MID-YEAR REPORT 1999
TY [LOGO]
TRI-CONTINENTAL
CORPORATION
AN INVESTMENT YOU CAN LIVE WITH
<PAGE>
TRI-CONTINENTAL CORPORATION INVESTS TO
PRODUCE FUTURE 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: August 6, 1999
During the first six months of 1999, Tri-Continental Corporation posted a
total return of 9.95% based on net asset value and 9.20% based on market value.
During the same period, the Lipper Closed-End Growth & Income Funds Average
returned 11.33% and the Standard & Poor's 500 Composite Stock Price Index (S&P
500) returned 12.38%. A discussion with your Portfolio Managers regarding the
Corporation's results begins on page 3.
The economic environment of the past six months was supportive for common
stocks. Inflation remained benign, corporate profits were strong, and the global
economy continued to recover, which should begin to lift some of the pressure
for world growth off the US. During this time, the US economy entered its ninth
year of expansion, with the pace of growth remarkably strong.
The strong US economy, coupled with improved business prospects in most of
the rest of the world, caused the Federal Reserve Board to announce in May that
it was leaning toward a tighter monetary policy. Thus, market participants were
not surprised when the Fed increased the federal funds rate by 25 basis points
on June 30. However, markets did not expect the Fed to also announce that it was
changing its bias from tightening to neutral. This news immediately pushed the
Dow Jones Industrial Average 155 points higher and pushed the 30-year Treasury
bond yield back below 6%. Since then, however, fears of additional interest rate
hikes have surfaced, sending the market averages lower and the 30-year Treasury
bond above 6%.
As we move into the second half of the fiscal year, US economic growth
remains strong, the rest of the world is showing solid signs of economic
recovery, and inflation appears benign. The common stocks that the Fund holds
are likely to continue to benefit in such an environment.
As the millennium approaches, we have become concerned that the media's focus
on the Year 2000 (Y2K) computer issue, and the fears that this attention may
spark, will cause some investors to take actions that are not in their best
long-term interests. In our view, the primary danger to investors is losing
sight of their long-term financial goals, and altering their portfolios and
asset allocations, in an attempt to respond to the confusion surrounding this
issue. In the US, governments and businesses have committed substantial
resources to this issue and, while there may be scattered inconveniences, we
believe that the US will enter the year 2000 relatively seamlessly, and that
much of the rest of the developed world is also well positioned to deal with the
new millennium.
1
<PAGE>
TRI-CONTINENTAL CORPORATION
For the past several years, J. & W. Seligman & Co. Incorporated (Seligman),
your Fund's manager, and Seligman Data Corp. (Seligman Data), your Fund's
Stockholder service agent, have been working to ensure that Stockholders do not
experience any Y2K-related inconveniences. We are pleased to report that the
early start has paid off. During the spring of this year, Seligman and Seligman
Data participated in Y2K testing conducted by the Securities Industry
Association. These tests were completed without any Y2K-related problems on the
part of Seligman or Seligman Data. Tests with key service providers were also
conducted, all of which were successfully completed in a Y2K environment.
Tri-Continental Corporation's annual Stockholders' meeting took place on May
20, 1999, in Palm Beach, Florida. 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,
a proposal to require additional qualifications for potential directors, and the
removal of J. & W. Seligman as Manager, were rejected by the majority of
Stockholders. For complete results of the vote, please refer to page 23.
Thank you for your continued support of Tri-Continental Corporation. We look
forward to serving your investment needs for many years to come.
By order of the Board of Directors,
/s/ William Morris
- ----------------------
William C. Morris
Chairman
/s/ Brian T. Zino
--------------------------
Brian T. Zino
President
2
<PAGE>
TRI-CONTINENTAL CORPORATION
INTERVIEW WITH YOUR PORTFOLIO MANAGERS
[PHOTO]
GROWTH AND INCOME TEAM: (FROM LEFT) AMY FUJII, JOHN ROTH, MELANIE RAVENELL
(ADMINISTRATIVE ASSISTANT), (SEATED) CHARLES SMITH (PORTFOLIO MANAGER), RODNEY
COLLINS (CO-PORTFOLIO MANAGER)
HOW DID TRI-CONTINENTAL PERFORM DURING THE FIRST SIX MONTHS OF 1999?
For the six-month period ended June 30, 1999, Tri-Continental Corporation posted
a total return of 9.95% based on net asset value and 9.20% based on market
value. This compares to 11.33% for the Lipper Closed-End Growth & Income Funds
Average and 12.38% for the Standard & Poor's 500 Composite Stock Price Index
(S&P 500).
WHAT ECONOMIC AND MARKET FACTORS AFFECTED THE CORPORATION'S PERFORMANCE DURING
THE FIRST HALF OF THE FISCAL YEAR?
The six-month period ended June 30, 1999, was a constructive one for common
stocks. While interest rates increased dramatically -- long-term rates rose by
100 basis points -- they are only back to the levels that prevailed before last
year's global economic crisis. At that time, central banks around the world
staged a coordinated effort to revive the global economic system. This effort
was successful and looser monetary policies around the world provided support
for uncertain stock markets. Six months later, a more positive global
environment has allowed stocks to flourish despite rising rates.
During this time, the US stock market continued to hit new highs. The
fundamentals of the market -- including benign inflation, positive news with
respect to corporate profits, and accelerating global growth -- have remained
strong. Even though the Fed raised rates as expected at its June meeting, its
announcement of a neutral bias toward rates provided the stock market with a
significant boost.
WHAT WAS YOUR INVESTMENT STRATEGY?
We didn't change our strategy over the past half year. The types of stocks
that the Corporation holds continue to perform well in this supportive
environment, and the Corporation continues to be nearly fully invested in common
stocks.
