66th Annual Report 1995
TRI-CONTINENTAL CORPORATION
an investment you can live with
<PAGE>
TRI-CONTINENTAL CORPORATION INVESTS PRIMARILY TO PRODUCE LONG-TERM GROWTH OF
BOTH CAPITAL AND INCOME, WHILE PROVIDING REASONABLE CURRENT INCOME.
TY is Tri-Continental Corporation's symbol for its Common Stock on the New York
Stock Exchange.
<PAGE>
TRI-CONTINENTAL CORPORATION
To the Stockholders: February 2, 1996
Nineteen ninety-five, Tri-Continental Corporation's 66th year, was a banner
year for U.S. equity markets and a good year for your Corporation. The Standard
& Poor's 500 Composite Stock Price Index (S&P 500) recorded its fifth best gain
since Tri-Continental was founded in 1929-only 1933, 1935, 1954, and 1958 saw
larger gains. What makes 1995's gains all the more remarkable is that unlike
those in prior periods, the U.S. economy was not recovering from a recession.
Rather, the Federal Reserve Board accomplished a osoft landingo; that is, the
U.S. economy's growth was slowed without triggering an actual contraction in
overall economic activity.
Even though the U.S. economy's growth slowed, corporate profits continued to
rise. This can be attributed to a combination of slight increases in unit
volumes in the U.S., expanded unit volumes internationally, and continued
increases in productivity. In addition, fears of an impending recession faded.
At this time last year, it was expected that inflation would increase to 3.5% or
more. Instead, inflation remained below 3%. As a result, long-term interest
rates declined during the year. The yield on the 30-year U.S. Treasury bond, for
example, fell from 7.84% on December 29, 1994, to 5.95% on December 29, 1995.
For Tri-Continental, 1995 was a transition year. The year began with the
appointment of Charles C. Smith, Jr. as Portfolio Manager. Early in the year, we
determined that efforts to increase the dividend distributions on a per share
basis had begun to interfere with our ability to meet your Corporation's core
investment objective of providing FUTURE GROWTH OF BOTH CAPITAL AND INCOME,
WHILE PROVIDING REASONABLE CURRENT INCOME. Therefore, the Corporation's
portfolio was shifted to increase the opportunity for capital appreciation and
long-term dividend growth. The fixed-income component of the portfolio, which
had accounted for more than 12% of assets, was reduced substantially. Proceeds
were invested in U.S. equities during the first quarter in time to participate
in this year's strong markets.
These moves contributed to an improvement in Tri-Continental's investment
performance. For the year, total return was 30.80% based on net asset value.
Although this return lagged the S&P 500, it compared favorably to the universe
of Closed-End Growth and Income Funds, which had an average total return of
30.05% for the year, as measured by Lipper Analytical Services, a prominent fund
ranking service. The total return based on market price was somewhat less at
27.95%, reflecting a widening in the discount from net asset value.
1
<PAGE>
TRI-CONTINENTAL CORPORATION
At the same time that Tri-Continental's portfolio was achieving greater
capital growth, it was also able to generate an increase of 1.3% in total
dividends from net investment income for Common Stockholders who invested their
1994 capital gain distribution in additional shares. The net realized capital
gain paid for 1995 was $169,106,048, or $2.01 per share.
Important progress was made during the year, but our work is far from
complete. Our first priority is to continue to improve the investment results of
your Corporation. In addition, your Manager, J.& W. Seligman & Co.
Incorporated, with the approval of your Corporation's Board of Directors, has
strengthened Tri-Continental's Investor Relations Program with the goal of
enhancing the long-term value of being a Tri-Continental Stockholder.
During the next several years, we will be doing more to promote and enhance
Tri-Continental's image, reputation, and identity as a closed-end investment
company. You'll notice some changes in your Corporation's Annual Report which
were made to address commonly raised issues such as the capital gain and
dividend distributions, and the Corporation's historical discount or premium.
Our goal is to increase the public's understanding of the issues and
opportunities of investing in Tri-Continental. We hope you find all of the
information in this Report helpful.
Looking ahead, the slowing economy, the budget negotiations, and the
Presidential election are a few of the factors that may create somewhat more
volatile markets. However, one thing is clear: Prices of common stocks will
fluctuate, both up and down. Therefore, we will continue to practice sound
investment principles and to pursue your Corporation's stated investment
objectives. In doing so, we will search for, and invest in, companies that can
sustain earnings growth in a challenging and competitive global business
environment-strategy we believe to be key to investment performance.
We thank you for your continued confidence in Tri-Continental Corporation and
look forward to serving your investment needs in the years to come.
By order of the Board of Directors,
/s/William C. Morris
William C. Morris
Chairman
/s/Brian T. Zino
Brian T. Zino
President
2
<PAGE>
TRI-CONTINENTAL CORPORATION
HIGHLIGHTS OF THE YEAR
NET INVESTMENT ASSETS were $2,506,785,758 at December 31.
NET ASSET VALUE of each share of Common Stock was $27.58 at December 31,
compared to $23.70 at the start of the year. If you invested the December gain
distribution in additional shares, the net asset value of each share you owned
at the beginning of 1995 was equivalent to $30.03 at year end. Assuming you
invested dividends and took the gain distribution in shares, your total return
was 30.80%. This compares with 37.58% for common stock prices generally, as
measured by the Standard & Poor's 500 Composite Stock Price Index.
INVESTMENT INCOME was $76,774,096 in 1995, compared to $79,332,941 in 1994. For
Stockholders who invested the 1994 capital gain distribution in additional
shares, the total 1995 investment income rose 1.3%.
OPERATING EXPENSES for the year were $14,507,036. The ratio of expenses to the
average value of net assets was 0.63%, down from 1994's expense ratio of 0.64%.
DIVIDENDS DECLARED totaled $63,180,788. Preferred Stock dividends paid each
quarter completed 66 years of uninterrupted payments. Total net investment
income available to cover the $2.50 Preferred Stock dividend was equivalent to
$82.72 per Preferred share.
Common Stock dividends, paid quarterly, totaled $0.73 per share on an average of
83,971,000 shares, compared to $0.79 in 1994 when, on average, there were
approximately 5,310,000 fewer shares outstanding. Common Stock dividends per
share with the 1994 capital gain distribution taken in additional shares were
equivalent to $0.80 per share.
TAXABLE NET INVESTMENT gain of $220,082,721 was realized in 1995. This amounted
to $2.46 per share of Common Stock outstanding at December 31, 1995. The amount
of net gain realized is the result of sales of securities in the portfolio
throughout the year.
UNREALIZED GAIN on investments totaled $494,660,634, or $5.53 per share of
Common Stock outstanding at December 31, 1995.
DISTRIBUTION OF REALIZED GAIN
Your Directors declared a distribution of $2.01 per Common share from taxable
net gains realized through October 31, 1995, consisting of $1.86 from net
long-term gains and $.15 from net short-term gains, which was paid on December
27 to Stockholders of record on December 8.
The Corporation was required to distribute to Common Stockholders the total
undistributed net capital gains realized through October 31, 1995, to avoid a 4%
federal excise tax. The undistributed net capital gain realized from November 1,
1995, to December 31, 1995, remains a part of the underlying market value of
Common Stock shares as of December 31, 1995. This amount will be distributed to
Common Stockholders during 1996, at which time Common Stockholders will be
subject to federal income taxes on the amount distributed.
The number of shares of Common Stock issued to those who took the December
payment in shares was determined by dividing the total dollar amount payable by
$22.625, the mean of the high and low market prices on the New York Stock
Exchange on December 18. Distributions should be takenainto account in measuring
the results of an investment in Tri-Continental Common Stock, andashould be
taken in shares if you wish your investment to benefit from the full effect of
compounding.
3
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TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
ASSETS AT YEAR END: 1995 1994
--------------- ---------------
<S> <C> <C>
Total assets ............................... $ 2,528,405,417 $ 2,049,281,845
Amounts owed ............................. 21,619,659 17,546,369
--------------- ---------------
NET INVESTMENT ASSETS ...................... $ 2,506,785,758 $ 2,031,735,476
Preferred Stock, at par value ............ 37,637,000 37,637,000
--------------- ---------------
Net assets for Common Stock ................ $ 2,469,148,758 $ 1,994,098,476
=============== ===============
Common shares outstanding .................. 89,512,184 84,144,106
NET ASSETS BEHIND EACH
COMMON SHARE ............................. $ 27.58 $ 23.70
With 1995 gain distribution
taken in shares .......................... $ 30.03 --
TAXABLE GAIN:
Net capital gain realized .................. $ 220,082,721 $ 149,773,270
Per Common share ......................... $ 2.46 $ 1.90
Undistributed capital gains, end of year ... $ 50,976,673 --
Per Common share, end of year ............ $ .57 --
Unrealized capital gain, end of year ....... $ 494,660,634 $ 191,363,863
Per Common share, end of year ............ $ 5.53 $ 2.27
DISTRIBUTION OF CURRENT YEAR'S GAIN:
Per Common share* ........................ $ 2.01 $ 1.90
INCOME:
Total income earned ........................ $ 76,774,096 $ 79,332,941
Expenses ................................. 14,507,036 13,705,939
Preferred Stock dividends ................ 1,881,850 1,881,850
--------------- ---------------
Income for Common Stock .................... $ 60,385,210 $ 63,745,152
=============== ===============
DIVIDENDS PER COMMON SHARE $ .73 $ .79
With December 1994 gain
distribution taken in shares ............. $ .80 --
</TABLE>
*The Corporation's net capital gain realized for the year 1995 was $2.46 per
share of Common Stock outstanding at December 31, 1995. However, the Corporation
was required to distribute only the total undistributed net capital gains
realized through October 31, 1995, ($2.01) to avoid a 4% federal excise tax. The
undistributed net realized capital gain remains a part of the underlying market
value of Common Stock shares as of December 31, 1995. This amount will be
distributed to Common Stockholders during 1996, at which time Common
Stockholders will be subject to federal income taxes on the amount received.
4
<PAGE>
TRI-CONTINENTAL CORPORATION
INTERVIEW WITH YOUR PORTFOLIO MANAGER
CHARLES C. SMITH, JR. is a Managing Director of J. & W.
