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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number811-00266
Tri-Continental Corporation
(Exact name of registrant as specified in charter)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip code)
Christopher O. Petersen
c/o Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, Massachusetts 02110
Ryan C. Larrenaga, Esq.
c/o Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
(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, 2018
FormN-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 Rule30e-1 under the Investment Company Act of 1940 (17 CFR270.30e-1). The Commission may use the information provided on FormN-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by FormN-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in FormN-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, 100 F Street, NE, Washington, DC 20549. 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, 2018
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Average annual total returns (%) (for the period ended December 31, 2018) | |||||
Inception | 1 Year | 5 Years | 10 Years | ||
Market Price | 01/05/29 | -5.88 | 8.41 | 13.26 | |
Net Asset Value | 01/05/29 | -4.10 | 7.91 | 13.11 | |
S&P 500 Index | -4.38 | 8.49 | 13.12 | ||
Blended Benchmark | -4.17 | 6.88 | 11.80 |
Price Per Share | ||||
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | |
Market Price ($) | 23.52 | 27.87 | 26.51 | 26.31 |
Net Asset Value ($) | 26.58 | 31.42 | 29.93 | 29.60 |
Distributions Paid Per Common Share(a) | |
Payable Date | Per Share Amount ($) |
March 29, 2018 | 0.2301 |
June 28, 2018 | 0.4531(b) |
September 27, 2018 | 0.2385 |
December 27, 2018 | 0.9916(c) |
2 | Tri-Continental Corporation | Annual Report 2018 |
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Top 10 holdings (%) (at December 31, 2018) | |
JPMorgan Chase & Co. | 2.0 |
Alphabet, Inc., Class A | 1.8 |
Cisco Systems, Inc. | 1.7 |
Microsoft Corp. | 1.7 |
Boeing Co. (The) | 1.7 |
Verizon Communications, Inc. | 1.6 |
Bristol-Myers Squibb Co. | 1.5 |
Facebook, Inc., Class A | 1.5 |
MasterCard, Inc., Class A | 1.3 |
Eli Lilly & Co. | 1.2 |
Portfolio breakdown (%) (at December 31, 2018) | |
Common Stocks | 66.7 |
Convertible Bonds | 8.8 |
Convertible Preferred Stocks | 5.8 |
Corporate Bonds & Notes | 15.2 |
Limited Partnerships | 0.3 |
Money Market Funds | 2.0 |
Preferred Debt | 0.7 |
Senior Loans | 0.5 |
Warrants | 0.0(a) |
Total | 100.0 |
(a) | Rounds to zero. |
Equity sector breakdown (%) (at December 31, 2018) | |
Communication Services | 7.8 |
Consumer Discretionary | 9.3 |
Consumer Staples | 7.1 |
Energy | 5.9 |
Financials | 16.5 |
Health Care | 14.4 |
Industrials | 8.6 |
Information Technology | 19.9 |
Materials | 2.0 |
Real Estate | 3.7 |
Utilities | 4.8 |
Total | 100.0 |
Tri-Continental Corporation | Annual Report 2018 | 3 |
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4 | Tri-Continental Corporation | Annual Report 2018 |
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Tri-Continental Corporation | Annual Report 2018 | 5 |
