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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)
225 Franklin Street, Boston, Massachusetts 02110
(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: (800) 345-6611
Date of fiscal year end: December 31
Date of reporting period: December 31, 2017
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
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Item 1. | Reports to Stockholders. |
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December 31, 2017
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Average annual total returns (%) (for the period ended December 31, 2017) | |||||
Inception | 1 Year | 5 Years | 10 Years | ||
Market Price | 01/05/29 | 28.00 | 15.57 | 7.16 | |
Net Asset Value | 01/05/29 | 20.82 | 14.28 | 7.23 | |
S&P 500 Index | 21.83 | 15.79 | 8.50 | ||
Blended Benchmark | 17.01 | 12.77 | 7.95 |
Price Per Share | ||||
December 31, 2017 | September 30, 2017 | June 30, 2017 | March 31, 2017 | |
Market Price ($) | 26.94 | 25.55 | 24.35 | 23.12 |
Net Asset Value ($) | 29.88 | 28.72 | 27.56 | 27.00 |
Distributions Paid Per Common Share(a) | |
Payable Date | Per Share Amount ($) |
March 28, 2017 | 0.2507 |
June 27, 2017 | 0.2509 |
September 26, 2017 | 0.2614 |
December 29, 2017 | 0.4044 (b) |
2 | Tri-Continental Corporation | Annual Report 2017 |
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Top 10 holdings (%) (at December 31, 2017) | |
Citigroup, Inc. | 1.7 |
Facebook, Inc., Class A | 1.7 |
Boeing Co. (The) | 1.7 |
JPMorgan Chase & Co. | 1.7 |
Altria Group, Inc. | 1.6 |
Cisco Systems, Inc. | 1.6 |
Microsoft Corp. | 1.6 |
AT&T, Inc. | 1.4 |
Wal-Mart Stores, Inc. | 1.3 |
Pfizer, Inc. | 1.3 |
Portfolio breakdown (%) (at December 31, 2017) | |
Common Stocks | 67.4 |
Convertible Bonds | 9.1 |
Convertible Preferred Stocks | 6.8 |
Corporate Bonds & Notes | 13.0 |
Limited Partnerships | 0.9 |
Money Market Funds | 1.1 |
Preferred Debt | 0.6 |
Senior Loans | 1.1 |
Warrants | 0.0 (a) |
Total | 100.0 |
(a) | Rounds to zero. |
Equity sector breakdown (%) (at December 31, 2017) | |
Consumer Discretionary | 9.9 |
Consumer Staples | 8.7 |
Energy | 6.6 |
Financials | 17.0 |
Health Care | 13.1 |
Industrials | 9.4 |
Information Technology | 21.8 |
Materials | 3.2 |
Real Estate | 3.6 |
Telecommunication Services | 1.8 |
Utilities | 4.9 |
Total | 100.0 |
Tri-Continental Corporation | Annual Report 2017 | 3 |
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4 | Tri-Continental Corporation | Annual Report 2017 |
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Tri-Continental Corporation | Annual Report 2017 | 5 |
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December 31, 2017
Common Stocks 67.1% | ||
Issuer | Shares | Value ($) |
Consumer Discretionary 7.4% | ||
Automobiles 0.2% | ||
General Motors Co. | 97,500 | 3,996,525 |
Hotels, Restaurants & Leisure 1.6% | ||
Darden Restaurants, Inc. | 15,700 | 1,507,514 |
Extended Stay America, Inc. | 460,000 | 8,740,000 |
Royal Caribbean Cruises Ltd. | 84,700 | 10,103,016 |
Six Flags Entertainment Corp. | 97,500 | 6,490,575 |
Total | 26,841,105 | |
Household Durables 0.1% | ||
PulteGroup, Inc. | 29,600 | 984,200 |
Internet & Direct Marketing Retail 0.3% | ||
Amazon.com, Inc.(a) | 1,400 | 1,637,258 |
Expedia, Inc. | 8,100 | 970,137 |
Liberty Interactive Corp., Class A(a) | 95,800 | 2,339,436 |
Total | 4,946,831 | |
Leisure Products 0.5% | ||
Hasbro, Inc. | 92,700 | 8,425,503 |
Media 1.6% | ||
Charter Communications, Inc., Class A(a) | 48,000 | 16,126,080 |
Comcast Corp., Class A | 130,800 | 5,238,540 |
News Corp., Class A | 367,900 | 5,963,659 |
Total | 27,328,279 | |
Multiline Retail 0.2% | ||
Target Corp. | 50,100 | 3,269,025 |
Specialty Retail 2.1% | ||
Best Buy Co., Inc. | 236,800 | 16,213,696 |
Home Depot, Inc. (The) | 50,600 | 9,590,218 |
Ross Stores, Inc. | 85,100 | 6,829,275 |
TJX Companies, Inc. (The) | 20,200 | 1,544,492 |
Total | 34,177,681 | |
Textiles, Apparel & Luxury Goods 0.8% | ||
Ralph Lauren Corp. | 132,800 | 13,770,032 |
Total Consumer Discretionary | 123,739,181 |
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Consumer Staples 6.0% | ||
Food & Staples Retailing 2.8% | ||
CVS Health Corp. | 216,000 | 15,660,000 |
SYSCO Corp. | 160,000 | 9,716,800 |
Wal-Mart Stores, Inc. | 221,200 | 21,843,500 |
Total | 47,220,300 | |
Food Products 1.2% | ||
Campbell Soup Co. | 20,500 | 986,255 |
Kellogg Co. | 92,500 | 6,288,150 |
Tyson Foods, Inc., Class A | 159,100 | 12,898,237 |
Total | 20,172,642 | |
Household Products 0.4% | ||
Procter & Gamble Co. (The) | 64,800 | 5,953,824 |
Tobacco 1.6% | ||
Altria Group, Inc. | 380,000 | 27,135,800 |
Total Consumer Staples | 100,482,566 | |
Energy 4.0% | ||
Energy Equipment & Services 0.1% | ||
Halliburton Co. | 43,700 | 2,135,619 |
Oil, Gas & Consumable Fuels 3.9% | ||
BP PLC, ADR | 202,500 | 8,511,075 |
Chevron Corp.(b) | 102,600 | 12,844,494 |
ConocoPhillips | 318,600 | 17,487,954 |
Goodrich Petroleum Corp.(a),(c),(d) | 3,824,000 | 4 |
Suncor Energy, Inc. | 235,000 | 8,629,200 |
Valero Energy Corp. | 192,400 | 17,683,484 |
Total | 65,156,211 | |
Total Energy | 67,291,830 | |
Financials 11.0% | ||
Banks 5.2% | ||
Bank of America Corp. | 416,400 | 12,292,128 |
Citigroup, Inc. | 384,000 | 28,573,440 |
Citizens Financial Group, Inc. | 50,700 | 2,128,386 |
First Hawaiian, Inc. | 147,500 | 4,304,050 |
JPMorgan Chase & Co. | 255,000 | 27,269,700 |
PacWest Bancorp | 190,000 | 9,576,000 |
PNC Financial Services Group, Inc. (The) | 23,800 | 3,434,102 |
Total | 87,577,806 |
6 | Tri-Continental Corporation | Annual Report 2017 |
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December 31, 2017
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Capital Markets 2.4% | ||
Ares Capital Corp. | 510,000 | 8,017,200 |
Franklin Resources, Inc. | 205,700 | 8,912,981 |
S&P Global, Inc. | 100,900 | 17,092,460 |
State Street Corp. | 18,500 | 1,805,785 |
T. Rowe Price Group, Inc. | 7,700 | 807,961 |
TCG BDC, Inc. | 215,000 | 4,308,600 |
Total | 40,944,987 | |
Insurance 2.7% | ||
Allstate Corp. (The) | 147,000 | 15,392,370 |
Aon PLC | 39,000 | 5,226,000 |
Marsh & McLennan Companies, Inc. | 82,800 | 6,739,092 |
MetLife, Inc. | 112,500 | 5,688,000 |
Prudential Financial, Inc. | 69,400 | 7,979,612 |
Validus Holdings Ltd. | 85,000 | 3,988,200 |
Total | 45,013,274 | |
Mortgage Real Estate Investment Trusts (REITS) 0.7% | ||
Blackstone Mortgage Trust, Inc. | 100,000 | 3,218,000 |
Starwood Property Trust, Inc. | 370,000 | 7,899,500 |
Total | 11,117,500 | |
Total Financials | 184,653,567 | |
Health Care 8.5% | ||
Biotechnology 2.3% | ||
AbbVie, Inc. | 90,000 | 8,703,900 |
Alexion Pharmaceuticals, Inc.(a) | 36,500 | 4,365,035 |
Biogen, Inc.(a) | 14,900 | 4,746,693 |
BioMarin Pharmaceutical, Inc.(a) | 19,900 | 1,774,483 |
Celgene Corp.(a) | 35,300 | 3,683,908 |
Gilead Sciences, Inc. | 126,900 | 9,091,116 |
TESARO, Inc.(a) | 16,000 | 1,325,920 |
Vertex Pharmaceuticals, Inc.(a) | 27,650 | 4,143,629 |
Total | 37,834,684 | |
Health Care Equipment & Supplies 1.4% | ||
Baxter International, Inc. | 239,700 | 15,494,208 |
Medtronic PLC | 100,000 | 8,075,000 |
Total | 23,569,208 |
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Health Care Providers & Services 1.6% | ||
Centene Corp.(a) | 138,400 | 13,961,792 |
Express Scripts Holding Co.(a) | 169,600 | 12,658,944 |
Total | 26,620,736 | |
Pharmaceuticals 3.2% | ||
Eli Lilly & Co. | 65,600 | 5,540,576 |
Johnson & Johnson | 64,700 | 9,039,884 |
Merck & Co., Inc. | 325,500 | 18,315,885 |
Pfizer, Inc. | 576,209 | 20,870,290 |
Total | 53,766,635 | |
Total Health Care | 141,791,263 | |
Industrials 6.1% | ||
Aerospace & Defense 2.0% | ||
Boeing Co. (The) | 92,900 | 27,397,139 |
Lockheed Martin Corp. | 19,000 | 6,099,950 |
Total | 33,497,089 | |
Airlines 0.7% | ||
Southwest Airlines Co. | 189,700 | 12,415,865 |
Electrical Equipment 0.7% | ||
AMETEK, Inc. | 49,800 | 3,609,006 |
Rockwell Automation, Inc. | 39,500 | 7,755,825 |
Total | 11,364,831 | |
Industrial Conglomerates 1.1% | ||
Honeywell International, Inc. | 116,000 | 17,789,760 |
Professional Services —% | ||
Nielsen Holdings PLC | 16,100 | 586,040 |
Road & Rail 0.3% | ||
Union Pacific Corp. | 32,500 | 4,358,250 |
Trading Companies & Distributors 0.8% | ||
WW Grainger, Inc. | 60,800 | 14,364,000 |
Transportation Infrastructure 0.5% | ||
Macquarie Infrastructure Corp. | 125,000 | 8,025,000 |
Total Industrials | 102,400,835 |
Tri-Continental Corporation | Annual Report 2017 | 7 |
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December 31, 2017
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Information Technology 15.6% | ||
Communications Equipment 2.0% | ||
Cisco Systems, Inc. | 705,500 | 27,020,650 |
F5 Networks, Inc.(a) | 49,600 | 6,508,512 |