Seligman & Co. Incorporated and has been Portfolio Manager of
Tri-Continental Corporation since January 1, 1995. Mr. Smith
is also Portfolio Manager and Vice President of Seligman
[photo] Common Stock Fund and Seligman Income Fund. He is also Vice
President of Seligman Portfolios, Inc. and Portfolio Manager
of its Common Stock and Income portfolios. Mr. Smith joined
Seligman in 1985 as Vice President, Investment Officer. He was
promoted to Senior Vice President, Senior Investment Officer
in August 1992, andatoaManaging Director in January 1994.
ECONOMIC FACTORS AFFECTING YOUR CORPORATION
"Contrary to 1994's restrictive monetary policy, the Federal Reserve Board took
a more accommodating stance in 1995, lowering short-term interest rates twice.
This action gave investors more confidence in the near-term growth prospects for
the U.S. economy and contributed to the strength of the U.S. equity markets
which, in turn, benefited the prices of many of the companies owned by
Tri-Continental."
YOUR CORPORATION'S INVESTMENT STRATEGY
"1995 was a transition year for Tri-Continental. Emphasis was placed on
increasing investments in equities relative to fixed income securities equity
securities over fixed-income investments, with the expectation of strong stock
market performance in 1995. Tri-Continental's bond investments, all very short
in maturity, were sold and the assets were redeployed into equities. This was
done in an effort to increase the opportunity for capital appreciation and at
the same time to maintain income at or above 1994 levels for those Stockholders
investing capital gain distributions in additional shares. In fact, there was a
modest 1.3% increase in 1995's income over 1994 for those Stockholders who
invested their 1994 capital gain distribution in additional shares.
"With regard to our particular investment philosophy, we remain broadly
diversified, choosing to focus on identifying and investing in companies we
believe have the strongest relative earnings growth and attractive valuations in
each industry group. We believe using this strategy consistently is the best
method of achieving your Corporation's investment objective of providing future
growth of both capital and income, while providing reasonable current income."
INDIVIDUAL SECTOR PERFORMANCE
"As one might expect, interest rate sensitive issues were the strongest
performers in Tri-Continental's portfolio in 1995, as they benefited from the
significant decline in interest rates. The economically sensitive capital goods
industry also did very well, especially Aerospace stocks which continued to
appreciate, responding to consolidation in that industry. In addition, health
care related securities rebounded from their depressed levels in 1994 and the
technology sector had a strong year, in spite of some weakness in the fourth
quarter.
5
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TRI-CONTINENTAL CORPORATION
"Our decision to greatly reduce your Corporation's exposure to Real Estate
Investment Trusts (REITs) proved particularly timely as those issues
significantly lagged the stock market, notwithstanding the high yields and
interest rate sensitivity that is generally associated with REITs.
"As part of your Corporation's investment policy, it may invest up to 10% of
assets directly in international markets. By investing in non-U.S. markets we
look to add value for Tri-Continental Stockholders by seeking greater
diversification, less year-to-year volatility, and a higher expected return over
the long term. However, in shorter periods when international markets lag the
U.S. markets, such as 1995, international exposure can dampen overall investment
results. Seligman Henderson Co., the joint venture between J. &W. Seligman &Co.
Incorporated and Henderson Administration Group, plc in London, is responsible
for Tri-Continental's international investments."
LOOKING AHEAD
"In 1996, we will continue to focus on achieving Tri-Continental's objectives by
investing primarily in common stocks. We will also maintain modest exposure to
convertible stocks and bonds, in an effort to generate slightly higher income.
We will use a disciplined process of identifying issues with the best relative
earnings growth in each industry group, as opposed to making large sector bets.
While 1996 may not produce the same dramatic rise in share prices as did 1995,
the opportunity exists to make attractive investments that should prove to be
successful long-term holdings, regardless of any near-term price volatility."
6
<PAGE>
TRI-CONTINENTAL CORPORATION
DIVERSIFICATION OF ASSETS
The diversification of portfolio holdings by industry on December 31, 1995, was
as follows. Individual securities owned are listed on pages 18 to 26.
<TABLE>
<CAPTION>
Percent of
Net Investment
Assets
------------------
December 31,
Issues Cost Value 1995 1994
-------- -------------- -------------- ------ ------
<S> <C> <C> <C> <C> <C>
Net Cash and Short-Term
Holdings 2 $ 171,852,821 $ 171,852,821 6.9% 4.2%
Tri-Continental
Financial Division 4 25,844,937 31,049,388 1.2 1.3
U.S. Government Securities -- -- -- -- 3.3
Corporate Bonds -- -- -- -- 2.2
---- -------------- -------------- ------ ------
6 $ 197,697,758 $ 202,902,209 8.1% 11.0%
---- -------------- -------------- ------ ------
Common Stocks and
Convertible Issues:
Aerospace 5 $ 66,497,563 $ 93,284,375 3.7% 1.7%
Automotive and related 8 75,563,674 86,554,958 3.4 4.0
Basic materials 3 22,664,338 24,734,375 1.0 3.7
Building and construction 2 26,396,485 32,025,000 1.3 0.9
Chemicals 8 88,793,252 106,617,169 4.3 --
Communications 10 80,664,644 106,275,030 4.2 4.0
Computer and business services 7 74,328,448 97,261,267 3.8 5.2
Consumer goods and services 20 239,057,233 319,582,421 12.7 10.6
Diversified 7 82,642,017 100,431,387 4.0 5.2
Drugs and health care 9 112,250,275 164,619,375 6.6 5.8
Electric and gas utilities 6 48,496,329 56,952,450 2.3 2.3
Electronics 5 49,112,681 57,801,875 2.3 2.8
Energy 12 148,520,052 193,435,597 7.7 9.4
Entertainment and leisure 4 23,829,269 31,460,000 1.3 1.2
Environmental management 1 8,125,060 7,375,000 0.3 0.7
Finance and insurance 20 188,301,799 276,618,727 11.1 10.5
Manufacturing and
industrial equipment 11 117,441,619 144,477,397 5.8 7.9
Packaging and paper 1 3,317,500 3,397,500 0.1 1.1
Paper and forest products 5 54,833,303 66,691,542 2.7 --
Publishing 5 45,491,318 54,719,248 2.2 0.3
Real estate investment trusts 4 31,011,962 37,912,500 1.5 4.9
Retail trade 9 145,127,983 156,851,521 6.3 4.4
Steel 2 30,086,875 25,090,625 1.0 --
Transportation 5 51,873,687 59,714,210 2.3 1.9
Miscellaneous -- -- -- -- 0.5
---- -------------- -------------- ------ ------
169 $1,814,427,366 $2,303,883,549 91.9% 89.0%
---- -------------- -------------- ------ ------
NET INVESTMENT ASSETS 175 $2,012,125,124 $2,506,785,758 100.0% 100.0%
==== ============== ============== ====== ======
</TABLE>
7
<PAGE>
TRI-CONTINENTAL CORPORATION
LARGEST PORTFOLIO CHANGES
October 1 to December 31, 1995
Shares
------------------
Holdings
ADDITIONS Increase 12/31/95
-------- --------
COMMON STOCKS
ALLTEL Corporation 500,000 500,000
Frontier Corporation 400,000 400,000
Intel Corporation 300,000 300,000
International Paper
Company 350,000 350,000
Lockheed Martin
Corporation 200,000 200,000
Lowe's Companies, Inc. 600,000 600,000
The Pep Boys--Manny,
Moe and Jack 500,000 500,000
RJR Nabisco Holdings
Corporation 500,000 500,000
Sara Lee Corporation 600,000 600,000
Teradyne, Inc. 500,000 500,000
Shares
------------------
Holdings
REDUCTIONS Decrease 12/31/95
-------- --------
COMMON STOCKS
Aetna Life and Casualty
Company 225,000 --
Bell Atlantic Corporation 300,000 --
Federal National Mortgage
Association 100,000 100,000
General Electric Company 200,000 500,000
NYNEX Corporation 500,000 --
PacifiCorp. 1,000,000 --
Procter & Gamble
Company 150,000 250,000
SCEcorp. 750,000 --
Southern Company 1,000,000 --
The Williams Companies,
Inc. 300,000 400,000
Largest portfolio changes are based on cost of purchases or proceeds from sales
of securities.
10 LARGEST HOLDINGS
December 31, 1995
<TABLE>
<CAPTION>
Increase (Decrease)
December 31, 1995 in Per Share Price
--------------------------- ----------------------
Cost Value For Since
(000s) (000s) 1995 Purchase
---------- ---------- --------- -----------
<S> <C> <C> <C> <C>
General Electric Company $ 16,079 $ 36,000 41.2% 123.9%
Colgate-Palmolive Company 23,199 31,613 10.8 36.3
Kimberly-Clark Corporation 17,211 28,963 63.9 68.3
Amoco Corporation 20,362 28,750 21.6 41.2
American International
Group, Inc. 10,386 27,750 (5.6) 167.2
Eastman Kodak Company 18,336 26,800 40.3 46.2
GTE Corporation 13,675 26,400 44.9 93.1
May Department Stores
Company 22,535 25,350 25.2 12.5
Morgan (J.P.) & Co., Inc. 18,721 24,075 28.6 28.6
Exxon Corporation 15,838 24,038 31.9 51.8
---------- ----------
$176,342 $279,739
========== ==========
</TABLE>
8
<PAGE>
TRI-CONTINENTAL CORPORATION
Tri-Continental is a closed-end investment company whose stock is listed on
the New York Stock Exchange. Unlike mutual funds, whose shares sell at net asset
value, the market price of Tri-Continental stock is set by the forces of supply
and demand. Therefore, the market price of Tri-Continental's stock can be above
its net asset value, selling at a PREMIUM, or below its net asset value, selling
at a DISCOUNT.
TRI-CONTINENTAL'S CURRENT DISCOUNT IN PERSPECTIVE
The chart below shows Tri-Continental's year-end premiums or discounts for
the 20 years ended December 31, 1995. During this period, the premium was as
high as 2.45% at December 31, 1986, and the discount was as wide as 25.12% on
December 31, 1980. The median discount was 13.75%. Tri-Continental's year-end
1995 discount of 17.97% is wider than the 16.14% discount at year-end 1994 and
is within the third quartile of the premium/discount range experienced in the
past 20 years.
