<PAGE>
MID-YEAR REPORT 1998
TY
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: July 31, 1998
For the second quarter of 1998, Tri-Continental Corporation posted a total
return of 1.66% based on net asset value, outpacing the 0.41% total return of
its peers as measured by the Lipper Closed-End Growth & Income Funds Average.
Tri-Continental's total return based on market price was 0.87%. For the
three-month period, the Standard & Poor's 500 Composite Stock Price Index (S&P
500) had a total return of 3.30%. A discussion with your Portfolio Manager
regarding the second quarter begins on page 3.
The US economy, now in its eighth year of expansion, continued to grow in the
second quarter, helped by low inflation, steady wage increases, strong consumer
spending, a tight labor market, and healthy consumer confidence. According to
the Conference Board, consumer confidence rose to a 29-year high in June,
reflecting these positive fundamentals. Further, the supply of consumer goods
kept pace with demand, which helped the economic expansion remain balanced.
However, some economic indicators suggested the start of a deceleration in the
pace of growth toward the end of the second quarter.
Ironically, the Asian financial crisis actually strengthened the US equity
market, as it increased demand for "safe haven" equities. Domestic and overseas
investors retreated into well-known, liquid stocks with stable earnings and
dividends, such as those contained in Tri-Continental's portfolio. Consequently,
the market remained "narrow," with demand for large-capitalization growth stocks
far outpacing demand for their value counterparts, as well as for
small-capitalization and mid-capitalization stocks. The market effectively
became two-tiered, as the 30 largest companies in the S&P 500 accounted for more
than half of its gains during the second quarter.
Looking ahead, while the Asian financial crisis only modestly affected the US
economy in the second quarter of 1998, we believe its full impact is yet to
come. This leads us to believe that the current benign business environment
could become less stable. In fact, some early warning economic indicators
started flashing cautionary signals toward the end of the second quarter as the
economy began to decelerate. US corporate profits were coming under pressure,
while several stock indices moved to new highs. While the basic fundamental case
for stocks remains positive, investor expectations, at least for the short term,
may be too optimistic.
1
<PAGE>
TRI-CONTINENTAL CORPORATION
While we expect the economy to remain healthy, it may not grow at the strong
pace seen over the past few years. Investors should maintain realistic
expectations for the future. Trends of the past three years, whereby the equity
markets posted returns in excess of 20%, are well above historic norms, and may
not continue. Under this scenario, the Corporation's strategy of identifying
current income and capital appreciation potential at a competitive price should
be an advantage in the months to come, regardless of economic conditions or
investor sentiment.
As you may know, companies are modifying their computer systems to recognize
dates of January 1, 2000, and beyond. This is often referred to as the "Y2K"
problem. Unless systems are updated, many applications may interpret the last
two digits of the year to mean 1900 instead of 2000. J. & W. Seligman & Co.
Incorporated, Tri-Continental Corporation, and Seligman Data Corp., your
shareholder service agent, have jointly established a team to ensure that your
investment and shareholder services are not disrupted. This team is supported by
consulting firms specializing in Y2K solutions. Substantial work has been
performed to date, and we are confident that there will be no disruption in the
services provided by your Corporation.
Tri-Continental Corporation's Annual Meeting took place on Thursday, May 21,
1998, in St. Louis, Missouri. At the meeting, four directors were elected and
the selection of Deloitte & Touche LLP as auditors was ratified. Stockholder
proposals, including a proposal to convert Tri-Continental to an open-end fund
and a proposal to allow stockholders access to the names and addresses of all
stockholders, were rejected by the majority of the stockholders. For the
complete results of the vote, please refer to page 23.
Thank you for your continued interest in Tri-Continental Corporation. We look
forward to serving your investment needs in the many years to come. The
Corporation's portfolio of investments and financial statements follow this
letter.
By order of the Board of Directors,
/s/ William Morris
- ------------------
William C. Morris
Chairman
/s/ Brian Zino
--------------
Brian T. Zino
President
2
<PAGE>
TRI-CONTINENTAL CORPORATION
INTERVIEW WITH YOUR PORTFOLIO MANAGER
SELIGMAN GROWTH AND INCOME TEAM
[GRAPHIC]
RODNEY COLLINS, AMY FUJII, MELANIE RAVENELL (ADMINISTRATIVE ASSISTANT), JONATHAN
ROTH, CHARLES C. SMITH, JR. (PORTFOLIO MANAGER)
What were Tri-Continental Corporation's investment results in the second quarter
of 1998?
"Tri-Continental Corporation posted a total return of 1.66% based on net asset
value for the three months ended June 30, 1998. This return outpaced the 0.41%
total return of its peers, as measured by the Lipper Closed-End Growth & Income
Funds Average, and the 0.26% return of the Lipper Growth & Income Funds Average,
which measures the results of mutual funds with investment objectives similar to
Tri-Continental's. The Standard & Poor's 500 Composite Stock Price Index (S&P
500) had a total return of 3.30% for the quarter. Tri-Continental Corporation's
total return based on market price was 0.87%."
Which economic and market factors influenced the Corporation's results in the
second quarter of 1998?
"Positive economic fundamentals continued to fuel the US economy's pace of
growth throughout the second quarter.However, as the quarter came to a close,
there appeared to be some indications that the rate of economic growth was
beginning to slow.
"Although the Asian financial crisis actually had a positive impact on the US
equity market during the quarter, it negatively affected corporate profits in
some industries. Due to depressed demand for their products at home, Asian
companies infused US consumer markets with inexpensive imports, effectively
tempering inflationary pressures that usually emerge during periods of sustained
economic growth. Further, the crisis stimulated demand for "safe haven" US
equities, as domestic and overseas investors favored well-known, liquid,
large-capitalization growth stocks over international issues, smaller-
capitalization stocks, and value stocks. This drove valuations higher in the
large-capitalization market."
What was your investment strategy?
"We continued to maintain our investment strategy of seeking domestic stocks
that possessed attractive yields, low volatility, and earnings stability. We
remained focused on reasonably valued domestic issues with strong fundamentals
and steady earnings growth, some of which have large, yet diversified
international exposure. Consequently, we made no major changes in the
Corporation's portfolio holdings during the quarter."