Total | 33,529,162 | |
Electronic Equipment, Instruments & Components 0.4% | ||
Corning, Inc. | 195,000 | 6,238,050 |
Internet Software & Services 3.1% | ||
Alphabet, Inc., Class A(a) | 8,200 | 8,637,880 |
Facebook, Inc., Class A(a) | 161,000 | 28,410,060 |
VeriSign, Inc.(a) | 128,000 | 14,648,320 |
Total | 51,696,260 | |
IT Services 1.5% | ||
Automatic Data Processing, Inc. | 35,000 | 4,101,650 |
Booz Allen Hamilton Holdings Corp. | 115,000 | 4,384,950 |
MasterCard, Inc., Class A | 111,600 | 16,891,776 |
Total | 25,378,376 | |
Semiconductors & Semiconductor Equipment 3.6% | ||
Analog Devices, Inc. | 70,000 | 6,232,100 |
Broadcom Ltd. | 80,100 | 20,577,690 |
Intel Corp. | 387,500 | 17,887,000 |
KLA-Tencor Corp. | 60,000 | 6,304,200 |
Lam Research Corp. | 33,500 | 6,166,345 |
QUALCOMM, Inc. | 65,000 | 4,161,300 |
Total | 61,328,635 | |
Software 3.7% | ||
Adobe Systems, Inc.(a) | 99,500 | 17,436,380 |
Cadence Design Systems, Inc.(a) | 81,100 | 3,391,602 |
Electronic Arts, Inc.(a) | 140,000 | 14,708,400 |
Microsoft Corp. | 308,800 | 26,414,752 |
Total | 61,951,134 | |
Technology Hardware, Storage & Peripherals 1.3% | ||
Apple, Inc. | 110,050 | 18,623,762 |
HP, Inc. | 140,500 | 2,951,905 |
Total | 21,575,667 | |
Total Information Technology | 261,697,284 |
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Materials 2.1% | ||
Chemicals 1.5% | ||
DowDuPont, Inc. | 87,500 | 6,231,750 |
Eastman Chemical Co. | 22,400 | 2,075,136 |
LyondellBasell Industries NV, Class A | 153,500 | 16,934,120 |
Total | 25,241,006 | |
Containers & Packaging 0.3% | ||
International Paper Co. | 75,000 | 4,345,500 |
Packaging Corp. of America | 11,500 | 1,386,325 |
Total | 5,731,825 | |
Metals & Mining 0.3% | ||
Freeport-McMoRan, Inc.(a) | 124,100 | 2,352,936 |
Warrior Met Coal, Inc. | 90,000 | 2,263,500 |
Total | 4,616,436 | |
Total Materials | 35,589,267 | |
Real Estate 2.2% | ||
Equity Real Estate Investment Trusts (REITS) 2.2% | ||
Alexandria Real Estate Equities, Inc. | 47,500 | 6,203,025 |
American Tower Corp. | 108,200 | 15,436,894 |
Equinix, Inc. | 13,000 | 5,891,860 |
Host Hotels & Resorts, Inc. | 59,000 | 1,171,150 |
SBA Communications Corp.(a) | 48,000 | 7,841,280 |
Total | 36,544,209 | |
Total Real Estate | 36,544,209 | |
Telecommunication Services 1.4% | ||
Diversified Telecommunication Services 1.4% | ||
AT&T, Inc. | 598,400 | 23,265,792 |
Total Telecommunication Services | 23,265,792 | |
Utilities 2.8% | ||
Electric Utilities 1.5% | ||
American Electric Power Co., Inc. | 85,000 | 6,253,450 |
Entergy Corp. | 144,800 | 11,785,272 |
Xcel Energy, Inc. | 166,100 | 7,991,071 |
Total | 26,029,793 | |
Independent Power and Renewable Electricity Producers 0.5% | ||
NRG Yield, Inc. Class A | 422,291 | 7,960,185 |
8 | Tri-Continental Corporation | Annual Report 2017 |
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December 31, 2017
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Multi-Utilities 0.8% | ||
Ameren Corp. | 17,500 | 1,032,325 |
CenterPoint Energy, Inc. | 421,200 | 11,945,232 |
Total | 12,977,557 | |
Total Utilities | 46,967,535 | |
Total Common Stocks (Cost $991,559,050) | 1,124,423,329 |
Convertible Bonds 9.0% | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Automotive 0.2% | ||||
Navistar International Corp. | ||||
04/15/2019 | 4.750% | 3,609,000 | 3,906,743 | |
Cable and Satellite 0.5% | ||||
DISH Network Corp. | ||||
08/15/2026 | 3.375% | 7,300,000 | 7,943,312 | |
Gaming 0.2% | ||||
Caesars Entertainment Corp. | ||||
10/01/2024 | 5.000% | 2,150,000 | 4,158,906 | |
Health Care 0.7% | ||||
Invacare Corp. | ||||
02/15/2021 | 5.000% | 3,345,000 | 4,108,078 | |
Novavax, Inc. | ||||
02/01/2023 | 3.750% | 5,400,000 | 2,524,500 | |
Teladoc, Inc.(e) | ||||
12/15/2022 | 3.000% | 4,000,000 | 4,496,840 | |
Total | 11,129,418 | |||
Home Construction 0.4% | ||||
SunPower Corp. | ||||
01/15/2023 | 4.000% | 7,500,000 | 6,274,687 | |
Independent Energy 0.5% | ||||
Chesapeake Energy Corp.(e) | ||||
09/15/2026 | 5.500% | 9,400,000 | 8,569,388 | |
Chesapeake Energy Corp. | ||||
12/15/2038 | 2.250% | 10,000 | 9,712 | |
Total | 8,579,100 | |||
Media and Entertainment 0.2% | ||||
Liberty Interactive LLC(e) | ||||
09/30/2046 | 1.750% | 3,600,000 | 4,155,750 |
Convertible Bonds (continued) | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Oil Field Services 0.4% | ||||
Bristow Group, Inc. | ||||
06/01/2023 | 4.500% | 4,100,000 | 4,522,812 | |
Cobalt International Energy, Inc.(f) | ||||
12/01/2019 | 0.000% | 6,400,000 | 1,696,013 | |
Total | 6,218,825 | |||
Other Financial Institutions 0.3% | ||||
Encore Capital Group, Inc.(e) | ||||
03/15/2022 | 3.250% | 4,050,000 | 4,523,344 | |
Walter Investment Management Corp.(f) | ||||
11/01/2019 | 0.000% | 3,340,000 | 334,000 | |
Total | 4,857,344 | |||
Other Industry 0.2% | ||||
Green Plains, Inc. | ||||
09/01/2022 | 4.125% | 4,500,000 | 4,232,813 | |
Other REIT 0.9% | ||||
Blackstone Mortgage Trust, Inc. | ||||
05/05/2022 | 4.375% | 4,800,000 | 4,869,000 | |
IH Merger Sub LLC(e) | ||||
01/15/2022 | 3.500% | 5,300,000 | 6,154,625 | |
New York Mortgage Trust, Inc. | ||||
01/15/2022 | 6.250% | 4,000,000 | 4,075,000 | |
Total | 15,098,625 | |||
Pharmaceuticals 2.3% | ||||
Acorda Therapeutics, Inc. | ||||
06/15/2021 | 1.750% | 4,800,000 | 4,065,000 | |
Aegerion Pharmaceuticals, Inc. | ||||
08/15/2019 | 2.000% | 5,000,000 | 3,975,390 | |
Clovis Oncology, Inc. | ||||
09/15/2021 | 2.500% | 3,000,000 | 4,036,875 | |
Dermira, Inc.(e) | ||||
05/15/2022 | 3.000% | 3,800,000 | 4,187,125 | |
Fluidigm Corp. | ||||
02/01/2034 | 2.750% | 5,300,000 | 4,346,991 | |
Innoviva, Inc. | ||||
Subordinated | ||||
01/15/2023 | 2.125% | 4,250,000 | 4,248,428 | |
Intercept Pharmaceuticals, Inc. | ||||
07/01/2023 | 3.250% | 7,500,000 | 5,962,500 | |
PTC Therapeutics, Inc. | ||||
08/15/2022 | 3.000% | 4,300,000 | 3,289,500 |
Tri-Continental Corporation | Annual Report 2017 | 9 |
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December 31, 2017
Convertible Bonds (continued) | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Radius Health, Inc. | ||||
09/01/2024 | 3.000% | 4,800,000 | 4,515,000 | |
Total | 38,626,809 | |||
Property & Casualty 0.8% | ||||
Heritage Insurance Holdings, Inc.(e) | ||||
08/01/2037 | 5.875% | 3,800,000 | 5,068,250 | |
MGIC Investment Corp.(e),(g) | ||||
Junior Subordinated | ||||
04/01/2063 | 9.000% | 6,000,000 | 8,235,000 | |
Total | 13,303,250 | |||
Retailers 0.1% | ||||
GNC Holdings, Inc. | ||||
08/15/2020 | 1.500% | 3,000,000 | 1,291,875 | |
Technology 0.9% | ||||
Microchip Technology, Inc.(e) | ||||
Junior Subordinated | ||||
02/15/2037 | 2.250% | 6,700,000 | 7,895,950 | |
Micron Technology, Inc. | ||||
02/15/2033 | 2.125% | 1,800,000 | 6,753,375 | |
Total | 14,649,325 | |||
Transportation Services 0.4% | ||||
Aegean Marine Petroleum Network, Inc.(e) | ||||
12/15/2021 | 4.250% | 5,800,000 | 4,034,625 | |
Ship Finance International Ltd. | ||||
10/15/2021 | 5.750% | 2,703,000 | 2,873,627 | |
Total | 6,908,252 | |||
Total Convertible Bonds (Cost $158,088,103) | 151,335,034 |
Convertible Preferred Stocks 6.8% | |||
Issuer | Coupon Rate | Shares | Value ($) |
Consumer Staples 0.5% | |||
Food Products 0.5% | |||
Bunge Ltd. | 4.875% | 80,000 | 8,334,160 |
Total Consumer Staples | 8,334,160 | ||
Energy 0.7% | |||
Oil, Gas & Consumable Fuels 0.7% | |||
Hess Corp. | 8.000% | 112,500 | 6,511,500 |
WPX Energy, Inc. | 6.250% | 80,000 | 4,948,000 |
Total | 11,459,500 | ||
Total Energy | 11,459,500 |
Convertible Preferred Stocks (continued) | |||
Issuer | Coupon Rate | Shares | Value ($) |
Financials 1.7% | |||
Banks 1.0% | |||
Bank of America Corp. | 7.250% | 6,100 | 8,045,900 |
Wells Fargo & Co. | 7.500% | 6,000 | 7,859,940 |
Total | 15,905,840 | ||
Capital Markets 0.7% | |||
AMG Capital Trust II | 5.150% | 130,000 | 8,214,375 |
Cowen, Inc. | 5.625% | 5,000 | 4,028,350 |
Total | 12,242,725 | ||
Total Financials | 28,148,565 | ||
Health Care 1.4% | |||
Health Care Equipment & Supplies 0.5% | |||
Becton Dickinson and Co. | 6.125% | 150,000 | 8,685,000 |
Health Care Providers & Services 0.5% | |||
Anthem, Inc. | 5.250% | 150,000 | 8,400,000 |
Pharmaceuticals 0.4% | |||
Allergan PLC | 5.500% | 10,400 | 6,097,000 |
Total Health Care | 23,182,000 | ||
Industrials 0.6% | |||
Machinery 0.6% | |||
Rexnord Corp. | 5.750% | 72,500 | 4,231,825 |
Stanley Black & Decker, Inc. | 5.375% | 52,500 | 6,444,375 |
Total | 10,676,200 | ||
Total Industrials | 10,676,200 | ||
Information Technology 0.7% | |||
Electronic Equipment, Instruments & Components 0.5% | |||
Belden, Inc. | 6.750% | 75,000 | 7,728,750 |
Internet Software & Services 0.2% | |||
Mandatory Exchangeable Trust(e) | 5.750% | 20,000 | 3,895,200 |
Total Information Technology | 11,623,950 | ||
Materials 0.2% | |||
Chemicals 0.2% | |||