[The following table represents a chart which appears in the printed report]
Premium/Discount Range
1976-1995
----------------------
1976 ... -21%
1977 ... -12%
1978 ... -22%
1979 ... -23%
1980 ... -25%
1981 ... -20%
1982 ... -8%
1983 ... -5%
1984 ... -2%
1985 ... -1%
1986 ... 2%
1987 ... -14%
1988 ... -18%
1989 ... -16%
1990 ... -13%
1991 ... -3%
1992 ... -9%
1993 ... -14%
1994 ... -16%
1995 ... -18%
Tri-Continental's discounts and premiums experienced in the past 20 years are
generally consistent with many other closed-end Funds with similar investment
objectives.
9
<PAGE>
TRI-CONTINENTAL CORPORATION
A PRUDENT WAY TO PROTECT AND INCREASE ASSETS
Regardless of the changes in the discount or premium, an investment in
Tri-Continental has been a good way to protect and increase assetsueven over
periods as short as five years. The chart below illustrates how a $10,000
investment grew in each five-year period in the past 20 years. The table lists
these periods in order of the greatest WIDENING of the discount to the greatest
NARROWING of the discount ("Percentage Point Difference").
<TABLE>
<CAPTION>
5-Year Premium/Discount Percentage Market Value of Cost of Living
- ---------------- --------------------- Point $10,000 at End Adjustment for Increase in
Holding Period Start End Difference of Period* $10,000 Buying Power
- ---------------- -------- -------- ---------- -------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dec. 31, 84-89 -1.91% -16.18% -14.27 $21,063 $11,975 $ 9,088
Dec. 31, 83-88 -4.69% -18.26% -13.57 16,128 11,895 4,233
Dec. 31, 85-90 -1.36% -13.11% -11.75 16,169 12,242 3,927
Dec. 31, 82-87 -7.58% -13.85% -6.27 18,826 11,824 7,002
Dec. 31, 86-91 +2.45% -2.87% -5.32 18,262 12,480 5,782
Dec. 31, 90-95 -13.11% -17.97% -4.86 18,079 11,480 6,599
Dec. 31, 75-80 -21.88% -25.12% -3.24 21,291 15,550 5,741
Dec. 31, 89-94 -16.18% -16.14% +0.04 14,618 11,872 2,746
Dec. 31, 76-81 -20.52% -20.44% +0.08 16,660 16,151 509
Dec. 31, 77-82 -12.01% -7.58% +4.43 25,115 15,717 9,398
Dec. 31, 88-93 -18.26% -13.60% +4.66 21,244 12,100 9,144
Dec. 31, 87-92 -13.85% -9.03% +4.82 21,152 12,296 8,856
Dec. 31, 78-83 -21.77% -4.69% +17.08 31,388 14,963 16,425
Dec. 31, 79-84 -22.54% -1.91% +20.63 26,287 13,729 12,558
Dec. 31, 81-86 -20.44% +2.45% +22.89 33,969 11,755 22,214
Dec. 31, 80-85 -25.12% -1.36% +23.76 26,834 12,665 14,169
*Adjusted for the effect of the 1992 rights offering.
</TABLE>
During the five-year holding period Dec. 31, 84-89, for example,
Tri-Continental's discount widened to 16.18% from 1.91%--a 14.27 percentage
point change. Even so, a $10,000 investment in Tri-Continental at the beginning
of this period (December 31, 1984) would have more than doubled to $21,063 at
the end of the period (December 31, 1989). To keep up with inflation (the
Consumer Price Index) in this five-year period, $10,000 would have had to
increase to $11,975. Therefore, a Tri-Continental investor's buying power would
have increased by $9,088 ($21,063-$11,975).
A narrowing of the discount is generally associated with even better results.
The five years ended December 31, 1985, for example, experienced the greatest
narrowing of the discount--by 23.76 percentage points. A $10,000 investment made
at the beginning of this period (December 31, 1980) was worth $26,834 at the end
of the period (December 31, 1985). To keep up with inflation in this five-year
period, $10,000 would have had to increase to $12,665. Therefore, a
Tri-Continental investor's buying power would have increased by $14,169
($26,834-$12,665).
The information provided is based on past performance, which is no guarantee
of future results, and excludes any commissions or costs associated with the
purchase of Tri-Continental shares. In addition, capital gain and dividend
distributions taken in additional shares are subject to personal income tax in
the year earned. The examples shown do not reflect the effect of such taxes.
THE EXAMPLES IN THE TABLE ASSUME THE INVESTMENT OF BOTH CAPITAL GAIN AND
DIVIDEND DISTRIBUTIONS IN ADDITIONAL SHARES--BOTH ARE IMPORTANT TO YOUR
PARTICIPATION IN THE FUTURE GROWTH OF BOTH CAPITAL AND INCOME PROVIDED BY
TRI-CONTINENTAL.
10
<PAGE>
TRI-CONTINENTAL CORPORATION
THE WAY TO BUILD YOUR CAPITAL INVESTMENT IN TRI-CONTINENTAL
In order for a Common Stockholder to fully realize the opportunity for
capital appreciation of his or her investment in Tri-Continental, capital gain
distributions must be invested in additional shares. Taking capital gain
distributions in cash, as opposed to investing them in additional shares, is
comparable to an investor selling an individual security at a profit and only
reinvesting the original cost of the investment. Such a strategy would maintain
only the value of the investor's portfolio at the original investment amount. Of
course, the portfolio's value would also reflect any unrealized gains or losses.
The following table illustrates how investing capital gain distributions in
additional shares contributes to the capital appreciation of an investment in
Tri-Continental. As an example of how to use this table, let's look at 1,000
shares of Tri-Continental purchased on December 31, 1975, at a cost of $18.50
per share ($18,500). In 1976, the realized capital gain distribution of $0.66
per share would have been worth $660-enough to purchase an additional 30.88
shares. Had this process of investing capital gain distributions in additional
shares continued, by the end of 1995 the initial 1,000 share purchase would have
grown to a holding of 6,060.37 shares. At the year-end 1995 market price of
$22.625, the market value of the initial $18,500 investment would have increased
to $137,116. By contrast, had the capital gain distributions not been invested
in additional shares over the 20-year period, the initial investment of $18,500
would be worth only $22,625 (1,000 shares x $22.625) at December 31, 1995.
<TABLE>
<CAPTION>
Year-End
Gain Paid New Shares Number of Year-End Year-End
Year Per Share Received Shares Market Price Market Value
- ---------- ---------- ------------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
1975 -- -- 1,000.00 $18.500 $ 18,500
1976 $0.66 30.88 1,030.88 22.000 22,679
1977 1.19 60.21 1,091.09 20.625 22,504
1978 1.21 71.36 1,162.45 17.625 20,488
1979 1.01 67.33 1,229.78 19.875 24,442
1980 1.08 64.78 1,294.56 23.625 30,584
1981 1.64 103.25 1,397.81 20.750 29,005
1982 2.72 211.23 1,609.04 26.875 43,243
1983 1.48 94.54 1,703.58 29.375 50,043
1984 4.46 324.17 2,027.75 24.875 50,440
1985 2.40 197.63 2,225.38 29.375 65,371
1986 6.96 572.44 2,797.82 28.625 80,088
1987 3.73 475.75 3,273.57 20.625 67,517
1988 1.25 205.88 3,479.45 19.250 66,979
1989 2.55 394.34 3,873.79 23.000 89,097
1990 1.60 280.14 4,153.93 21.375 88,790
1991 1.80 287.58 4,441.51 27.750 123,252
1992* 1.67 282.05 4,723.56 25.500 120,451
1993 1.80 360.84 5,084.40 23.750 120,754
1994 1.90 481.50 5,565.90 19.875 110,622
1995 2.01 494.47 6,060.37 22.625 137,116
*Adjusted for the effect of the 1992 rights offering.
</TABLE>
11
<PAGE>
TRI-CONTINENTAL CORPORATION
THE WAY TO INCREASE DIVIDEND INCOME
The following chart COMPARES the year-end annual dividend income paid on
1,000 shares of Tri-Continental purchased on December 31, 1975, at a total price
of $18,500, WITH and WITHOUT the capital gain distributions invested in
additional shares. Although the per-share dividends for these two strategies are
identical, the increase in shares due to the investment of capital gain
distributions has a significant impact on the total yearly dividend incomeuan
impact that builds over time. In 1995, the total dividend income was $4,063 for
the individual who had invested his or her capital gain distributions in
additional shares over the 20-year period. By contrast, for the individual who
failed to invest capital gain distributions in additional shares, the share
balance would have remained at 1,000 and just $730 in total income would have
been produced in 1995.
[The following table represents a chart which appears in the printed report]
GROWING DIVIDEND INCOME
Annual dividend income Annual divident income
with capital gains invested without capital gains invested
in additional shares. in additional shares.
1976 .............. $ 660 $ 660
1977 .............. $1,080 $ 990
1978 .............. $1,230 $1,060
1979 .............. $1,300 $1,060
1980 .............. $1,471 $1,140
1981 .............. $1,601 $1,150
1982 .............. $1,731 $1,080
1983 .............. $1,851 $1,090
1984 .............. $2,290 $1,130
1985 .............. $2,310 $1,040
1986 .............. $2,351 $ 970
1987 .............. $2,490 $ 890
1988 .............. $2,650 $ 810
1989 .............. $2,920 $ 840
1990 .............. $3,330 $ 860
1991 .............. $3,240 $ 780
1992 .............. $3,500 $ 780
1993 .............. $3,771 $ 800
1994 .............. $4,011 $ 790
1995 .............. $4,063 $ 730
*Adjusted for the effect of the 1992 rights offering.
THE WAY TO MAXIMIZE VALUE AND FUTURE INCOME
For those individuals who do not need current income, reinvesting dividend
income as well as capital gain distributions produces an even more rapid
accumulation of Tri-Continental shares with a commensurate increase in both
value and future income. This chart illustrates how an investment in
Tri-Continental accumulates over a 20-year period through the investment of
capital gain distributions ONLY, and through the investment of BOTH dividends
and capital gains.