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December 31, 2018
Common Stocks 66.4% | ||
Issuer | Shares | Value ($) |
Communication Services 5.7% | ||
Diversified Telecommunication Services 2.1% | ||
AT&T, Inc. | 267,700 | 7,640,158 |
Verizon Communications, Inc. | 421,400 | 23,691,108 |
Total | 31,331,266 | |
Interactive Media & Services 3.2% | ||
Alphabet, Inc., Class A(a) | 24,650 | 25,758,264 |
Facebook, Inc., Class A(a) | 159,800 | 20,948,182 |
Total | 46,706,446 | |
Media 0.4% | ||
Comcast Corp., Class A | 156,300 | 5,322,015 |
Total Communication Services | 83,359,727 | |
Consumer Discretionary 6.7% | ||
Automobiles 0.6% | ||
General Motors Co. | 205,000 | 6,857,250 |
Harley-Davidson, Inc. | 63,200 | 2,156,384 |
Total | 9,013,634 | |
Hotels, Restaurants & Leisure 1.9% | ||
Carnival Corp. | 67,500 | 3,327,750 |
Extended Stay America, Inc. | 450,000 | 6,975,000 |
Marriott International, Inc., Class A | 114,700 | 12,451,832 |
Six Flags Entertainment Corp. | 95,000 | 5,284,850 |
Total | 28,039,432 | |
Household Durables 0.1% | ||
PulteGroup, Inc. | 88,000 | 2,287,120 |
Internet & Direct Marketing Retail 1.6% | ||
Amazon.com, Inc.(a) | 8,000 | 12,015,760 |
Booking Holdings, Inc.(a) | 6,475 | 11,152,669 |
Total | 23,168,429 | |
Leisure Products 0.2% | ||
Hasbro, Inc. | 42,500 | 3,453,125 |
Multiline Retail 0.5% | ||
Kohl’s Corp. | 102,200 | 6,779,948 |
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Specialty Retail 1.4% | ||
Advance Auto Parts, Inc. | 14,900 | 2,346,154 |
Best Buy Co., Inc. | 134,400 | 7,117,824 |
Foot Locker, Inc. | 126,400 | 6,724,480 |
Home Depot, Inc. (The) | 23,000 | 3,951,860 |
Total | 20,140,318 | |
Textiles, Apparel & Luxury Goods 0.4% | ||
Ralph Lauren Corp. | 57,200 | 5,917,912 |
Total Consumer Discretionary | 98,799,918 | |
Consumer Staples 4.7% | ||
Food & Staples Retailing 1.8% | ||
Walgreens Boots Alliance, Inc. | 193,050 | 13,191,107 |
Walmart, Inc. | 145,100 | 13,516,065 |
Total | 26,707,172 | |
Food Products 0.9% | ||
General Mills, Inc. | 185,000 | 7,203,900 |
Tyson Foods, Inc., Class A | 103,700 | 5,537,580 |
Total | 12,741,480 | |
Household Products 1.0% | ||
Kimberly-Clark Corp. | 107,550 | 12,254,247 |
Procter & Gamble Co. (The) | 19,600 | 1,801,632 |
Total | 14,055,879 | |
Tobacco 1.0% | ||
Altria Group, Inc. | 95,300 | 4,706,867 |
Philip Morris International, Inc. | 152,000 | 10,147,520 |
Total | 14,854,387 | |
Total Consumer Staples | 68,358,918 | |
Energy 3.5% | ||
Energy Equipment & Services 0.2% | ||
National Oilwell Varco, Inc. | 101,500 | 2,608,550 |
Oil, Gas & Consumable Fuels 3.3% | ||
BP PLC, ADR | 200,000 | 7,584,000 |
Chevron Corp.(b) | 44,900 | 4,884,671 |
ConocoPhillips | 238,600 | 14,876,710 |
Goodrich Petroleum Corp.(a) | 593 | 8,006 |
Marathon Petroleum Corp. | 80,200 | 4,732,602 |
6 | Tri-Continental Corporation | Annual Report 2018 |
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December 31, 2018
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Suncor Energy, Inc. | 250,000 | 6,992,500 |
Valero Energy Corp. | 136,100 | 10,203,417 |
Total | 49,281,906 | |
Total Energy | 51,890,456 | |
Financials 10.0% | ||
Banks 4.5% | ||