3
<PAGE>
TRI-CONTINENTAL CORPORATION
INVESTMENT RESULTS PER COMMON SHARE
TOTAL RETURNS*
FOR PERIODS ENDED JUNE 30, 1998
Average Annual
-----------------------
Three Six One Five 10
Months Months Year Years Years
------ ------ ----- ----- -----
MARKET PRICE** 0.87% 12.23% 22.93% 17.33% 15.49%
NET ASSET VALUE** 1.66 14.03 21.92 19.13 16.37
LIPPER CLOSED-END
GROWTH & INCOME
FUNDS AVERAGE*** 0.41 12.86 22.96 18.68 15.64
S&P 500*** 3.30 17.71 30.16 23.08 18.56
PRICE PER SHARE
June 30, 1998 March 31, 1998 December 31, 1997
------------- -------------- -----------------
MARKET PRICE $27.875 $29.5625 $26.6875
NET ASSET VALUE 34.02 35.80 32.06
DIVIDEND AND CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1998
Capital Gain
--------------------------------------------------
Dividends Paid+ Paid Realized Unrealized
-------------- ---- -------- ----------
$0.26 $1.835++ $2.07 $9.58+++
--------------------------------------------------------------------
The rates of return will vary and the principal value of an investment will
fluctuate. Shares, if sold, may be worth more or less than their original
cost. Past performance is not indicative of future investment results.
* Returns for periods of less than one year are not annualized.
** These rates of return reflect changes in market price or net asset value,
as applicable, and assume that all distributions within the period are
taken in additional shares.
*** The Lipper Closed-End Growth & Income Funds Average and the S&P 500 are
unmanaged benchmarks that assume investment of dividends. The Lipper
Closed-End Growth & Income Funds Average excludes the effect of any costs
associated with the purchase of shares, and the S&P 500 excludes the effect
of fees and sales charges. Investors cannot invest directly in an index or
an average.
+ Preferred Stockholders were paid dividends totaling $1.25 per share.
++ Represents realized capital gains from 1997, which were paid on June 23,
1998.
+++ Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1998.
4
<PAGE>
TRI-CONTINENTAL CORPORATION
INTERVIEW WITH YOUR PORTFOLIO MANAGER (continued)
WHICH INDUSTRIES IMPROVED THE CORPORATION'S RESULTS IN THE SECOND QUARTER?
"The portfolio's holdings in capital goods, consumer cyclicals, finance,
health care, and technology all posted strong returns. The consumer cyclicals
sector performed especially well, led by Chrysler Corp. Also, a slight
overweighting in the energy sector positively contributed to the Corporation's
results, despite the drop in energy prices. We will remain overweight in energy
stocks, as we believe this decline will be short-lived. Additionally, these
stocks have attractive yields and reasonable valuations, and we believe
long-term prospects for the portfolio's energy holdings are favorable.
"The portfolio's underweighted position in technology enabled the Corporation
to avoid the negative impact of dwindling Asian demand on corporate earnings in
the industry. We will remain underweight in this sector until the long-term
effects of the Asian crisis become clearer."
WHICH INDUSTRIES IMPAIRED THE CORPORATION'S PERFORMANCE IN THE SECOND QUARTER?
"The consumer staples sector hindered the portfolio's investment results in
the second quarter. Norfolk Southern, the Corporation's sole transportation
holding, negatively affected the portfolio due to the issues associated with the
company's acquisition of Conrail. Additionally, because of ongoing regulatory
concerns and a competitive environment, the telecommunications sector
underperformed expectations."
WHAT IS THE OUTLOOK?
"We remain cautiously optimistic due to our expectations for stable but
slowing economic growth. While the Asian financial crisis only modestly affected
the US economy in the second quarter, and in fact may have helped to buoy stock
prices, we believe it may further erode corporate profits in the months to come.
The weakness in Asian currencies and economies is beginning to negatively impact
some of the multinational corporations whose stock Tri-Continental owns and
recent earnings pre-announcements by US companies indicate that corporate
profits are coming under pressure in some industries. Further, economic
indicators in the second quarter foreshadowed a possible deceleration of the
economy's rate of growth. Nevertheless, Tri-Continental Corporation's portfolio
remains conservatively invested in companies which have valuations below that of
the overall market. Therefore, we believe the Corporation should be
well-positioned in the third quarter.
5
<PAGE>
TRI-CONTINENTAL CORPORATION
INTRODUCE TRI-CONTINENTAL TO A FRIEND
At the 1998 Annual Meeting in St. Louis, Missouri, the Manager of
Tri-Continental Corporation unveiled a new Investor Relations
Program--"Introduce Tri-Continental to a Friend."
The Program is designed to help encourage potential investors to consider
investing in Tri-Continental. This initiative targets the more than 43,500
current Stockholders of record, individual investors, Wall Street analysts, and
financial consultants through a comprehensive effort including advertising,
direct mail, and one-on-one meetings. Tri-Continental has also published a new
brochure that traces its history since its launch in 1929.
The "Introduce Tri-Continental to a Friend" campaign is based on the results
of annual Stockholder surveys that showed fully 95% of Stockholders said they
were either very satisfied or somewhat satisfied with Tri-Continental. Further,
seven in 10 Stockholders said they were likely to recommend Tri-Continental to
someone they know.
Stockholders are invited to request a new investor package be sent to one or
more family members, friends, or associates. The package includes a letter from
Mr. William C. Morris, Tri-Continental's Chairman, a copy of the most recent
Stockholder Report, a Prospectus, the story of Tri-Continental brochure, and a
pamphlet explaining the attributes of a closed-end fund.
The response card included in this Mid-Year Report allows you to request a
copy of the new brochure and to request that family members, friends, or
associates receive the "Introduce Tri-Continental to a Friend" new investor
package.
[GRAPH]
[The following table was depicted as a bar graph in the printed material.]
