Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 811-00266
| TRI-CONTINENTAL CORPORATION |
(Exact name of registrant as specified in charter)
| 50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474 |
(Address of principal executive offices) (Zip code)
| Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474 |
(Name and address of agent for service)
Registrant’s telephone number, including area code: (612) 671-1947
Date of fiscal year end: December 31
Date of reporting period: June 30, 2012
Table of Contents
Item 1. Reports to Stockholders.
Semiannual Report
Table of Contents
| Semiannual Report June 30, 2012 |
|
|
Tri-Continental Corporation
|
Table of Contents
| Tri-Continental Corporation | ||
Letter to Stockholders
Dear Stockholders,
We are pleased to present the semiannual stockholder report for Tri-Continental Corporation (the fund). The report includes the fund’s investment results and a portfolio of investment and financial statements as of June 30, 2012.
The fund’s Common Stock gained 9.23%, based on net asset value, and 10.51%, based on market price, for the six months ended June 30, 2012. The fund’s benchmark, the S&P 500 Index, returned 9.49% during the same period.
During the first half of 2012, the fund paid two distributions, in accordance with its earned distribution policy, that aggregated $0.255 per share of Common Stock of the fund. Distributions are based upon amounts distributed by underlying portfolio companies owned by the fund.
We welcome the addition of Oliver Buckley and Yan Jin, who joined Brian Condon and David King in March 2012 as co-portfolio managers of the fund.
On April 12, 2012, the fund held its 82nd Annual Meeting of Stockholders. During the meeting, Stockholders re-elected three Directors and ratified the selection of Ernst & Young LLP (Ernst & Young) as the fund’s independent registered public accounting firm for 2012. Subsequently, at its June Meeting, the fund’s Audit Committee recommended, and the fund’s Board of Directors approved, the appointment of PricewaterhouseCoopers LLP (PricewaterhouseCoopers) as independent auditor for the fund, as well as the other funds in the Columbia Family of Funds (collectively, the funds). PricewaterhouseCoopers’ engagement is effective at the completion of Ernst & Young’s audits of the financial statements of the funds with fiscal years ending July 31, 2012, which is expected to be completed in September 2012. Ernst & Young completed the audit of the fund’s financial statements for the fiscal year ended December 31, 2011 and issued its report on February 22, 2012.
Information about the fund, including daily pricing, current performance, fund holdings, stockholder reports, the most current prospectus for the fund, distributions and other information can be found at columbiamanagement.com under the Closed-End Funds tab.
On behalf of the Board, we would like to thank you for your support of Tri-Continental Corporation.
Stephen R. Lewis
Semiannual Report 2012
Table of Contents
| Tri-Continental Corporation | ||
Semiannual Report 2012
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| Tri-Continental Corporation | ||
(Unaudited)
Performance Summary
| > | Tri-Continental Corporation (the fund) Common Stock gained 9.23%, based on net asset value, and 10.51%, based on market price for the six months ended June 30, 2012. |
| > | The fund’s benchmark, the S&P 500 Index, returned 9.49% for the same time period. |
|
Average Annual Total Returns (%) (for period ended June 30, 2012) |
| |||||||||||||||||
| Inception | 6 Months cumulative |
1 Year | 5 Years | 10 Years | ||||||||||||||
| Market Price |
01/05/29 | 10.51 | 6.45 | -4.22 | 3.42 | |||||||||||||
| Net Asset Value |
01/05/29 | 9.23 | 7.38 | -2.31 | 3.67 | |||||||||||||
| S&P 500 Index |
9.49 | 5.45 | 0.22 | 5.33 | ||||||||||||||
The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting columbiamanagement.com.
Returns reflect changes in market price or net asset value, as applicable, and assume reinvestment of distributions. Returns do not reflect the deduction of taxes that investors may pay on distributions or the sale of shares.
The S&P 500 Index, an unmanaged index of common stocks, is frequently used as a general measure of market performance. The index reflects reinvestment of all distributions and changes in market prices.
Indices are not available for investment, are not professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the fund may not match those in an index.
|
Price Per Share |
| |||||||||
| June 30, 2012 | March 31, 2012 | December 31, 2011 | ||||||||
| Market Price ($) |
15.47 | 15.92 | 14.23 | |||||||
| Net Asset Value ($) |
18.02 | 18.67 | 16.77 | |||||||
|
Distributions Paid Per Common Share (a) |
| |||
| Payable Date |
Per Share Amount ($) | |||
| March 29, 2012 |
0.105 | |||
| June 28, 2012 |
0.150 | |||
| (a) | Preferred Stockholders were paid dividends totaling $2.50 per share. |
The net asset value of the fund’s shares may not always correspond to the market price of such shares. Common stock of many closed-end funds frequently trade at a discount from their net asset value. The fund is subject to stock market risk, which is the risk that stock prices overall will decline over short or long periods, adversely affecting the value of an investment in the fund.
| 2 | Semiannual Report 2012 |
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| Tri-Continental Corporation | ||
(Unaudited)
| Semiannual Report 2012 | 3 |
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| Tri-Continental Corporation | ||
June 30, 2012 (Unaudited)
(Percentages represent value of investments compared to net assets)
The accompanying Notes to Financial Statements are an integral part of this statement.
| 4 | Semiannual Report 2012 |
Table of Contents
| Tri-Continental Corporation | ||
Portfolio of Investments (continued)
June 30, 2012 (Unaudited)
The accompanying Notes to Financial Statements are an integral part of this statement.
| Semiannual Report 2012 | 5 |
Table of Contents
| Tri-Continental Corporation | ||
Portfolio of Investments (continued)
June 30, 2012 (Unaudited)
The accompanying Notes to Financial Statements are an integral part of this statement.
| 6 | Semiannual Report 2012 |
Table of Contents
| Tri-Continental Corporation | ||
Portfolio of Investments (continued)
June 30, 2012 (Unaudited)
The accompanying Notes to Financial Statements are an integral part of this statement.