We remained focused on finding value in a market that has been unforgiving to
richly priced companies that miss short-term expectations. We seek companies
that are selling at reasonable prices and that have attractive dividend yields
within their industry groups. Selective valuations in the marketplace still seem
high. However, there are many companies whose valuations appear quite
reasonable, and we are still finding opportunities in equities.
(CONTINUED ON PAGE 5)
3
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TRI-CONTINENTAL CORPORATION
================================================================================
INVESTMENT RESULTS PER COMMON SHARE
TOTAL RETURNS
FOR PERIODS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
AVERAGE ANNUAL
--------------------------------
THREE SIX ONE FIVE 10
*MONTHS* *MONTHS* YEAR YEARS YEARS
------- ------- ----- ----- -----
<S> <C> <C> <C> <C> <C>
MARKET PRICE** 6.88% 9.20% 22.78% 22.62% 16.77%
NET ASSET VALUE** 7.40 9.95 21.30 23.35 16.74
LIPPER CLOSED-END
GROWTH & INCOME
FUNDS AVERAGE*** 11.76 11.33 15.85 21.90 15.65
S&P 500*** 7.05 12.38 22.76 27.87 18.78
</TABLE>
<TABLE>
<CAPTION>
PRICE PER SHARE
JUNE 30, 1999 MARCH 31, 1999 DECEMBER 31, 1998
------------ ------------- -----------------
<S> <C> <C> <C>
MARKET PRICE $30.1875 $29.00 $28.50
NET ASSET VALUE 36.40 34.80 34.13
</TABLE>
DIVIDEND AND CAPITAL GAIN INFORMATION
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Capital Gain
-----------------------------------------------------
+DIVIDENDS PAID+ PAID REALIZED UNREALIZED
---------------- --------- --------- ----------
<S> <C> <C> <C> <C>
$0.24 ++$0.67++ $2.09 +++$11.61+++
</TABLE>
- --------------------------------------------------------------------------------
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 1998, which were paid on
June 24, 1999.
+++ Represents the per share amount of net unrealized appreciation of portfolio
securities as of June 30, 1999.
================================================================================
4
<PAGE>
TRI-CONTINENTAL CORPORATION
INTERVIEW WITH YOUR PORTFOLIO MANAGERS (CONTINUED)
WHAT SECTORS OF THE PORTFOLIO CONTRIBUTED POSITIVELY TO THE CORPORATION'S
PERFORMANCE DURING THE PERIOD?
The best-performing sector of the portfolio year-to-date was cyclical stocks.
Diversified companies also performed well and made a strong contribution to
performance, despite comprising a small percentage of the portfolio. Both of
these sectors are examples of the significant appreciation that cyclical stocks
enjoyed during the second quarter. During this time, we saw an increased focus
on value as the market adjusted in advance of the June 30 interest-rate
increase. Technology continues to be a strong performer. In fact, this was the
best-performing sector over the past 52 weeks.
WHAT SECTORS PERFORMED POORLY DURING THE PERIOD?
The drugs and health care sector was the worst-performing sector during the
period, and this affected performance significantly because this sector
represents a large percentage of the portfolio. Health care stocks have suffered
lately because of a new Medicare proposal that could adversely affect some
health care companies. We have not reduced the Corporation's holdings in this
area, however, because we believe that health care still offers attractive
long-term opportunities.
WHAT IS YOUR OUTLOOK?
American business fundamentals remain strong and should gain additional
support from rising world demand. Therefore, we believe that corporate profits
will grow and may even exceed expectations, despite higher interest rates. This,
in addition to a benign inflation outlook, bodes well for common stocks.
Over the next six months, we do not plan any major strategy changes for
Tri-Continental and we continue to focus on meeting the Corporation's objectives
for our Stockholders. We will remain focused on the long term and will use the
short-term price declines of companies with valuable franchises and those making
strategic far-sighted investments as buying opportunities. It is in these
situations where we often find the best long-term purchases for the Corporation
and its Stockholders.
5
<PAGE>
TRI-CONTINENTAL CORPORATION
INTRODUCING WWW.TRICONTINENTAL.COM
Now Stockholders can get the latest Tri-Continental information -- including
daily net asset values, monthly fact sheets, portfolio manager commentary,
recent reports, and more -- over the Internet, 24 hours a day, seven days a
week.
We have developed a new website for the convenience of current Stockholders
and to let the world know about Tri-Continental. In addition to up-to-date
practical information, the site contains interesting facts about
Tri-Continental, including a complete history.
Please stop by www.tricontinental.com. We hope you find the site a useful one
that you will want to visit often.
THANKS FOR MAKING "INTRODUCE TRI-CONTINENTAL TO A FRIEND" A SUCCESS
Since May 1998, Stockholders have been spreading the word about
Tri-Continental to potential investors through "Introduce Tri-Continental to a
Friend," a program designed to encourage potential investors to consider
investing in Tri-Continental. Many Stockholders have contacted us through the
business reply cards in Stockholder reports, and to date we have mailed nearly
1,400 "Friend" packages.
Stockholders are invited to request that a new investor package be sent to
family members, friends, and 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 closed-end funds.
A business reply card, which can be used to request packages, is included
with this report. Once again, we thank Tri-Continental's Stockholders for their
enthusiastic response to this program. Please remember that, because
Tri-Continental is a closed-end fund with shares listed on the New York Stock
Exchange, new investors may not purchase shares directly from the Corporation.
Interested investors should contact their financial advisors.
STOCK REPURCHASE PROGRAM
In November 1998, the Board of Directors authorized a share repurchase
program for up to 7.5% of the Corporation's shares over a 12-month period. The
Board's decision benefits all Stockholders, allowing them to continue to enjoy
the advantages of Tri-Continental's closed-end structure, while reducing the
number of shares outstanding and increasing the NAV of the remaining shares.