A. Schulman, Inc. | 6.000% | 4,500 | 4,189,365 |
Total Materials | 4,189,365 |
10 | Tri-Continental Corporation | Annual Report 2017 |
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December 31, 2017
Convertible Preferred Stocks (continued) | |||
Issuer | Coupon Rate | Shares | Value ($) |
Real Estate 0.5% | |||
Equity Real Estate Investment Trusts (REITS) 0.5% | |||
Crown Castle International Corp. | 6.875% | 7,200 | 8,140,860 |
Total Real Estate | 8,140,860 | ||
Utilities 0.5% | |||
Multi-Utilities 0.5% | |||
DTE Energy Co. | 6.500% | 155,000 | 8,363,800 |
Total Utilities | 8,363,800 | ||
Total Convertible Preferred Stocks (Cost $113,081,851) | 114,118,400 |
Corporate Bonds & Notes 13.0% | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Automotive 0.4% | ||||
Navistar International Corp.(e) | ||||
11/01/2025 | 6.625% | 7,100,000 | 7,406,741 | |
Banking 0.4% | ||||
Popular, Inc. | ||||
07/01/2019 | 7.000% | 7,000,000 | 7,260,407 | |
Brokerage/Asset Managers/Exchanges 0.5% | ||||
LPL Holdings, Inc.(e) | ||||
09/15/2025 | 5.750% | 7,900,000 | 8,050,843 | |
Cable and Satellite 0.9% | ||||
Charter Communications Operating LLC/Capital | ||||
10/23/2045 | 6.484% | 7,200,000 | 8,432,914 | |
Telesat Canada/LLC(e) | ||||
11/15/2024 | 8.875% | 5,360,000 | 5,983,877 | |
Total | 14,416,791 | |||
Chemicals 0.2% | ||||
A. Schulman, Inc. | ||||
06/01/2023 | 6.875% | 3,900,000 | 4,054,947 | |
Consumer Products 0.2% | ||||
Mattel, Inc.(e) | ||||
12/31/2025 | 6.750% | 3,992,000 | 4,041,449 | |
Electric 0.5% | ||||
Covanta Holding Corp. | ||||
07/01/2025 | 5.875% | 8,323,000 | 8,371,839 | |
Finance Companies 0.9% | ||||
Fortress Transportation & Infrastructure Investors LLC(e) | ||||
03/15/2022 | 6.750% | 5,850,000 | 6,078,442 |
Corporate Bonds & Notes (continued) | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
iStar, Inc. | ||||
04/01/2022 | 6.000% | 7,743,000 | 8,033,146 | |
Total | 14,111,588 | |||
Food and Beverage 0.5% | ||||
Chobani LLC/Finance Corp., Inc.(e) | ||||
04/15/2025 | 7.500% | 3,897,000 | 4,138,630 | |
Lamb Weston Holdings, Inc.(e) | ||||
11/01/2026 | 4.875% | 3,900,000 | 4,070,956 | |
Total | 8,209,586 | |||
Health Care 0.5% | ||||
Quotient Ltd.(c),(d),(e) | ||||
10/15/2023 | 12.000% | 2,170,000 | 2,170,000 | |
Surgery Center Holdings, Inc.(e) | ||||
07/01/2025 | 6.750% | 6,800,000 | 6,419,540 | |
Total | 8,589,540 | |||
Healthcare Insurance 0.5% | ||||
Centene Corp. | ||||
01/15/2025 | 4.750% | 8,155,000 | 8,283,792 | |
Independent Energy 0.6% | ||||
Extraction Oil & Gas, Inc.(e) | ||||
05/15/2024 | 7.375% | 3,994,000 | 4,253,610 | |
Stone Energy Corp. | ||||
05/31/2022 | 7.500% | 6,136,177 | 6,119,063 | |
Total | 10,372,673 | |||
Media and Entertainment 0.5% | ||||
Lions Gate Entertainment Corp.(e) | ||||
11/01/2024 | 5.875% | 7,750,000 | 8,208,474 | |
Metals and Mining 1.0% | ||||
CONSOL Energy, Inc.(e) | ||||
11/15/2025 | 11.000% | 4,200,000 | 4,413,671 | |
Constellium NV(e) | ||||
03/01/2025 | 6.625% | 8,000,000 | 8,402,712 | |
Warrior Met Coal, Inc.(e) | ||||
11/01/2024 | 8.000% | 4,000,000 | 4,133,148 | |
Total | 16,949,531 | |||
Midstream 0.3% | ||||
Summit Midstream Partners LP(g) | ||||
Junior Subordinated | ||||
12/31/2049 | 9.500% | 4,200,000 | 4,234,768 | |
Oil Field Services 0.3% | ||||
SESI LLC(e) | ||||
09/15/2024 | 7.750% | 4,100,000 | 4,346,578 |
Tri-Continental Corporation | Annual Report 2017 | 11 |
Table of Contents
December 31, 2017
Corporate Bonds & Notes (continued) | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Packaging 1.0% | ||||
BWAY Holding Co.(e) | ||||
04/15/2025 | 7.250% | 8,000,000 | 8,267,648 | |
Novolex (e) | ||||
01/15/2025 | 6.875% | 7,890,000 | 8,167,610 | |
Total | 16,435,258 | |||
Pharmaceuticals 1.2% | ||||
AMAG Pharmaceuticals, Inc.(e) | ||||
09/01/2023 | 7.875% | 8,150,000 | 7,949,159 | |
Horizon Pharma, Inc.(e) | ||||
11/01/2024 | 8.750% | 3,900,000 | 4,119,094 | |
Valeant Pharmaceuticals International, Inc.(e) | ||||
03/01/2023 | 5.500% | 9,400,000 | 8,651,563 | |
Total | 20,719,816 | |||
Retailers 0.1% | ||||
Rite Aid Corp. | ||||
Junior Subordinated | ||||
02/15/2027 | 7.700% | 1,937,000 | 1,647,620 | |
Supermarkets 0.4% | ||||
Safeway, Inc. | ||||
02/01/2031 | 7.250% | 7,512,000 | 6,416,450 | |
Technology 1.0% | ||||
Diebold, Inc. | ||||
04/15/2024 | 8.500% | 7,700,000 | 8,189,928 | |
Genesys Telecommunications Laboratories, Inc./Greeneden Lux 3 Sarl/U.S. Holdings I LLC(e) | ||||
11/30/2024 | 10.000% | 3,750,000 | 4,097,051 | |
Informatica LLC(e) | ||||
07/15/2023 | 7.125% | 4,188,000 | 4,293,651 | |
Total | 16,580,630 | |||
Transportation Services 0.6% | ||||
Hertz Corp. (The)(e) | ||||
06/01/2022 | 7.625% | 4,250,000 | 4,476,793 | |
Hertz Corp. (The) | ||||
10/15/2022 | 6.250% | 6,200,000 | 5,992,957 | |
Total | 10,469,750 | |||
Wirelines 0.5% | ||||
Frontier Communications Corp. | ||||
01/15/2025 | 6.875% | 1,130,000 | 730,015 | |
09/15/2025 | 11.000% | 10,360,000 | 7,619,894 | |
Total | 8,349,909 | |||
Total Corporate Bonds & Notes (Cost $215,273,835) | 217,528,980 |
Limited Partnerships 0.9% | ||
Issuer | Shares | Value ($) |
Energy 0.2% | ||
Oil, Gas & Consumable Fuels 0.2% | ||
Enviva Partners LP | 145,000 | 4,009,250 |
Total Energy | 4,009,250 | |
Industrials 0.3% | ||
Trading Companies & Distributors 0.3% | ||
Fortress Transportation & Infrastructure Investors LLC | 225,000 | 4,484,250 |
Total Industrials | 4,484,250 | |
Utilities 0.4% | ||
Independent Power and Renewable Electricity Producers 0.4% | ||
8Point3 Energy Partners LP | 400,000 | 6,084,000 |
Total Utilities | 6,084,000 | |
Total Limited Partnerships (Cost $14,841,612) | 14,577,500 |
Preferred Debt 0.6% | ||||
Issuer | Coupon Rate | Shares | Value ($) | |
Banking 0.4% | ||||
Citigroup Capital XIII(g) | ||||
10/30/2040 | 7.875% | 220,000 | 6,045,600 | |
Finance Companies 0.2% | ||||
GMAC Capital Trust I(g) | ||||
02/15/2040 | 7.201% | 160,000 | 4,152,000 | |
Total Preferred Debt (Cost $9,796,866) | 10,197,600 |
Senior Loans 1.1% | ||||
Borrower | Weighted Average Coupon | Principal Amount ($) | Value ($) | |
Food and Beverage 0.2% | ||||
HLF Financing SARL(h),(i) | ||||
Term Loan | ||||
3-month USD LIBOR + 5.500% 02/15/2023 | 3,775,000 | 3,762,014 | ||
Metals and Mining 0.1% | ||||
CONSOL Energy, Inc.(h),(i) | ||||
Tranche B Term Loan | ||||
3-month USD LIBOR + 6.000% 11/28/2022 | 2,100,000 | 2,122,743 |
12 | Tri-Continental Corporation | Annual Report 2017 |
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December 31, 2017
Senior Loans (continued) | ||||
Borrower | Weighted Average Coupon | Principal Amount ($) | Value ($) | |
Oil Field Services 0.5% | ||||
EagleClaw Midstream Ventures(h),(i) | ||||
Term Loan | ||||
3-month USD LIBOR + 4.250% 06/24/2024 | 5.729% | 7,963,980 | 7,988,907 | |
Retailers 0.3% | ||||
BJ’s Wholesale Club, Inc.(h),(i) | ||||
2nd Lien Term Loan | ||||
3-month USD LIBOR + 4.000% 02/03/2025 | 4,108,000 | 4,000,165 | ||
Total Senior Loans (Cost $17,872,440) | 17,873,829 |
Warrants —% | ||
Issuer | Shares | Value ($) |
Energy —% | ||
Oil, Gas & Consumable Fuels —% | ||
Goodrich Petroleum Corp.(a),(c),(d),(j) | 11,283 | 0 |
Total Energy | 0 | |
Total Warrants (Cost $—) | 0 | |
Money Market Funds 1.0% | ||
Shares | Value ($) | |
Columbia Short-Term Cash Fund, 1.350%(k),(l) | 13,847,965 | 13,847,965 |
JPMorgan U.S. Government Money Market Fund, Agency Shares, 1.090%(k) | 3,597,022 | 3,597,022 |
Total Money Market Funds (Cost $17,443,945) | 17,444,987 | |
Total Investments (Cost: $1,537,957,702) | 1,667,499,659 | |
Other Assets & Liabilities, Net | 7,690,599 | |
Net Assets | 1,675,190,258 |
Long futures contracts | ||||||
Description | Number of contracts | Expiration date | Trading currency | Notional amount | Value/Unrealized appreciation ($) | Value/Unrealized depreciation ($) |
S&P 500 E-mini | 56 | 03/2018 | USD | 7,492,800 | 60,588 | — |
S&P 500 E-mini | 56 | 03/2018 | USD | 7,492,800 | — | (48,439) |
Total | 60,588 | (48,439) |
(a) | Non-income producing investment. |
(b) | This security or a portion of this security has been pledged as collateral in connection with derivative contracts. |
(c) | Represents fair value as determined in good faith under procedures approved by the Board of Trustees. At December 31, 2017, the value of these securities amounted to $2,170,004, which represents 0.13% of net assets. |
(d) | Valuation based on significant unobservable inputs. |
(e) | Represents privately placed and other securities and instruments exempt from SEC registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Directors. At December 31, 2017, the value of these securities amounted to $193,357,337, which represents 11.54% of net assets. |
