fund, Inc. and Seligman Tax-Aware Fund, Inc.; and
Vice President of Seligman Portfolios, Inc. and
Co-Portfolio Manager of its Seligman Common Stock
Portfolio and Seligman Income Portfolio. Formerly,
Portfolio Manager, Nicholas-Applegate Capital Management
from 1996 to 1999; and Vice President , Research and
Quantitative Analysis, Leland O'Brien Rubinstein
Associates, Inc. from 1994 to 1996.
David Guy (43) 2001 to Date Managing Director, J. & W. Seligman & Co. Incorporated N/A N/A
Vice President and since January 2000; Vice President and Co-Portfolio
Co-Portfolio Manager Manager of Seligman Common Stock Fund, Inc., Seligman
Income Fund, Inc. and Seligman Tax-Aware Fund, Inc.; and
Vice President of Seligman Portfolios, Inc. and
Co-Portfolio Manager of its Seligman Common Stock
Portfolio and Seligman Income Portfolio. Formerly,
Portfolio Manager, Systematic Investment Group,
Nicholas-Applegate Capital Management from 1997 to 1999;
and Vice President, Equity Derivatives Analysis Group,
Salomon Brothers, Inc. from 1992 to 1996.
7
Term of Number of Other
Office Portfolios Directorships
and in Fund Held By Director
Length of Complex Not Disclosed
Name, (Age), Position(s) Time Principal Occupation(s) During Past 5 Years and Other Overseen Under Principal
With Corporation Served* Information by Director Occupation(s)
--------------------------------------------------------------------------------------------------------------------------------
Thomas Rose (44) 2000 to Date Senior Vice President, Finance, J. & W. Seligman & Co. N/A N/A
Vice President Incorporated, Seligman Advisors, Inc. and Seligman Data
Corp.; Vice President of each of the investment companies
of the Seligman Group of Funds** and of Seligman
Services, Inc. and Seligman International, Inc.
Formerly, Treasurer of each of the investment companies
of the Seligman Group of Funds and of Seligman Data Corp.
Lawrence P. Vogel (45) V.P.: 1992 Senior Vice President and Treasurer, Investment N/A N/A
Vice President and to Date Companies, J. & W. Seligman & Co. Incorporated; Vice
Treasurer Treas.: President and Treasurer of each of the investment
2000 to Date companies of the Seligman Group of Funds** and of
Seligman Data Corp. Formerly, Senior Vice President,
Finance, J. & W. Seligman & Co. Incorporated, Seligman
Advisors, Inc., Seligman International, Inc. and Seligman
Data Corp.; Vice President, Seligman Services, Inc.; and
Treasurer, Seligman International, Inc. and Seligman
Henderson Co.
Frank J. Nasta (37) 1994 to Date General Counsel, Senior Vice President, Law and N/A N/A
Secretary Regulation and Corporate Secretary, J. & W. Seligman &
Co. Incorporated; Secretary, of each of the investment
companies of the Seligman Group of Funds**; and Corporate
Secretary, Seligman Advisors, Inc., Seligman Services,
Inc., Seligman International, Inc. and Seligman Data
Corp. Formerly, Corporate Secretary, Seligman Henderson
Co.
----------
* All officers are elected annually by the Board and serve until their
successors are elected and qualified or their earlier resignation.
** The Seligman Group of Funds consists of twenty-three registered investment
companies.
*** Mr. Morris and Mr. Zino are considered "interested persons" of the
Corporation, as defined in the 1940 Act, by virtue of their positions with
J. & W. Seligman & Co. Incorporated and its affiliates.
The standing committees of the Board include the Board Operations Committee,
Audit Committee and Director Nominating Committee. These Committees are
comprised solely of Directors who are not "interested" persons of the
Corporation as that term is defined in the 1940 Act. The duties of these
Committees are described below.
Board Operations Committee. This Committee has authority generally to direct the
operations of the Board, including the nomination of members of other Board
Committees and the selection of legal counsel for the Corporation. The Committee
met five times during the year ended December 31, 2001. Members of the Committee
are Messrs. Riordan (Chairman), Galvin, McPherson, Merow, Pitney, Richie, Shafer
and Whitson, and Dr. Ilchman and Ms. Michel.
