SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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|_| Soliciting material under Rule 14a-12.
|_| Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2)).
TRI-CONTINENTAL CORPORATION
(Name of Registrant as Specified in Its Charter)
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Tri-Continental Corporation
an investment you can live with
September 13, 2006
Dear Valued Stockholder:
Tri-Continental Corporation has thrived over the years despite the stock market
crash of 1929, the Great Depression, World War II, social upheavals of the 60s,
and devastating bear markets in the 70s and early 2000s. Today, Tri-Continental
faces a new challenge. We need your help to defeat an attack by a group of hedge
funds. Your vote is critical.
You may have recently received another letter from hedge fund manager Arthur
Lipson containing preposterous allegations of misdeeds at Tri-Continental.
Please don't be fooled. This is a desperate attempt by Mr. Lipson and his hedge
funds and shows the lengths to which they will go to mislead Stockholders in
their efforts to take control of Tri-Continental.
In addition, the letter obscures the significant conflicts, both personal and
financial, of Mr. Lipson and his director nominees (the "Hedge Fund Slate"). By
any measure, the hedge fund nominees are not "truly independent" and, as a
consequence, their interests and your interests are not aligned. Their behavior
suggests that these are not people you can trust to oversee your Corporation:
o Mr. Lipson is not Tri-Continental's largest Stockholder. He
personally owns 901 shares of Tri-Continental. The two other members
of the Hedge Fund Slate own 100 shares each, which were gifted to
them in July 2006 by one of Lipson's hedge funds.
o Each member of the Hedge Fund Slate is -- first and foremost -- an
investor in Lipson's hedge funds, which do own a substantial
position in Tri-Continental.
o The hedge funds' positions in Tri-Continental are hedged;
accordingly, Tri-Continental investment results are of little
consequence to them.
o How can one realistically expect the Hedge Fund Slate to put the
interests of long-term Stockholders ahead of the interests of
Lipson's hedge funds?
Outlined below are matters relating to your investment that we believe are
particularly important for your consideration:
o Tri-Continental expects to resume capital gains payments no later
than 2007, barring adverse market conditions. Due to substantial
gains realized by the Corporation's portfolio since 2003 (see chart
on next page), the tax loss carry-forward has been reduced to only
$.74 a share. This means that we have less than $1 of losses to
offset before we can start paying out gains again.
o Tri-Continental's recent performance has been highly respectable. As
of September 12, 2006 Market Price and NAV total return exceeds the
S&P 500 year-to-date and for the one- and three-year periods (see
chart on next page).
o The mutual fund inquiry referred to by the hedge fund group does not
in any way relate to Tri-Continental, and was fully disclosed to you
nearly three years ago in a letter and in each Annual and
Semi-Annual Report since December 31, 2003.
Call us old fashioned, but we think it's important to keep the Tri-Continental
tradition of prudent wealth-building alive to serve the long-term needs of
current Stockholders and future generations. It's a shame that in today's
financial marketplace a cottage industry has emerged where hedge fund
speculators search out and destroy closed-end investment companies in order to
turn a quick profit.
Please support Tri-Continental by completing and signing the enclosed WHITE
proxy card. Remember, if you voted a GOLD card in support of Lipson's hedge
funds, and wish to change that vote, you can do so by completing and signing the
enclosed WHITE card. Returning the WHITE card is a vote against the destructive
practices of hedge funds and a vote for continued improvement in investment
results and for eminent board members who seek to strengthen, not radically
alter, your Corporation.
Again, if you already voted with the hedge funds, please change your vote by
returning the WHITE card.
Sincerely,
/s/ William C. Morris /s/ Brian T. Zino
William C. Morris Brian T. Zino
Chairman President
P.S. If you have any questions or need assistance in voting your shares, please
call Georgeson toll-free at 888-219-8293. Banks and brokerage firms, please call
212-440-9800.
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REALIZED CAPITAL GAINS
2004 2005 2006(8 months)
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Realized Capital Gains $1.79 $2.23 $1.87
INVESTMENT PERFORMANCE CONTINUES TO BE HIGHLY RESPECTABLE
Return Average Annual Returns Cumulative Return
Year-to-Date 1 year 3 years 3 years
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Market Price 10.1% 11.2% 11.3% 37.7%
NAV 7.1% 8.5% 10.9% 36.3%
S&P 500 6.6% 7.9% 10.8% 36.1%
All performance data as of September 12, 2006.
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