As of June 30, 1999, the Corporation had repurchased 3,161,639 shares,
representing approximately 2.9% of the shares outstanding on November 19, 1998,
the date the program was announced. The repurchase of additional shares is
expected to take place through November 1999, as long as the discount remains
above 10%. At that time, the Board of Directors of the Corporation will consider
the continuation of the stock repurchase program.
6
<PAGE>
TRI-CONTINENTAL CORPORATION
HIGHLIGHTS OF THE FIRST HALF
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS: 1999 1998
------------ ------------
<S> <C> <C>
Total assets .............................................. $ 4,315,803,484 $ 4,043,814,126
5,885,177 3,660,628
------------ ------------
Net Investment Assets ..................................... $ 4,309,918,307 $ 4,040,153,498
Preferred Stock, at par value ............................. 37,637,000 37,637,000
------------ ------------
Net Assets for Common Stock ............................... $ 4,272,281,307 $ 4,002,516,498
============ ============
Common shares outstanding ................................. 117,378,003 117,276,903
Net Assets Behind Each Common Share ....................... $36.40 $34.13
SIX MONTHS ENDED JUNE 30,
--------------------------------
TAXABLE GAIN: 1999 1998
------------ ------------
Net capital gain realized ................................. $ 245,285,567 $ 229,370,647
Per Common share .......................................... $2.09 $2.07
Unrealized capital gains, end of period ................... $ 1,363,204,585 $ 1,059,126,597
Per Common share, end of period ........................... $11.61 $9.58
Distribution of Gain:
Per Common share .......................................... $0.67 $1.835
Income:
Total income earned ....................................... $ 43,071,946 $ 37,063,229
Expenses .................................................. 11,629,941 10,563,340
Preferred Stock dividends ................................. 940,925 940,925
------------ ------------
Income for Common Stock ................................... $ 30,501,080 $ 25,558,964
============ ============
Expenses to average net investment assets ................. 0.57%* 0.58%*
Expenses to average net assets for Common Stock ........... 0.58%* 0.58%*
Dividends per Common Share ................................ $0.24 $0.26
With December 1998 gain distribution
taken in shares ........................................ $0.26 --
</TABLE>
- -----------------
* Annualized.
7
<PAGE>
TRI-CONTINENTAL CORPORATION
DIVERSIFICATION OF NET INVESTMENT ASSETS
The diversification of portfolio holdings by industry on June 30, 1999, 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 1999 1998
------ -------------- -------------- ---- ----
<S> <C> <C> <C> <C> <C>
NET CASH AND
SHORT-TERM HOLDINGS 1 $ 77,577,388 $ 77,577,388 1.8% 1.5%
US GOVERNMENT SECURITIES 4 233,884,214 236,243,800 5.5 7.3
TRI-CONTINENTAL
FINANCIAL DIVISION 2 14,757,557 15,633,750 0.4 0.4
-- -------------- -------------- ---- ----
7 $ 326,219,159 $ 329,454,938 7.7% 9.2%
-- -------------- -------------- ---- ----
COMMON STOCKS:
Aerospace 1 $ 15,920,461 $ 27,400,000 0.6% 0.6%
Automotive and Related 2 78,533,404 103,187,812 2.4 3.8
Basic Materials -- -- -- -- 0.5
Capital Goods -- -- -- -- 0.8
Chemicals 1 38,271,286 43,720,000 1.0 0.8
Communications 5 250,373,815 378,406,094 8.8 8.5
Communications Equipment 1 61,432,998 70,809,375 1.6 1.0
Computer and Business Services 8 332,495,559 562,780,000 13.1 11.2
Consumer Goods and Services 10 394,944,550 444,821,188 10.3 13.0
Diversified 1 29,448,134 74,340,000 1.7 1.3
Drugs and Health Care 9 310,461,657 498,043,125 11.5 11.0
Electric and Gas Utilities 4 149,455,763 197,252,187 4.6 3.3
Electronics 3 94,681,088 129,357,188 3.0 1.4
Energy 5 213,560,427 283,982,500 6.6 8.1
Finance and Insurance 11 370,763,442 652,754,938 15.1 14.4
Machinery and Industrial
Equipment 2 149,408,545 276,413,025 6.4 5.5
Paper and Forest Products 1 31,408,798 45,090,000 1.1 0.8
Publishing 1 10,328,565 28,550,000 0.7 0.7
Retail Trade 2 69,188,290 134,628,437 3.1 2.6
Transportation 1 19,817,781 28,927,500 0.7 1.5
-- -------------- -------------- ---- ----
68 $2,620,494,563 $3,980,463,369 92.3% 90.8%
-- -------------- -------------- ---- ----
NET INVESTMENT ASSETS 75 $2,946,713,722 $4,309,918,307 100.0% 100.0%
== ============== ============== ===== =====
</TABLE>
8
<PAGE>
TRI-CONTINENTAL CORPORATION
LARGEST PORTFOLIO CHANGES
APRIL 1 TO JUNE 30, 1999
SHARES OR PRIN. AMT.
----------------------
HOLDINGS
ADDITIONS INCREASE 6/30/99
- --------- -------- ---------
COMMON STOCKS
America Online, Inc. 200,000 shs. 200,000 shs.
Applied Materials, Inc. 690,000 690,000
AT&T Corp. 1,137,500 1,835,000(1)
Bestfoods 980,000 980,000
Hewlett-Packard
Company 360,000 360,000
MCI WorldCom, Inc. 335,000 805,000
US GOVERNMENT
SECURITIES
US Treasury Bonds,
7.875%, 2/15/2021 $25,000,000 $25,000,000
US Treasury Notes:
5.625%, 11/30/2000 60,000,000 60,000,000
7.25%, 8/15/2004 65,000,000 65,000,000
6.50%, 10/15/2006 75,000,000 75,000,000
SHARES OR PRIN. AMT.