| Semiannual Report 2012 | 7 |
Table of Contents
| Tri-Continental Corporation | ||
Portfolio of Investments (continued)
June 30, 2012 (Unaudited)
The accompanying Notes to Financial Statements are an integral part of this statement.
| 8 | Semiannual Report 2012 |
Table of Contents
| Tri-Continental Corporation | ||
Portfolio of Investments (continued)
June 30, 2012 (Unaudited)
The accompanying Notes to Financial Statements are an integral part of this statement.
| Semiannual Report 2012 | 9 |
Table of Contents
| Tri-Continental Corporation | ||
Portfolio of Investments (continued)
June 30, 2012 (Unaudited)
Futures Contracts Outstanding at June 30, 2012
| Contract Description |
|
Number of Contracts Long (Short) |
|
|
Notional Market Value ($) |
|
|
Expiration Date |
|
|
Unrealized Appreciation ($) |
|
|
Unrealized Depreciation ($) |
| |||||
| S&P 500 Index |
11 | 3,730,100 | Sept. 2012 | 62,387 | — |
Notes to Portfolio of Investments
| (a) | Non-income producing. |
| (b) | At June 30, 2012, security was partially or fully on loan. |
| (c) | At June 30, 2012, investments in securities included securities valued at $689,443 that were partially pledged as collateral to cover initial margin deposits on open stock index futures contracts. |
| (d) | Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933. This security may be resold in transactions exempt from registration, normally to qualified institutional buyers. At June 30, 2012, the value of these securities amounted to $101,334,695 or 8.55% of net assets. |
| (e) | Identifies issues considered to be illiquid as to their marketability. The aggregate value of such securities at June 30, 2012 was $413,780, representing 0.03% of net assets. Information concerning such security holdings at June 30, 2012 was as follows: |
| Security |
Acquisition Dates | Cost ($) | ||||||
| WCAS Capital Partners II LP |
12/11/90 - 03/24/98 | 2,686,507 |
| (f) | At June 30, 2012, there was no capital committed to the LLC or LP for future investment. |
| (g) | At June 30, 2012, the Fund owned one limited partnership investment that was purchased through a private offering and cannot be sold without prior registration under the Securities Act of 1933 or pursuant to an exemption therefrom. The investment is valued at fair value as determined in accordance with procedures approved by the Board of Directors of the Fund. The acquisition dates of investment in the limited partnership, along with the cost and value at June 30, 2012, were as follows: |
| Security |
Acquisition Dates | Cost ($) | Value ($) | |||||||||
| WCAS Capital Partners II LP |
12/11/90 - 03/24/98 | 2,686,507 | 413,780 |
| (h) | The rate shown is the seven-day current annualized yield at June 30, 2012. |
| (i) | As defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of its outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and transactions in these affiliated companies during the period ended June 30, 2012, are as follows: |
| Issuer |
|
Beginning Cost ($) |
|
|
Purchase Cost ($) |
|
|
Sales Cost/ Proceeds From Sales ($) |
|
|
Realized Gain/Loss ($) |
|
|
Ending Cost ($) |
|
|
Dividends or Interest Income ($) |
|
Value ($) | |||||||||
| Columbia Short-Term Cash Fund |
3,550,359 | 25,542,181 | (26,096,867 | ) | — | 2,995,673 | 2,170 | 2,995,673 |
| (j) | The table below represents securities received as collateral for repurchase agreements. This collateral is deposited with the Fund’s custodian and, pursuant to the terms of the repurchase agreement, must have an aggregate value greater than or equal to the repurchase price plus accrued interest at all times. The value of securities and/or cash held as collateral for repurchase agreements is monitored on a daily basis to ensure the proper level of collateral. |
The accompanying Notes to Financial Statements are an integral part of this statement.
| 10 | Semiannual Report 2012 |
Table of Contents
| Tri-Continental Corporation | ||
Portfolio of Investments (continued)
June 30, 2012 (Unaudited)
Notes to Portfolio of Investments (continued)
| Security Description |
Value ($) | |||
| Deutsche Bank AG (0.160%) |
||||
| Fannie Mae REMICS |
3,839,305 | |||
| Freddie Mac Gold Pool |
1,706,845 | |||
| Freddie Mac REMICS |
6,693,850 | |||
| Total market value of collateral securities |
12,240,000 | |||
| Security Description |
Value ($) | |||
| Goldman Sachs & Co. (0.190%) |
||||
| Fannie Mae Pool |
6,129,491 | |||
| Freddie Mac Gold Pool |
3,699,312 | |||
| Freddie Mac Non Gold Pool |
371,197 | |||
| Total market value of collateral securities |
10,200,000 | |||
| Security Description |
Value ($) | |||
| Mizuho Securities USA, Inc. (0.250%) |
||||
| Fannie Mae REMICS |
3,616,756 | |||
| Freddie Mac REMICS |
4,228,963 | |||
| Total market value of collateral securities |
7,845,719 | |||
| Security Description |
Value ($) | |||
| Natixis Financial Products, Inc. (0.250%) |
||||
| Fannie Mae Pool |
3,050,048 | |||
| Fannie Mae REMICS |
5,276,655 | |||
| Federal Home Loan Banks |
691,915 | |||
| Federal National Mortgage Association |
691,768 | |||
| Freddie Mac Gold Pool |
1,770,485 | |||
| Freddie Mac Non Gold Pool |
656,783 | |||
| Freddie Mac REMICS |
3,136,229 | |||
| Government National Mortgage Association |
3,713,512 | |||
| United States Treasury Note/Bond |
1,413,030 | |||
| Total market value of collateral securities |
20,400,425 | |||
| Security Description |
Value ($) | |||
| Natixis Financial Products, Inc. (0.300%) |
||||
| Fannie Mae Pool |
6,549,952 | |||
| Fannie Mae REMICS |
6,336,920 | |||
| Freddie Mac REMICS |
2,917,845 | |||
| Government National Mortgage Association |
1,406,673 | |||
| United States Treasury Note/Bond |
3,189,120 | |||
| Total market value of collateral securities |
20,400,510 | |||
| Security Description |
Value ($) | |||
| Nomura Securities (0.240%) |
||||
| Fannie Mae Pool |
10,388,505 | |||
| Freddie Mac Gold Pool |
4,911,495 | |||
| Total market value of collateral securities |
15,300,000 | |||
The accompanying Notes to Financial Statements are an integral part of this statement.