- --------------------------------------------------------------------------------
Overall Stockholder Satisfaction
Somewhat Satisfied Very Satisfied
Investment in TY 95% 36% 59%
Stockholder Services 97% 19% 78%
- --------------------------------------------------------------------------------
6
<PAGE>
TRI-CONTINENTAL CORPORATION
HIGHLIGHTS OF THE FIRST HALF
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS: 1998 1997
-------------- --------------
<S> <C> <C>
Total assets ...................................... $3,822,064,548 $3,464,836,574
22,779,857 35,383,654
-------------- --------------
NET INVESTMENT ASSETS ............................. $3,799,284,691 $3,429,452,920
Preferred Stock, at par value ..................... 37,637,000 37,637,000
-------------- --------------
Net Assets for Common Stock ....................... $3,761,647,691 $3,391,815,920
============== ==============
Common shares outstanding ......................... 110,568,118 105,796,914
NET ASSETS BEHIND EACH COMMON SHARE ............... $34.02 $32.06
SIX MONTHS ENDED JUNE 30,
--------------------------------
TAXABLE GAIN: 1998 1997
-------------- --------------
Net capital gain realized ......................... $ 229,370,647 $ 122,289,688
Per Common share .................................. $2.07 $1.26
Unrealized capital gains, end of period ........... $1,059,126,597 $1,002,829,508
Per Common share, end of period ................... $9.58 $10.37
DISTRIBUTION OF GAIN:
Per Common share .................................. $1.835 $0.807
INCOME:
Total income earned ............................... $ 37,063,229 $ 37,982,269
Expenses .......................................... 10,563,340 9,321,340
Preferred Stock dividends ......................... 940,925 940,925
-------------- --------------
Income for Common Stock ........................... $ 25,558,964 $ 27,720,004
============== ==============
Expenses to average net investment assets ......... 0.58%* 0.62%*
Expenses to average net assets for Common Stock ... 0.58%* 0.62%*
DIVIDENDS PER COMMON SHARE ........................ $0.26 $0.31
With December 1997 and June 1998 gain distributions
taken in shares ................................ $0.29 --
- ----------
* Annualized.
</TABLE>
7
<PAGE>
TRI-CONTINENTAL CORPORATION
DIVERSIFICATION OF NET INVESTMENT ASSETS
The diversification of portfolio holdings by industry on June 30, 1998, was as
follows. Individual securities owned are listed on pages 10 to 13.
<TABLE>
<CAPTION>
PERCENT OF
NET INVESTMENT
ASSETS
-----------------------
JUNE 30, DECEMBER 31,
ISSUES COST VALUE 1998 1997
------ -------------- -------------- -------- ------------
<S> <C> <C> <C> <C> <C>
US GOVERNMENT SECURITIES -- -- -- -- 4.2%
CORPORATE BONDS -- -- -- -- 0.6
TRI-CONTINENTAL
FINANCIAL DIVISION 3 $ 17,798,984 $ 18,869,765 0.5% 0.5
---- -------------- -------------- ----- -----
3 $ 17,798,984 $ 18,869,765 0.5% 5.3%
---- -------------- -------------- ----- -----
COMMON STOCKS AND
CONVERTIBLE ISSUES:
Aerospace 2 $ 89,741,461 $ 121,362,500 3.2% 2.4%
Automotive and related 4 132,632,100 182,764,300 4.8 3.3
Basic materials 1 29,178,839 32,309,375 0.9 0.9
Building and construction -- -- -- -- 0.5
Chemicals 2 72,280,687 84,598,125 2.2 2.4
Communications 7 235,523,915 295,445,000 7.8 6.6
Computer and business services 4 170,560,752 252,318,750 6.7 6.9
Consumer goods and services 10 412,044,123 478,739,500 12.6 11.2
Diversified 1 29,448,134 52,362,500 1.4 1.3
Drugs and health care 8 259,301,404 423,208,438 11.1 8.3
Electric and gas utilities 3 111,736,582 149,472,188 3.9 3.6
Electronics 1 56,701,326 62,376,875 1.6 5.9
Energy 7 340,378,942 404,114,688 10.6 8.3
Entertainment and leisure -- -- -- -- 1.0
Finance and insurance 12 317,060,094 626,378,437 16.5 16.9
Manufacturing and
industrial equipment 2 103,604,738 178,945,000 4.7 6.6
Paper and forest products 4 125,269,660 132,460,000 3.5 2.7
Publishing 1 10,328,565 28,425,000 0.8 0.7
Real estate investment trusts -- -- -- -- 0.4
Retail trade 3 96,964,557 148,050,937 3.9 2.3
Steel 1 36,447,698 31,453,125 0.8 0.6
Transportation 1 28,977,532 31,452,187 0.8 0.5
---- -------------- -------------- ----- -----
74 $2,658,181,109 $3,716,236,925 97.8% 93.3%
---- -------------- -------------- ----- -----
SHORT-TERM HOLDINGS AND
OTHER ASSETS LESS LIABILITIES 1 64,178,001 64,178,001 1.7 1.4
---- -------------- -------------- ----- -----
NET INVESTMENT ASSETS 78 $2,740,158,094 $3,799,284,691 100.0% 100.0%
==== ============== ============== ===== =====
</TABLE>
8
<PAGE>
TRI-CONTINENTAL CORPORATION
LARGEST PORTFOLIO CHANGES
APRIL 1 TO JUNE 30, 1998
SHARES
----------------------
HOLDINGS
ADDITIONS INCREASE 6/30/98
- --------- --------- ---------
Allegheny
Teledyne, Inc. 501,000 1,375,000
American Telephone
& Telegraph
Company 375,000 375,000
Avon Products, Inc. 450,000 450,000
The British Petroleum
Company plc (ADRs) 425,000 425,000
Eaton Corporation 117,700 352,700
GTE Corporation 295,000 1,065,000
Kimberly-Clark
Corporation 760,000 760,000
Mobil Corporation 270,000 1,220,000
United Technologies
Corporation 200,000 935,000
The Williams
Companies, Inc. 400,000 1,915,000
SHARES
----------------------
HOLDINGS
REDUCTIONS DECREASE 6/30/98
- ---------- --------- ---------
Amoco Corporation 400,000 --
AMP Inc. 665,000 --
Bell Atlantic
Corporation 425,000 --
Deere &
Company, Inc. 505,000 --
General Re
Corporation 75,000 --
Illinois Tool
Works, Inc. 300,000 --
RJR Nabisco Holdings
Corporation 891,600 483,400
Security Capital US
Realty Trust 1,000,000 --
Sherwin-Williams
Corporation 600,000 --
Thomas & Betts
Corporation 600,000 --
Largest portfolio changes from the previous quarter to the current quarter are
based on cost of purchases and proceeds from sales of securities.