----------------------
HOLDINGS
REDUCTIONS INCREASE 6/30/99
- ---------- -------- ---------
COMMON STOCKS
Alcoa Inc. 550,000 shs. --
Campbell Soup
Company 925,000 --
Fort James
Corporation 680,000 1,050,000 shs.
Norfolk Southern
Corporation 1,055,000 --
Raytheon Company
Class "B" 500,000 600,000
RJR Nabisco
Holdings Corp. 2,000,000 --
US GOVERNMENT SECURITIES
US Treasury Notes:
4.625%, 11/30/2000 $ 50,000,000 --
6.375%, 9/30/2001 50,000,000 --
6.625%, 5/15/2007 125,000,000 --
7.25%, 8/15/2022 25,000,000 --
Largest portfolio changes from the previous period to the current period are
based on cost of purchases and proceeds from sales of securities.
(1) Includes 232,500 shares received as a result of a 3-for-2 stock split.
10 LARGEST HOLDINGS
JUNE 30, 1999
PERCENT OF
VALUE NET INVESTMENT ASSETS
------------ ---------------------
Microsoft Corporation $159,070,625 3.7%
General Electric Company 142,357,400 3.3
United Technologies Corporation 134,055,625 3.1
International Business Machines
Corporation 111,801,250 2.6
AT&T Corp. 102,415,938 2.4
Citigroup Inc. 100,818,750 2.3
GTE Corporation 90,142,500 2.1
Bristol-Myers Squibb Company 85,933,750 2.0
Wal-Mart Stores, Inc. 85,885,000 2.0
Bank of New York Company, Inc. 79,245,000 1.8
9
<PAGE>
<TABLE>
<CAPTION>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS JUNE 30, 1999
SHARES VALUE
--------- --------------
<S> <C> <C>
COMMON STOCKS - 92.3%
AEROSPACE - 0.6%
GENERAL DYNAMICS CORPORATION 400,000 $ 27,400,000
--------------
Manufacturer of defense products
--------------
AUTOMOTIVE AND RELATED - 2.4%
DAIMLERCHRYSLER CORPORATION 580,000 $ 51,547,500
Manufacturer of automobiles, trucks, and related parts
FORD MOTOR COMPANY 915,000 51,640,312
Manufacturer and distributor of automobiles, trucks, and related parts
--------------
$ 103,187,812
--------------
CHEMICALS - 1.0%
DUPONT (E.I.) DE NEMOURS AND COMPANY 640,000 $ 43,720,000
Producer of chemicals
--------------
COMMUNICATIONS - 8.8%
AT&T CORP 1,835,000 $ 102,415,938
Provider of telecommunications services
AMERITECH CORPORATION 955,000 70,192,500
Provider of telecommunications services
GTE CORPORATION 1,190,000 90,142,500
Provider of telephone services, systems, and equipment
MCI WORLDCOM, INC.* 805,000 69,255,156
Provider of telecommunications services
SBC COMMUNICATIONS INC 800,000 46,400,000
Provider of telephone services
--------------
$ 378,406,094
--------------
COMMUNICATIONS EQUIPMENT - 1.6%
LUCENT TECHNOLOGIES, INC.* 1,050,000 $ 70,809,375
Manufacturer of telecommunications equipment
--------------
COMPUTER AND BUSINESS SERVICES - 13.1%
AMERICA ONLINE, INC.* 200,000 $ 22,100,000
Provider of electronic mail, entertainment, reference, and interactive
publications, as well as Internet access
CISCO SYSTEMS, INC.* 900,000 57,965,625
Manufacturer of computer network products
DELL COMPUTER CORPORATION* 570,000 21,072,187
International provider of computer systems and services
ELECTRONIC DATA SYSTEMS CORPORATION 1,275,000 72,117,188
Provider of management consulting and technology services
INTEL CORPORATION 1,300,000 77,309,375
Manufacturer of microprocessors and memory circuits
INTERNATIONAL BUSINESS MACHINES CORPORATION 865,000 111,801,250
Manufacturer of micro and personal computers
MICROSOFT CORPORATION* 1,765,000 159,070,625
Provider of personal computer operating system and
application software products
XEROX CORPORATION 700,000 41,343,750
Developer, manufacturer, and marketer of office automation products
--------------
$ 562,780,000
--------------
</TABLE>
- ----------------
See footnotes on page 13.