<TABLE>
<CAPTION>
BUILDING WEALTH AND INCOME
No Investment Invest Capital Invest Capital Gains
of Distributions Gains Only and Dividends
---------------- -------------- --------------------
<S> <C> <C> <C>
1000.00 6060.37 13656.15
Market Value at December 31, 1995 $22,625.00 $137,116.00 $308,970.00
1995 Dividend Income $ 730.00 $ 4,063.00 $ 8,981.00
</TABLE>
*Adjusted for the effect of the 1992 rights offering.
Had you choosen to invest BOTH capital gain and dividend distributions in
additional shares, at the end of 1995 you would have had 13,656.15 shares with a
total market value of $308,970, and $8,981 in total income would have been
produced in 1995.
12
<PAGE>
TRI-CONTINENTAL CORPORATION
STOCKHOLDER SERVICES
Tri-Continental provides a number of services to make maintaining an investment
in its Common Stock more convenient.
PURCHASES OF COMMON STOCK. Under the Automatic Dividend Investment and Cash
Purchase Plan, and other Stockholder plans, purchases of Common Stock were made
by the Corporation in the open market and from Stockholders participating in
withdrawal plans to satisfy Plan requirements. Those shares were then sold to
Stockholders using the Plan. During 1995, 1,890,436 shares were purchased by
Stockholders through the Plan.
The Corporation may make additional purchases of its Common Stock in the open
market at such prices and in such amounts as the Board of Directors may deem
advisable. No such additional purchases were made during 1995.
INDIVIDUAL RETIREMENT ACCOUNT TRUST (IRA) is available to individuals under age
70 1/2 who have earned income. The maximum annual deductible individual
contribution is $2,000. A married person with a non-working spouse may set aside
$2,250 annually, while a working couple may shelter up to $4,000 a year. If your
adjusted gross income as a single person exceeds $25,000 a year, or as a married
couple filing jointly exceeds $40,000, and you or your spouse are participating
in an employer's retirement plan, your deduction for the IRA contribution is
reduced or eliminated. To the extent that your deduction for an IRA contribution
is reduced, you will be able to make a non-deductible contribution, the earnings
on which accumulate tax-free. The IRA allows you to invest for your retirement,
to defer taxes on dividends and gain distributions, and to provide benefits for
your spouse, if you wish.
ROLLOVER IRAS. You may be eligible to roll over a distribution of assets
received from another IRA, a qualified employee benefit plan, or tax-deferred
annuity into an IRA with Tri-Continental. To avoid a tax penalty, the transfer
to a Rollover IRA must occur within 60 days of receipt of the qualifying
distribution. However, if you do not make a direct transfer of a distribution
from a qualified employee benefit plan or a tax-deferred annuity to a Rollover
IRA, the payor of the distribution must withhold 20% of the distribution.
RETIREMENT PLANNING -- QUALIFIED PLANS. Unincorporated businesses and the
self-employed may take advantage of the same benefits in their retirement plans
that were previously available only to corporations. Maximum contribution levels
are 25% of earned income (reduced by plan contributions), up to $30,000 per
participant for pension plans, and 15%, up to $30,000, for profit-sharing plans.
For retirement plan purposes, no more than $150,000 may be taken into account as
earned income under the plan in 1995 and future years (subject to adjustments to
reflect cost of living increases). Social Security integration and employee
vesting schedules are also available as options in the Tri-Continental prototype
retirement plans. Although you already may be participating in an employer's
retirement plan, you may be eligible to establish another plan based upon income
from other sources, such as director's fees.
13
<PAGE>
TRI-CONTINENTAL CORPORATION
RETIREMENT PLAN SERVICES provides information about our prototype retirement
plans. The toll-free telephone number is (800) 445-1777 in the Continental U.S.
GIFTS FREE OF FEDERAL TAX are often made using Tri-Continental Common Stock. You
may give as much as $10,000 a year to as many individuals as desired free of
federal gift tax, and a married couple may give up to $20,000 a year.
THE AUTOMATIC CASH WITHDRAWAL PLAN enables owners of Common shares with a market
value of $5,000 or more to receive a fixed amount from their investment at
regular intervals. Investors use the plan to supplement current or retirement
income, for educational expenses, or for other purposes.
FEDERAL TAXES
Quarterly dividends paid on both the Preferred and Common Stocks for 1995, and
the distribution from net short-term gain of $0.15 per Common share paid on
December 27, are subject to federal income tax as "ordinary income." Under the
Internal Revenue Code, 63% of such 1995 ordinary dividend income paid to Common
and Preferred Stockholders qualifies for the dividend received deduction
available to corporate stockholders. In order to claim the dividend received
deduction on these distributions, corporate stockholders must have held the
shares for at least 46 days.
The distribution of $1.86 from net long-term gain realized on investments
through October 31, 1995 was paid to Common Stockholders on December 27, 1995.
The long-term gain is designated as a "capital gain dividend" for federal income
tax purposes and is taxable to stockholders in 1995 as a long-term gain from the
sale of capital assets no matter how long Tri-Continental Common may have been
owned. However, if shares on which a capital gain distribution was received are
subsequently sold, and such shares have been held for six months or less from
date of purchase, any loss would be treated as long-term to the extent it
offsets the long-term gain distribution.
The tax cost basis of shares acquired by investing the December 27 capital gain
and dividend distributions in additional shares was $22.625 per share.
INTEREST ON U.S. GOVERNMENT OBLIGATIONS. Certain states do not tax dividends
paid by regulated investment companies, such as Tri-Continental, to the extent
the income is derived from interest on U.S. Government obligations. Tax
treatment varies by state, and it is suggested that you consult your tax
advisor. Information regarding that portion of dividends derived from interest
on U.S. Government obligations and other relevant information was included in
the 1995 Important Tax Information attached to your combined Form 1099-DIV/B.
14
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS AND LIABILITIES DECEMBER 31, 1995
ASSETS:
Investments at value:
Common stocks (cost--$1,651,233,536) $2,122,406,050
Convertible issues (cost--$163,193,830) 181,477,499
Tri-Continental Financial Division
(cost--$25,844,937) 31,049,388
Short-term holdings (cost--$103,000,000) 103,000,000 $2,437,932,937
--------------
Cash 58,174,154
Receivable for securities sold 23,323,577
Receivable for dividends and interest 8,445,860
Investment in, and expenses prepaid to, stockholder
service agent 412,720
Other 116,169
--------------
Total Assets $2,528,405,417
--------------
LIABILITIES:
Payable for securities purchased $ 18,995,694
Dividends payable 470,463
Accrued expenses, taxes, and other 2,153,502
--------------
Total Liabilities $ 21,619,659
--------------
NET INVESTMENT ASSETS $2,506,785,758
Preferred Stock, at $50 par value 37,637,000
--------------
NET ASSETS FOR COMMON STOCK $2,469,148,758
==============
Net Assets per share of Common Stock
(market value--$22.625) $27.58
======
CAPITAL STOCK AND SURPLUS DECEMBER 31, 1995
CAPITAL STOCK:
$2.50 Cumulative Preferred Stock, $50 par value,
asset coverage per share--$3,330.21
Shares authorized--1,000,000; issued
and outstanding--752,740 $ 37,637,000
Common Stock, $.50 par value:
Shares authorized--99,000,000; issued
and outstanding--89,512,184 44,756,092
SURPLUS:
Capital surplus 1,877,880,677
Undistributed net investment income 880,537
Undistributed net realized gain 50,976,673
Net unrealized appreciation of investments 490,956,402
Net unrealized appreciation on translation of assets
and liabilities denominated in foreign currencies* 3,698,377
--------------
$2,506,785,758
==============
</TABLE>
- ------------
*Includes unrealized appreciation on translation of investments denominated in
foreign currencies of $3,704,232.
See notes to financial statements.
15
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1995
<S> <C> <C>
INVESTMENT INCOME:
Dividends ................................................ $ 61,308,556
Interest ................................................. 15,430,041
------------
Total investment income (net of foreign taxes
withheld of $554,215) ................................... $ 76,738,597
EXPENSES:
Management fee ........................................... $ 9,761,371
Stockholder account and
registrar services ...................................... 3,374,961
Stockholder reports and
communications .......................................... 560,981
Stockholders' meeting .................................... 215,871
Directors' fees and expenses ............................. 195,424
Auditing and legal fees .................................. 188,390
Registration ............................................. 72,361
Miscellaneous ............................................ 137,677
------------
Total expenses ............................................ 14,507,036
------------
NET INVESTMENT INCOME ..................................... $ 62,231,561*
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain on investments ......................... $219,387,584
Net realized gain from foreign
currency transactions ................................... 730,636
Net change in unrealized appreciation
of investments .......................................... 301,589,307
Net change in unrealized appreciation
on translation of assets and liabilities
denominated in foreign currencies ....................... 1,694,560
------------
Net gain on investments and foreign
currency transactions .................................... 523,402,087
-----------
INCREASE IN NET INVESTMENT ASSETS
FROM OPERATIONS .......................................... $585,633,648
============
</TABLE>
- ------------
*Net investment income available for Common Stock is $60,385,210, which is net
of Preferred Stock dividends of $1,881,850, and includes net realized ordinary
gains from foreign currency transactions of $35,499.
See notes to financial statements.