Bank of America Corp. | 285,000 | 7,022,400 |
BB&T Corp. | 125,000 | 5,415,000 |
Citigroup, Inc. | 300,900 | 15,664,854 |
Comerica, Inc. | 30,900 | 2,122,521 |
JPMorgan Chase & Co. | 298,800 | 29,168,856 |
PacWest Bancorp | 200,000 | 6,656,000 |
Total | 66,049,631 | |
Capital Markets 2.8% | ||
Ares Capital Corp. | 460,000 | 7,166,800 |
BlackRock, Inc. | 15,350 | 6,029,787 |
CME Group, Inc. | 16,900 | 3,179,228 |
S&P Global, Inc. | 79,700 | 13,544,218 |
T. Rowe Price Group, Inc. | 91,400 | 8,438,048 |
TCG BDC, Inc. | 275,000 | 3,410,000 |
Total | 41,768,081 | |
Consumer Finance 0.3% | ||
Capital One Financial Corp. | 66,000 | 4,988,940 |
Diversified Financial Services 0.2% | ||
Voya Financial, Inc. | 54,200 | 2,175,588 |
Insurance 1.5% | ||
Allstate Corp. (The) | 135,700 | 11,212,891 |
Principal Financial Group, Inc. | 125,000 | 5,521,250 |
Prudential Financial, Inc. | 70,800 | 5,773,740 |
Total | 22,507,881 | |
Mortgage Real Estate Investment Trusts (REITS) 0.7% | ||
Blackstone Mortgage Trust, Inc. | 90,000 | 2,867,400 |
Starwood Property Trust, Inc. | 350,000 | 6,898,500 |
Total | 9,765,900 | |
Total Financials | 147,256,021 |
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Health Care 9.9% | ||
Biotechnology 2.2% | ||
AbbVie, Inc. | 70,000 | 6,453,300 |
Alexion Pharmaceuticals, Inc.(a) | 34,500 | 3,358,920 |
Biogen, Inc.(a) | 16,700 | 5,025,364 |
BioMarin Pharmaceutical, Inc.(a) | 37,100 | 3,159,065 |
Gilead Sciences, Inc. | 162,100 | 10,139,355 |
Vertex Pharmaceuticals, Inc.(a) | 25,950 | 4,300,174 |
Total | 32,436,178 | |
Health Care Equipment & Supplies 1.1% | ||
Abbott Laboratories | 64,100 | 4,636,353 |
Baxter International, Inc. | 170,200 | 11,202,564 |
Total | 15,838,917 | |
Health Care Providers & Services 1.4% | ||
AmerisourceBergen Corp. | 70,400 | 5,237,760 |
Cardinal Health, Inc. | 76,400 | 3,407,440 |
HCA Healthcare, Inc. | 24,400 | 3,036,580 |
Humana, Inc. | 5,800 | 1,661,584 |
McKesson Corp. | 59,400 | 6,561,918 |
Total | 19,905,282 | |
Life Sciences Tools & Services 0.1% | ||
Agilent Technologies, Inc. | 23,500 | 1,585,310 |
Pharmaceuticals 5.1% | ||
Allergan PLC | 10,200 | 1,363,332 |
Bristol-Myers Squibb Co. | 410,700 | 21,348,186 |
Eli Lilly & Co. | 152,800 | 17,682,016 |
Johnson & Johnson | 117,100 | 15,111,755 |
Merck & Co., Inc. | 109,200 | 8,343,972 |
Pfizer, Inc. | 264,709 | 11,554,548 |
Total | 75,403,809 | |
Total Health Care | 145,169,496 | |
Industrials 5.5% | ||
Aerospace & Defense 2.0% | ||
Boeing Co. (The) | 73,500 | 23,703,750 |
Lockheed Martin Corp. | 20,000 | 5,236,800 |
Total | 28,940,550 |
Tri-Continental Corporation | Annual Report 2018 | 7 |
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December 31, 2018
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Airlines 0.9% | ||
Delta Air Lines, Inc. | 233,950 | 11,674,105 |
Southwest Airlines Co. | 33,400 | 1,552,432 |
Total | 13,226,537 | |
Electrical Equipment 0.5% | ||
Acuity Brands, Inc. | 21,420 | 2,462,229 |
Emerson Electric Co. | 38,000 | 2,270,500 |
Rockwell Automation, Inc. | 15,400 | 2,317,392 |
Total | 7,050,121 | |
Industrial Conglomerates 0.4% | ||