(f) | Represents securities that have defaulted on payment of interest. The Fund has stopped accruing interest on these securities. At December 31, 2017, the value of these securities amounted to $2,030,013, which represents 0.12% of net assets. |
Tri-Continental Corporation | Annual Report 2017 | 13 |
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December 31, 2017
(g) | Represents a step bond where the coupon rate adjusts according to a schedule for a series of periods, typically lower for an initial period and then increasing to a higher coupon rate thereafter. |
(h) | Senior loans have interest rates that float periodically based primarily on the London Interbank Offered Rate (“LIBOR”) and other short-term rates. The interest rate shown reflects the weighted average coupon as of December 31, 2017. The interest rate for senior loans purchased on a when-issued or delayed delivery basis will be determined upon settlement therefore no weighted average coupon rate is disclosed. Remaining maturities of senior loans may be less than the stated maturities shown as a result of contractual or optional prepayments by the borrower. Such prepayments cannot be predicted. |
(i) | Variable rate security. |
(j) | Negligible market value. |
(k) | The rate shown is the seven-day current annualized yield at December 31, 2017. |
(l) | As defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and transactions in these affiliated companies during the year ended December 31, 2017 are as follows: |
Issuer | Beginning shares | Shares purchased | Shares sold | Ending shares | Realized gain (loss) — affiliated issuers ($) | Net change in unrealized appreciation (depreciation) — affiliated issuers ($) | Dividends — affiliated issuers ($) | Value — affiliated issuers at end of period ($) |
Columbia Short-Term Cash Fund, 1.350% | ||||||||
4,250,122 | 127,293,107 | (117,695,264) | 13,847,965 | 584 | 1,094 | 56,409 | 13,847,965 |
ADR | American Depositary Receipt |
USD | US Dollar |
¦ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. |
¦ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
¦ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
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Under the direction of the Fund’s Board of Directors (the Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
Level 1 quoted prices in active markets for identical assets ($) | Level 2 other significant observable inputs ($) | Level 3 significant unobservable inputs ($) | Investments measured at net asset value ($) | Total ($) | |
Investments | |||||
Common Stocks | |||||
Consumer Discretionary | 123,739,181 | — | — | — | 123,739,181 |
Consumer Staples | 100,482,566 | — | — | — | 100,482,566 |
Energy | 67,291,826 | — | 4 | — | 67,291,830 |
Financials | 184,653,567 | — | — | — | 184,653,567 |
Health Care | 141,791,263 | — | — | — | 141,791,263 |
Industrials | 102,400,835 | — | — | — | 102,400,835 |
Information Technology | 261,697,284 | — | — | — | 261,697,284 |
Materials | 35,589,267 | — | — | — | 35,589,267 |
Real Estate | 36,544,209 | — | — | — | 36,544,209 |
Telecommunication Services | 23,265,792 | — | — | — | 23,265,792 |
Utilities | 46,967,535 | — | — | — | 46,967,535 |
Total Common Stocks | 1,124,423,325 | — | 4 | — | 1,124,423,329 |
Convertible Bonds | — | 151,335,034 | — | — | 151,335,034 |
Convertible Preferred Stocks | |||||
Consumer Staples | — | 8,334,160 | — | — | 8,334,160 |
Energy | 11,459,500 | — | — | — | 11,459,500 |
Financials | 15,905,840 | 12,242,725 | — | — | 28,148,565 |
Health Care | 23,182,000 | — | — | — | 23,182,000 |
Industrials | 10,676,200 | — | — | — | 10,676,200 |
Information Technology | 7,728,750 | 3,895,200 | — | — | 11,623,950 |
Materials | — | 4,189,365 | — | — | 4,189,365 |
Real Estate | 8,140,860 | — | — | — | 8,140,860 |
Utilities | 8,363,800 | — | — | — | 8,363,800 |
Total Convertible Preferred Stocks | 85,456,950 | 28,661,450 | — | — | 114,118,400 |
Corporate Bonds & Notes | — | 215,358,980 | 2,170,000 | — | 217,528,980 |
Limited Partnerships | |||||
Energy | 4,009,250 | — | — | — | 4,009,250 |
Industrials | 4,484,250 | — | — | — | 4,484,250 |
Utilities | 6,084,000 | — | — | — | 6,084,000 |
Total Limited Partnerships | 14,577,500 | — | — | — | 14,577,500 |
Preferred Debt | 10,197,600 | — | — | — | 10,197,600 |
Senior Loans | — | 17,873,829 | — | — | 17,873,829 |
Tri-Continental Corporation | Annual Report 2017 | 15 |
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December 31, 2017
Level 1 quoted prices in active markets for identical assets ($) | Level 2 other significant observable inputs ($) | Level 3 significant unobservable inputs ($) | Investments measured at net asset value ($) | Total ($) | |
Warrants | |||||
Energy | — | — | 0* | — | 0* |
Money Market Funds | 3,597,022 | — | — | 13,847,965 | 17,444,987 |
Total Investments | 1,238,252,397 | 413,229,293 | 2,170,004 | 13,847,965 | 1,667,499,659 |
Derivatives | |||||
Asset | |||||
Futures Contracts | 60,588 | — | — | — | 60,588 |
Liability | |||||
Futures Contracts | (48,439) | — | — | — | (48,439) |
Total | 1,238,264,546 | 413,229,293 | 2,170,004 | 13,847,965 | 1,667,511,808 |
* | Rounds to zero. |
16 | Tri-Continental Corporation | Annual Report 2017 |
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December 31, 2017
Assets | |
Investments in unaffiliated issuers, at cost | $1,524,110,779 |
Investments in affiliated issuers, at cost | 13,846,923 |
Investments in unaffiliated issuers, at value | 1,653,651,694 |
Investments in affiliated issuers, at value | 13,847,965 |
Receivable for: | |
Investments sold | 1,867,280 |
Dividends | 2,066,642 |
Interest | 5,860,306 |
Foreign tax reclaims | 9,660 |
Prepaid expenses | 67,232 |
Other assets | 43,681 |
Total assets | 1,677,414,460 |
Liabilities | |
Payable for: | |
Common Stock payable | 1,302,549 |
Preferred Stock dividends | 470,463 |
Variation margin for futures contracts | 75,599 |
Management services fees | 18,795 |
Stockholder servicing and transfer agent fees | 12,190 |
Compensation of board members | 160,874 |
Stockholders’ meeting fees | 12,066 |
Compensation of chief compliance officer | 332 |
Other expenses | 171,334 |
Total liabilities | 2,224,202 |
Net assets | $1,675,190,258 |
Preferred Stock | 37,637,000 |
Net assets for Common Stock | 1,637,553,258 |
Net asset value per share of outstanding Common Stock | $29.88 |
Market price per share of Common Stock | $26.94 |
Tri-Continental Corporation | Annual Report 2017 | 17 |
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December 31, 2017
Capital Stock | |
$2.50 Cumulative Preferred Stock, $50 par value, assets coverage per share $2,225 | |
Shares issued and outstanding — 752,740 | $37,637,000 |
Common Stock, $0.50 par value: | |
Shares issued and outstanding — 54,808,142 | 27,404,071 |
Surplus | |
Capital surplus | 1,472,305,476 |
Excess of distributions over net investment income | (1,472,724) |
Accumulated net realized gain | 9,762,329 |
Unrealized appreciation (depreciation) on: | |
Investments — unaffiliated issuers | 129,540,915 |
Investments — affiliated issuers | 1,042 |
Futures contracts | 12,149 |
Net assets | 1,675,190,258 |
18 | Tri-Continental Corporation | Annual Report 2017 |
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Year Ended December 31, 2017
Net investment income | |
Income: | |
Dividends — unaffiliated issuers | $38,023,029 |
Dividends — affiliated issuers | 56,409 |
Interest | 21,244,478 |
Foreign taxes withheld | (35,019) |
Total income | 59,288,897 |
Expenses: | |
Management services fees | 6,506,899 |
Stockholder servicing and transfer agent fees | 584,152 |
Compensation of board members | 83,121 |
Custodian fees | 22,780 |
Printing and postage fees | 106,708 |
Stockholders’ meeting fees | 60,425 |
Audit fees | 43,458 |
Legal fees | 20,430 |
Compensation of chief compliance officer | 313 |
Other | 240,805 |
Total expenses | 7,669,091 |
Net investment income(a) | 51,619,806 |
Realized and unrealized gain (loss) — net | |
Net realized gain (loss) on: | |
Investments — unaffiliated issuers | 181,692,719 |
Investments — affiliated issuers | 584 |
Foreign currency translations | 1,906 |
Futures contracts | 900,403 |
Net realized gain | 182,595,612 |
Net change in unrealized appreciation (depreciation) on: | |
Investments — unaffiliated issuers | 46,664,154 |
Investments — affiliated issuers | 1,094 |
Futures contracts | 77,777 |
Net change in unrealized appreciation (depreciation) | 46,743,025 |
Net realized and unrealized gain | 229,338,637 |
Net increase in net assets resulting from operations | $280,958,443 |
(a) | Net investment income for Common Stock is $49,737,956, which is net of Preferred Stock dividends of $1,881,850. |
Tri-Continental Corporation | Annual Report 2017 | 19 |
Table of Contents
Year Ended December 31, 2017 | Year Ended December 31, 2016 | |
Operations | ||