16
<PAGE>
TRI-CONTINENTAL CORPORATION
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31,
---------------------------------
1995 1994
--------------- ---------------
OPERATIONS:
Net investment income ........................$ 62,231,561 $ 65,971,543
Net realized gain on investments ............. 219,387,584 149,714,043
Net realized gain (loss) from foreign
currency transactions ........................ 730,636 (285,314)
Net change in unrealized appreciation
of investments ............................... 301,589,307 (282,010,077)
Net change in unrealized appreciation on
translation of assets and liabilities
denominated in foreign currencies ............ 1,694,560 2,003,817
--------------- ---------------
Increase (decrease) in net investment
assets from operations .......................$ 585,633,648 $ (64,605,988)
--------------- ---------------
DISTRIBUTIONS TO STOCKHOLDERS:
Net investment income:
Preferred Stock (per share: $2.50 and $2.50) .$ (1,881,850) $ (1,881,850)
Common Stock (per share: $.73 and $.79) ...... (61,298,938) (62,142,379)
--------------- ---------------
$ (63,180,788) $ (64,024,229)
Net realized gain on investments:
Common Stock (per share: $2.01 and $1.90) .... (169,106,048) (149,879,009)
--------------- ---------------
Decrease in net investment assets
from distributions ...........................$ (232,286,836) $ (213,903,238)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Value of shares of Common Stock issued
at market price in gain distributions
(5,310,869 and 5,366,690 shares) .............$ 120,158,419 $ 107,671,901
Value of shares of Common Stock issued
for investment plans (1,890,436 and
2,106,411 shares) ............................ 42,080,503 46,577,919
Cost of shares purchased
for investment plans (1,837,697
and 2,142,604 shares) ........................ (40,543,318) (47,855,965)
Net proceeds from issuance of shares of
Common Stock upon exercise of
Warrants (4,470 and 824 shares) .............. 7,866 1,549
--------------- ---------------
Increase in net investment assets
from capital share transactions ..............$ 121,703,470 $ 106,395,404
--------------- ---------------
Increase (decrease) in net investment
assets .......................................$ 475,050,282 $ (172,113,822)
NET INVESTMENT ASSETS:
Beginning of year ............................ 2,031,735,476 2,203,849,298
--------------- ---------------
End of year (including undistributed
net investment income of $880,537
and $1,794,265) ..............................$ 2,506,785,758 $ 2,031,735,476
=============== ===============
__________
See notes to financial statements.
17
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS December 31, 1995
Shares Value
__________ ____________
COMMON STOCKS - 84.7%
<S> <C> <C>
AEROSPACE - 3.7%
BOEING COMPANY 225,000 $ 17,634,375
Aircraft manufacturer
GENERAL MOTORS CORPORATION CLASS "H" 400,000 19,650,000
Diversified aerospace manufacturer--missiles, satellites,
and communication systems
LOCKHEED MARTIN CORPORATION 200,000 15,800,000
Missiles and space systems, aeronautical systems, technology services
LORAL CORPORATION 600,000 21,225,000
Military electronic equipment
UNITED TECHNOLOGIES CORPORATION 200,000 18,975,000
Manufacturer of elevators, jet engines, flight systems, and
automotive parts
------------
$ 93,284,375
------------
AUTOMOTIVE AND RELATED - 2.6%
AUTOLIV (ADRs)+* 135,000 $ 7,897,500
Swedish supplier of safety restraint systems
DANA CORPORATION 400,000 11,700,000
Original equipment for trucks; fluid power systems
EATON CORPORATION 225,000 12,065,625
Equipment for trucks and automobiles
GENUINE PARTS COMPANY 330,000 13,530,000
Supplier of auto parts
HARLEY-DAVIDSON INC. 500,000 14,375,000
Motorcycle manufacturer
VOLKSWAGEN AG 20,000 6,696,833
Manufacturer of automobiles
------------
$ 66,264,958
------------
BASIC MATERIALS - 1.0%
ALUMINUM COMPANY OF AMERICA 200,000 $ 10,575,000
U.S. aluminum producer
NUCOR CORPORATION 200,000 11,425,000
Mini-mill steel production
POHANG IRON & STEEL (ADSs) 125,000 2,734,375
Korean steel manufacturer
------------
$ 24,734,375
------------
BUILDING AND CONSTRUCTION - 1.3%
FLUOR CORPORATION 300,000 $ 19,800,000
Engineering and related services
SHERWIN-WILLIAMS CORPORATION 300,000 12,225,000
Paints and allied products
------------
$ 32,025,000
------------
CHEMICALS - 4.3%
AIR PRODUCTS AND CHEMICALS 200,000 $ 10,550,000
Industrial gases and chemicals
BAYER AG 40,000 10,603,550
Producer of specialty chemicals, pharmaceuticals, and plastics
DOW CHEMICAL COMPANY 250,000 17,593,750
Diversified chemicals
</TABLE>
18
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Continued) December 31, 1995
Shares Value
__________ ____________
<S> <C> <C>
CHEMICALS (continued)
EUROPEAN VINYLS CORPORATION 162,000 $ 4,201,119
Market leaders in PVC industry
GREAT LAKES CHEMICAL CORPORATION 300,000 21,600,000
Specialty chemicals
MONSANTO COMPANY 150,000 18,375,000
Fat substitutes, herbicides, industrial chemicals, pharmaceuticals
MORTON INTERNATIONAL, INC. 350,000 12,556,250
Adhesives, coatings, and specialty products
OLIN CORPORATION 150,000 11,137,500
Chemicals; defense products and ammunition; metals
------------
$106,617,169
------------
COMMUNICATIONS - 4.2%
ALCATEL ALSTHOM COMPAGNIE GENERALE D'ELECTRICITE 65,000 $ 5,593,193
French developer of equipment and systems for
public telecommunications
ALLTEL CORPORATION 500,000 14,750,000
Telephone utility
AMERICAN TELEPHONE & TELEGRAPH COMPANY 300,000 19,425,000
INTERNATIONAL AND DOMESTIC TELECOMMUNICATIONS SERVICES
FRONTIER CORPORATION 400,000 12,000,000
Telephone utility
GTE CORPORATION 600,000 26,400,000
Telephone systems and equipment
INDOSAT (ADRs) 31,200 1,138,800
International telecommunications to the Indonesian market
TELE DANMARK (ADSs) 380,000 10,497,500
Domestic and international telephone services
in Denmark
TELECOM ITALIA-DI RISP 2,526,000 3,089,101
Provider of the whole spectrum of
telecommunications services throughout Italy
TELECOM ITALIA MOBILE-DI RISP 2,526,000 2,656,436
Provider of the whole spectrum of mobile
telecommunications services throughout Italy
U.S. WEST, INC. 300,000 10,725,000
Telephone utility
------------
$106,275,030
------------
COMPUTER AND BUSINESS SERVICES - 2.4%
FIRST DATA CORPORATION 250,000 $ 16,718,750
Information processing services
HEWLETT-PACKARD COMPANY 100,000 8,375,000
Computers and peripherals
INTEL CORPORATION 300,000 17,043,750
Semiconductors/memory circuits
MICROSOFT CORPORATION* 150,000 13,171,875
Computer software
OLIVETTI & C SPA 6,500,000 5,210,642
PCs, minicomputers, workstations, and peripherals
------------
$ 60,520,017
------------
</TABLE>
19
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Continued) December 31, 1995
Shares Value
__________ ____________
<S> <C> <C>
CONSUMER GOODS AND SERVICES - 12.7%
ADIDAS AG 115,960 $ 6,118,878
Sporting equipment, footware
ALLIED-DOMECQ PLC 870,000 7,088,075
International food, drink, and hospitality group
B.A.T. INDUSTRIES PLC 1,440,000 12,681,718
UK financial services and tobacco company
THE CLOROX COMPANY 250,000 17,906,250
Household products and specialty tools
COCA-COLA COMPANY 200,000 14,850,000
Soft drinks, consumer products
COLGATE-PALMOLIVE COMPANY 450,000 31,612,500
HOUSEHOLD AND PERSONAL CARE PRODUCTS
CPC INTERNATIONAL INC. 300,000 20,587,500
International food company
EASTMAN KODAK COMPANY 400,000 26,800,000
Film, chemicals, and health care products
GENERAL MILLS, INC. 200,000 11,550,000
Consumer foods and restaurants
GILLETTE COMPANY 300,000 15,637,500
Personal care products
HASBRO, INC. 500,000 15,500,000
Manufacturer of games and hobby products; infant products
LIZ CLAIBORNE, INC. 600,000 16,650,000
Designer and distributor of women's apparel
PEPSICO, INC. 275,000 15,365,625
Soft drinks and consumer products
PHILIP MORRIS COMPANIES, INC. 175,000 15,837,500
Tobacco, food, and beverage manufacturer
PROCTER & GAMBLE COMPANY 250,000 20,750,000
Household and personal care products
RJR Nabisco Holdings Corporation 500,000 15,437,500
PROCESSED FOODS, CONSUMER PRODUCTS
RUBBERMAID INCORPORATED 800,000 20,400,000
Manufacturer of plastic and rubber household products
SARA LEE CORPORATION 600,000 19,125,000
Processed foods, consumer products
SCHWEITZER-MAUDUIT INTERNATIONAL, INC. 35,000 809,375
Manufacturer of cigarette paper
WENDY'S INTERNATIONAL, INC. 700,000 14,875,000
Fast food restaurant franchise
------------
$319,582,421
------------
DIVERSIFIED - 2.6%
ALLIED-SIGNAL, INC. 400,000 $ 19,000,000
Aerospace and automotive materials
CORNING, INC. 350,000 11,200,000
Specialty glass products
DOVER CORPORATION 350,000 12,906,250
Elevators; petroleum equipment; and industrial products
TENNECO, INC. 456,300 22,643,887
------------
Natural gas pipelines; shipbuilding; auto parts; chemicals; plastic packaging $ 65,750,137
------------
</TABLE>
20
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Continued) December 31, 1995
Shares Value
__________ ____________
<S> <C> <C>
DRUGS AND HEALTH CARE - 6.6%
ABBOTT LABORATORIES 300,000 $ 12,525,000
Diversified health care products
AMERICAN HOME PRODUCTS CORPORATION 200,000 19,400,000
Pharmaceuticals, food, and housewares
BAUSCH & LOMB, INCORPORATED 565,000 22,388,125
Sunglasses, eye care products
BRISTOL-MYERS SQUIBB COMPANY 250,000 21,468,750
Health and personal care products
GUIDANT CORPORATION 450,000 19,012,500
Cardiac rhythm management and coronary artery disease intervention
MERCK & CO., INC. 300,000 19,725,000
Pharmaceutical company
PHARMACIA & UPJOHN, INC. 200,000 7,750,000
Pharmaceutical manufacturer
UNITED HEALTHCARE CORPORATION 350,000 22,925,000
National managed health care company
WARNER-LAMBERT COMPANY 200,000 19,425,000