10 LARGEST HOLDINGS
JUNE 30, 1998
VALUE
------------
General Electric Company $145,600,000
Exxon Corporation 120,161,563
Mobil Corporation 93,482,500
United Technologies Corporation 86,487,500
Microsoft Corporation 85,640,938
American International Group, Inc. 81,030,000
Chrysler Corporation 78,079,375
Bristol-Myers Squibb Company 72,985,313
American General Corporation 71,187,500
International Business Machines Corporation 69,461,562
9
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
JUNE 30, 1998
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCKS -- 97.8%
AEROSPACE -- 3.2%
GENERAL DYNAMICS CORPORATION 750,000 $ 34,875,000
Diversified defense contractor
UNITED TECHNOLOGIES CORPORATION 935,000 86,487,500
Manufacturer of elevators, jet engines, flight systems, and
automotive parts ------------
$121,362,500
------------
AUTOMOTIVE AND RELATED -- 4.8%
CHRYSLER CORPORATION 1,385,000 $ 78,079,375
Manufacturer of automobiles, trucks, and related parts
DANA CORPORATION 575,000 30,762,500
Manufacturer and distributor of products and
systems for automotive and related markets
EATON CORPORATION 352,700 27,422,425
Diversified manufacturer, including truck transmissions and axles
HARLEY-DAVIDSON INC. 1,200,000 46,500,000
Manufacturer of motorcycles ------------
$182,764,300
------------
BASIC MATERIALS -- 0.9%
ALUMINUM COMPANY OF AMERICA 490,000 $ 32,309,375
Aluminum producer ------------
CHEMICALS -- 2.2%
DUPONT (E.I.) DE NEMOURS AND COMPANY 595,000 $ 44,401,875
Producer of chemicals
THE B.F. GOODRICH COMPANY 810,000 40,196,250
Chemical manufacturer; supplier of systems and component
parts for the aerospace industry ------------
$ 84,598,125
------------
COMMUNICATIONS -- 7.8%
AMERICAN TELEPHONE & TELEGRAPH COMPANY 375,000 $ 21,421,875
Provider of telephone services, systems, and equipment
AMERITECH CORPORATION 955,000 42,855,625
Provider of telecommunications services
GTE Corporation 1,065,000 59,240,625
Provider of telephone services, systems, and equipment
SBC COMMUNICATIONS, INC. 1,070,000 42,800,000
Provider of telephone services in the Southwest
SPRINT CORPORATION 385,000 27,142,500
Global communications company
US WEST COMMUNICATIONS GROUP 915,000 43,005,000
Provider of telephone services
WORLDCOM INC.* 1,220,000 58,979,375
Diversified telecommunications company ------------
$295,445,000
------------
COMPUTER AND BUSINESS SERVICES -- 6.7%
INTEL CORPORATION 640,000 $ 47,420,000
Manufacturer of semiconductors and memory circuits
INTERNATIONAL BUSINESS MACHINES CORPORATION 605,000 69,461,562
Manufacturer of micro and personal computers
MICROSOFT CORPORATION* 790,000 85,640,938
Developer of computer software
</TABLE>
- ----------
See footnotes on page 13.
10
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (CONTINUED) JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
COMPUTER AND BUSINESS SERVICES (continued)
XEROX CORPORATION 490,000 $ 49,796,250
Developer and marketer of document processing products and services
------------
$252,318,750
------------
CONSUMER GOODS AND SERVICES -- 12.6%
ANHEUSER-BUSCH COMPANIES, INC. 1,180,000 $ 55,681,250
Brewery; theme park operator; manufacturer and
recycler of aluminum beverage containers
AVON PRODUCTS, INC. 450,000 34,875,000
Manufacturer of household and personal care products
COCA-COLA COMPANY 770,000 65,835,000
Manufacturer of soft drinks and consumer products
CONAGRA, INC. 1,795,000 56,879,063
Developer and manufacturer of prepared foods and agricultural products
GENERAL MILLS, INC. 520,000 35,555,000
Manufacturer and marketer of consumer foods and restaurants
PEPSICO, INC. 1,190,000 49,013,125
Manufacturer and marketer of soft drinks and consumer products
PHILIP MORRIS COMPANIES, INC. 1,530,000 60,243,750
Manufacturer of tobacco products, food, and beverages
PROCTER & GAMBLE COMPANY 600,000 54,637,500
Manufacturer and distributor of household and personal care products
RJR NABISCO HOLDINGS CORPORATION 483,400 11,480,750
Manufacturer of tobacco products and processed foods
SARA LEE CORPORATION 975,000 54,539,062
Manufacturer of processed foods and consumer products ------------
$478,739,500
------------
DIVERSIFIED -- 1.4%
ALLIEDSIGNAL INC. 1,180,000 $ 52,362,500
Producer of aerospace and automotive materials ------------
DRUGS AND HEALTH CARE -- 11.1%
ABBOTT LABORATORIES 1,080,000 $ 44,145,000
Developer and manufacturer of diversified health care products
AMERICAN HOME PRODUCTS CORPORATION 1,300,000 67,275,000
Developer and manufacturer of pharmaceuticals, food, and housewares
BAXTER INTERNATIONAL INC. 650,000 34,978,125
Manufacturer and distributor of hospital and laboratory products
BRISTOL-MYERS SQUIBB COMPANY 635,000 72,985,313
Developer and manufacturer of health and personal care products
JOHNSON & JOHNSON 650,000 47,937,500
Manufacturer of health care products
MERCK & CO., INC. 515,000 68,881,250
Manufacturer of pharmaceuticals
PFIZER INC. 320,000 34,780,000
Manufacturer of health care consumer products and specialty chemicals
SCHERING-PLOUGH CORPORATION 570,000 52,226,250
Manufacturer of pharmaceuticals and health and personal care products ------------
$423,208,438
------------
ELECTRIC AND GAS UTILITIES -- 3.9%
EDISON INTERNATIONAL 1,500,000 $ 44,343,750
Power company
UNICOM CORPORATION 1,155,000 40,497,188
Electric utility
</TABLE>
- ----------
See footnotes on page 13.