10
<PAGE>
<TABLE>
<CAPTION>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) JUNE 30, 1999
SHARES VALUE
--------- --------------
<S> <C> <C>
CONSUMER GOODS AND SERVICES - 10.3%
ANHEUSER-BUSCH COMPANIES, INC. 600,000 $ 42,562,500
Brewery; theme park operator; manufacturer and
recycler of aluminum beverage containers
BESTFOODS 980,000 48,510,000
Manufacturer of brand name food products
COCA-COLA COMPANY (THE) 635,000 39,687,500
Manufacturer and marketer of soft drinks and consumer products
CONAGRA, INC. 2,500,000 66,562,500
Producer and manufacturer of prepared foods and agricultural products
FORT JAMES CORPORATION 1,050,000 39,768,750
Producer of paper and related products
FORTUNE BRANDS, INC. 239,500 9,909,313
Manufacturer of diversified consumer products
PEPSICO, INC. 1,550,000 59,965,625
Manufacturer and marketer of soft drinks and consumer products
PHILIP MORRIS COMPANIES, INC. 1,430,000 57,468,125
Manufacturer of tobacco products, food, and beverages
PROCTER & GAMBLE COMPANY (THE) 405,000 36,146,250
Manufacturer and distributor of household and personal care products
SARA LEE CORPORATION 1,950,000 44,240,625
Manufacturer of processed foods and consumer products
--------------
$ 444,821,188
--------------
DIVERSIFIED - 1.7%
ALLIEDSIGNAL INC. 1,180,000 $ 74,340,000
Producer of aerospace and automotive products
--------------
DRUGS AND HEALTH CARE - 11.6%
ABBOTT LABORATORIES 1,080,000 $ 49,140,000
Developer and manufacturer of diversified health care products
AMERICAN HOME PRODUCTS CORPORATION 1,300,000 74,750,000
Developer and manufacturer of pharmaceuticals, food, and housewares
BAXTER INTERNATIONAL INC. 575,000 34,859,375
Manufacturer and distributor of hospital and laboratory products
BRISTOL-MYERS SQUIBB COMPANY 1,220,000 85,933,750
Developer and manufacturer of health and personal care products
JOHNSON & JOHNSON 600,000 58,800,000
Developer and manufacturer of health care products
MERCK & CO., INC. 1,035,000 76,590,000
Developer and manufacturer of pharmaceuticals
PFIZER INC. 370,000 40,607,500
Manufacturer of health care consumer products and specialty chemicals
PHARMACIA & UPJOHN, INC. 760,000 43,177,500
Global pharmaceutical and biotechnology company
SCHERING-PLOUGH CORPORATION 645,000 34,185,000
--------------
Manufacturer of pharmaceuticals and health and personal care products
$ 498,043,125
--------------
ELECTRIC AND GAS UTILITIES - 4.6%
DQE INC. 1,000,000 $ 40,125,000
Electric energy supplier
SONAT INC. 1,600,000 53,000,000
Energy company that operates in the exploration and
production of oil and natural gas
UNICOM CORPORATION 1,155,000 44,539,687
Electric utility
WILLIAMS COMPANIES, INC. (THE) 1,400,000 59,587,500
Transporter and producer of natural gas --------------
$ 197,252,187
--------------
</TABLE>
- ----------------
See footnotes on page 13.
11
<PAGE>
<TABLE>
<CAPTION>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) JUNE 30, 1999
SHARES VALUE
--------- --------------
<S> <C> <C>
ELECTRONICS - 3.0%
APPLIED MATERIALS, INC.* 690,000 $ 50,952,188
Manufacturer of semiconductor wafer
fabrication equipment
HEWLETT-PACKARD COMPANY 360,000 36,180,000
Manufacturer of computers and peripherals
RAYTHEON COMPANY CLASS "B" 600,000 42,225,000
--------------
Producer of defense and commercial electronics $ 129,357,188
--------------
ENERGY - 6.6%
BP AMOCO PLC (ADRS) (UNITED KINGDOM) 500,000 $ 54,250,000
Explorer, producer, refiner, and retailer of petroleum products
EXXON CORPORATION 1,000,000 77,125,000
Explorer and producer of natural gas, oil, and petroleum products
MOBIL CORPORATION 400,000 39,600,000
International oil enterprise
ROYAL DUTCH PETROLEUM COMPANY (NETHERLANDS) 1,030,000 62,057,500
Provider of international oil services
SCHLUMBERGER LTD. 800,000 50,950,000
--------------
Worldwide provider of energy services $ 283,982,500
--------------
FINANCE AND INSURANCE - 15.1%
ALLSTATE CORPORATION (THE) 1,100,000 $ 39,462,500
Insurance provider
AMERICAN GENERAL CORPORATION 1,000,000 75,375,000
Diversified financial services provider
AMERICAN INTERNATIONAL GROUP, INC. 460,000 53,848,750
International insurance holding company
BANK OF AMERICA CORPORATION 915,000 67,080,938
Commercial bank
BANK OF NEW YORK COMPANY, INC. 2,160,000 79,245,000
Commercial bank
CHUBB CORPORATION (THE) 625,000 43,437,500
International holding company specializing in property and casualty insurance
CITIGROUP INC. 2,122,500 100,818,750
Provider of diversified financial services
FANNIE MAE 720,000 49,230,000
Provider of mortgage financing
MELLON BANK CORPORATION 1,500,000 54,562,500
Provider of financial services
MORGAN (J.P.) & CO. INCORPORATED 300,000 42,150,000
Provider of financial services
WASHINGTON MUTUAL, INC. 1,344,000 47,544,000
--------------
Provider of financial services $ 652,754,938
--------------
MACHINERY AND
INDUSTRIAL EQUIPMENT - 6.4%
GENERAL ELECTRIC COMPANY 1,259,800 $ 142,357,400
Supplier of industrial equipment and consumer products
UNITED TECHNOLOGIES CORPORATION 1,870,000 134,055,625
--------------
Manufacturer of elevators, jet engines, flight systems, $ 276,413,025
and automotive parts --------------
</TABLE>
- ----------------
See footnotes on page 13.