Audit Committee. This Committee recommends the independent public accountants
for selection as auditors by the Board annually. In addition, the Committee
assists the Board in its oversight of the Fund's financial reporting process and
operates pursuant to a written charter. The Committee met three times during the
year ended December 31, 2001. Members of the Committee are Messrs. Whitson
(Chairman), Galvin, Merow, and Richie, and Ms. Michel.
Director Nominating Committee. This Committee selects and nominates persons for
election as Directors by the Board. In addition, if a shareholder meeting is
held where Directors are to be elected, the Committee will select and nominate
persons for election as Directors at such shareholder meeting. The Committee
will consider suggestions from shareholders submitted in writing to the
Secretary of the Fund. The Committee met once during the year ended December 31,
2001. Members of the Committee are Messrs. Shafer (Chairman), Pitney, McPherson,
and Riordan and Dr. Ilchman.
8
Beneficial Ownership of Shares
As of December 31, 2001, the Directors beneficially owned shares in the
Corporation and the Seligman Group of Funds as follows:
Aggregate Dollar Range of Shares
Dollar Range of Fund Shares Owned Owned by Director in the Seligman
Name By Director Group of Funds
-------------------------------------------------------------------------------------------------------------
INDEPENDENT DIRECTORS
-------------------------------------------------------------------------------------------------------------
John R. Galvin $10,001 - $50,000 $50,001-$100,000
Alice S. Ilchman Over $100,000 Over $100,000
Frank A. McPherson Over $100,000 Over $100,000
John E. Merow Over $100,000 Over $100,000
Betsy S. Michel $10,001 - $50,000 Over $100,000
James C. Pitney Over $100,000 Over $100,000
Leroy C. Richie $10,001 - $50,000 $10,001-$50,000
James Q. Riordan Over $100,000 Over $100,000
Robert L. Shafer $50,001 -$100,000 Over $100,000
James N. Whitson Over $100,000 Over $100,000
-------------------------------------------------------------------------------------------------------------
INTERESTED DIRECTORS
-------------------------------------------------------------------------------------------------------------
William C. Morris Over $100,000 Over $100,000
Brian T. Zino Over $100,000 Over $100,000
Compensation Table
Pension or
Aggregate Retirement Benefits Total Compensation
Compensation Accrued as part of from Corporation and
Name and Position with Corporation from Corporation (1) Corporation Expenses Fund Complex (1)(2)
----------------------------------- -------------------- --------------------- -------------------
William C. Morris, Director and Chairman N/A N/A N/A
Brian T. Zino, Director and President N/A N/A N/A
John R. Galvin, Director $30,794 N/A $94,500
Alice S. Ilchman, Director 28,642 N/A 88,500
Frank A. McPherson, Director 28,628 N/A 90,000
John E. Merow, Director 30,794 N/A 94,500
Betsy S. Michel, Director 28,664 N/A 91,500
James C. Pitney, Director 27,577 N/A 87,000
Leroy C. Richie, Director 28,679 N/A 90,000
James Q. Riordan, Director 25,500 N/A 87,000
Robert L. Shafer, Director 27,541 N/A 85,500
James N. Whitson, Director 27,652(3) N/A 93,000(3)
----------------------
(1) Based on remuneration received by the Directors of the Corporation for the
year ended December 31, 2001.
(2) As defined in the Corporation's Prospectus, the Seligman Group of Funds
consists of twenty-three investment companies.
(3) Deferred.
The Corporation has adopted a deferred compensation plan under which independent
directors may elect to defer receiving their fees. A director who has elected
deferral of his or her fees may choose a rate of return equal to either (1) the
interest rate on short-term Treasury Bills, or (2) the rate of return on the
shares of certain of the investment companies advised by the Manager, as
designated by the director. 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, 2001, the total amount of deferred compensation (including
interest) payable in respect of the Corporation to Mr. Whitson was $196,196.
Messrs. Merow and Pitney no longer defer current compensation; however, they
have accrued deferred compensation in the amounts of $89,037 and $64,266,
respectively, as of December 31, 2001.
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
of Funds.