Drug, toiletries, and food manufacturer
------------
$164,619,375
------------
ELECTRIC AND GAS UTILITIES - 2.3%
BRITISH GAS PLC (ADRs) 115,000 $ 4,485,000
Major gas supplier in UK
CHINA LIGHT & POWER CO. LTD. (ADRs) 1,000,000 4,604,200
Electric utility in Hong Kong and China
EMPRESA NACIONAL DE ELECTRICIDAD (ADRs) 132,000 7,557,000
Major electric utility in Spain
HUANENG POWER INTERNATIONAL (ADRs)* 220,000 3,162,500
Flagship power company of China
SONAT INC. 550,000 19,593,750
Oil and gas production and pipelines
THE WILLIAMS COMPANIES, INC. 400,000 17,550,000
Oil and gas production and pipelines
------------
$ 56,952,450
------------
ELECTRONICS - 2.3%
AMP INC. 320,000 $ 12,280,000
Manufacturer of electronic connectors and systems
APPLIED MATERIALS, INC. 350,000 13,759,375
World's largest supplier of semiconductor fabrication equipment
MOTOROLA INC. 275,000 15,675,000
Producer of semiconductors and communications equipment
PHILIPS ELECTRONICS N.V. (ADRS) 100,000 3,587,500
Consumer and industrial electronics
TERADYNE, INC. 500,000 12,500,000
Semiconductor test equipment
------------
$ 57,801,875
------------
ENERGY - 7.7%
AMOCO CORPORATION 400,000 $ 28,750,000
Oil and gas producer
ANADARKO PETROLEUM COMPANY 193,000 10,446,125
Oil and gas exploration, development, and production
</TABLE>
21
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Continued) December 31, 1995
Shares Value
__________ ____________
<S> <C> <C>
ENERGY (continued)
ATLANTIC RICHFIELD COMPANY 125,000 $ 13,843,750
Oil producer and West Coast marketer
BAKER HUGHES INCORPORATED 500,000 12,187,500
Oil service company
ENRON CORPORATION 500,000 19,062,500
Pipeline exploration and production
EXXON CORPORATION 300,000 24,037,500
Integrated oil and gas company
PANHANDLE EASTERN CORPORATION 750,000 20,906,250
OIL AND GAS PRODUCTION AND PIPELINES
SCHLUMBERGER LTD. 300,000 20,775,000
Worldwide energy services
TEXACO INC. 300,000 23,550,000
International oil company
TOTAL S.A. CLASS "B" 75,000 5,051,972
International oil enterprise
UNION PACIFIC RESOURCES GROUP INC. 200,000 5,075,000
Producer of natural gas
USX-MARATHON GROUP, INC. 500,000 9,750,000
Worldwide oil and gas producer and refiner
------------
$193,435,597
------------
ENTERTAINMENT AND LEISURE - 1.3%
DISNEY (WALT) COMPANY 300,000 $ 17,700,000
Film entertainment, amusement parks, and
other forms of leisure related activities
NEWS CORP. LTD. (ADRs) 260,000 5,557,500
Worldwide media and television provider
NEWS CORP. LTD. (ADRs--Voting Preference Shares) 130,000 2,502,500
Worldwide media and television provider
U.S. WEST MEDIA, INC. 300,000 5,700,000
Cable television operator
------------
$ 31,460,000
------------
ENVIRONMENTAL MANAGEMENT - 0.3%
BROWNING-FERRIS INDUSTRIES, INC. 250,000 $ 7,375,000
------------
Solid- and liquid-waste management services
FINANCE AND INSURANCE - 9.3%
AMERICAN INTERNATIONAL GROUP, INC. 300,000 $ 27,750,000
International insurance holding company
AXA S.A. 75,000 5,044,329
Provider of financial services and insurance
BANKAMERICA CORPORATION 300,000 19,425,000
Largest commercial bank in California and Western states
BANK OF NEW YORK COMPANY, INC. 400,000 19,500,000
Commercial bank
CORPORACION BANCARIA DE ESPANA, S.A. (ADRs) 489,000 9,841,125
Spanish banking and financial services company
FEDERAL NATIONAL MORTGAGE ASSOCIATION 100,000 12,412,500
Mortgage financing
GENERAL RE CORPORATION 140,000 21,700,000
Largest property casualty re-insurer in the US
</TABLE>
22
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Continued) December 31, 1995
Shares Value
_________ ____________
<S> <C> <C>
FINANCE AND INSURANCE (continued)
Grupo Financiero Banamex Accival, S.A. Class "B" 2,176,000 $ 3,626,196
One of the largest financial companies in Mexico
involved in banking and stockbroking
HOUSEHOLD INTERNATIONAL, INC. 350,000 20,693,750
Consumer loans, credit cards, equity loans, and life insurance
INTERNATIONALE NEDERLANDEN BANK N.V. 166,846 11,123,067
Largest banking and insurance services group in the Netherlands
MBNA CORPORATION 300,000 11,062,500
Issuer of bank credit cards
MORGAN (J.P.) & CO., INC. 300,000 24,075,000
Commercial and wholesale banking, based in New York
ST. PAUL COMPANIES 200,000 11,125,000
Property and casualty insurance
SOCIETE GENERALE 35,711 4,403,374
Provider of full banking and financial services
STATE STREET BOSTON CORPORATION 350,000 15,750,000
Northeast bank
TRAVELERS INCORPORATED 250,000 15,718,750
Broad-based financial services company
------------
$233,250,591
------------
MANUFACTURING AND
INDUSTRIAL EQUIPMENT - 5.3%
BBC BROWN BOVERI (ADRs) 88,500 $ 10,306,347
Manufacturer of heavy equipment for electric power
generation and distribution
BTR PLC 1,300,000 6,637,262
UK Global manufacturer of industrial goods
EMERSON ELECTRIC CO. 250,000 20,437,500
Electric motors, hand-held tools, and miscellaneous electric equipment
GENERAL ELECTRIC COMPANY 500,000 36,000,000
Supplier of electrical equipment and other industrial and
consumer products
GENERAL SIGNAL CORPORATION 450,000 14,568,750
Capital goods producer
ILLINOIS TOOL WORKS, INC. 275,000 16,225,000
Manufacturer of fasteners, tools, and plastic items
MANNESMANN 15,000 4,766,794
Plant and machinery construction; automotive technology
MINNESOTA MINING & MANUFACTURING COMPANY 300,000 19,875,000
Consumer and industrial goods and services
PACIFIC DUNLOP LTD. 1,500,000 3,509,494
Australian manufacturer of a wide range of products
------------
$132,326,147
------------
PAPER AND FOREST PRODUCTS - 2.7%
BOWATER INCORPORATED 250,000 $ 8,875,000
Manufacturer of newsprint and coated paper
INTERNATIONAL PAPER COMPANY 350,000 13,256,250
Paper and paper products; specialty products; wood and timber
KIMBERLY-CLARK CORPORATION 350,000 28,962,500
Consumer paper products; newsprint
</TABLE>
23
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Continued) December 31, 1995
Shares Value
__________ ____________
<S> <C> <C>
PAPER AND FOREST PRODUCTS (continued)
LOUISIANA-PACIFIC CORPORATION 500,000 $ 12,125,000
Lumber, plywood, and pulp
STORA KOPPARBERGS CLASS "B" 290,000 3,472,792
Manufactuer of forestry products
------------
$ 66,691,542
------------
PUBLISHING - 2.2%
DONNELLEY (R.R.) & SONS COMPANY 300,000 $ 11,812,500
Printing and computer services
GANNET CO., INC. 200,000 12,275,000
Newspapers, radio and TV broadcasting
READER'S DIGEST ASSOCIATION INC. CLASS "A" 250,000 12,812,500
Publisher of periodicals, books, videos, and records
REED ELSEVIER 650,000 8,650,498
Global printer and publisher of professional trade journals
and magazines
TRIBUNE CO. 150,000 9,168,750
Book publishing, newsprint operations
------------
$ 54,719,248
------------
REAL ESTATE INVESTMENT TRUSTS - 1.5%
AVALON PROPERTIES, INC. 500,000 $ 10,750,000
REIT focusing on apartment properties in the Eastern United
States
KIMCO REALTY CORPORATION 450,000 12,262,500
High-quality REIT operator of shopping centers
SECURITY CAPITAL INDUSTRIAL TRUST 400,000 7,000,000
Real estate investment trust
SECURITY CAPITAL PACIFIC TRUST 400,000 7,900,000
Real estate investment trust involved in multi-family residential
properties
------------
$ 37,912,500
------------
RETAIL TRADE - 6.3%
AMERICAN STORES COMPANY 750,000 $ 20,062,500
Food retailer
DILLARD DEPARTMENT STORES INC. 400,000 11,400,000
Major department store chain
LOWE'S COMPANIES, INC. 600,000 20,100,000
Building products, retail and wholesale
MAY DEPARTMENT STORES COMPANY 600,000 25,350,000
LARGE DEPARTMENT STORE CHAIN
NORDSTROM, INC. 400,000 16,150,000
Department store chain
THE PEP BOYS - MANNY, MOE AND JACK 500,000 12,812,500
Auto parts store
SEARS, ROEBUCK & COMPANY 400,039 15,601,521
Major department store
WAL-MART STORES, INC. 1,000,000 22,375,000
Largest discount retail chain
WOOLWORTH CORPORATION 1,000,000 13,000,000
Discount and variety retailer
------------
$156,851,521
------------
</TABLE>
24
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Continued) December 31, 1995
Shares
or Prin. Amt. Value
_____________ ____________
<S> <C> <C>
TRANSPORTATION - 2.1%
CALIBER SYSTEM, INC. 355,000 shs. $ 17,306,250
Motor carrier
CONRAIL INC. 250,000 17,500,000
Freight railroad system
JURONG SHIPYARD LTD. 425,000 3,275,472
Leading ship repair company in Singapore
NORFOLK SOUTHERN CORPORATION 200,000 15,875,000
Railroad holding company, motor carrier
--------------
$ 53,956,722
--------------
TOTAL COMMON STOCKS
(Cost: $1,651,233,536) $2,122,406,050
--------------
CONVERTIBLE ISSUES - 7.2%
CONVERTIBLE DEBENTURES - 3.4%
AUTOMOTIVE AND RELATED - 0.8%
Exide Corporation, 2.90%, 12/15/2005+ $14,000,000 $ 10,115,000
Magna International Inc., 5%, 10/15/2002 10,000,000 10,175,000
-------------
$ 20,290,000
-------------
COMPUTER AND BUSINESS SERVICES - 0.5%
EMC Corporation, 4 1/4%, 1/1/2001 13,000,000 $ 12,935,000
-------------
DIVERSIFIED - 0.9%
Cooper Industries Inc., 7.05%, 1/1/2015 10,000,000 $ 10,350,000
-------------
MascoTech Inc., 4 1/2%, 12/15/2006 15,000,000 11,737,500
-------------
$ 22,087,500
-------------
FINANCE AND INSURANCE - 0.4%
AXA S.A., 6%, 1/1/2001 3,614,185 $ 4,748,136
Liberty Life International, 6 1/2%, 9/30/2004 3,500,000 4,602,500
-------------
$ 9,350,636
-------------
MANUFACTURING AND
INDUSTRIAL EQUIPMENT - 0.5%
Teco Electrical and Machinery, 2 3/4%, 4/15/2004 3,000,000 2,351,250
TriMas Corporation, 5%, 8/1/2003 10,000,000 9,800,000
-------------
$ 12,151,250
-------------
PACKAGING AND PAPER - 0.1%
Land and General Berhad, 4 1/2%, 7/26/2004 3,000,000 $ 3,397,500
_____________
TRANSPORTATION - 0.2%
Nippon Yusen, 2%, 9/29/2000 4,879,227 $ 5,757,488
-------------
TOTAL CONVERTIBLE DEBENTURES
(COST: $83,556,270) $ 85,969,374
-------------
</TABLE>