| Semiannual Report 2012 | 11 |
Table of Contents
| Tri-Continental Corporation | ||
Portfolio of Investments (continued)
June 30, 2012 (Unaudited)
Notes to Portfolio of Investments (continued)
| Security Description |
Value ($) | |||
| Pershing LLC (0.270%) |
||||
| Fannie Mae Pool |
419,150 | |||
| Fannie Mae REMICS |
758,771 | |||
| Fannie Mae-Aces |
49,414 | |||
| Freddie Mac Reference REMIC |
15,260 | |||
| Freddie Mac REMICS |
1,854,344 | |||
| Government National Mortgage Association |
2,003,061 | |||
| Total market value of collateral securities |
5,100,000 | |||
| Security Description |
Value ($) | |||
| Societe Generale (0.190%) |
||||
| Fannie Mae Pool |
3,140,560 | |||
| Freddie Mac Gold Pool |
1,998,423 | |||
| Total market value of collateral securities |
5,138,983 | |||
Abbreviation Legend
| ADR | American Depositary Receipt | |
| REMIC(s) | Real Estate Mortgage Investment Conduit(s) |
Fair Value Measurements
Generally accepted accounting principles (GAAP) require disclosure regarding the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category.
The Fund categorizes its fair value measurements according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset or liability’s fair value measurement. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
| > | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date (including NAV for open-end mutual funds). Valuation adjustments are not applied to Level 1 investments. |
| > | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
| > | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
Inputs that are used in determining fair value of an investment may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices. Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for carrying out the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and procedures (the Policies). The Policies address, among other things, instances when market quotations are readily available,
The accompanying Notes to Financial Statements are an integral part of this statement.
| 12 | Semiannual Report 2012 |
Table of Contents
| Tri-Continental Corporation | ||
Portfolio of Investments (continued)
June 30, 2012 (Unaudited)
Fair Value Measurements (continued)
including recommendation of third party pricing vendors and a determination of appropriate pricing methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third-party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those described earlier.
For investments categorized as Level 3, the Committee monitors information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair value. This data is also used to corroborate, when available, information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the Committee may determine that changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.
The following table is a summary of the inputs used to value the Fund’s investments at June 30, 2012:
| Description |
|
Level 1 Quoted Prices in Active Markets for Identical Assets ($) |
|
|
Level 2 Other Significant Observable Inputs ($) |
|
|
Level 3 Significant Unobservable Inputs ($) |
|
Total ($) | ||||||
| Equity Securities |
||||||||||||||||
| Common Stocks |
||||||||||||||||
| Consumer Discretionary |
74,729,897 | — | — | 74,729,898 | ||||||||||||
| Consumer Staples |
85,310,118 | — | — | 85,310,118 | ||||||||||||
| Energy |
87,347,852 | — | — | 87,347,852 | ||||||||||||
| Financials |
125,422,402 | — | — | 125,422,402 | ||||||||||||
| Health Care |
96,629,768 | — | — | 96,629,768 | ||||||||||||
| Industrials |
92,281,656 | — | — | 92,281,656 | ||||||||||||
| Information Technology |
155,674,405 | — | — | 155,674,405 | ||||||||||||
| Materials |
35,376,785 | — | — | 35,376,785 | ||||||||||||
| Telecommunication Services |
30,210,137 | — | — | 30,210,137 | ||||||||||||
| Utilities |
33,396,898 | — | — | 33,396,898 | ||||||||||||
| Convertible Preferred Stocks |
||||||||||||||||
| Consumer Discretionary |
4,560,938 | — | — | 4,560,937 | ||||||||||||
| Consumer Staples |
5,502,170 | — | — | 5,502,170 | ||||||||||||
| Energy |
8,197,500 | — | — | 8,197,500 | ||||||||||||
| Financials |
29,406,900 | — | — | 29,406,900 | ||||||||||||
| Industrials |
6,059,350 | 5,094,040 | — | 11,153,390 | ||||||||||||
| Utilities |
11,537,745 | — | — | 11,537,745 | ||||||||||||
| Total Equity Securities |
881,644,521 | 5,094,040 | — | 886,738,561 | ||||||||||||
| Bonds |
||||||||||||||||
| Corporate Bonds & Notes |
— | 147,516,223 | — | 147,516,223 | ||||||||||||
| Convertible Bonds |
— | 130,855,022 | — | 130,855,022 | ||||||||||||
| Total Bonds |
— | 278,371,245 | — | 278,371,245 | ||||||||||||
| Other |
||||||||||||||||
| Limited Partnerships |
— | — | 413,780 | 413,780 | ||||||||||||
| Money Market Funds |
8,255,677 | — | — | 8,255,677 | ||||||||||||
| Investments of Cash Collateral Received for Securities on Loan |
— | 107,729,902 | — | 107,729,902 | ||||||||||||
| Total Other |
8,255,677 | 107,729,902 | 413,780 | 116,399,359 | ||||||||||||
| Investments in Securities |
889,900,198 | 391,195,187 | 413,780 | 1,281,509,165 | ||||||||||||
The accompanying Notes to Financial Statements are an integral part of this statement.
| Semiannual Report 2012 | 13 |
Table of Contents
| Tri-Continental Corporation | ||
Portfolio of Investments (continued)
June 30, 2012 (Unaudited)
Fair Value Measurements (continued)
| Description |
|
Level 1 Quoted Prices in Active Markets for Identical Assets ($) |
|
|
Level 2 Other Significant Observable Inputs ($) |
|
|
Level 3 Significant Unobservable Inputs ($) |
|
Total ($) | ||||||
| Derivatives |
||||||||||||||||
| Assets |
||||||||||||||||
| Futures Contracts |
62,387 | — | — | 62,387 | ||||||||||||
| Total |
889,962,585 | 391,195,187 | 413,780 | 1,281,571,552 | ||||||||||||
| See | the Portfolio of Investments for all investment classifications not indicated in the table. |
The Fund’s assets assigned to the Level 2 input category are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
Financial assets were transferred from Level 2 to Level 1 as the market for these assets was deemed to be active during the period and fair values were consequently obtained using quoted prices for identical assets rather than being based upon other observable market inputs as of period end, June 30, 2012.