9
Code of Ethics
The Manager, Seligman Advisors, Inc. (Seligman Advisors), their subsidiaries and
affiliates, and the Seligman Group of Funds have adopted a Code of Ethics that
sets forth the circumstances under which officers, directors and employees
(collectively, Employees) are permitted to engage in personal securities
transactions. The Code of Ethics proscribes certain practices with regard to
personal securities transactions and personal dealings, provides a framework for
the reporting and monitoring of personal securities transactions by the
Manager's Director of Compliance, and sets forth a procedure of identifying, for
disciplinary action, those individuals who violate the Code of Ethics. The Code
of Ethics prohibits Employees (including all investment team members) from
purchasing or selling any security or an equivalent security that is being
purchased or sold by any client, or where the Employee intends, or knows of
another's intention, to purchase or sell a security on behalf of a client. The
Code also prohibits all Employees from acquiring securities in a private
placement or in an initial or secondary public offering unless an exemption has
been obtained from the Manager's Director of Compliance.
The Code of Ethics prohibits (1) each portfolio manager or member of an
investment team from purchasing or selling any security within seven calendar
days of the purchase or sale of the security by a client's account (including
investment company accounts) that the portfolio manager or investment team
manages; (2) each Employee from engaging in short-term trading (a purchase and
sale or vice-versa within 60 days); and (3) each member of an investment team
from profiting from short sales of a security if, at that time, any client
managed by that team has a long position in that security. Any profit realized
pursuant to any of these prohibitions must be disgorged to charitable
organizations.
Employees are required, except under very limited circumstances, to engage in
personal securities transactions through the Manager's order desk, or through an
authorized dealer or investment advisor designated by the Manager. All Employee
personal securities transactions must be pre-cleared through the Manager's
compliance department. The compliance department and the order desk maintain a
list of securities that may not be purchased due to a possible conflict with
clients. All Employees are also required to disclose all securities beneficially
owned by them upon commencement of employment and at the end of each calendar
year.
A copy of the Code of Ethics is on public file with, and is available upon
request from, the SEC. You can access it through the SEC's Internet site,
http://www.sec.gov.
MANAGEMENT OF THE CORPORATION
The Manager
J. & W. Seligman & Co. Incorporated (the "Manager"), subject to the control of
the Corporation's Board of Directors, manages the investments of the assets of
the Corporation and administers its business and other affairs pursuant to a
management agreement (the "Management Agreement"). The Manager also serves as
investment manager to twenty-two other US registered investment companies which,
together with the Corporation, make up the "Seligman Group of Funds." There are
no other management-related service contracts under which services are provided
to the Corporation. No person or persons, other than the Directors, officers or
employees of the Manager and the Corporation regularly advise the Corporation
with respect to its investments.
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 is a successor firm to an investment banking business founded in
1864 which has provided investment services to individuals, families,
institutions and corporations. Mr. William C. Morris, Chairman of the Manager
and Chairman of the Board of Directors and Chairman and C.E.O. of the
Corporation, owns a majority of the outstanding voting securities of the
Manager. See the Appendix for information regarding the history of the Manager.
The Corporation pays the Manager a management fee for its services, 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 $12,508,900 in 2001,
10
$15,398,779 in 2000 and $16,408,753 in 1999, respectively, which was equivalent
to an annual rate of .40%, .39% and .40%, respectively, of the average daily net
assets of the Corporation.
As part of its services to the Corporation, the Manager provides the Corporation
with such office space, administrative and other services and executive and
other personnel as are necessary for the operations of the Corporation. The
Manager also provides senior management for Seligman Data Corp., a wholly-owned
subsidiary of the Corporation and certain of the other investment companies in
the Seligman Group of Funds. 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.
At the November 15, 2001 Board of Directors meeting, the Board unanimously
approved the continuance of the Management Agreement. In preparation for the
meeting, the Board requested and reviewed a wide variety of materials from the
Manager, including extensive performance and expense information for other
investment companies compiled by third parties, and the Independent Directors
conferred with their counsel at the meeting prior to voting. In their
determinations with respect to continuance of the Management Agreement, the
Board considered many factors, including, but not limited to: (1) the investment
results achieved by the Manager for the Corporation (including investment
performance comparisons with other comparable closed-end funds and certain
indices); (2) the nature and quality of the administrative services rendered by
the Manager; (3) the payments received by the Manager and its affiliates from
all sources involving both the Corporation and the other investment companies in
the Seligman Group of Funds; (4) the costs borne by, and profitability of, the
Manager and its affiliates in providing service of all types to the Corporation
and to the other investment companies in the Seligman Group of Funds; (5)
information concerning the Corporation's expense ratio and competitive industry
fee structures and expense ratios, including, specifically, the relationship of
the Corporation's management fee rates to those typically paid by similar funds;
(6) the Manager's policies and practices regarding allocation of portfolio
transactions, including the use of brokers or dealers that provided research and
other services to the Manager and the benefits derived from such services to the
Corporation and to the Manager; (7) portfolio turnover for the Corporation and
other comparable investment companies; (8) the Manager's willingness to consider
and, when desirable, implement organizational and operational changes designed
to improve investment results; and (9) the fall-out benefits which the Manager
and its affiliates receive from the Manager's relationship to the Corporation.