Honeywell International, Inc. | 41,400 | 5,469,768 |
Machinery 0.6% | ||
Illinois Tool Works, Inc. | 19,700 | 2,495,793 |
Snap-On, Inc. | 47,300 | 6,872,217 |
Total | 9,368,010 | |
Professional Services 0.1% | ||
Robert Half International, Inc. | 18,000 | 1,029,600 |
Road & Rail 0.2% | ||
Union Pacific Corp. | 27,600 | 3,815,148 |
Trading Companies & Distributors 0.6% | ||
W.W. Grainger, Inc. | 30,800 | 8,696,688 |
Transportation Infrastructure 0.2% | ||
Macquarie Infrastructure Corp. | 105,000 | 3,838,800 |
Total Industrials | 81,435,222 | |
Information Technology 14.1% | ||
Communications Equipment 1.9% | ||
Cisco Systems, Inc. | 555,500 | 24,069,815 |
F5 Networks, Inc.(a) | 21,700 | 3,516,051 |
Total | 27,585,866 | |
Electronic Equipment, Instruments & Components 0.4% | ||
Corning, Inc. | 190,000 | 5,739,900 |
IT Services 3.0% | ||
Automatic Data Processing, Inc. | 27,500 | 3,605,800 |
MasterCard, Inc., Class A | 96,900 | 18,280,185 |
VeriSign, Inc.(a) | 84,700 | 12,560,163 |
Visa, Inc., Class A | 66,100 | 8,721,234 |
Total | 43,167,382 |
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Semiconductors & Semiconductor Equipment 3.8% | ||
Analog Devices, Inc. | 81,500 | 6,995,145 |
Broadcom, Inc. | 55,700 | 14,163,396 |
Intel Corp. | 112,500 | 5,279,625 |
KLA-Tencor Corp. | 42,500 | 3,803,325 |
Lam Research Corp. | 52,500 | 7,148,925 |
Maxim Integrated Products, Inc. | 72,500 | 3,686,625 |
QUALCOMM, Inc. | 249,900 | 14,221,809 |
Texas Instruments, Inc. | 9,600 | 907,200 |
Total | 56,206,050 | |
Software 3.3% | ||
Adobe, Inc.(a) | 65,100 | 14,728,224 |
Fortinet, Inc.(a) | 32,900 | 2,317,147 |
Microsoft Corp. | 236,400 | 24,011,148 |
VMware, Inc., Class A | 53,400 | 7,322,742 |
Total | 48,379,261 | |
Technology Hardware, Storage & Peripherals 1.7% | ||
Apple, Inc. | 94,850 | 14,961,639 |
HP, Inc. | 156,800 | 3,208,128 |
NetApp, Inc. | 57,900 | 3,454,893 |
Western Digital Corp. | 100,000 | 3,697,000 |
Total | 25,321,660 | |
Total Information Technology | 206,400,119 | |
Materials 1.5% | ||
Chemicals 1.3% | ||
DowDuPont, Inc. | 70,000 | 3,743,600 |
Eastman Chemical Co. | 39,200 | 2,865,912 |
LyondellBasell Industries NV, Class A | 149,000 | 12,390,840 |
Total | 19,000,352 | |
Metals & Mining 0.2% | ||
Nucor Corp. | 49,200 | 2,549,052 |
Total Materials | 21,549,404 |
8 | Tri-Continental Corporation | Annual Report 2018 |
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December 31, 2018
Common Stocks (continued) | ||
Issuer | Shares | Value ($) |
Real Estate 2.2% | ||
Equity Real Estate Investment Trusts (REITS) 2.2% | ||
Alexandria Real Estate Equities, Inc. | 45,000 | 5,185,800 |
American Tower Corp. | 28,900 | 4,571,691 |
Digital Realty Trust, Inc. | 50,000 | 5,327,500 |
Host Hotels & Resorts, Inc. | 699,200 | 11,655,664 |
Simon Property Group, Inc. | 30,300 | 5,090,097 |
Total | 31,830,752 | |
Total Real Estate | 31,830,752 | |
Utilities 2.6% | ||
Electric Utilities 1.1% | ||
American Electric Power Co., Inc. | 90,000 | 6,726,600 |
Edison International | 95,000 | 5,393,150 |
Entergy Corp. | 31,900 | 2,745,633 |
Exelon Corp. | 27,800 | 1,253,780 |
Total | 16,119,163 | |