12
<PAGE>
<TABLE>
<CAPTION>
TRI-CONTINENTAL CORPORATION
PORTFOLIO OF INVESTMENTS (continued) JUNE 30, 1999
SHARES VALUE
--------- --------------
<S> <C> <C>
PAPER AND FOREST PRODUCTS - 1.0%
MEAD CORPORATION (THE) 1,080,000SHS. $ 45,090,000
--------------
Manufacturer of paper, lumber, and wood products
PUBLISHING - 0.7%
GANNETT CO., INC. 400,000 $ 28,550,000
Newspapers; radio and television broadcasting
--------------
RETAIL TRADE - 3.1%
MAY DEPARTMENT STORES COMPANY 1,192,500 $ 48,743,437
Department store operator
WAL-MART STORES, INC. 1,780,000 85,885,000
Discount retailer
--------------
$ 134,628,437
--------------
TRANSPORTATION - 0.7%
GATX CORPORATION 760,000 $ 28,927,500
Railcar leasing; equipment financing
--------------
TOTAL COMMON STOCKS
(Cost: $2,620,494,563) $3,980,463,369
--------------
US GOVERNMENT SECURITIES - 5.5%
US TREASURY BONDS,
7.875%, 2/15/2021 $ 25,000,000 $ 29,617,200
US TREASURY NOTES:
5.625%, 11/30/2000 60,000,000 60,150,000
7.25%, 8/15/2004 65,000,000 69,062,500
6.50%, 10/15/2006 75,000,000 77,414,100
--------------
TOTAL US GOVERNMENT SECURITIES
(Cost: $233,884,214) $ 236,243,800
--------------
TRI-CONTINENTAL FINANCIAL DIVISION+ - 0.4%
(Cost: $14,757,557) $ 15,633,750
--------------
SHORT-TERM HOLDINGS - 1.7%
(Cost: $72,000,000) $ 72,000,000
--------------
TOTAL INVESTMENTS - 99.9%
(Cost: $2,941,136,334) $4,304,340,919
OTHER ASSETS LESS LIABILITIES - 0.1% 5,577,388
--------------
NET INVESTMENT ASSETS - 100.0% $4,309,918,307
==============
</TABLE>
- ----------
*Non-income producing security.
+Restricted security.
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, 1999
<TABLE>
<CAPTION>
ASSETS:
Investments at value:
<S> <C> <C>
Common stocks (cost--$2,620,494,563) .......................... $3,980,463,369
US Government securities (cost--$233,884,214) ................. 236,243,800
Tri-Continental Financial Division
(cost--$14,757,557) ......................................... 15,633,750
Short-term holdings (cost--$72,000,000) ....................... 72,000,000 $4,304,340,919
--------------
Cash .......................................................................... 241,833
Receivable for dividends and interest ......................................... 9,682,482
Investment in, and expenses prepaid to, stockholder
service agent ............................................................... 485,208
Other ......................................................................... 1,053,042
--------------
TOTAL ASSETS .................................................................. $4,315,803,484
--------------
LIABILITIES:
Payable for Common Stock repurchased .......................................... $ 2,520,345
Dividends payable ............................................................. 470,462
Accrued expenses and other .................................................... 2,894,370
--------------
Total Liabilities ............................................................. $ 5,885,177
--------------
Net Investment Assets ......................................................... $4,309,918,307
Preferred Stock, at $50 par value ............................................. 37,637,000
--------------
Net Assets for Common Stock ................................................... $4,272,281,307
==============
NET ASSETS PER SHARE OF COMMON STOCK
(MARKET VALUE--$30.1875) .................................................... $36.40
======
STATEMENT OF CAPITAL STOCK AND SURPLUS June 30, 1999
CAPITAL STOCK:
$2.50 Cumulative Preferred Stock, $50 par value,
asset coverage per share--$5,725.64
Shares authorized--1,000,000; issued
and outstanding--752,740 .................................................... $ 37,637,000
Common Stock, $0.50 par value:
Shares authorized--159,000,000; issued
and outstanding--117,378,003 ................................................ 58,689,001
SURPLUS:
Capital surplus .............................................................. 2,600,462,627
Undistributed net investment income .......................................... 2,252,997
Undistributed net realized gain .............................................. 247,672,097
Net unrealized appreciation of investments ................................... 1,363,204,585
--------------
.............................................................................. $4,309,918,307
==============
</TABLE>
- ----------------
See Notes to Financial Statements.
14
<PAGE>
TRI-CONTINENTAL CORPORATION
STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1999
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C> <C>
Dividends ......................................................... $ 32,156,980
Interest .......................................................... 10,914,966
------------
TOTAL INVESTMENT INCOME (net of foreign taxes
withheld of $455,769) ........................................................... $ 43,071,946
EXPENSES:
Management fee .................................................... $ 8,141,703
Stockholder account and registrar services ........................ 2,046,527
Stockholder reports and communications ............................ 540,603
Custody and related services ...................................... 319,056
Directors' fees and expenses ...................................... 149,369
Auditing and legal fees ........................................... 134,644
Stockholders' meeting ............................................. 130,230
Registration ...................................................... 83,005
Miscellaneous ..................................................... 84,804
------------
TOTAL EXPENSES ................................................................... 11,629,941
------------
NET INVESTMENT INCOME ............................................................ $ 31,442,005*
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments .................................. $245,285,567
Net change in unrealized appreciation
of investments ................................................... 96,332,012
------------
NET GAIN ON INVESTMENTS .......................................................... 341,617,579
------------
INCREASE IN NET INVESTMENT ASSETS
FROM OPERATIONS ................................................................. $373,059,584
============
</TABLE>
- -------------
*Net investment income available for Common Stock is $30,501,080, which is net
of Preferred Stock dividends of $940,925.