11
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
ELECTRIC AND GAS UTILITIES (continued)
THE WILLIAMS COMPANIES, INC. 1,915,000 $ 64,631,250
Transporter and producer of natural gas ------------
$149,472,188
------------
ELECTRONICS -- 1.6%
RAYTHEON COMPANY CLASS "B" 1,055,000 $ 62,376,875
Producer of defense and commercial electronics ------------
ENERGY -- 10.6%
THE BRITISH PETROLEUM COMPANY PLC (ADRS) (UNITED KINGDOM) 425,000 $ 37,506,250
Explorer, producer, refiner, and retailer of petroleum products
CHEVRON CORPORATION 480,000 39,870,000
Explorer, developer, and producer of crude oil and natural gas
EXXON CORPORATION 1,685,000 120,161,563
Explorer and producer of natural gas, oil, and petroleum products
MOBIL CORPORATION 1,220,000 93,482,500
International oil enterprise
ROYAL DUTCH PETROLEUM COMPANY (NETHERLANDS) 1,030,000 56,456,875
International oil services
SCHLUMBERGER LTD. 200,000 13,662,500
Worldwide provider of energy services
TEXACO INC. 720,000 42,975,000
Explorer, producer, transporter, refiner, and marketer of
natural gas, oil, and petroleum products ------------
$404,114,688
------------
FINANCE AND INSURANCE -- 16.5%
ACE LIMITED 900,000 $ 35,100,000
Provider of liability insurance
AHMANSON (H.F.) & COMPANY 800,000 56,800,000
Provider of savings and loan services throughout the US
AMERICAN GENERAL CORPORATION 1,000,000 71,187,500
Diversified financial services provider
AMERICAN INTERNATIONAL GROUP, INC. 555,000 81,030,000
International insurance holding company
BANKAMERICA CORPORATION 555,000 47,972,812
Commercial bank in California and the Western states
BANK OF NEW YORK COMPANY, INC. 1,080,000 65,542,500
Commercial bank
CITICORP 200,000 29,850,000
Worldwide provider of financial services
FEDERAL NATIONAL MORTGAGE ASSOCIATION 720,000 43,740,000
Mortgage financer
MARSH & MCLENNAN COMPANIES, INC. 780,000 47,141,250
Insurance and reinsurance brokerage
MELLON BANK CORPORATION 750,000 52,218,750
Provider of financial services
ST. PAUL COMPANIES, INC. 1,110,000 46,689,375
Property and casualty insurer
TRAVELERS INCORPORATED 810,000 49,106,250
Provider of broad-based financial services
------------
$626,378,437
------------
MANUFACTURING AND
INDUSTRIAL EQUIPMENT -- 4.7%
GATX Corporation 760,000 $ 33,345,000
Railcar leasing; equipment financing
</TABLE>
- ----------
See footnotes on page 13.
12
<PAGE>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (CONTINUED) JUNE 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
--------- --------------
<S> <C> <C>
MANUFACTURING AND
INDUSTRIAL EQUIPMENT (continued)
GENERAL ELECTRIC COMPANY 1,600,000 $ 145,600,000
Supplier of electrical equipment and other industrial
and consumer products --------------
$ 178,945,000
--------------
PAPER AND FOREST PRODUCTS -- 3.5%
FORT JAMES CORPORATION 865,000 $ 38,492,500
Producer of paper and related products
KIMBERLY-CLARK CORPORATION 760,000 34,865,000
Consumer paper products, newsprint
THE MEAD CORPORATION 1,080,000 34,290,000
Manufacturer of paper, lumber, and wood products
UNION CAMP CORPORATION 500,000 24,812,500
Producer of paper products, building materials, and chemicals --------------
$ 132,460,000
--------------
PUBLISHING -- 0.8%
GANNETT COMPANY, INC. 400,000 $ 28,425,000
Newspapers; radio and television broadcasting --------------
RETAIL TRADE -- 3.9%
MAY DEPARTMENT STORES COMPANY 795,000 $ 52,072,500
Department store operator
J.C. PENNEY COMPANY, INC. 735,000 53,149,687
Operator of retail department stores and drugstores; insurance
WAL-MART STORES, INC. 705,000 42,828,750
Discount retailer --------------
$ 148,050,937
--------------
STEEL -- 0.8%
ALLEGHENY TELEDYNE, INC. 1,375,000 $ 31,453,125
Manufacturer of specialty metals and aviation and electronics products --------------
TRANSPORTATION -- 0.8%
NORFOLK SOUTHERN CORPORATION 1,055,000 $ 31,452,187
Railroad holding company --------------
TOTAL COMMON STOCKS
(Cost: $2,658,181,109) $3,716,236,925
--------------
TRI-CONTINENTAL FINANCIAL DIVISION+- 0.5%
(Cost: $17,798,984) $ 18,869,765
--------------
SHORT-TERM HOLDINGS - 2.0%
(Cost: $74,100,000) $ 74,100,000
--------------
TOTAL INVESTMENTS - 100.3%
(Cost: $2,750,080,093) $3,809,206,690
OTHER ASSETS LESS LIABILITIES - (0.3)% (9,921,999)
--------------
NET INVESTMENT ASSETS - 100.0% $3,799,284,691
==============
</TABLE>
- ----------
* Non-income producing security.
+ Restricted securities.
Descriptions of companies have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
13
<PAGE>
TRI-CONTINENTAL CORPORATION
STATEMENT OF ASSETS AND LIABILITIES June 30, 1998
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Investments at value:
Common stocks (cost--$2,658,181,109) .............. $3,716,236,925
Tri-Continental Financial Division
(cost--$17,798,984) .............................. 18,869,765
Short-term holdings (cost--$74,100,000) ........... 74,100,000 $3,809,206,690
--------------
Cash ................................................................ 527,998
Receivable for dividends and interest ............................... 7,660,820
Receivable for securities sold ...................................... 3,480,538
Investment in, and expenses prepaid to, stockholder
service agent ..................................................... 459,081
Other ............................................................... 729,421
--------------
TOTAL ASSETS ........................................................ $3,822,064,548
--------------
LIABILITIES:
Payable for securities purchased .................................... $ 19,859,222
Dividends payable ................................................... 470,463
Accrued expenses, taxes, and other .................................. 2,450,172
--------------
TOTAL LIABILITIES ................................................... $ 22,779,857
--------------
NET INVESTMENT ASSETS ............................................... $3,799,284,691
Preferred Stock, at $50 par value ................................... 37,637,000
--------------
NET ASSETS FOR COMMON STOCK ......................................... $3,761,647,691
==============
NET ASSETS PER SHARE OF COMMON STOCK
(MARKET VALUE--$27.875) ........................................... $34.02
======
STATEMENT OF CAPITAL STOCK AND SURPLUS June 30, 1998
CAPITAL STOCK:
$2.50 Cumulative Preferred Stock, $50 par value,
asset coverage per share--$5,047.27
Shares authorized--1,000,000; issued
and outstanding--752,740 .......................................... $ 37,637,000
Common Stock, $0.50 par value:
Shares authorized--129,000,000; issued
and outstanding--110,568,118 ...................................... 55,284,059
SURPLUS:
Capital surplus .................................................... 2,418,629,096
Distributions in excess of net investment income (2,234,482)
Undistributed net realized gain 230,863,265
Net unrealized appreciation of investments ......................... 1,059,126,597
Net unrealized depreciation on translation of assets
and liabilities denominated in foreign currencies (20,844)
-------------
$3,799,284,691
==============
</TABLE>
- ----------
See Notes to Financial Statements.