Independent Power and Renewable Electricity Producers 0.7% | ||
NRG Energy, Inc. | 279,900 | 11,084,040 |
Multi-Utilities 0.8% | ||
CenterPoint Energy, Inc. | 242,300 | 6,840,129 |
Public Service Enterprise Group, Inc. | 86,900 | 4,523,145 |
Total | 11,363,274 | |
Total Utilities | 38,566,477 | |
Total Common Stocks (Cost $956,779,931) | 974,616,510 |
Convertible Bonds 8.8% | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Cable and Satellite 0.5% | ||||
DISH Network Corp. | ||||
08/15/2026 | 3.375% | 8,500,000 | 6,863,886 | |
Gaming 0.2% | ||||
Caesars Entertainment Corp. | ||||
10/01/2024 | 5.000% | 2,800,000 | 3,475,545 | |
Health Care 0.5% | ||||
Invacare Corp. | ||||
02/15/2021 | 5.000% | 4,000,000 | 2,874,364 |
Convertible Bonds (continued) | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Novavax, Inc. | ||||
02/01/2023 | 3.750% | 6,800,000 | 4,097,000 | |
Total | 6,971,364 | |||
Home Construction 0.4% | ||||
SunPower Corp. | ||||
01/15/2023 | 4.000% | 7,500,000 | 6,014,820 | |
Independent Energy 0.5% | ||||
Chesapeake Energy Corp. | ||||
09/15/2026 | 5.500% | 8,500,000 | 6,841,327 | |
Life Insurance 0.2% | ||||
AXA SA(c) | ||||
05/15/2021 | 7.250% | 4,100,000 | 3,578,361 | |
Metals and Mining 0.3% | ||||
Endeavour Mining Corp.(c) | ||||
02/15/2023 | 3.000% | 4,600,000 | 4,453,260 | |
Oil Field Services 0.1% | ||||
Bristow Group, Inc. | ||||
06/01/2023 | 4.500% | 3,658,000 | 1,399,185 | |
Other Industry 0.3% | ||||
Green Plains, Inc. | ||||
09/01/2022 | 4.125% | 4,600,000 | 4,053,750 | |
Other REIT 1.0% | ||||
Blackstone Mortgage Trust, Inc. | ||||
05/05/2022 | 4.375% | 4,500,000 | 4,378,977 | |
IH Merger Sub LLC | ||||
01/15/2022 | 3.500% | 5,800,000 | 5,942,634 | |
New York Mortgage Trust, Inc. | ||||
01/15/2022 | 6.250% | 3,800,000 | 3,731,125 | |
Total | 14,052,736 | |||
Pharmaceuticals 2.9% | ||||
Aegerion Pharmaceuticals, Inc. | ||||
08/15/2019 | 2.000% | 5,000,000 | 3,743,750 | |
Alder Biopharmaceuticals, Inc. | ||||
02/01/2025 | 2.500% | 4,500,000 | 3,589,583 | |
Clovis Oncology, Inc. | ||||
05/01/2025 | 1.250% | 6,800,000 | 4,758,803 | |
Dermira, Inc. | ||||
05/15/2022 | 3.000% | 5,200,000 | 4,011,374 | |
Insmed, Inc. | ||||
01/15/2025 | 1.750% | 5,300,000 | 3,774,914 | |
Intercept Pharmaceuticals, Inc. | ||||
07/01/2023 | 3.250% | 6,500,000 | 5,988,944 |
Tri-Continental Corporation | Annual Report 2018 | 9 |
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December 31, 2018
Convertible Bonds (continued) | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Medicines Co. (The) | ||||
07/15/2023 | 2.750% | 7,000,000 | 5,275,515 | |
PTC Therapeutics, Inc. | ||||
08/15/2022 | 3.000% | 4,000,000 | 3,975,000 | |
Radius Health, Inc. | ||||
09/01/2024 | 3.000% | 5,000,000 | 3,843,750 | |
Tilray, Inc.(c) | ||||
10/01/2023 | 5.000% | 5,000,000 | 3,544,000 | |
Total | 42,505,633 | |||
Property & Casualty 0.7% | ||||
Heritage Insurance Holdings, Inc. | ||||
08/01/2037 | 5.875% | 3,500,000 | 4,085,165 | |
MGIC Investment Corp.(c),(d) | ||||
Junior Subordinated | ||||
04/01/2063 | 9.000% | 4,711,000 | 5,917,675 | |
Total | 10,002,840 | |||
Retailers 0.3% | ||||
