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Tri-Continental Corporation
April 2006
Tri-Continental
I.
History and Tradition
II.
Annual Meeting
III.
Dissidents’ Stated Objectives
IV.
Dissidents’ Stated Rationale
– Integrity of Directors
– Investment Results
– Discount
V.
Dissidents’ Actual Objective
VI.
Cumulative Voting
VII.
Tri-Continental — A Closed-End Fund
VIII.
Consequences of Dissident’s Success
IX.
Board’s Recommendations
Tri-Continental
History and Tradition
A closed-end investment company established in January 1929, by
J. & W. Seligman & Co.
One of the nation’s oldest and largest diversified equity closed-end
funds with $2.5 billion in assets
Listed on the New York Stock Exchange for 77 years (NYSE: TY)
The average stockholder has held his or her shares for more than 20
years
62 consecutive years of paying dividends
Has among the lowest expense ratio in its investment category
(0.65% vs. 1.08%)*
*Source: Morningstar
Tri-Continental
Annual Meeting: May 4, 2006
1.
Election of Three Directors
2.
Ratification of Auditors
3.
Stockholder Proposal to Adopt Cumulative Voting
Tri-Continental
Dissidents’ Stated Objectives
Elect three of their own directors
Effect cumulative voting
Tri-Continental
Dissidents’ Stated Rationale
Integrity of Directors
Investment Results
Discount
Tri-Continental
Integrity and Quality of Directors
More than 75% of Directors are Independent (7 out of 9 currently)
Highly Qualified Independent Directors with experience as
Chairman/CEO of Fortune 500 company
Directors of multiple NYSE listed companies
President/Dean of leading colleges
Director, New York Regional Office, Federal Trade Commission
Director, Federal Reserve System, Kansas City Reserve Bank
U.N. Ambassador
Supreme Allied Commander, NATO
Diverse Professional Experience
Business: Pharmaceutical, Financial Services, Consumer Products, Energy, Media
Legal
Academia
Government/Military
Philanthropy
Tri-Continental
Integrity and Quality of Directors
Six regularly scheduled Board meetings each year (only four
required by law)
Recent ICI study shows 72% of funds have four regularly scheduled meetings
Independent Board committees meet in executive session at each
meeting
Board Operations Committee
Audit Committee
Director Nominating Committee
Tri-Continental
Integrity and Quality of Directors
Board Operations Committee
All seven Independent Directors
Directs operation of the full Board
In existence for 25 years
Chaired by Frank A. McPherson, Lead Independent Director
Audit Committee
Four Independent Directors
Oversight of financial reporting process
Chaired by James N. Whitson, 1940 Act “Audit Committee Financial Expert”
Director Nominating Committee
Three Independent Directors
Identifies and evaluates candidates for the Board
Chaired by Ambassador Robert L. Shafer
Tri-Continental
Integrity and Quality of Directors
Nominees proposed by the Director Nominating Committee
Extensive experience in investments and business
General John R. Galvin: Independent TY director since 1995; Dean Emeritus of Fletcher
School of Law and
Diplomacy of Tufts University; Formerly Supreme Allied Commander,
NATO, and
Commander-in-Chief, United States European Command; Formerly Director
of
Raytheon Co. and USLIFE Corporations; current independent member of Board of
investment companies of the Seligman Group of Funds.
William
C. Morris: TY Director and Chairman of the Fund since 1988; Chairman of
J.
& W. Seligman & Co. Incorporated; Chairman Carbo Ceramics, Inc.; Former
Senior
Officer of Lehman Brothers and its successor firms; President and CEO
of the
Metropolitan Opera Association.
Ambassador Robert L. Shafer: Independent TY Director since 1991; Ambassador and
Permanent Observer of the Sovereign Military Order of Malta to the United Nations;
former director of USLIFE Corporation
and Vice President of Pfizer Inc.; current
independent member of Boards of investment companies of Seligman Group of Funds.