In its deliberations, the Board did not identify any particular information that
was all-important or controlling. Rather, the Board evaluated all information
available to it and determined that the compensation paid to the Manager under
the Management Agreement was fair and reasonable in light of the services
performed, expenses incurred and such other matters as the Board (and each
Director) considered relevant in the exercise of its (or such Director's)
reasonable judgment.
Certain of the factors addressed by the Board in reaching its determination are
discussed in more detail below.
Portfolio Performance. The Board of Directors considered the performance of the
Corporation as compared to the performance of other comparable closed-end funds
and as compared to appropriate securities indices. Directors also considered the
nature and quality of the investment advice rendered by the Manager. In addition
to the information received by the Directors in connection with the November 15,
2001 Board of Directors meeting, the Board receives detailed information related
to performance of the Corporation at each Board meeting during the year.
Expenses of the Corporation. The Board also considered the management fee rate
paid by the Corporation to the Manager and the other expenses of the
Corporation, in comparison to both the quality of services provided and the fees
and expenses of funds with similar characteristics.
Costs of Providing Service and Profitability. The Directors reviewed information
concerning profitability of the Manager's investment advisory and investment
company activities and its financial condition based on results for 2000 and
2001 (through September 30) and estimates for full-year 2001. The information
considered by the Board of Directors included operating profit margin
information for the Manager's investment company business alone (i.e., excluding
results of its affiliates) and on a consolidated basis. The Board of Directors
also reviewed profitability data and estimated profitability data for each of
the investment companies of the Seligman Group of Funds on a fund-by-fund basis.
The Board of Directors reviewed certain assumptions and methods of allocation
used by the Manager in preparing fund-specific profitability data. While the
Manager believes that the methods of allocation used were reasonable, there are
limitations inherent in allocating costs to multiple individual advisory
products served by an organization such as the Manager's where each of the
advisory products draws on, and benefits from, the pooled research of the
organization.
11
HOLDINGS OF PREFERRED STOCK, COMMON STOCK AND WARRANTS
As of March 31, 2002, holders of record of Preferred Stock totaled 426; holders
of record of Common Stock totaled 40,289; and holders of record of Warrants
totaled 114.
Control Persons
As of March 31, 2002, there was no person or persons who controlled the
Corporation, either through a significant ownership of shares or any other means
of control.
Principal Holders
As of March 31, 2002, the principal holders of 5% or more of the outstanding
equity securities of the Corporation, are: Cede & Co., a nominee for The
Depository Trust Company, 55 Water Street, New York (1), New York 10041, owns of
record approximately 44% of the Corporation's Common Stock outstanding;
approximately 80% of the Corporation's Preferred Stock outstanding and
approximately 52% of the Corporation's Warrants outstanding; and (2) Dwight
Goldthorpe, PO Box 2778, Palm Beach, Florida 33480, owns of record approximately
11% of the Corporation's Warrants outstanding.
Management Ownership
As of March 31, 2002, all Directors and officers of the Corporation, as a group,
owned less than 1% of the Corporation's Common Stock. As of the same date, no
Directors or officers owned any of the Corporation's Preferred Stock or
Warrants.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Brokerage Transactions. 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 of the Seligman Group of Funds 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.
Commissions. Total brokerage commissions (not including any spreads on principal
transactions on a net basis) paid by the Corporation during the years ended
December 31, 2001, 2000 and 1999, were $8,798,853, $4,830,427 and $2,719,304,
respectively.
Regular Broker-Dealers. During the year ended December 31, 2001, the Corporation
acquired securities of its regular brokers or dealers (as defined in Rule 10b-1
under the 1940 Act) or of their parents. The Corporation held securities of
Citigroup, Inc., the parent company of Salomon Smith Barney, with an aggregate
value of $84,049,200; and held securities of Merrill Lynch & Co. Incorporated,
the parent company of Merrill Lynch, Pierce Fenner & Smith, Incorporated, with
an aggregate value of $29,187,200; and held securities of Bank of America
Corporation, with an aggregate value of $23,574,775 as of December 31, 2001.