The following table shows transfers between Level 1 and Level 2 of the fair value hierarchy:
| Transfers In ($) |
|
|
Transfers Out ($) |
| ||||||||
| Level 1 |
Level 2 | Level 1 | Level 2 | |||||||||
| 39,201,080 |
— | — | 39,201,080 | |||||||||
Transfers between Level 1 and Level 2 are determined based on the fair value at the beginning of the period for security positions held throughout the period.
Derivative instruments are valued at unrealized appreciation (depreciation).
The following table is a reconciliation of level 3 assets for which significant observable and/or unobservable inputs were used to determine fair value.
| Limited Partnerships ($) | ||||
| Balance as of December 31, 2011 |
412,516 | |||
| Accrued discounts/premiums |
— | |||
| Realized gain (loss) |
— | |||
| Change in unrealized appreciation (depreciation)(a) |
1,264 | |||
| Sales |
— | |||
| Purchases |
— | |||
| Transfers into Level 3 |
— | |||
| Transfers out of Level 3 |
— | |||
| Balance as of June 30, 2012 |
413,780 | |||
| (a) | Change in unrealized appreciation (depreciation) relating to securities held at June 30, 2012 was $1,264. |
The Fund’s assets assigned to the Level 3 category are valued utilizing the valuation technique deemed the most appropriate in the circumstances. Certain Limited Partnership Securities classified as Level 3 are valued using a market approach. To determine fair value for these securities, management considered various factors which may have included, but were not limited to, the Fund’s pro-rata interest in the limited partnership’s capital balance, estimated earnings of the respective company, and the position of the security within the respective company’s capital structure. Significant increases (decreases) to any of these inputs would result in a significantly lower (higher) fair value measurement. Generally, a change in the fund’s pro-rata interest would result in a change to the limited partnership’s capital balance.
Transfers in and/or out of Level 3 are determined based on the fair value at the beginning of the period for security positions held throughout the period.
The accompanying Notes to Financial Statements are an integral part of this statement.
| 14 | Semiannual Report 2012 |
Table of Contents
| Tri-Continental Corporation | ||
Statement of Assets and Liabilities
June 30, 2012 (Unaudited)
| Assets |
||||
| Investments, at value* |
||||
| Unaffiliated issuers (identified cost $1,081,836,104) |
$1,170,783,590 | |||
| Affiliated issuers (identified cost $2,995,673) |
2,995,673 | |||
| Investment of cash collateral received for securities on loan |
||||
| Short-term securities (identified cost $12,999,802) |
12,999,802 | |||
| Repurchase agreements (identified cost $94,730,100) |
94,730,100 | |||
|
|
||||
| Total investments (identified cost $1,192,561,679) |
1,281,509,165 | |||
| Cash |
15 | |||
| Receivable for: |
||||
| Dividends |
1,443,340 | |||
| Interest |
4,148,625 | |||
| Variation margin on futures contracts |
93,500 | |||
| Receivable for equity-linked notes (Note 9) |
7,105,584 | |||
| Other assets |
43,681 | |||
|
|
||||
| Total assets |
1,294,343,910 | |||
|
|
||||
| Liabilities |
||||
| Due upon return of securities on loan |
107,729,902 | |||
| Payable for: |
||||
| Common stock payable |
102,549 | |||
| Preferred stock dividends |
470,463 | |||
| Investment management fees |
11,273 | |||
| Stockholder servicing and transfer agent fees |
3,073 | |||
| Administration fees |
1,793 | |||
| Compensation of board members |
53,291 | |||
| Stockholders’ meeting fees |
205,753 | |||
| Other expenses |
583,837 | |||
|
|
||||
| Total liabilities |
109,161,934 | |||
|
|
||||
| Net assets |
1,185,181,976 | |||
| Preferred stock |
37,637,000 | |||
|
|
||||
| Net assets for common stock |
$1,147,544,976 | |||
|
|
||||
| Net asset value per share of outstanding common stock |
$18.02 | |||
|
|
||||
| Market price per share of common stock |
$15.47 | |||
|
|
||||
| * Value of securities on loan |
$108,415,344 | |||
|
|
||||
The accompanying Notes to Financial Statements are an integral part of this statement.
| Semiannual Report 2012 | 15 |
Table of Contents
| Tri-Continental Corporation | ||
Statement of Capital Stock and Surplus
June 30, 2012 (Unaudited)
| Capital stock |
||||
| $2.50 Cumulative preferred stock, $50 par value, assets coverage per share $1,574 |
||||
| Shares issued and outstanding — 752,740 |
$37,637,000 | |||
| Common stock, $0.50 par value: |
||||
| Shares issued and outstanding — 63,678,180 |
31,839,090 | |||
| Surplus |
||||
| Capital surplus |
1,654,591,779 | |||
| Undistributed net investment income |
3,294,343 | |||
| Accumulated net realized loss |
(635,423,323 | ) | ||
| Unrealized appreciation (depreciation) on: |
||||
| Investments — unaffiliated issuers |
88,947,486 | |||
| Futures contracts |
62,387 | |||
| Receivables for equity-linked notes (Note 9) |
4,233,214 | |||
|
|
||||
| Net assets |
$1,185,181,976 | |||
|
|
||||
The accompanying Notes to Financial Statements are an integral part of this statement.