25
<PAGE>
TRI-CONTINENTAL CORPORATION
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS (Continued) December 31, 1995
Shares Value
__________ ____________
<S> <C> <C>
CONVERTIBLE PREFERRED STOCKS - 3.8%
COMPUTER AND BUSINESS SERVICES - 0.9%
General Motors Corporation Series "C", $3.25 325,000 $ 23,806,250
-------------
DIVERSIFIED - 0.5%
Corning Inc. (Delaware), 6% 250,000 $ 12,593,750
-------------
FINANCE AND INSURANCE - 1.4%
Citicorp, $5.375+ 100,000 $ 18,312,500
Travelers Incorporated, 5 1/2% 180,000 15,705,000
_____________
$ 34,017,500
-------------
STEEL - 1.0%
AK Steel Holdings Corporation, 7% 350,000 $ 11,965,625
Bethlehem Steel Corporation, $3.50+ 300,000 13,125,000
-------------
$ 25,090,625
-------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST: $79,637,560) $ 95,508,125
-------------
TOTAL CONVERTIBLE ISSUES
(COST: $163,193,830) $ 181,477,499
-------------
TRI-CONTINENTAL FINANCIAL DIVISION++ - 1.2%
(COST: $25,844,937) $ 31,049,388
_____________
SHORT-TERM HOLDINGS - 4.1%
(COST: $103,000,000) $ 103,000,000
-------------
TOTAL INVESTMENTS - 97.2%
(COST: $1,943,272,303) $2,437,932,937
OTHER ASSETS LESS LIABILITIES - 2.8% 68,852,821
--------------
NET INVESTMENT ASSETS - 100.0% $2,506,785,758
==============
</TABLE>
- ------------------------------------------
*Non-income producing security.
+Rule 144A security.
++Restricted securities, see note 6 to financial statements.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See notes to financial statements.
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant accounting policies followed, all in conformity with
generally accepted accounting principles, are given below:
a. Investments in stocks, bonds, limited partnership interests, and
short-term holdings maturing in more than 60 days are valued at current
market values or, in their absence, fair value determined in accordance
with procedures approved by the Board of Directors. Securities traded on
national exchanges are valued at last sales prices or, in their absence and
in the case of over-the-counter securities, a mean of bid and asked prices.
Short-term holdings maturing in 60 days or less are valued at amortized
cost.
b. The books and records of the Corporation are maintained in U.S.
dollars. The market value of investment securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollars at the closing daily rate of exchange as reported by a pricing
service. Purchases and sales of investment securities, income, and expenses
are translated into U.S. dollars at the rate of exchange prevailing on the
respective dates of such transactions.
The Corporation separates that portion of the results of operations
resulting from changes in the foreign exchange rates from the fluctuations
arising from changes in the market prices of securities held in the
portfolio. Similarly, the Corporation separates the effect of changes in
foreign exchange rates from the fluctuations arising from changes in the
market prices of portfolio securities sold during the period.
c. The Corporation may enter into forward currency contracts in order
to hedge its exposure to changes in foreign currency exchange rates on its
foreign portfolio holdings, or other amounts receivable or payable in
foreign currency. A forward contract is a commitment to purchase or sell a
foreign currency at a future date at a negotiated forward rate. Certain
risks may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts. The
contracts are valued daily at current exchange rates and any unrealized
gain or loss is included in net unrealized appreciation or depreciation on
translation of assets and liabilities denominated in foreign currencies and
forward currency contracts. The gain or loss, if any, arising from the
difference between the settlement value of the forward contract and the
closing of such contract, is included in net realized gain or loss from
foreign currency transactions.
d. There is no provision for federal income or excise tax. The
Corporation has elected to be taxed as a regulated investment company and
intends to distribute substantially all taxable net income and net gain
realized.
e. Investment transactions are recorded on trade dates. Identified
cost of investments sold is used for both financial statements and federal
income tax purposes. Dividends receivable and payable are recorded on
ex-dividend dates. Interest income is recorded on the accrual basis.
f. The treatment for financial statement purposes of distributions
made during the year from net investment income or net realized gains may
differ from their ultimate treatment for federal income tax purposes. These
differences primarily are caused by differences in the timing of the
recognition of certain components of income, expense or capital gain, and
the recharacterization of foreign exchange gains or losses to either
ordinary income or realized capital gain for federal income tax purposes.
Where such differences are permanent in nature, they are reclassified in
the components of net investment assets based on their ultimate
characterization for federal income tax purposes. Any such reclassification
will have no effect on net assets, results of operations, or net asset
value per share of the Corporation.
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
2. Under the Corporation's Charter, dividends on the Common Stock cannot be
declared unless net assets, after such dividends and dividends on Preferred
Stock, equal at least $100 per share of Preferred Stock outstanding. The
Preferred Stock is subject to redemption at the Corporation's option at any time
on 30 days' notice at $55 per share (or a total of $41,400,700 for the shares
outstanding) plus accrued dividends, and entitled in liquidation to $50 per
share plus accrued dividends.
The Corporation, in connection with its Automatic Dividend Investment and
Cash Purchase Plan and other Stockholder plans, acquires and issues shares of
its own Common Stock, as needed, to satisfy Plan requirements. For the year
ended December 31, 1995, 1,837,697 shares were purchased from Plan participants
and on the open market at a cost of $40,543,318 which represented a weighted
average discount of 16.6% from the net asset value of those acquired shares. A
total of 1,890,436 shares were issued to Plan participants during the year for
proceeds of $42,080,503, a discount of 16.9% from the net asset value of those
shares.
At December 31, 1995, 209,491 shares of Common Stock were reserved for
issuance upon exercise of 15,472 Warrants, each of which entitled the holder to
purchase 13.54 shares of Common Stock at $1.66 per share. Assuming the exercise
of all Warrants outstanding at December 31, 1995, net investment assets would
have increased by $347,755 and the net asset value of the Common Stock would
have been $27.52 per share. The number of Warrants exercised during the years
1995 and 1994, was 350 and 69, respectively.
3. Purchases and sales of portfolio securities, excluding short-term
investments, amounted to $1,328,927,398 and $1,465,483,623, respectively. At
December 31, 1995, the cost of investments for federal income tax purposes was
substantially the same as the cost for financial reporting purposes, and the tax
basis gross unrealized appreciation and depreciation of portfolio securities,
including the effects of foreign currency transactions, amounted to $528,766,920
and $34,106,286, respectively.
4. At December 31, 1995, the Corporation owned short-term investments which
matured in less than 7 days.
5. J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of
the Corporation and provides necessary personnel and facilities. Compensation of
all officers of the Corporation, all directors of the Corporation who are
employees or consultants of the Manager, and all personnel of the Corporation
and the Manager is paid by the Manager. The Manager receives a fee, calculated
daily and payable monthly, equal to a percentage of the Corporation's daily net
assets at the close of business on the previous business day. The management fee
rate is calculated on a sliding scale of 0.45% to 0.375%, based on average daily
net assets of all the investment companies managed by the Manager. The
management fee for the year ended December 31, 1995, was equivalent to an annual
rate of 0.42% of the average daily net assets of the Corporation. Seligman
Henderson Co. (the "Subadviser"), a 50% owned affiliate of the Manager, is
entitled to a portion of the Manager's fee for acting as subadviser for certain
of the international investments of the Corporation.
Seligman Data Corp., owned by the Corporation and certain associated
investment companies, charged the Corporation at cost $3,339,270 for stockholder
account services. The Corporation's investment in Seligman Data Corp. is
recorded at a cost of $43,681.
Certain officers and directors of the Corporation are officers or directors
of the Manager, the Subadviser, and/or Seligman Data Corp.
Fees of $85,000 were incurred by the Corporation for legal services of
Sullivan & Cromwell, a member of which firm is a director of the Corporation.
28
<PAGE>
Notes to Financial Statements (continued)
The Corporation has a compensation arrangement under which directors who
receive fees may elect to defer receiving such fees. Interest is accrued on the
deferred balances. The annual cost of such fees and interest is included in
directors' fees and expenses, and the accumulated balance thereof at December
31, 1995, of $387,419 is included in other liabilities. Deferred fees and the
related accrued interest are not deductible for federal income tax purposes
until such amounts are paid.