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, 1999 December 31, 1998
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income ............................................ $ 31,442,005 $ 58,765,720
Net realized gain on investments ................................. 245,285,567 356,343,038
Net realized loss from foreign currency transactions ............. -- (9,753,590)
Net change in unrealized appreciation
of investments ................................................. 96,332,012 401,764,341
Net change in unrealized depreciation
on translation of assets and liabilities
denominated in foreign currencies .............................. -- 7,774,454
-------------- --------------
INCREASE IN NET INVESTMENT
ASSETS FROM OPERATIONS ......................................... $ 373,059,584 $ 814,893,963
-------------- --------------
DISTRIBUTIONS TO STOCKHOLDERS:
Net investment income:
Preferred Stock (per share: $1.25 and $2.50) ................... $ (940,925) $ (1,881,850)
Common Stock (per share: $0.24 and $0.52) ...................... (27,865,891) (56,195,184)
-------------- --------------
................................................................. $ (28,806,816) $ (58,077,034)
Net realized gain on investments:
Common Stock (per share: $0.67 and $4.275) ..................... (77,449,535) (463,498,251)
-------------- --------------
DECREASE IN NET INVESTMENT ASSETS
FROM DISTRIBUTIONS ............................................. $ (106,256,351) $ (521,575,285)
-------------- --------------
Capital Share Transactions:
Value of shares of Common Stock issued
at market price in gain distributions
(1,778,887 and 11,748,613 shares) .............................. $ 52,559,202 $ 325,650,732
Value of shares of Common Stock issued
for investment plans (1,007,545 and 1,894,263 shares) .......... 29,521,476 52,067,826
Cost of shares of Common Stock purchased
from investment plan participants
(1,028,216 and 1,921,433 shares) ............................... (30,228,591) (53,367,830)
Cost of shares of Common Stock purchased in the
open market (1,661,900 and 251,900 shares) ..................... (48,896,539) (6,982,882)
Net proceeds from issuance of shares of
Common Stock upon exercise of
Warrants (4,784 and 10,446 shares) ............................. 6,028 14,054
-------------- --------------
INCREASE IN NET INVESTMENT ASSETS
FROM CAPITAL SHARE TRANSACTIONS ................................ $ 2,961,576 $ 317,381,900
-------------- --------------
INCREASE IN NET INVESTMENT ASSETS ................................ $ 269,764,809 $ 610,700,578
NET INVESTMENT ASSETS:
Beginning of period .............................................. 4,040,153,498 3,429,452,920
-------------- --------------
END OF PERIOD (including undistributed/
(distributions in excess of) net investment
income of $2,252,997 and $(382,192), respectively) ............. $4,309,918,307 $4,040,153,498
============== ==============
</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, 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 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. CAPITAL STOCK TRANSACTIONS -- 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, 1999, 1,028,216 shares were purchased from Plan
participants at a cost of $30,228,591, which represented a weighted average
discount of 16.81% from the net asset value of those acquired shares. A total of
1,007,545 shares were issued to Plan participants during the year for proceeds
of $29,521,476, a discount of 16.65% from the net asset value of those shares.
The Corporation may make additional purchases of its Common Stock in the open
market and elsewhere at such prices in such amounts as the Board of Directors
may deem advisable. For the six months ended June 30, 1999, the Corporation
purchased 1,661,900 shares of its Common Stock in the open market at an
aggregate cost of $48,896,539, which represented a weighted average discount of
16.80% from the net asset value of those acquired shares.
At June 30, 1999, 245,670 shares of Common Stock were reserved for issuance
upon exercise of 13,543 Warrants, each of which entitled the holder to purchase
18.14 shares of Common Stock at $1.24 per share. Assuming the exercise of all
Warrants outstanding at June 30, 1999, net investment assets would have
increased by $304,631 and the net asset value of the Common Stock would have
been $36.32 per share. The number of Warrants exercised during the six months
ended June 30, 1999, and the year ended December 31, 1998, was 268 and 625,
respectively.
3. PURCHASES AND SALES OF SECURITIES -- Purchases and sales of portfolio
securities, excluding US Government obligations and short-term investments,
amounted to $817,372,332 and $864,572,282, respectively; purchases and sales of
USGovernment obligations amounted to $264,962,349 and $305,951,172,
respectively. At June 30, 1999, 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 $1,380,331,653 and $17,127,068, respectively.
4. SHORT-TERM INVESTMENTS -- At June 30, 1999, 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,
1999, was equivalent to an annual rate of 0.40% of the average daily net assets
of the Corporation.
Seligman Data Corp., owned by the Corporation and certain associated
investment companies, charged the Corporation at cost $2,015,551 for stockholder
account services. The Corporation's investment in Seligman Data Corp. is
recorded at a cost of $43,681.
18
<PAGE>
TRI-CONTINENTAL CORPORATION
Certain officers and directors of the Corporation are officers or directors
of the Manager and/or Seligman Data Corp.
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, 1999, of
$463,006 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, 1999, the Tri-Continental Financial
Division of the Corporation was comprised of two 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, 1999, are as follows:
<TABLE>
<CAPTION>
INVESTMENTS ACQUISITION DATE(S) COST VALUE
- ------------------------------------ ------------------- ----------- -----------
<S> <C> <C> <C>
WCAS Capital Partners II, L.P. 12/11/90 to 3/24/98 $ 6,328,655 $ 7,484,014
Whitney Subordinated Debt Fund, L.P. 7/12/89 to 11/10/98 8,428,902 8,149,736
----------- -----------
Total $14,757,557 $15,633,750
=========== ===========
</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" 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 the periods presented, do
not reflect the effect of dividends paid to Preferred Stockholders.