| 16 | Semiannual Report 2012 |
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| Tri-Continental Corporation | ||
Six Months Ended June 30, 2012 (Unaudited)
| Net investment income |
||||
| Income: |
||||
| Dividends |
$12,329,083 | |||
| Interest |
9,042,015 | |||
| Dividends from affiliates |
2,170 | |||
| Income from securities lending — net |
265,225 | |||
| Foreign taxes withheld |
(10,697 | ) | ||
|
|
||||
| Total income |
21,627,796 | |||
|
|
||||
| Expenses: |
||||
| Investment management fees |
2,092,954 | |||
| Stockholder servicing and transfer agent fees |
570,849 | |||
| Administration fees |
332,077 | |||
| Compensation of board members |
39,257 | |||
| Stockholders’ meeting fees |
105,798 | |||
| Custodian fees |
7,844 | |||
| Printing and postage fees |
43,542 | |||
| Professional fees |
43,869 | |||
| Other |
145,672 | |||
|
|
||||
| Total expenses |
3,381,862 | |||
|
|
||||
| Net investment income(a) |
18,245,934 | |||
|
|
||||
| Realized and unrealized gain (loss) — net |
||||
| Net realized gain (loss) on: |
||||
| Investments |
55,614,853 | |||
| Futures contracts |
271,642 | |||
|
|
||||
| Net realized gain |
55,886,495 | |||
| Net change in unrealized appreciation (depreciation) on: |
||||
| Investments |
22,710,675 | |||
| Futures contracts |
(6,600 | ) | ||
| Receivables for equity-linked notes (Note 9) |
(993,254 | ) | ||
|
|
||||
| Net change in unrealized appreciation |
21,710,821 | |||
|
|
||||
| Net realized and unrealized gain |
77,597,316 | |||
|
|
||||
| Net increase in net assets resulting from operations |
$95,843,250 | |||
|
|
||||
| (a) | Net investment income for Common Stock is $17,305,009, which is net of Preferred Stock dividends of $940,925. |
The accompanying Notes to Financial Statements are an integral part of this statement.
| Semiannual Report 2012 | 17 |
Table of Contents
| Tri-Continental Corporation | ||
Statement of Changes in Net Assets
| |
Six MonthsEnded June 30, 2012 (Unaudited) |
|
|
Year Ended December 31, 2011 |
| |||
| Operations |
||||||||
| Net investment income |
$18,245,934 | $21,272,340 | ||||||
| Net realized gain |
55,886,495 | 109,499,990 | ||||||
| Net change in unrealized appreciation (depreciation) |
21,710,821 | (62,345,406 | ) | |||||
|
|
||||||||
| Net increase in net assets resulting from operations |
95,843,250 | 68,426,924 | ||||||
|
|
||||||||
| Distributions to stockholders: |
||||||||
| Net investment income |
||||||||
| Preferred stock |
(940,925 | ) | (1,881,850 | ) | ||||
| Common stock |
(16,236,632 | ) | (17,927,111 | ) | ||||
|
|
||||||||
| Total distributions to stockholders |
(17,177,557 | ) | (19,808,961 | ) | ||||
|
|
||||||||
| Increase (decrease) in net assets from capital share transactions |
(9,280,327 | ) | (31,709,705 | ) | ||||
|
|
||||||||
| Total increase in net assets |
69,385,366 | 16,908,258 | ||||||
| Net assets at beginning of period |
1,115,796,610 | 1,098,888,352 | ||||||
|
|
||||||||
| Net assets at end of period |
$1,185,181,976 | $1,115,796,610 | ||||||
|
|
||||||||
| Undistributed net investment income |
3,294,343 | $ 2,225,966 | ||||||
|
|
||||||||
The accompanying Notes to Financial Statements are an integral part of this statement.
| 18 | Semiannual Report 2012 |
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| Tri-Continental Corporation | ||
Statement of Changes in Net Assets (continued)
| |
Six Months Ended June 30, 2012 (Unaudited) |
|
|
Year Ended December 31, 2011 |
| |||||||||||
| Shares | Dollars ($) | Shares | Dollars ($) | |||||||||||||
| Capital stock activity |
||||||||||||||||
| Common stock issued at market price in distributions |
329,724 | 5,105,219 | 424,615 | 5,954,436 | ||||||||||||
| Common stock issued for investment plan purchases |
167,312 | 2,543,276 | 129,968 | 1,838,794 | ||||||||||||
| Common stock purchased from investment plan participants |
(716,407 | ) | (10,927,631 | ) | (1,540,448 | ) | (21,866,509 | ) | ||||||||
| Common stock purchased in the open market |
(387,465 | ) | (6,001,191 | ) | (1,238,498 | ) | (17,636,426 | ) | ||||||||
|
|
||||||||||||||||
| Total net decrease |
(606,836 | ) | (9,280,327 | ) | (2,224,363 | ) | (31,709,705 | ) | ||||||||
|
|
||||||||||||||||
The accompanying Notes to Financial Statements are an integral part of this statement.
| Semiannual Report 2012 | 19 |
Table of Contents
| Tri-Continental Corporation | ||
Per share operating performance data is designed to allow investors to trace the operating performance, on a per Common Stock 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 Stock share amounts, using average Common Stock shares outstanding during the period.
Total return measures the Fund’s performance assuming that investors purchased shares of the Fund at the market price or net asset value as of the beginning of the period, invested all distributions paid, as provided for in the Fund’s Prospectus and Automatic Dividend Investment and Cash Purchase Plan, and then sold their shares at the closing market price or net asset value per share on the last day of the period. The computations do not reflect any sales charges or transaction costs on your investment or taxes investors may incur on distributions or on the sale of shares of the Fund, and are not annualized for periods of less than one year.
The ratios of expenses and net investment income to average net assets for Common Stock for the periods presented do not reflect the effect of dividends paid to Preferred Stockholders.