12
FINANCIAL STATEMENTS
The Corporation's financial statements for the year ended December 31, 2001 are
incorporated into this SAI by reference to the 2001 Annual Report to
Stockholders of the Corporation, filed with the SEC pursuant to Section 30(b) of
the 1940 Act and the rules and regulations thereunder. The 2001 Annual Report
contains schedules of the Corporation's portfolio investments as of December 31,
2001 and certain other financial information. The Corporation will furnish,
without charge, a copy of such Annual Report to any person who requests a copy
of the SAI.
The financial information of the Corporation included in the Prospectus under
the caption "Financial Highlights" and the financial statements that are
incorporated by reference in this SAI 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 AND EXPERTS
Custodian. State Street Bank and Trust Company, 801 Pennsylvania Avenue, 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.
Stockholder Service Agent and Dividend Paying Agent. Seligman Data Corp., a
wholly-owned subsidiary of the Corporation, and certain other investment
companies of the Seligman Group of Funds, acts as the stockholder service agent
and dividend paying agent and performs, at cost, certain recordkeeping functions
for the Corporation, maintains the records of stockholder accounts and furnishes
dividend paying, redemption and related services.
Independent Auditors. Deloitte & Touche LLP, Two World Financial Center, New
York, New York 10281, serves as the independent auditors for the Corporation and
in such capacity audits the Corporation's annual financial statements and
financial highlights.
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 auditing standards generally
accepted in the United States of America, the statements of assets and
liabilities, including the portfolios 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, 2001 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 8 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, 2001 is fairly stated, in all
material respects, in relation to the financial statements from which it has
been derived.
DELOITTE & TOUCHE LLP
New York, New York
February 8, 2002
13
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
o Helps finance America's fledgling railroads through underwriting.
o Is admitted to the New York Stock Exchange in 1869. Seligman remained a
member of the NYSE until 1993, when the evolution of its business made it
unnecessary.
o Becomes a prominent underwriter of corporate securities, including New York
Mutual Gas Light Company, later part of Consolidated Edison.
o Provides financial assistance to Mary Todd Lincoln and urges the Senate to
award her a pension.
o Is appointed U.S. Navy fiscal agent by President Grant.
o Becomes a leader in raising capital for America's industrial and urban
development.
....1900-1910
o Helps Congress finance the building of the Panama Canal.
....1910s
o Participates in raising billions for Great Britain, France and Italy,
helping to finance World War I.
....1920s
o Participates in hundreds of underwritings including those for some of the
country's largest companies: Briggs Manufacturing, Dodge Brothers, General
Motors, Minneapolis-Honeywell Regulatory Company, Maytag Company, United
Artists Theater Circuit and Victor Talking Machine Company.
o Forms Tri-Continental Corporation in 1929, today the nation's largest,
diversified closed-end equity investment company, and one of its oldest.
....1930s
o Assumes management of Broad Street Investing Co. Inc., its first mutual
fund, today known as Seligman Common Stock Fund, Inc.
o Establishes Investment Advisory Service.
....1940s
o Helps shape the Investment Company Act of 1940.
o Leads in the purchase and subsequent sale to the public of Newport News
Shipbuilding and Dry Dock Company, a prototype transaction for the
investment banking industry.
o Assumes management of National Investors Corporation, today Seligman Growth
Fund, Inc.
o Establishes Whitehall Fund, Inc., today Seligman Income Fund, Inc.
14
....1950-1989
o Develops new open-end investment companies. Today, manages more than 60
mutual fund portfolios.
o Helps pioneer state-specific, municipal bond funds, today managing a
national and 18 state-specific municipal funds.
o Establishes J. & W. Seligman Trust Company, and J. & W. Seligman Valuations
Corporation.
o Establishes Seligman Portfolios, Inc., an investment vehicle with fifteen
portfolios offered through variable annuity and variable life insurance
products.