Net investment income | $51,619,806 | $51,948,388 |
Net realized gain | 182,595,612 | 33,777,222 |
Net change in unrealized appreciation (depreciation) | 46,743,025 | 99,696,778 |
Net increase in net assets resulting from operations | 280,958,443 | 185,422,388 |
Distributions to stockholders | ||
Net investment income | ||
Preferred Stock | (1,881,850) | (1,881,850) |
Common Stock | (59,435,096) | (52,298,343) |
Net realized gains | ||
Common Stock | (5,188,617) | — |
Total distributions to stockholders | (66,505,563) | (54,180,193) |
Decrease in net assets from capital stock activity | (47,742,610) | (43,111,564) |
Total increase in net assets | 166,710,270 | 88,130,631 |
Net assets at beginning of year | 1,508,479,988 | 1,420,349,357 |
Net assets at end of year | $1,675,190,258 | $1,508,479,988 |
Undistributed (excess of distributions over) net investment income | $(1,472,724) | $2,500,556 |
Year Ended | Year Ended | |||
December 31, 2017 | December 31, 2016 | |||
Shares | Dollars ($) | Shares | Dollars ($) | |
Capital stock activity | ||||
Common Stock issued at market price in distributions | 811,797 | 20,317,190 | 728,911 | 15,011,568 |
Common Stock issued for investment plan purchases | 75,986 | 1,801,761 | 86,267 | 1,697,112 |
Common Stock purchased from investment plan participants | (768,195) | (18,577,483) | (826,163) | (16,964,540) |
Common Stock purchased in the open market | (2,070,003) | (51,284,146) | (2,087,713) | (42,855,704) |
Net proceeds from issuance of shares of Common Stock upon exercise of warrants | 73 | 68 | — | — |
Total net decrease | (1,950,342) | (47,742,610) | (2,098,698) | (43,111,564) |
20 | Tri-Continental Corporation | Annual Report 2017 |
Table of Contents
Year ended December 31, | |||||
2017 | 2016 | 2015 | 2014 | 2013 | |
Per share data | |||||
Net asset value, beginning of period | $25.91 | $23.49 | $24.76 | $23.11 | $18.77 |
Income from investment operations: | |||||
Net investment income | 0.93 | 0.90 | 0.81 | 0.73 | 0.69 |
Net realized and unrealized gain (loss) | 4.24 | 2.33 | (1.37) | 1.70 | 4.36 |
Total from investment operations | 5.17 | 3.23 | (0.56) | 2.43 | 5.05 |
Less distributions to Stockholders from: | |||||
Net investment income — Preferred Stock | (0.03) | (0.03) | (0.03) | (0.03) | (0.03) |
Net investment income — Common Stock | (1.07) | (0.91) | (0.81) | (0.75) | (0.68) |
Net realized gains — Common Stock | (0.10) | — | — | — | — |
Total distributions to Stockholders | (1.20) | (0.94) | (0.84) | (0.78) | (0.71) |
Dilution in net asset value from dividend reinvestment | — | (0.06) | (0.05) | — | — |
Increase resulting from share repurchases | — | 0.19 | 0.18 | — | — |
Net asset value, end of period | $29.88 | $25.91 | $23.49 | $24.76 | $23.11 |
Adjusted net asset value, end of period(a) | $29.77 | $25.83 | $23.42 | $24.68 | $23.04 |
Market price, end of period | $26.94 | $22.05 | $20.02 | $21.41 | $19.98 |
Total return | |||||
Based upon net asset value | 20.82% | 15.25% | (1.36%) | 11.09% | 27.76% |
Based upon market price | 28.00% | 15.08% | (2.78%) | 11.11% | 29.58% |
Ratios to average net assets | |||||
Expenses to average net assets for Common Stock(b) | 0.49% | 0.50% | 0.50% | 0.49% | 0.50% |
Net investment income to average net assets for Common Stock | 3.21% | 3.59% | 3.16% | 2.91% | 3.12% |
Supplemental data | |||||
Net assets, end of period (000’s): | |||||
Common Stock | $1,637,553 | $1,470,843 | $1,382,712 | $1,511,285 | $1,435,734 |
Preferred Stock | $37,637 | $37,637 | $37,637 | $37,637 | $37,637 |
Total net assets | $1,675,190 | $1,508,480 | $1,420,349 | $1,548,922 | $1,473,371 |
Portfolio turnover | 95% | 82% | 76% | 76% | 62% |
Notes to Financial Highlights | |
(a) | Assumes the exercise of outstanding warrants. |
(b) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
Tri-Continental Corporation | Annual Report 2017 | 21 |
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December 31, 2017
22 | Tri-Continental Corporation | Annual Report 2017 |
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December 31, 2017
Tri-Continental Corporation | Annual Report 2017 | 23 |
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December 31, 2017
24 | Tri-Continental Corporation | Annual Report 2017 |
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December 31, 2017
Asset derivatives | ||
Risk exposure category | Statement of capital stock and surplus location | Fair value ($) |
Equity risk | Surplus — unrealized appreciation on futures contracts | 60,588* |
Liability derivatives | ||
Risk exposure category | Statement of capital stock and surplus location | Fair value ($) |
Equity risk | Surplus — unrealized depreciation on futures contracts | 48,439* |
* | Includes cumulative appreciation (depreciation) as reported in the tables following the Portfolio of Investments. Only the current day’s variation margin is reported in receivables or payables in the Statement of Assets and Liabilities. |
Amount of realized gain (loss) on derivatives recognized in income | |
Risk exposure category | Futures contracts ($) |
Equity risk | 900,403 |
Change in unrealized appreciation (depreciation) on derivatives recognized in income | |
Risk exposure category | Futures contracts ($) |
Equity risk | 77,777 |
Derivative instrument | Average notional amounts ($)* |
Futures contracts — long | 8,908,864 |
* | Based on the ending quarterly outstanding amounts for the year ended December 31, 2017. |
Tri-Continental Corporation | Annual Report 2017 | 25 |
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December 31, 2017
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Excess of distributions over net investment income ($) | Accumulated net realized gain ($) | Paid in capital ($) |
5,723,860 | (5,539,348) | (184,512) |
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December 31, 2017
December 31, 2017 | December 31, 2016 | ||||
Ordinary income ($) | Long-term capital gains ($) | Total ($) | Ordinary income ($) | Long-term capital gains ($) | Total ($) |
61,316,946 | 5,188,617 | 66,505,563 | 54,180,193 | — | 54,180,193 |
Undistributed ordinary income ($) | Undistributed long-term capital gains ($) | Capital loss carryforwards ($) | Net unrealized appreciation ($) |
45,397 | 12,719,393 | — | 125,508,466 |
Federal tax cost ($) | Gross unrealized appreciation ($) | Gross unrealized (depreciation) ($) | Net unrealized appreciation ($) |
1,542,003,342 | 172,532,400 | (47,023,934) | 125,508,466 |
2018 ($) | 2019 ($) | No expiration short-term ($) | No expiration long-term ($) | Total ($) | Utilized ($) | Expired ($) | Permanently lost ($) |
— | — | — | — | — | 159,807,480 | — | — |
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(Unaudited)
Qualified dividend income | Dividends received deduction | Capital gain dividend |
52.06% | 48.84% | $18,803,411 |
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Name, Address, Year of Birth | Position Held With the Fund and Length of Service | Principal Occupation(s) During the Past Five Years and Other Relevant Professional Experience | Number of Funds in the Columbia Funds Complex Overseen | Other Directorships Held by Director During the Past Five Years |
George S. Batejan c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1953 | Director since January 2018 | Executive Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc. 2010-2016 | 125 | Advisory Board Member, University of Colorado Business School since November 2015; former Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro Denver Chamber of Commerce, 2015-2016 |
Kathleen Blatz c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 | Director since November 2008 | Attorney, specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees | 125 | Trustee, BlueCross BluesShield of Minnesota (Chair of the Business Development Committee, 2014-2017) since 2009; Chair of the Robina Foundation since August 2013 |
Edward J. Boudreau, Jr. c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1944 | Director and Chair of the Board since January 2018 | Managing Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988 | 125 | Former Trustee, Boston Museum of Science (Chair of Finance Committee), 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011 |
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Pamela G. Carlton c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1954 | Director since November 2008 | President, Springboard-Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991 | 125 | Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Darien Rowayton Bank (Audit Committee) since 2017 |