14
<PAGE>
TRI-CONTINENTAL CORPORATION
STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1998
INVESTMENT INCOME:
Dividends ...................................... $ 32,569,244
Interest ....................................... 5,065,421
------------
TOTAL INVESTMENT INCOME (net of foreign taxes
withheld of $228,260) ......................................... $ 37,634,665
EXPENSES:
Management fee ................................. $ 7,287,163
Stockholder account and registrar services ..... 1,827,211
Stockholder reports and communications ......... 637,457
Custody and related services ................... 260,001
Stockholders' meeting .......................... 149,172
Auditing and legal fees ........................ 145,217
Directors' fees and expenses ................... 117,430
Registration ................................... 72,193
Miscellaneous .................................. 67,496
------------
TOTAL EXPENSES ................................................. 10,563,340
------------
NET INVESTMENT INCOME .......................................... $ 27,071,325*
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain on investments ............... $238,541,094
Net realized loss from foreign
currency transactions ......................... (9,741,883)
Net change in unrealized appreciation
of investments ................................ 194,018,365
Net change in unrealized depreciation
on translation of assets and liabilities
denominated in foreign currencies ............. 7,753,610
------------
NET GAIN ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS ......................................... 430,571,186
-----------
INCREASE IN NET INVESTMENT ASSETS
FROM OPERATIONS ............................................... $457,642,511
============
- ----------
*Net investment income available for Common Stock is $25,558,964, which is net
of Preferred Stock dividends of $940,925, and includes a portion of the net
realized loss from foreign currency transactions of $571,436, which is a
reduction to ordinary income.
See Notes to Financial Statements.
15
<PAGE>
TRI-CONTINENTAL CORPORATION
STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income ................................. $ 27,071,325 $ 58,712,421
Net realized gain on investments ...................... 238,541,094 463,458,808
Net realized loss from foreign currency transactions .. (9,741,883) (6,633,164)
Net change in unrealized appreciation
of investments ...................................... 194,018,365 210,948,617
Net change in unrealized appreciation/depreciation
on translation of assets and liabilities
denominated in foreign currencies ................... 7,753,610 (9,609,797)
-------------- --------------
INCREASE IN NET INVESTMENT
ASSETS FROM OPERATIONS .............................. $ 457,642,511 $ 716,876,885
-------------- --------------
Distributions to Stockholders:
Net investment income:
Preferred Stock (per share: $1.25 and $2.50) ........ $ (940,925) $ (1,881,850)
Common Stock (per share: $0.26 and $0.60) ........... (27,453,937) (58,603,778)
-------------- --------------
$ (28,394,862) $ (60,485,628)
Net realized gain on investments:
Common Stock (per share: $1.835 and $3.447) ......... (193,711,024) (338,654,348)
--------------- --------------
DECREASE IN NET INVESTMENT ASSETS
FROM DISTRIBUTIONS .................................. (222,105,886) $ (399,139,976)
-------------- --------------
Capital Share Transactions:
Value of shares of Common Stock issued
at market price in gain distributions
(4,886,032 and 9,018,136 shares) .................... $ 137,572,583 $ 240,732,759
Value of shares of Common Stock issued
for investment plans (816,640 and 1,805,903 shares) . 23,290,288 48,297,075
Cost of shares purchased for investment plans
(932,383 and 1,864,646 shares) ...................... (26,569,006) (49,978,136)
Net proceeds from issuance of shares of
Common Stock upon exercise of
Warrants (915 and 647 shares) ....................... 1,281 989
-------------- --------------
INCREASE IN NET INVESTMENT ASSETS
FROM CAPITAL SHARE TRANSACTIONS ..................... $ 134,295,146 $ 239,052,687
-------------- --------------
INCREASE IN NET INVESTMENT ASSETS ..................... $ 369,831,771 $ 556,789,596
Net Investment Assets:
Beginning of period ................................... 3,429,452,920 2,872,663,324
-------------- --------------
END OF PERIOD (including distributions in excess of net
investment income and accumulated net investment
loss of $2,234,482 and $339,509, respectively) ...... $3,799,284,691 $3,429,452,920
============== ==============
</TABLE>
- ----------
See Notes to Financial Statements.
16
<PAGE>
TRI-CONTINENTAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been
prepared in conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions at the date of the
financial statements. The following summarizes the significant accounting
policies of the Corporation:
a. SECURITY VALUATION -- Investments in stocks, 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 an exchange are valued at last sales
prices or, in their absence and in the case of over-the-counter
securities, at the mean of bid and asked prices. Short-term holdings
maturing in 60 days or less are valued at amortized cost.
b. FOREIGN CURRENCY TRANSACTIONS -- The books and records of the Corporation
are maintained in US dollars. The market value of investment securities,
other assets and liabilities denominated in foreign currencies are
translated into US dollars at the daily rate of exchange as reported by a
pricing service. Purchases and sales of investment securities, income, and
expenses are translated into US 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. FORWARD CURRENCY CONTRACTS -- 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. FEDERAL TAXES -- There is no provision for federal income 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. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- 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, except that certain dividends from foreign securities where the
ex-dividend dates may have passed are recorded as soon as the Corporation
is informed of the dividend. Interest income is recorded on the accrual
basis.
f. DISTRIBUTIONS TO STOCKHOLDERS -- 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 are caused primarily 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.
17
<PAGE>
TRI-CONTINENTAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
2. AUTOMATIC DIVIDEND INVESTMENT AND CASH PURCHASE PLANS -- 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 six
months ended June 30, 1998, 932,383 shares were purchased from Plan participants
at a cost of $26,569,006, which represented a weighted average discount of
17.35% from the net asset value of those acquired shares. A total of 816,640
shares were issued to Plan participants during the six months for proceeds of
$23,290,288, a discount of 17.25% from the net asset value of those shares.