The accompanying Notes to Financial Statements are an integral part of this statement.
| 20 | Semiannual Report 2012 |
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| Tri-Continental Corporation | ||
Financial Highlights (continued)
| |
Six Months
Ended June 30, |
|
Year Ended December 31, | |||||||||||||||||||||
| |
2012 (Unaudited) |
|
2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||
| Per share data |
||||||||||||||||||||||||
| Net asset value, beginning of period |
$16.77 | $15.96 | $13.73 | $11.29 | $23.03 | $25.66 | ||||||||||||||||||
| Income from investment operations |
||||||||||||||||||||||||
| Net investment income |
0.29 | 0.33 | 0.30 | 0.20 | 0.52 | 0.84 | ||||||||||||||||||
| Net realized and unrealized gain (loss) |
1.23 | 0.79 | 2.28 | 2.42 | (9.88) | (1.01) | ||||||||||||||||||
| Increase from payments by affiliate |
— | — | — | 0.04 | — | — | ||||||||||||||||||
| Total from investment operations |
1.52 | 1.12 | 2.58 | 2.66 | (9.36) | (0.17) | ||||||||||||||||||
| Less distributions to stockholders from: |
||||||||||||||||||||||||
| Net investment income |
||||||||||||||||||||||||
| Preferred stock |
(0.01) | (0.03) | (0.03) | (0.03) | (0.02) | (0.02) | ||||||||||||||||||
| Common stock |
(0.26) | (0.28) | (0.25) | (0.17) | (0.50) | (0.87) | ||||||||||||||||||
| Net realized gains |
||||||||||||||||||||||||
| Common stock |
— | — | — | — | (0.39) | (1.57) | ||||||||||||||||||
| Tax return of capital |
||||||||||||||||||||||||
| Common stock |
— | — | — | (0.02) | (1.22) | — | ||||||||||||||||||
| Total distributions to stockholders |
(0.27) | (0.31) | (0.28) | (0.22) | (2.13) | (2.46) | ||||||||||||||||||
| Capital stock transactions at market price |
— | — | (0.07) | — | (0.25)(a) | — | ||||||||||||||||||
| Net asset value, end of period |
$18.02 | $16.77 | $15.96 | $13.73 | $11.29 | $23.03 | ||||||||||||||||||
| Adjusted net asset value, end of period(b) |
$17.96 | $16.72 | $15.90 | $13.69 | $11.26 | $22.98 | ||||||||||||||||||
| Market value, end of period |
$15.47 | $14.23 | $13.76 | $11.52 | $9.86 | $20.90 | ||||||||||||||||||
| Total return |
||||||||||||||||||||||||
| Based upon net asset value |
9.23% | 7.15% | 18.58% | 24.11% | (c) | (43.77%) | (0.52%) | |||||||||||||||||
| Based upon market value |
10.51% | 5.46% | 21.85% | 19.24% | (45.89%) | 3.51% | ||||||||||||||||||
| Ratios to average net assets(d) |
||||||||||||||||||||||||
| Expenses to average net assets for common stock |
0.59% | (e) | 0.59% | 0.60% | 0.98% | 0.73% | 0.66% | |||||||||||||||||
| Net investment income to average net assets for common stock |
3.03% | (e) | 1.80% | 1.84% | 1.46% | 2.96% | 3.22% | |||||||||||||||||
| Supplemental data |
||||||||||||||||||||||||
| Net assets, end of period (000s): |
||||||||||||||||||||||||
| Common stock |
$1,147,545 | $1,078,160 | $1,061,251 | $946,344 | $893,899 | $2,373,429 | ||||||||||||||||||
| Preferred stock |
37,637 | 37,637 | 37,637 | 37,637 | 37,637 | 37,637 | ||||||||||||||||||
| Total net assets |
$1,185,182 | $1,115,797 | $1,098,888 | $983,981 | $931,536 | $2,411,066 | ||||||||||||||||||
| Portfolio turnover |
38% | 97% | 86% | 70% | 111% | 123% | ||||||||||||||||||
Notes to Financial Highlights
| (a) | Reflects the issuance of Common Stock in distributions. |
| (b) | Assumes the exercise of outstanding warrants. |
| (c) | During the year ended December 31, 2009, the Fund received a payment by an affiliate. Had the Fund not received this payment, the total return would have been lower by 0.47%. |
| (d) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
| (e) | Annualized |
The accompanying Notes to Financial Statements are an integral part of this statement.
| Semiannual Report 2012 | 21 |
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| Tri-Continental Corporation | ||
June 30, 2012 (Unaudited)
| 22 | Semiannual Report 2012 |
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| Tri-Continental Corporation | ||
Notes to Financial Statements (continued)
June 30, 2012 (Unaudited)
| Semiannual Report 2012 | 23 |
Table of Contents
| Tri-Continental Corporation | ||
Notes to Financial Statements (continued)
June 30, 2012 (Unaudited)
| 24 | Semiannual Report 2012 |
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| Tri-Continental Corporation | ||
Notes to Financial Statements (continued)
June 30, 2012 (Unaudited)
| Semiannual Report 2012 | 25 |
Table of Contents
| Tri-Continental Corporation | ||
Notes to Financial Statements (continued)
June 30, 2012 (Unaudited)
| 26 | Semiannual Report 2012 |
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| Tri-Continental Corporation | ||
Notes to Financial Statements (continued)
June 30, 2012 (Unaudited)
| Semiannual Report 2012 | 27 |
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| Tri-Continental Corporation | ||
Notes to Financial Statements (continued)
June 30, 2012 (Unaudited)
| 28 | Semiannual Report 2012 |
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| Tri-Continental Corporation | ||
(Unaudited)
Change in Independent Registered Public Accounting Firm
At a meeting held on June 14, 2012, the Board, upon recommendation of the Audit Committee, approved the replacement of Ernst & Young LLP (Ernst & Young) as the independent registered public accounting firm for the Fund and certain other funds in the Columbia Family of Funds (collectively, the Funds) and appointed PricewaterhouseCoopers LLP (PwC). PwC’s engagement is effective at the completion of Ernst & Young’s audits of the financial statements of the Funds with fiscal years ending July 31, 2012, which are expected to be completed in September 2012. The Fund did not consult with PwC during the fiscal years ended December 31, 2011 and 2010 and through the June meeting.