William P. Carmichael c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1943 | Director since January 2014 | Retired; Co-founder, The Succession Fund (provides exit strategies to owners of privately held companies), 1998-2007; Adjunct Professor of Finance, Kelley School of Business, Indiana University, 1993-2007; Senior Vice President, Sara Lee Corporation, 1991-1993; Senior Vice President and Chief Financial Officer, Beatrice Foods Company, 1984-1990; Vice President, Esmark, Inc., 1973-1984; Associate, Price Waterhouse, 1968-1972 | 125 | Director, The Finish Line (athletic shoes and apparel) since July 2003; former Director, Cobra Electronics Corporation (electronic equipment manufacturer), 1994-August 2014; former Director, Spectrum Brands, Inc. (consumer products), 2002-2009; former Director, Simmons Company (bedding), 2004-2010; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, McMoRan Exploration Company (oil and gas exploration and development), 2010-2013; former Director, International Textile Corp., 2012-2016; former Director, hhgregg, 2015-2017 |
Patricia M. Flynn c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1950 | Director since November 2008 | Trustee Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean McCallum Graduate School of Business, Bentley University, 1992-2002 | 125 | Trustee, MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010 |
Catherine James Paglia c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1952 | Director since November 2008 | Director, Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc. | 125 | Director, Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee) |
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Minor M. Shaw c/o Columbia Management Investment Advisers, LLC 225 Franklin Street Mail Drop BX32 05228 Boston, MA 02110 1947 | Director since April 2016 | President, Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011 | 125 | Director, BlueCross BlueShield of South Carolina since April 2008; Director, National Association of Corporate Directors, Carolinas Chapter, since 2013; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville - Spartanburg Airport Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016 |
Name, Address, Year of Birth | Position Held With the Fund and Length of Service | Principal Occupation(s) During the Past Five Years and Other Relevant Professional Experience | Number of Funds in theColumbia Funds Complex Overseen | Other Directorships Held by Director During the Past Five Years |
William F. Truscott c/o Columbia Management Investment Advisers, LLC, 225 Franklin St. Boston, MA 02110 1960 | Director and Senior Vice President since November 2008 | Chairman of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; Chief Executive Officer, Global Asset Management, Ameriprise Financial, Inc. since September 2012 (previously Chief Executive Officer, U.S.Asset Management & President, Annuities, May 2010-September 2012); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006; Director, Threadneedle Asset Management Holdings, SARL since 2014; President and Chief Executive Officer, Ameriprise Certificate Company, 2006-August 2012. | 191 | Chairman of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; Former Director, Ameriprise Certificate Company, 2006-January 2013 |
* | Interested person (as defined under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the Investment Manager or Ameriprise Financial. |
investor.columbiathreadneedleus.com.
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Name, address and year of birth | Position and year first appointed to position for any Fund in the Columbia Funds complex or a predecessor thereof | Principal occupation(s) during past five years |
Christopher O. Petersen 5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1970 | President and Principal Executive Officer (2015) | Vice President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously, Vice President and Chief Counsel, January 2010 - December 2014; officer of Columbia Funds and affiliated funds since 2007. |
Michael G. Clarke 225 Franklin Street Boston, MA 02110 Born 1969 | Treasurer (2011), Chief Financial Officer (2009) and Chief Accounting Officer (2015) | Vice President — Mutual Fund Administration, Columbia Management Investment Advisers, LLC, since May 2010; senior officer of Columbia Funds and affiliated funds since 2002. |
Paul B. Goucher 100 Park Avenue New York, NY 10017 Born 1968 | Senior Vice President (2011) and Assistant Secretary (2008) | Senior Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively; and Chief Counsel, January 2010 - January 2013); Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since May 2010. |
Thomas P. McGuire 225 Franklin Street Boston, MA 02110 Born 1972 | Senior Vice President and Chief Compliance Officer (2012) | Vice President — Asset Management Compliance, Ameriprise Financial, Inc., since May 2010; Chief Compliance Officer, Ameriprise Certificate Company since September 2010. |
Colin Moore 225 Franklin Street Boston, MA 02110 Born 1958 | Senior Vice President (2010) | Executive Vice President and Global Chief Investment Officer, Ameriprise Financial, Inc., since July 2013; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013 (previously Director and Global Chief Investment Officer, 2010 - 2013). |
Ryan C. Larrenaga 225 Franklin Street Boston, MA 02110 Born 1970 | Senior Vice President (2017), Chief Legal Officer (2017) and Secretary (2015) | Vice President and Group Counsel, Ameriprise Financial, Inc. since August 2011; officer of Columbia Funds and affiliated funds since 2005. |
Michael E. DeFao 225 Franklin Street Boston, MA 02110 Born 1968 | Vice President (2011) and Assistant Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc. since May 2010. |
Amy Johnson 5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1965 | Vice President (2006) | Managing Director and Global Head of Operations, Columbia Management Investment Advisers, LLC since April 2016 (previously Managing Director and Chief Operating Officer, 2010 - 2016). |
Lyn Kephart-Strong 5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1960 | Vice President (2015) | President, Columbia Management Investment Services Corp. since October 2014; Vice President & Resolution Officer, Ameriprise Trust Company since August 2009. |
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Item 2. | Code of Ethics. |
(a) | The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. |
(b) | During the period covered by this report, there were not any amendments to a provision of the code of ethics adopted in 2(a) above. |
(c) | During the period covered by this report, there were no waivers, including any implicit waivers, from a provision of the code of ethics described in 2(a) above that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
Item 3. | Audit Committee Financial Expert. |
The registrant’s Board of Trustees has determined that Pamela G. Carlton, William P. Carmichael and Catherine James Paglia, each of whom are members of the registrant’s Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Ms. Carlton, Mr. Carmichael and Ms. Paglia are each independent trustees, as defined in paragraph (a)(2) of this item’s instructions.
Item 4. | Principal Accountant Fees and Services. |
Fee information below is disclosed for the one series of the registrant whose report to stockholders is included in this annual filing.
(a) Audit Fees. Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended December 31, 2017 and December 31, 2016 are approximately as follows:
2017 | 2016 | |
$37,400 | $37,000 |
Audit Fees include amounts related to the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
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(b) Audit-Related Fees. Aggregate Audit-Related Fees billed to the registrant by the principal accountant for professional services rendered during the fiscal years ended December 31, 2017 and December 31, 2016 are approximately as follows:
2017 | 2016 | |
$0 | $400 |
Audit-Related Fees include amounts for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported in Audit Fees above. In fiscal year 2016, Audit-Related Fees consist of agreed-upon procedures performed for semi-annual shareholder reports.
During the fiscal years ended December 31, 2017 and December 31, 2016, there were no Audit-Related Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant.
(c) Tax Fees. Aggregate Tax Fees billed by the principal accountant to the registrant for professional services rendered during the fiscal years ended December 31, 2017 and December 31, 2016 are approximately as follows:
2017 | 2016 | |
$6,200 | $4,300 |
Tax Fees include amounts for the review of annual tax returns, the review of required shareholder distribution calculations and typically include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning.