<TABLE>
<CAPTION>
Six Months Year Ended December 31,
Ended -------------------------------------------------
June 30, 1999 1998 1997 1996 1995 1994
------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
NET ASSET VALUE,
BEGINNING OF PERIOD ....................... $34.13 $32.06 $29.28 $27.58 $23.70 $27.49
------ ------ ------ ------ ------ ------
Net investment income ...................... 0.27 0.54 0.60 0.68 0.74 0.83
Net realized and unrealized
investment gain (loss) .................... 3.02 7.01 6.94 4.84 6.14 (1.69)
Net realized and unrealized gain (loss)
from foreign currency transactions ........ -- (0.01) (0.17) (0.02) 0.03 0.02
------ ------ ------ ------ ------ ------
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS ..................... 3.29 7.54 7.37 5.50 6.91 (0.84)
Dividends paid on Preferred Stock .......... (0.01) (0.02) (0.02) (0.02) (0.02) (0.03)
Dividends paid on Common Stock ............. (0.24) (0.52) (0.60) (0.66) (0.73) (0.79)
Distributions from net gain realized ....... (0.67) (4.28) (3.45) (2.72) (2.01) (1.90)
Issuance of Common Stock
in gain distributions ..................... (0.10) (0.65) (0.52) (0.40) (0.27) (0.23)
------ ------ ------ ------ ------ ------
NET INCREASE (DECREASE)
IN NET ASSET VALUE ........................ 2.27 2.07 2.78 1.70 3.88 (3.79)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD ............................. $36.40 $34.13 $32.06 $29.28 $27.58 $23.70
====== ====== ====== ====== ====== ======
ADJUSTED NET ASSET VALUE,
END OF PERIOD* ........................... $36.32 $34.06 $31.99 $29.22 $27.52 $23.65
MARKET VALUE, END OF PERIOD ................ $30.1875 $28.50 $26.6875 $24.125 $22.625 $19.875
</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, 1999 1998 1997 1996 1995 1994
------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Total Investment Return:
Based upon market value .................... 9.20% 26.19% 27.96% 21.98% 27.95% (5.07)%
Based upon net asset value ................. 9.95% 25.80% 26.65% 21.45% 30.80% (2.20)%
Ratios/Supplemental Data:
Expenses to average net
investment assets ........................ 0.57%+ 0.58% 0.60% 0.62% 0.63% 0.64%
Expenses to average net assets for
Common Stock ............................. 0.58%+ 0.58% 0.60% 0.63% 0.64% 0.65%
Net investment income to
average net investment assets ............ 1.54%+ 1.59% 1.80% 2.27% 2.71% 3.08%
Net investment income to average
net assets for Common Stock .............. 1.56%+ 1.60% 1.82% 2.31% 2.75% 3.14%
Portfolio turnover rate .................... 26.73% 63.39% 83.98% 53.96% 62.28% 70.38%
NET INVESTMENT ASSETS,
END OF PERIOD (000S OMITTED):
For Common Stock ........................... $4,272,281 $4,002,516 $3,391,816 $2,835,026 $2,469,149 $1,994,098
For Preferred Stock ........................ 37,637 37,637 37,637 37,637 37,637 37,637
---------- ---------- ---------- ---------- ---------- ----------
TOTAL NET INVESTMENT ASSETS ................ $4,309,918 $4,040,153 $3,429,453 $2,872,663 $2,506,786 $2,031,735
========== ========== ========== ========== ========== ==========
</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, 1999, 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, 1998, and the
financial highlights for the six months then ended and 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 June
30, 1999, by correspondence with the Corporation's custodian. 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 referred to
above present fairly, in all material respects, the financial position of
Tri-Continental Corporation as of June 30, 1999, 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.
DELOITTE & TOUCHE LLP
New York, New York
August 6, 1999
22
<PAGE>
TRI-CONTINENTAL CORPORATION
PROXY RESULTS
Tri-Continental Corporation Stockholders voted on the following proposals at
the Annual Meeting of Stockholders on May 20, 1999, in Palm Beach, Florida. The
description of each proposal and the voting results are stated below. Each
nominee for Director was elected, the selection of Deloitte & Touche LLP as
auditors for 1999 was ratified, and the proposal to amend the Charter to
increase the number of authorized shares of Common Stock was approved. None of
the Stockholder proposals passed.
For Withheld
--------- ---------
Election of Directors:
John E. Merow 88,966,268 3,296,791
Betsy S. Michel 88,954,818 3,308,241
James C. Pitney 88,926,961 3,336,098
James N. Whitson 89,019,240 3,243,819
<TABLE>
<CAPTION>
Broker
For Against Abstain Non-Vote
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Ratification of Deloitte &
Touche LLP as auditors 90,501,055 897,898 864,106 n/a
Approval of Amendment to the
Charter to increase the number
of authorized shares of
Common Stock 85,208,340 5,752,918 1,301,801 n/a
Stockholder proposal relating to:
1) Open-ending 9,145,517 55,133,427 3,101,430 24,882,685
2) Additional qualifications
for potential Directors 10,712,690 53,426,811 3,240,873 24,882,685
3) Removal of J. &W. Seligman
& Co. Incorporated
as Manager 7,322,615 56,130,316 3,927,443 24,882,685
</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
DIRECTOR, Conoco Inc.
JOHN E. MEROW (2,4)
RETIRED CHAIRMAN AND SENIOR PARTNER,
Sullivan & Cromwell, Law Firm
DIRECTOR, Commonwealth Industries, Inc.
DIRECTOR, New York Presbyterian Hospital
BETSY S. MICHEL (2,4)
TRUSTEE, The Geraldine R. Dodge Foundation
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, KeySpan Energy Corporation
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, ICI Mutual Insurance Company
MEMBER OF THE BOARD OF GOVERNORS,
Investment Company Institute
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
EXECUTIVE OFFICERS
WILLIAM C. MORRIS
CHAIRMAN
BRIAN T. ZINO
PRESIDENT
CHARLES W. KADLEC
VICE PRESIDENT
CHARLES C. SMITH, JR.
VICE PRESIDENT
LAWRENCE P. VOGEL
VICE PRESIDENT
THOMAS G. ROSE
TREASURER
FRANK J. NASTA
SECRETARY
- --------------------------------------------------------------------------------
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.
CETRI3 6/99