Tri-Continental
Dissident Director Candidates
Art Lipson: Controls Western Investment Hedge Fund Group (Mr. Lipson has
stated that his position in Tri-Continental is hedged)
Marlene Plumlee: Assistant Professor of Accounting at University of Utah (No
relevant Board experience)
Paul DeRosa: Principal at Mount Lucus Management Co., an asset management
firm and a Director of Intervest Bancshares Corp. (Nasdaq: IBCA)
ISS Corporate Governance Quotient for IBCA:
Index Score: 9.1% (bottom decile)
Industry Score: 2.4% (bottom decile)
Tri-Continental
Investment Results
Investment Objective
Invests to produce future growth of both capital and income, while
providing reasonable current income
Investment Strategy
Seeks to achieve its objective by investing in a diversified portfolio of
large-capitalization stocks and fixed-income securities
Tri-Continental
Investment
Results
Improved Investment Results as of March 31, 2006
Performance data quoted in this presentation represent past performance and does
not guarantee or indicate future investment results. The rates of return will
vary and the principal value of an
investment will fluctuate. Shares, if
sold, may be worth more or less than their original costs. Current performance
may be lower or higher than the performance data quoted. Total returns of the
Corporation as of the most recent month end will be made available at
www.seligman.com by the seventh business day following that month
end. J. & W. Seligman & Co. Incorporated, the
investment manager of
the Corporation, made certain payments to the Corporation in 2004. Absent such
payments, the net asset value returns that include this period would have been
lower.
Returns reflect changes in market price or net asset value, as
applicable and assume reinvestment of distributions. Performance data quoted
does not reflect the deduction of taxes that
investors may pay on
distributions or the sale of shares.
Source: J. & W. Seligman & Co. and FactSet
Tri-Continental
Investment
Results
Lead Portfolio Manager: John B. Cunningham
Joined Tri-Continental in September 2004
Seligman’s Chief Investment Officer
Chartered Financial Analyst (CFA)
Former Group Head of Salomon Brothers Asset Management Equity Team
Former Portfolio Manager for the highly regarded Salomon Brothers Investors
Value Fund
Member of New York Society of Security Analysts (NYSSA)
MBA from the Amos Tuck School of Business Administration, Dartmouth College
BA from University of Virginia
Tri-Continental
Investment
Results
The Investment Team: 90 Years of Combined Experience
Sector Responsibility
Industry Experience
Title
8
Senior Vice President
Francis Fay
Equity Trader
Consumer Staples, Discretionary,
Industrials, and Materials
15
Vice President
Edward Mehalick
Security Analyst
Consumer Staples and Discretionary
6
Vice President
Chris V. Kagaoan
Security Analyst
Heath Care, Utilities, and Energy
18
Senior Vice President
Brian M. Turner
Security Analyst
Information Technology
9
Senior Vice President
Christopher J. Boova
Security Analyst
Finance, Telecommunications Services,
and Telecommunications Equipment
16
Managing Director
Michael F. McGarry
Co-Portfolio Manager
18 years
Managing Director
John B. Cunningham
Portfolio Manager
Tri-Continental
Discount
Discounts, a well-known feature of closed-end funds
83% of all domestic equity closed-end funds trade at a discount*
S&P 500 Index Fund trades at a discount (NYSE: GRE)
Virtually all of Tri-Continental’s stockholders acquired their shares at
a discount to NAV
*Source: ETFConnect.com as of March 31, 2006
Tri-Continental
Discount
Directors Knowledgeable of Discount
Receive information about discount six times per year (at each Board meeting)
Receive a detailed report annually on closed-end equity fund discounts
Report presented for the past 12 years
The Discount Report
Investment Results
Distribution Policies
Market Turnover
Share Growth
Realized and Unrealized Capital Appreciation
Discount Trends
Macro-economic Factors
Tri-Continental
Discount
Discount: Perception vs. Reality
*Based on our 2005 independent telephone survey conducted annually (2004 82%, 2002 84%, 2001 80%).
Investors
Perception of Discount
New Investors
Positive
Existing Stockholders
Positive or Indifferent
(81% of Tri-Continental's stockholders are
either pleased or indifferent with current
discount)*
Sellers
Negative
Tri-Continental
Discount
An investment in a closed-end fund trading at a 15% discount
Buys a dollar worth of assets for 85 cents on the dollar
Enhances the dividend yield by 17.6%
63% of registered stockholders participate in one of the Fund’s
investment plans
Tri-Continental
Discount
Steps Taken that Benefit ALL Stockholders
Stock Repurchase Program established in 1998
Open market purchases when discount exceeds 10%
Five-year average discount before program: 17.1%
Average discount after program: 14.9%
Steps Taken to Raise Awareness
Founding member of Closed-End Fund Association
Conferences and Trade Shows
Advertising Campaign
Investor Relations Program
Dedicated Website (www.tricontinental.com)
Tri-Continental
Dissidents’ Actual Objective
Open-End the Fund,
Liquidate the Fund, or
Conduct Massive Tender Offers
Tri-Continental
Cumulative Voting
With Tri-Continental’s majority election threshold, cumulative voting
has the potential to impede election of directors
Cumulative voting allows the election of Directors who have support
from only a relatively small special interest group
Stockholders have voted against cumulative voting on two prior
occasions (most recently in 2004)
Tri-Continental
A Closed-End
Fund
Stockholders have voted to keep the Fund's closed-end structure on
nine prior occasions (most recently in 1999)
Successfully operated as closed-end fund since 1929
Closed-end fund structure is fundamental to meeting the Fund's
investment objective
Closed-end fund structure is necessary to maintain the Fund’s low
expense ratio
Tri-Continental
A Closed-End
Fund
The closed-end structure allows Jack Cunningham and his Team to focus solely on
investing for the long-term benefit of stockholders.