During the fiscal years ended December 31, 2017 and December 31, 2016, there were no Tax Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant.
(d) All Other Fees. Aggregate All Other Fees billed by the principal accountant to the registrant for professional services rendered during the fiscal years ended December 31, 2017 and December 31, 2016 are approximately as follows:
2017 | 2016 | |
$0 | $0 |
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All Other Fees include amounts for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) above.
Aggregate All Other Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant during the fiscal years ended December 31, 2017 and December 31, 2016 are approximately as follows:
2017 | 2016 | |
$225,000 | $225,000 |
In both fiscal years 2017 and 2016, All Other Fees primarily consist of fees billed for internal control examinations of the registrant’s transfer agent and investment advisor.
(e)(1) Audit Committee Pre-Approval Policies and Procedures
The registrant’s Audit Committee is required to pre-approve the engagement of the registrant’s independent auditors to provide audit and non-audit services to the registrant and non-audit services to its investment adviser (excluding any sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser (the “Adviser”) or any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund (a “Control Affiliate”) if the engagement relates directly to the operations and financial reporting of the registrant.
The Audit Committee has adopted a Policy for Engagement of Independent Auditors for Audit and Non-Audit Services (the “Policy”). The Policy sets forth the understanding of the Audit Committee regarding the engagement of the registrant’s independent accountants to provide (i) audit and permissible audit-related, tax and other services to the registrant (“Fund Services”); (ii) non-audit services to the registrant’s Adviser and any Control Affiliates, that relates directly to the operations and financial reporting of a Fund (“Fund-related Adviser Services”); and (iii) certain other audit and non-audit services to the registrant’s Adviser and its Control Affiliates. A service will require specific pre-approval by the Audit Committee if it is to be provided by the Fund’s independent auditor; provided, however, that pre-approval of non-audit services to the Fund, the Adviser or Control Affiliates may be waived if certain de minimis requirements set forth in the SEC’s rules are met.
Under the Policy, the Audit Committee may delegate pre-approval authority to any pre-designated member or members who are independent board members. The member(s) to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next regular meeting. The Audit Committee’s responsibilities with respect to the pre-approval of services performed by the independent auditor may not be delegated to management.
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On an annual basis, at a regularly scheduled Audit Committee meeting, the Fund’s Treasurer or other Fund officer shall submit to the Audit Committee a schedule of the types of Fund Services and Fund-related Adviser Services that are subject to specific pre-approval. This schedule will provide a description of each type of service that is subject to specific pre-approval, along with total projected fees for each service. The pre-approval will generally cover a one-year period. The Audit Committee will review and approve the types of services and the projected fees for the next one-year period and may add to, or subtract from, the list of pre-approved services from time to time, based on subsequent determinations. This specific approval acknowledges that the Audit Committee is in agreement with the specific types of services that the independent auditor will be permitted to perform and the projected fees for each service.
The Fund’s Treasurer or other Fund officer shall report to the Audit Committee at each of its regular meetings regarding all Fund Services or Fund-related Adviser Services provided since the last such report was rendered, including a description of the services, by category, with forecasted fees for the annual reporting period, proposed changes requiring specific pre-approval and a description of services provided by the independent auditor, by category, with actual fees during the current reporting period.
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(e)(2) 100% of the services performed for items (b) through (d) above during 2017 and 2016 were pre-approved by the registrant’s Audit Committee.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for the fiscal years ended December 31, 2017 and December 31, 2016 are approximately as follows:
2017 | 2016 | |
$231,200 | $229,700 |
(h) The registrant’s Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant’s adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal accountant’s independence.
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Item 5. | Audit Committee of Listed Registrants. |
(a) | The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)58)(A) of the Exchange Act (15 U.S.C. 78c(a)(58)(A). Pamela G. Carlton, William P. Carmichael and Catherine James Paglia are each independent trustees and collectively constitute the entire Audit Committee. |
(b) | Not applicable. |
Item 6. | Investments |
(a) | The registrant’s “Schedule I – 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. |
Proxy Voting Policies and Procedures
General. The Funds have delegated to the Investment Manager the responsibility to vote proxies relating to portfolio securities held by the Funds, including Funds managed by subadvisers.
The Investment Manager votes proxies relating to portfolio securities in accordance with a proxy voting policy and pre-determined proxy voting guidelines adopted by the Board. The Funds endeavor to vote all proxies of which they become aware prior to the vote deadline; provided, however, that in certain circumstances the Funds may refrain from voting securities. For instance, the Funds may refrain from voting foreign securities if the costs of voting outweigh the expected benefits of voting and typically will not vote securities if voting would impose trading restrictions.
Board Oversight and Retention of Proxy Voting Authority. The Board may, in its discretion, vote proxies for the Funds. For instance, the Board may determine to vote on matters that may present a material conflict of interest to the Investment Manager.
The Board reviews on an annual basis, or more frequently as determined appropriate, the Investment Manager’s administration of the proxy voting process and its adherence to the approved guidelines.
Voting Guidelines. The Investment Manager and Board will generally vote in accordance with pre-determined voting guidelines adopted by the Board. The voting guidelines indicate whether to vote for, against or abstain from particular proposals, or whether the matter should be considered on a case-by-case basis. A committee within the Investment Manager (the Proxy Voting Committee), which is composed of representatives of the Investment Manager’s equity investments, equity research, compliance, legal and operations functions, may determine to vote differently from the guidelines on particular proposals in the event it determines that doing so is in the clients’ best economic interests. The Board may also determine to vote differently from the guidelines on particular proposals in the event it determines that doing so is appropriate and in the
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Funds’ interests. The Investment Manager and the Board may also consider the voting recommendations of analysts, portfolio managers, subadvisers and information obtained from outside resources, including one or more third party research providers. When proposals are not covered by the voting guidelines or a voting determination must be made on a case-by-case basis, a portfolio manager, subadviser or analyst will make the voting determination based on his or her determination of the clients’ best economic interests. In addition, the Proxy Voting Committee or Board may determine proxy votes when proposals require special consideration.
On an annual basis, or more frequently as determined necessary, the Board reviews recommendations to revise the existing guidelines or add new guidelines. Recommendations are based on, among other things, industry trends and the frequency that similar proposals appear on company ballots.
Addressing Conflicts of Interest. If the Investment Manager is subject to a potential material conflict of interest with respect to a proxy vote, the Board will vote the proxy by administering the guidelines or determining the vote on a case-by-case basis. If the Board determines that its members may be subject to a potential material conflict of interest with respect to a proxy vote, the member is asked to recuse himself or herself from the determination.
Voting Proxies of Affiliated Underlying Funds. Certain Funds may invest in shares of other Columbia Funds (referred to in this context as “underlying funds”) and may own substantial portions of these underlying funds. If such Funds are in a master-feeder structure, the feeder fund will either seek instructions from its shareholders with regard to the voting of proxies with respect to the master fund’s shares and vote such proxies in accordance with such instructions or vote the shares held by it in the same proportion as the vote of all other master fund shareholders. With respect to Funds that hold shares of underlying funds other than in a master-feeder structure, the proxy policy of the Funds is, in general, to ensure that direct public shareholders of underlying funds control the outcome of any shareholder vote. To help manage this potential conflict of interest, the policy of the Funds is to vote proxies of the underlying funds in the same proportion as the vote of the direct public shareholders; provided, however, that if there are no direct public shareholders of an underlying fund or if direct public shareholders represent only a minority interest in an underlying fund, the Fund may cast votes in accordance with instructions from the independent members of the Board.
Proxy Voting Agents. The Investment Manager has retained Institutional Shareholder Services Inc., a third-party vendor, as its proxy voting administrator to implement the Funds’ proxy voting process and to provide recordkeeping and vote disclosure services. The Investment Manager has retained both Institutional Shareholder Services Inc. and Glass-Lewis & Co. to provide proxy research services.
Additional Information. Information regarding how the Columbia Funds (except certain Columbia Funds that do not invest in voting securities) voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 will be available by August 31 of this year free of charge: (i) through the Columbia Funds’ website at www.columbiathreadneedle.com/us and/or (ii) on the SEC’s website at www.sec.gov. For a copy of the voting guidelines in effect on the date of this SAI, see Appendix B to this SAI.
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Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
Portfolio Managers
Portfolio Manager | Title | Role with the Corporation | Managed the Corporation Since | |||
Brian Condon, CFA | Senior Portfolio Manager and Head of Quantitative Strategies | Co-Portfolio Manager | 2010 | |||
Peter Albanese | Senior Portfolio Manager | Co-Portfolio Manager | 2014 | |||
Yan Jin | Senior Portfolio Manager | Co-Portfolio Manager | 2012 | |||
David King, CFA | Senior Portfolio Manager | Co-Portfolio Manager | 2011 |
Mr. Condon joined one of the Columbia Management legacy firms or acquired business lines in 1999. Mr. Condon began his investment career in 1993 and earned a B.A. from Bryant University and an M.S. in finance from Bentley University.
Mr. Albanese joined the Investment Manager in August 2014. Prior to joining the Investment Manager, Mr. Albanese was a Managing Director and Senior Portfolio Manager at Robeco Investment Management. Mr. Albanese began his investment career in 1991 and earned a B.S. from Stony Brook University and an M.B.A. from the Stern School of Business at New York University.
Mr. Jin joined one of the Columbia Management legacy firms or acquired business lines in 2002. Mr. Jin began his investment career in 1998 and earned a M.A. in economics from North Carolina State University.
Mr. King joined the Investment Manager in 2010. Mr. King began his investment career in 1983 and earned a B.S. from the University of New Hampshire and an M.B.A. from Harvard Business School.