Ernst & Young’s reports on the financial statements of the Fund as of and for the fiscal years ended December 31, 2011 and 2010 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During such fiscal periods and through the June meeting, there were no: (1) disagreements between the Fund and Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to Ernst & Young’s satisfaction, would have caused them to make reference to the subject matter of the disagreement in connection with their reports, or (2) reportable events.
| Semiannual Report 2012 | 29 |
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| Tri-Continental Corporation | ||
Approval of Investment Management Services Agreement
Columbia Management Investment Advisers, LLC (Columbia Management or the investment manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to Tri-Continental Corporation (the Corporation). Under an investment management services agreement (the IMS Agreement), Columbia Management provides investment advice and other services to the Corporation and all funds distributed by Columbia Management Investment Distributors, Inc. (each, a Fund, and collectively, the Funds).
On an annual basis, the Corporation’s Board of Directors (the Board), including the independent Board members (the Independent Directors), considers renewal of the IMS Agreement. Columbia Management prepared detailed reports for the Board and its Contracts Committee in March and April 2012, including reports based on analyses of data provided by an independent organization and a comprehensive response to each item of information requested by independent legal counsel to the Independent Directors (Independent Legal Counsel) in a letter to the investment manager, to assist the Board in making this determination. All of the materials presented in March and April were first supplied in draft form to designated representatives of the Independent Directors, i.e., Independent Legal Counsel, the Board’s Chair and the Chair of the Contracts Committee, and the final materials were revised to reflect comments provided by these Board representatives. In addition, throughout the year, the Board (or its committees) regularly meets with portfolio management teams and senior management personnel, and reviews information prepared by Columbia Management addressing the services Columbia Management provides and Fund performance. The Board accords particular weight to the work, deliberations and conclusions of its Contracts Committee, Investment Review Committee and Compliance Committee in determining whether to continue the IMS Agreement.
The Board, at its April 10-12, 2012 in-person Board meeting (the April Meeting), considered the renewal of the IMS Agreement for an additional one-year term. At the April Meeting, Independent Legal Counsel reviewed with the Independent Directors various factors relevant to the Board’s consideration of advisory agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Directors, approved the renewal of the IMS Agreement.
Nature, Extent and Quality of Services Provided by Columbia Management
The Independent Directors analyzed various reports and presentations they had received detailing the services performed by Columbia Management, as well as its expertise, resources and capabilities. The Independent Directors specifically considered many developments during the past year concerning the services provided by Columbia Management, including, in particular, the continued investment in, and resources dedicated to, the Funds’ operations and the successful completion of various integration initiatives and the consolidation of dozens of Funds. The Independent Directors noted the information they received concerning Columbia Management’s ability to retain key portfolio management personnel. In that connection, the Independent Directors took into account their meetings with Columbia Management’s Chief Investment Officer (the CIO) and considered the CIO’s successful execution of additional risk and portfolio management oversight applied to the Funds. The Independent Directors also assessed Columbia Management’s significant investment in upgrading technology (such as an equity trading system) and considered management’s commitments to enhance existing resources in this area.
In connection with the Board’s evaluation of the overall package of services provided by Columbia Management, the Board also considered the quality of administrative services provided to the Corporation by Columbia Management and the services of Columbia Management’s affiliate, Columbia Management Investment Services Corp., as the Corporation’s stockholder service agent. In addition, the Board also reviewed the financial condition of Columbia Management (and its affiliates) and each entity’s ability to carry out its responsibilities under the IMS Agreement and the Corporation’s other services agreements with Ameriprise affiliates. The Board also discussed the acceptability of the terms of the IMS Agreement (including the relatively broad scope of services required to be performed by Columbia Management). The Board concluded that the services being performed under the IMS Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Management and its affiliates were in a position to continue to provide a high quality and level of services to the Corporation.
Investment Performance
For purposes of evaluating the nature, extent and quality of services provided under the IMS Agreement, the Board carefully reviewed the investment performance of the Corporation. In this regard, the Board considered detailed reports providing the results of analyses performed by an independent organization showing, for various periods, the performance of the Corporation,
| 30 | Semiannual Report 2012 |
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| Tri-Continental Corporation | ||
Approval of Investment Management Services Agreement (continued)
the performance of a benchmark index and the percentage ranking of the Corporation among its comparison group. The Board observed that the Corporation outperformed its benchmark and finished the year in the first quartile of its peer group. The Board determined that the Corporation’s investment performance met expectations.
Comparative Fees, Costs of Services Provided and the Profits Realized By Columbia Management and its Affiliates from their Relationships with the Corporation
The Board reviewed comparative fees and the costs of services provided under the IMS Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent organization) showing a comparison of the Corporation’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Corporation’s contribution to Columbia Management’s profitability.
The Board accorded particular weight to the notion that the level of fees should reflect a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with few defined exceptions) are generally in line with the “pricing philosophy” (i.e., that the total expense ratio of the Fund is at, or below, the median expense ratio of funds in the same comparison universe of the Fund). The Board reviewed information it received with respect to the Corporation demonstrating that its expense ratio was below its peer universe’s median expense ratio. Based on its review, the Board concluded that the Corporation’s management fee was fair and reasonable in light of the extent and quality of services that the Corporation receives.
The Board also considered the expected profitability of Columbia Management and its affiliates in connection with Columbia Management providing investment management services to the Corporation. In this regard, the Board referred to a detailed profitability report, discussing the profitability to Columbia Management and Ameriprise Financial from managing and operating the Funds. In this regard, the Board observed that 2011 profitability, while slightly lower than 2010, was generally in line with the reported profitability of other asset management firms. The Board also considered the indirect economic benefits flowing to Columbia Management or its affiliates in connection with managing, operating and, as the case may be, distributing the Funds, such as the enhanced ability to offer various other financial products to Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Funds should permit the investment manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
Economies of Scale to be Realized
The Board noted that the management fee schedule does not contain breakpoints that reduce the fee rate on assets above specified levels. However, due to the Corporation’s closed-end structure, the Board did not view the potential for realization of economies of scale as the Corporation’s assets grow to be a material factor in its deliberations.