....1990s
o Introduces Seligman Select Municipal Fund, Inc. and Seligman Quality
Municipal Fund, Inc., two closed-end funds that invest in high-quality
municipal bonds.
o Introduces to the public Seligman Frontier Fund, Inc., a small
capitalization mutual fund.
o Launches Seligman Global Fund Series, Inc., which today offers five
separate series: Seligman International Growth Fund, Seligman Global
Smaller Companies Fund, Seligman Global Technology Fund, Seligman Global
Growth Fund and Seligman Emerging Markets Fund.
o Launches Seligman Value Fund Series, Inc., which currently offers two
separate series: Seligman Large-Cap Value Fund and Seligman Small-Cap Value
Fund.
o Launches innovative Seligman New Technologies Fund, Inc., a closed-end
"interval" fund seeking long-term capital appreciation by investing in
technology companies, including venture capital investing.
....2000
o Introduces Seligman Time Horizon/Harvester Series, Inc., an asset
allocation type mutual fund containing four funds: Seligman Time Horizon 30
Fund, Seligman Time Horizon 20 Fund, Seligman Time Horizon 10 Fund and
Seligman Harvester Fund.
o Launches Seligman New Technologies Fund II, Inc., a closed-end "interval"
fund seeking long-term capital appreciation by investing in technology
companies, including up to 50% in venture capital investing.
....2001
o Launches Seligman Tax-Aware Fund, Inc., an innovative mutual fund seeking
to maximize after-tax returns.
o Launches Seligman Investment Grade Fixed Income Fund, Inc., a mutual fund
seeking a high level of current income.
15
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
1. Financial Statements.
Part A: Financial Highlights for the ten years ended December 31, 2001;
Table for the ten years ended December 31, 2001 under the caption "Senior
Securities - $2.50 Cumulative Preferred Stock."
Part B: The required financial statements are included in the
Corporation's 2001 Annual Report, which is incorporated by reference into the
Statement of Additional Information. These statements include: Portfolio of
Investments at December 31, 2001; Statement of Assets and Liabilities at
December 31, 2001; Statement of Capital Stock and Surplus at December 31, 2001;
Statement of Operations for the year ended December 31, 2001; Statements of
Changes in Net Investment Assets for the years ended December 31, 2001 and 2000;
Notes to Financial Statements; Financial Highlights for the five years ended
December 31, 2001; Report of Independent Auditors.
2. Exhibits: All Exhibits listed below have been previously filed and are
incorporated herein by reference, except those Exhibits marked with an asterisk
(*) which are filed herewith.
(a) Amended and Restated Charter of Registrant. (Incorporated by
reference to Registrant's Amendment No. 27 to the Registration
Statement on 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).
(c) Not Applicable.
(d)(1) Specimen certificates of Common Stock. (Incorporated by reference
to Registrant's Amendment No. 1 to the Registration Statement on
Form N-2 filed on March 6, 1981.)
(d)(2) Specimen certificates of $2.50 Cumulative Preferred Stock.
(Incorporated by reference to Registrant's Amendment No. 1 to the
Registration Statement on Form N-2 filed on March 6, 1981.)
(d)(3) Specimen of Warrant of the Registrant. (Incorporated by reference
to Registrant's Amendment No. 1 to the Registration Statement on
Form N-2 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 on Form N-2 filed on September 17, 1992.)
(d)(5) The Registrant's Charter is the constituent instrument defining
the rights of the $2.50 Cumulative Preferred Stock, par value $50,
and the Common Stock of the Registrant. (Incorporated by reference
to Registrant's Amendment No. 27 to the Registration Statement on
Form N-2 filed on April 16, 1998.)
(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.
(f) Not Applicable.
(g)(1) Amended Management Agreement between Registrant and J. & W.
Seligman & Co. Incorporated. (Incorporated by reference to
Registrant's Amendment No. 24 to the Registration Statement on
Form N-2 filed April 13, 1995.)
(h) Not Applicable.
(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 on Form N-1A of
Seligman Frontier Fund, Inc. (File No. 2-92487) filed on January
28, 1997.)
C-1
PART C. OTHER INFORMATION
(i)(2) Deferred Compensation Plan for Directors of Tri-Continental
Corporation. (Incorporated by reference to Registrant's Amendment
No. 27 to the Registration Statement on 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 Amendment No. 26 to the Registration Statement on
Form N-2 filed on April 24, 1997.)
(k) Not Applicable.
(l) *Opinion and Consent of Counsel.
(m) Not Applicable.
(n) *Consent of Independent Auditors.
(o) Not Applicable.
(p) Not Applicable.