Other Accounts Managed by the Portfolio Managers:
Fund | Portfolio | Other Accounts Managed | Performance | Ownership of Fund | ||||||
Number and type of | Approximate (excluding the | |||||||||
For fiscal period ending December 31, 2017, unless otherwise noted | ||||||||||
Tri-Continental Corporation | Brian Condon | 22 RICs 3 PIVs 61 Other accounts | $12.94 billion $140.82 million $6.85 billion | None | $100,001 - $500,000 | |||||
David King | 3 RICs 6 Other accounts | $1.39 billion $26.96 million | None | Over $1,000,000 | ||||||
Yan Jin | 3 RICs 7 Other accounts | $1.39 billion $3.47 million | None | $100,001 - $500,000 | ||||||
Peter Albanese | 16 RICs 3 PIVs 56 Other accounts | $12.88 billion $140.82 million $6.85 billion | None | $100,001 - $500,000 |
Potential Conflicts of Interest:
Like other investment professionals with multiple clients, a Fund’s portfolio manager(s) may face certain potential conflicts of interest in connection with managing both the Fund and other accounts at the same time. The Investment Manager and the Funds have adopted compliance policies and procedures that attempt to address certain of the potential conflicts that portfolio managers face in this regard. Certain of these conflicts of interest are summarized below.
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The management of accounts with different advisory fee rates and/or fee structures, including accounts that pay advisory fees based on account performance (performance fee accounts), may raise potential conflicts of interest for a portfolio manager by creating an incentive to favor higher fee accounts.
Potential conflicts of interest also may arise when a portfolio manager has personal investments in other accounts that may create an incentive to favor those accounts. As a general matter and subject to the Investment Manager’s Code of Ethics and certain limited exceptions, the Investment Manager’s investment professionals do not have the opportunity to invest in client accounts, other than the funds.
A portfolio manager who is responsible for managing multiple funds and/or accounts may devote unequal time and attention to the management of those Funds and/or accounts. The effects of this potential conflict may be more pronounced where Funds and/or accounts managed by a particular portfolio manager have different investment strategies.
A portfolio manager may be able to select or influence the selection of the broker/dealers that are used to execute securities transactions for the Funds. A portfolio manager’s decision as to the selection of broker/dealers could produce disproportionate costs and benefits among the Funds and the other accounts the portfolio manager manages.
A potential conflict of interest may arise when a portfolio manager buys or sells the same securities for a Fund and other accounts. On occasions when a portfolio manager considers the purchase or sale of a security to be in the best interests of a Fund as well as other accounts, the Investment Manager’s trading desk may, to the extent consistent with applicable laws and regulations, aggregate the securities to be sold or bought in order to obtain the best execution and lower brokerage commissions, if any. Aggregation of trades may create the potential for unfairness to a Fund or another account if a portfolio manager favors one account over another in allocating the securities bought or sold. The Investment Manager and its Participating Affiliates (including Threadneedle) may coordinate their trading operations for certain types of securities and transactions pursuant to personnel-sharing agreements or similar intercompany arrangements. However, typically the Investment Manager does not coordinate trading activities with a Participating Affiliate with respect to accounts of that Participating Affiliate unless such Participating Affiliate is also providing trading services for accounts managed by the Investment Manager. Similarly, a Participating Affiliate typically does not coordinate trading activities with the Investment Manager with respect to accounts of the Investment Manager unless the Investment Manager is also providing trading services for accounts managed by such Participating Affiliate. As a result, it is possible that the Investment Manager and its Participating Affiliates may trade in the same instruments at the same time, in the same or opposite direction or in different sequence, which could negatively impact the prices paid by the Fund on such instruments. Additionally, in circumstances where trading services are being provided on a coordinated basis for the Investment Manager’s accounts (including the Funds) and the accounts of one or more Participating Affiliates in accordance with applicable law, it is possible that the allocation opportunities available to the Funds may be decreased, especially for less actively traded securities, or orders may take longer to execute, which may negatively impact Fund performance.
“Cross trades,” in which a portfolio manager sells a particular security held by a Fund to another account (potentially saving transaction costs for both accounts), could involve a potential conflict of interest if, for example, a portfolio manager is permitted to sell a security from one account to another account at a higher price than an independent third party would pay. The Investment Manager and the Funds have adopted compliance procedures that provide that any transactions between a Fund and another account managed by the Investment Manager are to be made at a current market price, consistent with applicable laws and regulations.
Another potential conflict of interest may arise based on the different investment objectives and strategies of a Fund and other accounts managed by its portfolio manager(s). Depending on another account’s objectives and other factors, a portfolio manager may give advice to and make decisions for a Fund that may differ from advice given, or the timing or nature of decisions made, with respect to another account. A portfolio manager’s investment decisions are the product of many factors in addition to basic suitability for the particular account involved. Thus, a portfolio manager may buy or sell a particular security for certain
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accounts, and not for a Fund, even though it could have been bought or sold for the Fund at the same time. A portfolio manager also may buy a particular security for one or more accounts when one or more other accounts are selling the security (including short sales). There may be circumstances when a portfolio manager’s purchases or sales of portfolio securities for one or more accounts may have an adverse effect on other accounts, including the Funds.
To the extent a Fund invests in underlying funds, a portfolio manager will be subject to additional potential conflicts of interest. Because of the structure of funds-of-funds, the potential conflicts of interest for the portfolio managers may be different than the potential conflicts of interest for portfolio managers who manage other Funds. The Investment Manager and its affiliates may receive higher compensation as a result of allocations to underlying funds with higher fees.
A Fund’s portfolio manager(s) also may have other potential conflicts of interest in managing the Fund, and the description above is not a complete description of every conflict that could exist in managing the Fund and other accounts. Many of the potential conflicts of interest to which the Investment Manager’s portfolio managers are subject are essentially the same or similar to the potential conflicts of interest related to the investment management activities of the Investment Manager and its affiliates.
Structure of Compensation:
Portfolio manager direct compensation is typically comprised of a base salary, and an annual incentive award that is paid either in the form of a cash bonus if the size of the award is under a specified threshold, or, if the size of the award is over a specified threshold, the award is paid in a combination of a cash bonus, an equity incentive award, and deferred compensation. Equity incentive awards are made in the form of Ameriprise Financial restricted stock, or for more senior employees both Ameriprise Financial restricted stock and stock options. The investment return credited on deferred compensation is based on the performance of specified Columbia Funds, in most cases including the Columbia Funds the portfolio manager manages.
Base salary is typically determined based on market data relevant to the employee’s position, as well as other factors including internal equity. Base salaries are reviewed annually, and increases are typically given as promotional increases, internal equity adjustments, or market adjustments.
Annual incentive awards are variable and are based on (1) an evaluation of the employee’s investment performance and (2) the results of a peer and/or management review of the employee, which takes into account skills and attributes such as team participation, investment process, communication, and professionalism. Scorecards are used to measure performance of Columbia Funds and other accounts managed by the employee versus benchmarks and/or peer groups. Performance versus benchmark and peer group is generally weighted for the rolling one, three, and five year periods. One year performance is weighted 10%, three year performance is weighted 60%, and five year performance is weighted 30%. Relative asset size is a key determinant for fund weighting on a scorecard. Typically, weighting would be proportional to actual assets. Consideration may also be given to performance in managing client assets in sectors and industries assigned to the employee as part of his/her investment team responsibilities, where applicable. For leaders who also have group management responsibilities, another factor in their evaluation is an assessment of the group’s overall investment performance.
Equity incentive awards are designed to align participants’ interests with those of the shareholders of Ameriprise Financial. Equity incentive awards vest over multiple years, so they help retain employees.
Deferred compensation awards are designed to align participants’ interests with the investors in the Columbia Funds and other accounts they manage. The value of the deferral account is based on the performance of Columbia Funds. Employees have the option of selecting from various Columbia Funds for their deferral account, however portfolio managers must allocate a minimum of 25% of their incentive awarded through the deferral program to the Columbia Fund(s) they manage. Deferrals vest over multiple years, so they help retain employees.
Exceptions to this general approach to bonuses exist for certain teams and individuals. Funding for the bonus pool is determined by management and depends on, among other factors, the levels of compensation generally in the investment management industry taking into account investment performance (based on market compensation data) and both Ameriprise Financial and Columbia Management profitability for the year, which is largely determined by assets under management.
For all employees the benefit programs generally are the same, and are competitive within the financial services industry. Employees participate in a wide variety of plans, including options in Medical, Dental, Vision, Health Care and Dependent Spending Accounts, Life Insurance, Long Term Disability Insurance, 401(k), and a cash balance pension plan.
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Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
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) | ||||||||||||
07-01-17 to 07-31-17 | 264,543 | $ | 24.66 | 264,543 | 1,314,261 | |||||||||||
08-01-17 to 08-31-17 | 279,947 | $ | 24.93 | 279,947 | 1,034,314 | |||||||||||
09-01-17 to 09-30-17 | 147,092 | $ | 25.19 | 147,092 | 887,222 | |||||||||||
10-01-17 to 10-31-17 | 315,427 | $ | 25.87 | 315,427 | 571,795 | |||||||||||
11-01-17 to 11-30-17 | 276,396 | $ | 25.97 | 276,396 | 295,399 | |||||||||||
12-01-17 to 12-31-17 | 274,020 | $ | 26.74 | 274,020 | 21,379 |
(1) The registrant has a stock repurchase program. For 2017, the registrant was 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%. The table reflects trade date + 1, rather than trade date, which is used for financial statement purposes; therefore, shares reflected may vary from capital stock activity presented in the shareholder report.
Item 10. | Submission of Matters to a Vote of Security Holders. |
There were no material changes to the procedures 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 material 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. |
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(b) | There was no change in the registrant’s internal control 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. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies |
Not applicable.
Item 13. | Exhibits. |
(a)(1) Code of ethics required to be disclosed under Item 2 of Form N-CSR attached hereto as Exhibit 99.CODE ETH.
(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) None.
(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/ Christopher O. Petersen | |||||
Christopher O. Petersen, President and Principal Executive Officer | ||||||
Date | February 21, 2018 |
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/ Christopher O. Petersen | |||||
Christopher O. Petersen, President and Principal Executive Officer | ||||||
Date | February 21, 2018 | |||||
By (Signature and Title) | /s/ Michael G. Clarke | |||||
Michael G. Clarke, Treasurer and Chief Financial Officer | ||||||
Date | February 21, 2018 |