At June 30, 1998, 241,280 shares of Common Stock were reserved for issuance
upon exercise of 14,379 Warrants, each of which entitled the holder to purchase
16.78 shares of Common Stock at $1.34 per share. Assuming the exercise of all
Warrants outstanding at June 30, 1998, net investment assets would have
increased by $323,315 and the net asset value of the Common Stock would have
been $33.95 per share. The number of Warrants exercised during the six months
ended June 30, 1998 and the year ended December 31, 1997, was 57 and 44,
respectively.
3. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding USGovernment obligations and short-term investments,
amounted to $1,109,318,367 and $1,041,429,381, respectively; sales of
USGovernment obligations amounted $143,521,094. At June 30, 1998, 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 amounted to $1,110,733,207
and $51,606,610, respectively.
4. SHORT-TERM INVESTMENTS -- At June 30, 1998, the Corporation owned short-term
investments which matured in less than seven days.
5. MANAGEMENT FEE, ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS -- J. & W.
Seligman & Co. Incorporated (the "Manager") manages the affairs of the
Corporation and provides for the 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 six months ended June 30,
1998, was equivalent to an annual rate of 0.40% of the average daily net assets
of the Corporation.
Prior to March 31, 1998, Seligman Henderson Co., an entity owned 50% each by
the Manager and Henderson International, Inc., a subsidiary of Henderson plc,
supervised and directed all or a portion of the Corporation's foreign
investments. For this service, the Manager paid Seligman Henderson Co. a monthly
fee.
Seligman Data Corp., owned by the Corporation and certain associated
investment companies, charged the Corporation at cost $1,765,850 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 and/or Seligman Data Corp.
18
<PAGE>
TRI-CONTINENTAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (continued)
The Corporation has a compensation arrangement under which directors who
receive fees may elect to defer receiving such fees. Directors may elect to have
their deferred fees accrue interest or earn a return based on the performance of
the Corporation or other funds in the Seligman Group of Investment Companies.
The cost of such fees and earnings accrued thereon is included in directors'
fees and expenses, and the accumulated balance thereof at June 30, 1998, of
$452,375 is included in other liabilities. Deferred fees and related accrued
earnings are not deductible for federal income tax purposes until such amounts
are paid.
6. RESTRICTED SECURITIES -- At June 30, 1998, the Tri-Continental Financial
Division of the Corporation was comprised of three 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,
along with their cost and values at June 30, 1998, are as follows:
<TABLE>
<CAPTION>
Investments Acquisition Date(s) Cost Value
- ------------------------------------ ------------------- ----------- -----------
<S> <C> <C> <C>
Water Street Corporate Recovery
Fund I, L.P. 10/9/90 to 8/22/97 $ 234,509 $ 234,509
WCAS Capital Partners II, L.P. 12/11/90 to 3/24/98 7,353,396 7,407,664
Whitney Subordinated Debt Fund, L.P. 7/12/89 to 6/24/98 10,211,079 11,227,592
----------- -----------
Total $17,798,984 $18,869,765
=========== ===========
</TABLE>
19
<PAGE>
TRI-CONTINENTAL CORPORATION
FINANCIAL HIGHLIGHTS
The Corporation's financial highlights are presented below. "Per share
operating performance" data is designed to allow investors to trace the
operating performance, on a per Common share basis, from the beginning net asset
value to the ending net asset value, so that investors can understand what
effect the individual items have on their investment, assuming it was held
throughout the period. 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, using
average shares outstanding.
"Total investment return for period" measures the Corporation's performance
assuming that investors purchased shares of the Corporation at the market value
or net asset 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 or net asset value per share on the last day of the
period. The computations do not reflect any sales commissions investors may
incur in purchasing or selling shares of the Corporation. The total investment
return for periods of less than one year is not annualized.
The ratios of expenses and net investment income to average net investment
assets and to average net assets for Common Stock, for all periods presented do
not reflect the effect of dividends paid to Preferred Stockholders.
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended -----------------------------------------------------
June 30, 1998 1997 1996 1995 1994 1993
------------ ------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
NET ASSET VALUE,
BEGINNING OF PERIOD ................ $32.06 $29.28 $27.58 $23.70 $27.49 $28.03
------ ------ ------ ------ ------ ------
Net investment income ............... 0.25 0.60 0.68 0.74 0.83 0.83
Net realized and unrealized
investment gain (loss) ............. 4.10 6.94 4.84 6.14 (1.69) 1.46
Net realized and unrealized
gain (loss)from foreign
currency transactions .............. (0.02) (0.17) (0.02) 0.03 0.02 --
------ ------ ------ ------ ------ ------
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS .............. 4.33 7.37 5.50 6.91 (0.84) 2.29
Dividends paid on Preferred Stock ... (0.01) (0.02) (0.02) (0.02) (0.03) (0.03)
Dividends paid on Common Stock ...... (0.26) (0.60) (0.66) (0.73) (0.79) (0.80)
Distribution from net gain realized (1.84) (3.45) (2.72) (2.01) (1.90) (1.80)
Issuance of Common Stock
in gain distributions .............. (0.26) (0.52) (0.40) (0.27) (0.23) (0.19)
Issuance of Common Stock
upon Warrant exercise .............. -- -- -- -- -- (0.01)
------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE)
IN NET ASSET VALUE ................. 1.96 2.78 1.70 3.88 (3.79) (0.54)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD ...................... $34.02 $32.06 $29.28 $27.58 $23.70 $27.49
====== ====== ====== ====== ====== ======
ADJUSTED NET ASSET VALUE,
END OF PERIOD* .................... $33.95 $31.99 $29.22 $27.52 $23.65 $27.42
MARKET VALUE, END OF PERIOD ......... $27.875 $26.6875 $24.125 $22.625 $19.875 $23.75
</TABLE>
- ---------
See footnotes on page 21.