6. At December 31, 1995, the Tri-Continental Financial Division of the
Corporation was comprised of four investments that were purchased through
private offerings and cannot be sold without prior registration under the
Securities Act of 1933 or pursuant to an exemption therefrom. These investments
are valued at fair value as determined in accordance with procedures approved by
the Board of Directors of the Corporation. The acquisition dates of investments
in the limited partnerships and stock, along with their cost and values at
December 31, 1995, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Investments Acquisition Date(s) Cost Value
- ---------------------------------- ------------------ ----------- -----------
Tempest Reinsurance Company Ltd. 9/13/93 $10,000,000 $13,384,000
Water Street Corporate Recovery
Fund I, L.P. 10/9/90 to 12/22/95 1,193,271 972,563
WCAS Capital Partners II, L.P. 12/11/90 to 10/10/95 7,725,660 8,688,509
Whitney Subordinated Debt Fund, L.P. 7/12/89 to 12/22/95 6,926,006 8,004,316
----------- -----------
Total $25,844,937 $31,049,388
=========== ===========
</TABLE>
7. Following is a summary of unaudited quarterly results of operations, in
thousands of dollars except for per share amounts:
<TABLE>
<CAPTION>
For quarters ended in the year 1995
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 31 June 30 Sept. 30 Dec. 31
--------- -------- --------- --------
Total investment income $ 18,606 $ 20,059 $ 17,445 $ 20,629
Net investment income for
Common Stock $ 14,661 $ 15,906 $ 13,331 $ 16,452
Per Common share $ 0.17 $ 0.19 $ 0.16 $ 0.20
Net realized and unrealized
investment gain $ 132,012 $159,391 $ 118,105 $113,894
Per Common Share $ 1.56 $ 1.88 $ 1.39 $ 1.34
</TABLE>
<TABLE>
<CAPTION>
For quarters ended in the year 1994
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 31 June 30 Sept. 30 Dec. 31
--------- -------- --------- --------
Total investment income $ 17,474 $ 20,844 $ 20,662 $ 20,697
Net investment income for
Common Stock $ 13,479 $ 16,919 $ 16,847 $ 16,845
Per Common share $ 0.17 $ 0.21 $ 0.21 $ 0.21
Net realized and unrealized
investment gain (loss) $(79,263) $(58,099) $ 48,127 $(41,343)
Per Common Share $ (1.00) $ (0.74) $ 0.60 $ (0.53)
</TABLE>
29
<PAGE>
FINANCIAL HIGHLIGHTS
The Corporation's financial highlights are presented below. The per share
operating performance data is designed to allow investors to trace the operating
performance, on a per Common share basis, from the Corporation's beginning net
asset value to the ending net asset value so that they can understand what
effect the individual items have on their 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 amounts.
The total investment return based on market value measures the Corporation's
performance assuming investors purchased shares of the Corporation at the market
value as of the beginning of the period, invested dividends and capital gains
paid as provided for in the Corporation's Prospectus and Automatic Dividend
Investment and Cash Purchase Plan, and then sold their shares at the closing
market value per share on the last day of the period. 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.
The total investment return computations do not reflect any sales commissions
investors may incur in purchasing or selling shares of the Corporation.
The ratios of expenses to average net assets and net investment income to
average net assets for the years presented do not reflect the effect of
dividends paid to Preferred Stockholders.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
-------- -------- ------- -------- --------
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of year $ 23.70 $ 27.49 $ 28.03 $ 28.57 $ 24.60
-------- -------- ------- -------- --------
Net investment income .74 .83 .83 .81 .81
Net realized and unrealized
investment gain (loss) 6.14 (1.69) 1.46 1.19 5.79
Net realized and unrealized
gain on foreign currency transactions .03 .02 -- -- --
-------- -------- ------- -------- --------
Increase (decrease) from
investment operations 6.91 (.84) 2.29 2.00 6.60
Dividends paid on
Preferred Stock (.02) (.03) (.03) (.03) (.03)
Dividends paid on
Common Stock (.73) (.79) (.80) (.78) (.78)
Distribution from
net gain realized (2.01) (1.90) (1.80) (.70) (1.80)
Issuance of Common Stock
in gain distributions (.27) (.23) (.19) (.05) (.02)
Issuance of Common Stock
upon Warrant exercise -- -- (.01) -- --
Issuance of Common Stock
from exercise of Rights -- -- -- (.97) --
Rights offering costs -- -- -- (.01) --
-------- -------- ------- -------- --------
Net increase (decrease)
in net asset value 3.88 (3.79) (.54) (.54) 3.97
-------- -------- ------- -------- --------
Net asset value,
end of year $ 27.58 $ 23.70 $ 27.49 $ 28.03 $ 28.57
======== ======== ======= ======== ========
</TABLE>
30
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
--------- -------- --------- --------- ----------
Adjusted net asset value,
end of year* $ 27.52 $23.65 $ 27.42 $ 27.95 $ 28.48
Market value, end of year $ 22.625 $19.875 $ 23.75 $ 25.50 $ 27.75
TOTAL INVESTMENT RETURN:
Based upon market value 27.95% (5.07)% 3.47% .61%+ 42.98%
Based upon net asset value 30.80% (2.20)% 8.95% 7.42%+ 27.91%
RATIOS/SUPPLEMENTAL DATA:
Expenses to average
net assets .63% .64% .66% .67% .67%
Net investment income to
average net assets 2.71% 3.08% 2.88% 2.86% 2.90%
Portfolio turnover rate 62.28% 70.38% 69.24% 44.35% 49.02%
Net investment assets,
end of year (000's omitted):
For Common Stock $2,469,149 $1,994,098 $2,166,212 $2,088,102 $1,833,664
For Preferred Stock 37,637 37,637 37,637 37,637 37,637
---------- ---------- ---------- ---------- ----------
Total net investment assets $2,506,786 $2,031,735 $2,203,849 $2,125,739 $1,871,301
========== ========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
* Assumes the exercise of outstanding warrants.
+ 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.
See notes to financial statements.
31
<PAGE>
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND SECURITY HOLDERS,
TRI-CONTINENTAL CORPORATION:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, and the statement of capital stock and
surplus of Tri-Continental Corporation as of December 31, 1995, the related
statements of operations for the year then ended and of changes in net
investment assets for the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended. These
financial statements and financial highlights are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the Corporation's custodians and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Tri-Continental
Corporation as of December 31, 1995, the results of its operations, the changes
in its net investment assets and the financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
New York, New York
February 2, 1996
- --------------------------------------------------------------------------------
MANAGER
J. & W. Seligman & Co. Incorporated
100 Park Avenue
New York, NY 10017
SUBADVISER
Seligman Henderson Co.
100 Park Avenue
New York, NY 10017
STOCKHOLDER SERVICE AGENT
Seligman Data Corp.
100 Park Avenue
New York, NY 10017
IMPORTANT TELEPHONE NUMBERS
(800) TRI-1092 STOCKHOLDER
SERVICES
(800) 445-1777 RETIREMENT PLAN
SERVICES
(800) 622-4597 24-HOUR AUTOMATED
TELEPHONE ACCESS SERVICE
32
<PAGE>
TRI-CONTINENTAL CORPORATION
Board of Directors
FRED E. BROWN
DIRECTOR AND CONSULTANT,
J. & W. Seligman & Co.
Incorporated
JOHN R. GALVIN (2,4)
DEAN, Fletcher School of Law and
Diplomacy at Tufts University
DIRECTOR, USLIFE Corporation
ALICE S. ILCHMAN (3,4)
PRESIDENT, Sarah Lawrence College
TRUSTEE, Committee for Economic
Development
DIRECTOR, NYNEX
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON (2,4)
CHAIRMAN AND CEO, Kerr-McGee
Corporation
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW
PARTNER, Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Aluminum
Corporation
BETSY S. MICHEL (2,4)
DIRECTOR OR TRUSTEE,
Various Organizations
WILLIAM C. MORRIS (1)
CHAIRMAN
CHAIRMAN OF THE BOARD AND PRESIDENT,
J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Daniel Industries, Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY (3,4)
PARTNER, Pitney, Hardin, Kipp & Szuch,
Law Firm
DIRECTOR, Public Service Enterprise Group
JAMES Q. RIORDAN (3,4)
DIRECTOR, The Brooklyn Union Gas
Company
TRUSTEE, Committee for Economic
Development
DIRECTOR, Dow Jones & Co., Inc.
DIRECTOR, Public Broadcasting Service
RONALD T. SCHROEDER (1)
MANAGING DIRECTOR, J. & W. Seligman & Co.
Incorporated
ROBERT L. SHAFER (3,4)
VICE PRESIDENT, Pfizer Inc.
DIRECTOR, USLIFE Corporation
JAMES N. WHITSON (2,4)
EXECUTIVE VICE PRESIDENT AND DIRECTOR,
Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, Red Man Pipe and Supply
Company
BRIAN T. ZINO (1)
PRESIDENT
MANAGING DIRECTOR, J. & W. Seligman & Co.
Incorporated
--------------------
Member:
(1) Executive Committee
(2) Audit Committee
(3) Director Nominating Committee
(4) Board Operations Committee
- --------------------------------------------------------------------------------
Executive Officers
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
CHARLES C. SMITH, JR.
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT
THOMAS G. ROSE
TREASURER
FRANK J. NASTA
SECRETARY
33
<PAGE>
TRI-CONTINENTAL CORPORATION
MANAGED BY
J. & W. SELIGMAN & CO.
INCORPORATED
INVESTMENT MANAGERS AND ADVISORS
ESTABLISHED 1864
100 PARK AVENUE, NEW YORK, NY 10017
THIS REPORT IS INTENDED ONLY FOR THE INFORMATION OF STOCKHOLDERS OR THOSE WHO
HAVE RECEIVED THE CURRENT PROSPECTUS COVERING SHARES OF COMMON STOCK OF
TRI-CONTINENTAL CORPORATION, WHICH CONTAINS INFORMATION ABOUT MANAGEMENT FEES
AND OTHER COSTS.
CETR12 12/95