(q)(1) The Seligman Roth/Traditional IRA Information Kit. (Incorporated
by reference to Registrant's Amendment No. 27 to the Registration
Statement on 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 on Form N-1A of Seligman Value Fund Series,
Inc. (File 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 on
Form N-1A of Seligman Value Fund Series, Inc. (File No. 333-20621)
filed on April 17, 1997.)
(q)(4) Qualified Plan and Trust Basic Plan Document. (Incorporated by
reference to Registrant's Amendment No. 27 to the Registration
Statement on 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 Amendment
No. 27 to the Registration Statement on 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
Amendment No. 27 to the Registration Statement on Form N-2 filed
on April 16, 1998.)
(r) Code of Ethics. (Incorporated by reference to Amendment No. 30 to
the Registration Statement on Form N-2 filed on April 28, 2000.)
(Other Exhibits)
Power of Attorney for Leroy C. Richie. (Incorporated by reference
to Registrant's Amendment No. 31 to the Registration Statement on
Form N-2 filed on April 19, 2001.)
Item 25. Marketing Arrangements. Not Applicable.
C-2
PART C. OTHER INFORMATION
Item 26. Other Expenses of Issuance and Distribution.
Registration fees $1,718.56
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, 2002:
Title of Class Number of Recordholders
-------------- -----------------------
$2.50 Cumulative Preferred 426
Common Stock 40,289
Warrants 114
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, as amended, 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 (the
"Manager"), is the Registrant's investment manager. The Manager also serves
as investment manager to twenty-two other 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 Global Fund Series, Inc., Seligman High Income Fund Series,
Seligman Income Fund, Inc., Seligman Investment Grade Fixed Income Fund,
Inc., Seligman Municipal Fund Series, Inc., Seligman Municipal Series
Trust, Seligman New Jersey Municipal Fund, Inc., Seligman New Technologies
Fund, Inc., Seligman New Technologies Fund II, Inc., Seligman Pennsylvania
Municipal Fund Series, Seligman Portfolios, Inc., Seligman Quality
Municipal Fund, Inc., Seligman Select Municipal Fund, Inc., Seligman
Tax-Aware Fund, Inc., Seligman Time Horizon/Harvester Series, Inc. and
Seligman Value Fund Series, Inc.
The Manager has an advisory service division which provides investment
management or advice to private clients. The list required by this Item 30
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 with the Securities and Exchange Commission, pursuant to the
Investment Advisers Act of 1940, as amended, (SEC File No. 801-15798) which
was filed on March 31, 2001 (Schedule D) and June 8, 2001 (Schedule A),
respectively.
C-3
PART C. OTHER INFORMATION
Item 31. Location of Accounts and Records:
The accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the
Rules 17 CFR 270.31(a)(1)-31(a)(3) promulgated thereunder, are maintained
by J. & W. Seligman & Co. Incorporated, 100 Park Avenue, New York, NY
10017, and at the following locations: (1) Custodian: State Street Bank and
Trust Company, 801 Pennsylvania, Kansas City, Missouri 64105 and (2)
Transfer Agent, Redemption and Other Shareholder Account Services: Seligman
Data Corp., 100 Park Avenue, New York, NY 10017.
Item 32. Management Services: Not Applicable.
Item 33. Undertakings:
I. 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 10% from its net
asset value as of the effective date of the registration statement.
II. 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) and 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.
C-4
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 17th day of April, 2002.
TRI-CONTINENTAL CORPORATION
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 17, 2002.
Signature Title
--------- -----
/s/ William C. Morris Chairman of the Board
----------------------------------------
William C. Morris (Principal executive officer)
and Director
/s/ Brian T. Zino Director and President
----------------------------------------
Brian T. Zino
/s/ Lawrence P. Vogel Treasurer
----------------------------------------
Lawrence P. Vogel
John R. Galvin, Director )
Alice S. Ilchman, Director )
Frank A. McPherson, Director )
John E. Merow, Director ) /s/ Brian T. Zino
Betsy S. Michel, Director ) ------------------------------------
James C. Pitney, Director ) Brian T. Zino, Attorney-in-Fact
Leroy C. Richie, Director )
James Q. Riordan, Director )
Robert L. Shafer, Director )
James N. Whitson, Director )
TRI-CONTINENTAL CORPORATION
FORM N-2
EXHIBIT INDEX
Form N-2 Item No. Description
----------------- -----------
Item 24(2)(l) Opinion and Consent of Counsel
Item 24(2)(n) Consent of Independent Auditors