20
<PAGE>
TRI-CONTINENTAL CORPORATION
FINANCIAL HIGHLIGHTS (continued)
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended ---------------------------------------------------------------
June 30, 1998 1997 1996 1995 1994 1993
------------ -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total Investment Return for Period:
Based upon market value ........... 12.23% 27.96% 21.98% 27.95% (5.07)% 3.47%
Based upon net asset value ........ 14.03% 26.65% 21.45% 30.80% (2.20)% 8.95%
Ratios/Supplemental Data:
Expenses to average net
investment assets ............... 0.58%+ 0.60% 0.62% 0.63% 0.64% 0.66%
Expenses to average net assets for
Common Stock .................... 0.58%+ 0.60% 0.63% 0.64% 0.65% 0.67%
Net investment income to
average net investment assets ... 1.48%+ 1.80% 2.27% 2.71% 3.08% 2.88%
Net investment income to average
net assets for Common Stock ..... 1.49%+ 1.82% 2.31% 2.75% 3.14% 2.94%
Portfolio turnover rate ........... 30.83% 83.98% 53.96% 62.28% 70.38% 69.24%
NET INVESTMENT ASSETS,
End of Period (000s omitted):
For Common Stock ................ $3,761,648 $3,391,816 $2,835,026 $2,469,149 $1,994,098 $2,166,212
For Preferred Stock ............. 37,637 37,637 37,637 37,637 37,637 37,637
---------- ---------- ---------- ---------- ---------- ----------
TOTAL NET INVESTMENT ASSETS ....... $3,799,285 $3,429,453 $2,872,663 $2,506,786 $2,031,735 $2,203,849
========== ========== ========== ========== ========== ==========
</TABLE>
- -----------
* Assumes the exercise of outstanding warrants.
+ Annualized.
See Notes to Financial Statements.
21
<PAGE>
TRI-CONTINENTAL CORPORATION
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 June 30, 1998, the related statements of
operations for the six months then ended and of changes in net investment assets
for the six months then ended and for the year ended December 31, 1997, and the
financial highlights for the six months then ended and for each of the years in
the five-year period ended December 31, 1997. 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 June
30, 1998, by correspondence with the Corporation's custodian 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 June 30, 1998, 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
July 31, 1998
22
<PAGE>
TRI-CONTINENTAL CORPORATION
PROXY RESULTS
Tri-Continental Corporation Stockholders voted on the following proposals at
the Annual Meeting of Stockholders on May 21, 1998, in St. Louis, MO. The
description of each proposal and the voting results are stated below. Each
nominee for Director was elected, and the selection of Deloitte & Touche LLP as
auditors for 1998 was ratified. None of the Stockholder proposals passed.
For Withheld
--------- ---------
Election of Directors:
Alice S. Ilchman 80,687,629 2,930,919
Frank A. McPherson 80,668,319 2,950,229
Richard R. Schmaltz 80,718,557 2,899,991
Brian T. Zino 80,749,828 2,868,720
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Vote
--------- ------- ------- --------
<S> <C> <C> <C> <C>
Ratification of Deloitte &
Touche LLP as auditors 81,286,987 1,566,694 764,867 n/a
Stockholder proposal relating to:
1) Allowing access
to stockholder lists 8,936,795 51,789,543 3,003,048 19,889,162
2) Additional qualifications
for potential Directors 11,964,664 48,455,671 3,309,053 19,889,160
3) Open-ending 9,471,028 50,919,460 3,338,901 19,889,159
</TABLE>
23
<PAGE>
TRI-CONTINENTAL CORPORATION
BOARD OF DIRECTORS
JOHN R. GALVIN (2,4)
DEAN, Fletcher School of Law and
Diplomacy at Tufts University
DIRECTOR, Raytheon Company
ALICE S. ILCHMAN (3,4)
TRUSTEE, Committee for Economic
Development
CHAIRMAN, The Rockefeller Foundation
FRANK A. MCPHERSON (2,4)
DIRECTOR, Kimberly-Clark Corporation
DIRECTOR, Baptist Medical Center
JOHN E. MEROW (2,4)
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
TRUSTEE, The New York and
Presbyterian Hospital
BETSY S. MICHEL (2,4)
TRUSTEE, The Geraldine R. Dodge Foundation
CHAIRMAN OF THE BOARD OF TRUSTEES,
St. George's School
WILLIAM C. MORRIS (1)
CHAIRMAN
CHAIRMAN OF THE BOARD,
J. & W. Seligman & Co. Incorporated
CHAIRMAN, Carbo Ceramics Inc.
DIRECTOR, Kerr-McGee Corporation
JAMES C. PITNEY (3,4)
RETIRED PARTNER, Pitney, Hardin, Kipp & Szuch,
Law Firm
JAMES Q. RIORDAN (3,4)
DIRECTOR, The Brooklyn Union Gas Company
TRUSTEE, Committee for Economic
Development
DIRECTOR, Public Broadcasting Service
RICHARD R.SCHMALTZ (1)
MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS,
J. & W. Seligman & Co. Incorporated
TRUSTEE EMERITUS,Colby College
ROBERT L. SHAFER (3,4)
RETIRED VICE PRESIDENT, Pfizer Inc.
JAMES N. WHITSON (2,4)
DIRECTOR AND CONSULTANT,
Sammons Enterprises, Inc.
DIRECTOR, C-SPAN
DIRECTOR, CommScope, Inc.
BRIAN T. ZINO (1)
PRESIDENT
PRESIDENT, J. & W. Seligman & Co. Incorporated
CHAIRMAN, Seligman Data Corp.
DIRECTOR EMERITUS
FRED E. BROWN
DIRECTOR AND CONSULTANT,
J. & W. Seligman & Co. Incorporated
- --------------------
Member:
(1) Executive Committee
(2) Audit Committee
(3) Director Nominating Committee
(4) Board Operations Committee
24
<PAGE>
TRI-CONTINENTAL CORPORATION LAWRENCE P. VOGEL
VICE PRESIDENT
EXECUTIVE OFFICERS
WILLIAM C. MORRIS THOMAS G. ROSE
CHAIRMAN TREASURER
BRIAN T. ZINO FRANK J. NASTA
PRESIDENT SECRETARY
CHARLES W. KADLEC
VICE PRESIDENT
CHARLES C. SMITH, JR.
VICE PRESIDENT
- --------------------------------------------------------------------------------
FOR MORE INFORMATION
MANAGER
J. & W. Seligman & Co. Incorporated
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
(212) 682-7600 Outside the United States
(800) 622-4597 24-Hour Automated
Telephone Access Service
25
<PAGE>
TRI-CONTINENTAL CORPORATION
MANAGED BY
[LOGO]
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
CETR13 6/98
