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Tri-Continental Corporation
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Tri-Continental Corporation
an investment you can live with
March 17, 2006
To our Stockholders:
We recently mailed to you proxy materials for the upcoming 76th Annual
Meeting of Stockholders of Tri-Continental Corporation, to be held on May 4,
2006. In these materials, your Board of Directors is asking you to use the White
Proxy Card to:
o Vote "FOR" the re-election of three experienced Directors of
Tri-Continental: General John R. Galvin, Mr. William C. Morris, and Mr.
Robert L. Shafer;
o Vote "FOR" the ratification of the selection of Deloitte & Touche LLP as
independent auditors of Tri-Continental for 2006; and
o Vote "AGAINST" the proposal recommending that the Board of Directors take
steps to provide for cumulative voting in the election of directors of the
Corporation.
We hope you will take a moment to review these materials and to vote in
accordance with your Board of Directors' recommendations. Please be sure to
complete, sign and date the enclosed White Proxy Card to ensure that your vote
is counted. If you hold your shares in a brokerage or bank account (in "street
name"), your broker or bank cannot vote your shares this year (as it has in past
annual meetings) unless you complete, sign, date and return the proxy voting
form it will send you. If you have already returned the White Proxy Card, we
thank you for your support.
We also want to alert you that over the coming weeks, you may receive
proxy solicitation material with a proxy card from a group of dissidents led by
Western Investment Hedged Partners. Do not be confused. This is an attempt by a
group of Hedge Funds to take control of your long-term investment for their
short-term gain. The Western Investment Hedge Fund Group solicitation is not
endorsed by Tri-Continental or your Board of Directors. Your Board of Directors
strongly opposes both (i) Western Investment Hedge Fund Group's attempt to
replace three experienced Directors of Tri-Continental and (ii) the cumulative
voting stockholder proposal that is supported by the Western Investment Hedge
Fund Group.
The Hedge Fund Group's Agenda
The open agenda being pursued by the Western Investment Hedge Fund Group
is to install a minority of directors who will seek to have Tri-Continental
open-end, liquidate, or conduct massive tender offers. In recent years, Western
Investment has aligned itself with other Hedge Funds to pursue similar
short-term arbitrage strategies against other closed-end investment companies.
We believe that the actions proposed by the Western Investment Hedge Fund
Group, which are designed to result in a quick trading profit, could only be
undertaken at significant expense to Tri-Continental and its stockholders, and
would ultimately lead to termination of the Corporation, which has worked to
provide value to its stockholders for over 75 years. Please consider the
following:
o Contrary to the misleading assertions of the dissident Hedge Fund Group,
the discount at which Tri-Continental's shares trade relative to its net
asset value (NAV) does not represent "lost value." In fact, stockholders
who purchase Tri-Continental at a discount actually benefit. For example,
at a 13.1% discount (the discount on March 15, 2006), every $1.00 invested
by a stockholder in Tri-Continental buys the benefit of approximately
$1.15 worth of underlying assets. Many of our common stockholders take
advantage of this - over 63% of stockholders whose accounts are held on
the Corporation's books are currently taking advantage of this situation
either by participating in a plan that allows stockholders to take the
Corporation's dividends, year-end gain distributions, or both, in
additional shares, or by purchasing additional shares through one of the
plans offered by the Corporation. This opportunity to invest at a discount
would be lost after open-ending.
o Any short-term gain that could be realized through open-ending or similar
proposals would be offset by the significant expenses that implementing
such proposals could entail, including the costs of obtaining stockholder
approval, legal expenses, potential negative tax consequences, costs
associated with liquidating the Corporation's assets to meet redemption
requests (possibly at inopportune times), and the ongoing distribution and
other costs of operating an open-end fund. Partly for this reason,
Tri-Continental stockholders have rejected proposals to open-end on nine
prior occasions.
o On March 15, 2006, Tri-Continental's NAV per share reached $23.28, the
highest level in more than four years. The Corporation's expense ratio is
0.64% - a level that compares very favorably to the expense ratios of
funds that invest similarly to Tri-Continental.
Cumulative Voting Proposal
As noted above, the Board of Directors strongly opposes the cumulative
voting proposal supported by the Western Investment Hedge Fund Group. Cumulative
voting allows a stockholder to "stack" his or her votes in favor of a particular
director or directors. A special interest group - like the Western Investment
Group - can use cumulative voting to elect its own directors, and those
directors may be beholden to the special interest group. We believe that the
present voting system, which has long been used by Tri-Continental (and by most
leading corporations), helps ensure that the directors who are elected will
represent the interests of the Corporation and all stockholders as a whole.
Tri-Continental stockholders have rejected similar proposals by wide margins two
times in the past.
We urge you to support Tri-Continental by completing, signing and dating
our enclosed White Proxy Card and promptly mailing it in the enclosed
postage-paid envelope. Please do not sign or return any proxy card sent to you
by the Western Investment Group or its associates. If
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you have already returned a Gold Proxy Card from the Western Investment Group
and wish to vote according to the recommendations of your Board of Directors,
please return a currently dated White Proxy Card.
Whether or not you plan to attend the Meeting, and regardless of the
number of shares you own, we urge you to vote FOR your Board's nominees and
AGAINST the cumulative voting proposal.
Sincerely,
/s/ William C. Morris /s/ Brian T. Zino
William C. Morris Brian T. Zino
Chairman President
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If you have questions or need assistance in voting your shares, please call:
Georgeson Shareholder
17 State Street, 10th Floor
New York, NY 10004
(888) 219-8293 (Toll Free)
Banks and Brokerage Firms please call:
(212) 440-9800
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