Portfolio Manager is not impeded by:
Continuous purchases or redemptions of shares and related cash flows
Maintenance of cash reserves
Forced realization for capital gains and losses
Loss of ability to use leverage
Forced redemption of Preferred Stock and Warrants
Potential for increased expenses
Addition of 12b-1 fees
Increased transfer agency fees
Increased custodian fees
Tri-Continental
Consequences
of Dissident’s Success
Three unqualified board members with a self-serving agenda
Cumulative voting and the potential for more special interest
candidates
Altering Tri-Continental’s closed-end structure to the detriment of
long-term stockholders
(higher expenses, additional fees, and lower
yields)
Tri-Continental
Board’s
Recommendations
Proposal 1:
FOR election of General John R. Galvin,
Mr. William C. Morris and
Ambassador Robert L. Shafer
Proposal 2:
FOR the ratification of auditors
Proposal 3:
AGAINST the cumulative voting
stockholder proposal
Appendix
Tri-Continental
Independent Directors
General John R. Galvin
Independent TY director since 1995; Dean Emeritus of Fletcher School of Law and Diplomacy of Tufts University; Formerly
Supreme Allied Commander, NATO, and Commander-in-Chief, United States European
Command; Formerly Director of
Raytheon Co. and USLIFE Corporation; current independent member of Board of investment companies of the Seligman
Group of Funds.
Alice S. Ilchman
President Emerita, Sarah Lawrence College; Director, Jeannette K. Watson Fellowship; Trustee, Committee for Economic
Development; Governor, Court of Governors, London School of Economics; and
Director, Public Broadcasting Service
(PBS). Formerly, Trustee, Save the Children; Chairman, The Rockefeller Foundation; Director, New York Telephone
Company; current independent member of Board of investment companies of the Seligman Group of Funds.
Frank A. McPherson
Retired Chairman of the Board and Chief Executive Officer of Kerr-McGee Corporation; Director, DCP Midstream GP, LLP;
Integris Health; 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, Director, ConocoPhillips; Kimberly-Clark Corporation; BOK Financial; Director, the Federal
Reserve System’s
Kansas City Reserve Bank; current independent member of Board of investment companies of the Seligman Group of
Funds.
Betsy S. Michel
Attorney; Trustee, The Geraldine R. Dodge Foundation. Formerly, Chairman of the Board of Trustees of St. George’s
School; Trustee, World Learning, Inc.; Trustee, Council of New Jersey Grantmakers;
current independent member of Board
of investment companies of the Seligman Group of Funds.
Tri-Continental
Independent Directors
Leroy C. Richie
Counsel, Lewis & Munday, P.C.; Chairman and Chief Executive Officer, Q Standards Worldwide, Inc.; Director, Kerr-McGee
Corporation; Director, Infinity, Inc.; Director, Vibration Control Technologies,
LLC; Lead Outside Director, Digital Ally Inc.;
Director and Chairman, Highland Park Michigan Economic Development Corp.; Chairman, Detroit Public Schools
Foundation. Formerly, Trustee, New York University Law Center Foundation; Director, New York Regional
Office, Federal
Trade Commission; Vice Chairman, Detroit Medical Center and Detroit Economic Growth Corp.; Vice President and
General Counsel, Automotive Legal Affairs, Chrysler Corporation; current independent member of Board of investment
companies
of the Seligman Group of Funds.
Ambassador Robert L. Shafer
Independent TY Director since 1991; Ambassador and Permanent Observer of the Sovereign Military Order of Malta to the
United Nations; former director of USLIFE Corporation and Vice President
of Pfizer Inc.; current independent member of
Boards of investment companies of Seligman Group of Funds.
James N. Whitson
Retired Executive Vice President and Chief Operating Officer, Sammons Enterprises, Inc.; Director, CommScope, Inc.
Formerly, Director and Consultant, Sammons Enterprises, Inc. and a Director
of C-SPAN; current independent member of
Board of investment companies of the Seligman Group of Funds