Based on the foregoing, the Board, including all of the Independent Directors, concluded that the investment management service fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was determinative. On April 12, 2012, the Board, including all of the Independent Directors, approved the renewal of the IMS Agreement.
| Semiannual Report 2012 | 31 |
Table of Contents
| Tri-Continental Corporation | ||
Results of Meeting of Stockholders
The 82nd Annual Meeting of Stockholders of Tri-Continental Corporation (the Corporation) was held on April 12, 2012. Stockholders voted in favor of each of the two proposals. The description of each proposal and number of shares voted are as follows:
Proposal 1
To elect three Directors to the Corporation’s Board, each to hold office until the 2015 Annual Meeting of Stockholders and all until their successors are elected and qualify:
| Director |
For | Withheld | ||||||
| Kathleen Blatz |
43,287,319 | 5,645,597 | ||||||
| Pamela Carlton |
43,137,166 | 5,795,749 | ||||||
| Alison Taunton-Rigby |
43,112,457 | 5,820,458 |
Proposal 2
To ratify the selection of Ernst & Young LLP as the Corporation’s independent registered public accounting firm for 2012:
| For | Against | Abstain | ||||||
| 47,518,559 | 698,017 | 716,340 |
| 32 | Semiannual Report 2012 |
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| Tri-Continental Corporation | ||
Important Information About This Report
Each fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800.345.6611 and additional reports will be sent to you.
The policy of the Board is to vote the proxies of the companies in which each fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611; contacting your financial intermediary; visiting columbiamanagement.com; or searching the website of the Securities and Exchange Commission (SEC) at http://www.sec.gov. Information regarding how each fund voted proxies relating to portfolio securities is filed with the SEC by August 31 for the most recent 12-month period ending June 30 of that year, and is available without charge by visiting columbiamanagement.com; or searching the website of the SEC at sec.gov.
Each fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. Each fund’s Form N-Q is available on the SEC’s website at sec.gov and may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330. Each fund’s complete schedule of portfolio holdings, as filed on Form N-Q, can also be obtained without charge, upon request, by calling 800.345.6611.
| Semiannual Report 2012 | 33 |
Table of Contents
Tri-Continental Corporation
P.O. Box 8081
Boston, MA 02266-8081
columbiamanagement.com
You should consider the investment objectives, risks, charges and expenses of the fund carefully before investing. A prospectus containing information about the fund (including its investment objectives, risks, charges, expenses and other information about the fund) may be obtained by contacting your financial advisor or Columbia Management Investment Services Corp. at 800.345.6611. The prospectus should be read carefully before investing in the Fund. Tri-Continental is managed by Columbia Management Investment Advisers, LLC. This material is distributed by Columbia Management Investment Distributors, Inc., member FINRA.
© 2012 Columbia Management Investment Advisers, LLC. All rights reserved.
SL-9948 E (08/12)
Table of Contents
| Item 2. | Code of Ethics. Not applicable for semi-annual reports. |
| Item 3. | Audit Committee Financial Expert. Not applicable for semi-annual reports. |
| Item 4. | Principal Accountant Fees and Services. Not applicable for semi-annual reports. |
| Item 5. | Audit Committee of Listed Registrants. Not applicable. |
| Item 6. | Investments. |
| (a) | The registrant’s “Schedule 1 – Investments in securities of unaffiliated issuers” (as set forth in 17 CFR 210.12-12) is included in Item 1 of this Form N-CSR. |
| (b) | Not applicable. |
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable. |
| Item 8. | Portfolio Managers of Closed-End Management Investment Companies. Not applicable. |
| Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
| Fund: | Tri-Continental | |
| Period: | June 30, 2012 |
| Period |
Total Number of Shares Purchased |
Average Price Paid Per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) |
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs(1) |
||||||||||||
| 01-01-12 to 01-31-12 |
142,376 | $ | 14.85 | 142,376 | 3,071,875 | |||||||||||
| 02-01-12 to 02-29-12 |
209,526 | 15.54 | 209,526 | 2,862,349 | ||||||||||||
| 03-01-12 to 03-31-12 |
116,442 | 15.89 | 116,442 | 2,745,907 | ||||||||||||
| 04-01-12 to 04-30-12 |
144,791 | 15.73 | 144,791 | 2,601,116 | ||||||||||||
| 05-01-12 to 05-31-12 |
196,038 | 15.29 | 196,038 | 2,405,078 | ||||||||||||
| 06-01-12 to 06-30-12 |
298,399 | 15.05 | 298,399 | 2,106,679 | ||||||||||||
| (1) | The registrant has a stock repurchase program. For 2012, the registrant is authorized to repurchase up to 5% of its outstanding Common Stock directly from stockholders and in the open market, provided that, with respect to shares repurchased in the open market the excess of the net asset value of a share of Common Stock over its market price (the discount) is greater than 10%. |
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| Item 10. | Submission of Matters to a Vote of Security Holders. |
There were no material changes to the procedure by which shareholders may recommend nominees to the registrant’s board of directors.
| Item 11. | Controls and Procedures. |
(a) The registrant’s principal executive officer and principal financial officer, based on their evaluation of the registrant’s disclosure controls and procedures as of a date within 90 days of the filing of this report, have concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the registrant in Form N-CSR is accumulated and communicated to the registrant’s management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
(b) There was no change in the registrant’s internal controls over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
| Item 12. | Exhibits. |
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR: Not applicable for semi annual reports.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (registrant) | Tri-Continental Corporation | |
| By (Signature and Title) | /s/ J. Kevin Connaughton | |
| J. Kevin Connaughton, President and Principal Executive Officer | ||
| Date | August 21, 2012 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By (Signature and Title) | /s/ J. Kevin Connaughton | |
| J. Kevin Connaughton, President and Principal Executive Officer | ||
| Date | August 21, 2012 | |
| By (Signature and Title) | /s/ Michael G. Clarke | |
| Michael G. Clarke, Treasurer and Chief Financial Officer | ||
| Date | August 21, 2012 | |