GNC Holdings, Inc. | ||||
08/15/2020 | 1.500% | 5,700,000 | 4,075,500 | |
Technology 0.7% | ||||
Microchip Technology, Inc. | ||||
Junior Subordinated | ||||
02/15/2037 | 2.250% | 7,000,000 | 6,863,969 | |
Veeco Instruments, Inc. | ||||
01/15/2023 | 2.700% | 5,000,000 | 3,770,715 | |
Total | 10,634,684 | |||
Wireless 0.2% | ||||
Gogo, Inc.(c) | ||||
05/15/2022 | 6.000% | 4,200,000 | 3,646,860 | |
Total Convertible Bonds (Cost $150,579,552) | 128,569,751 |
Convertible Preferred Stocks 5.7% | |||
Issuer | Shares | Value ($) | |
Consumer Staples 0.5% | |||
Food Products 0.5% | |||
Bunge Ltd. | 4.875% | 75,000 | 7,283,370 |
Total Consumer Staples | 7,283,370 | ||
Energy 0.5% | |||
Energy Equipment & Services 0.2% | |||
Nabors Industries Ltd. | 6.000% | 145,000 | 2,528,394 |
Convertible Preferred Stocks (continued) | |||
Issuer | Shares | Value ($) | |
Oil, Gas & Consumable Fuels 0.3% | |||
Hess Corp. | 8.000% | 85,000 | 4,221,950 |
Total Energy | 6,750,344 | ||
Financials 1.9% | |||
Banks 0.9% | |||
Bank of America Corp. | 7.250% | 5,700 | 7,139,250 |
Wells Fargo & Co. | 7.500% | 5,500 | 6,935,969 |
Total | 14,075,219 | ||
Capital Markets 0.7% | |||
AMG Capital Trust II | 5.150% | 130,000 | 6,240,000 |
Cowen, Inc. | 5.625% | 5,200 | 4,148,268 |
Total | 10,388,268 | ||
Insurance 0.3% | |||
Assurant, Inc. | 6.500% | 40,000 | 3,920,192 |
Total Financials | 28,383,679 | ||
Health Care 0.5% | |||
Health Care Equipment & Supplies 0.5% | |||
Becton Dickinson and Co. | 6.125% | 135,000 | 7,748,487 |
Total Health Care | 7,748,487 | ||
Industrials 0.6% | |||
Machinery 0.6% | |||
Fortive Corp. | 5.000% | 6,000 | 5,449,500 |
Rexnord Corp. | 5.750% | 75,000 | 3,776,715 |
Total | 9,226,215 | ||
Total Industrials | 9,226,215 | ||
Information Technology 0.4% | |||
Electronic Equipment, Instruments & Components 0.4% | |||
Belden, Inc. | 6.750% | 90,000 | 5,168,700 |
Total Information Technology | 5,168,700 | ||
Real Estate 0.5% | |||
Equity Real Estate Investment Trusts (REITS) 0.5% | |||
Crown Castle International Corp. | 6.875% | 7,000 | 7,338,770 |
Total Real Estate | 7,338,770 |
10 | Tri-Continental Corporation | Annual Report 2018 |
Table of Contents
December 31, 2018
Convertible Preferred Stocks (continued) | |||
Issuer | Shares | Value ($) | |
Utilities 0.8% | |||
Multi-Utilities 0.8% | |||
CenterPoint Energy, Inc. | 7.000% | 105,000 | 5,283,600 |
DTE Energy Co. | 6.500% | 135,000 | 7,004,178 |
Total | 12,287,778 | ||
Total Utilities | 12,287,778 | ||
Total Convertible Preferred Stocks (Cost $95,801,082) | 84,187,343 |
Corporate Bonds & Notes 15.2% | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Brokerage/Asset Managers/Exchanges 0.5% | ||||
LPL Holdings, Inc.(c) | ||||
09/15/2025 | 5.750% | 7,850,000 | 7,359,375 | |
Cable and Satellite 0.9% | ||||
Charter Communications Operating LLC/Capital | ||||
10/23/2045 | 6.484% | 7,000,000 | 7,111,475 | |
Telesat Canada/LLC(c) | ||||
11/15/2024 | 8.875% | 5,360,000 | 5,576,850 | |
Total | 12,688,325 | |||
Chemicals 0.5% | ||||
Starfruit Finco BV/US Holdco LLC(c) | ||||
10/01/2026 | 8.000% | 7,900,000 | 7,350,484 | |
Consumer Products 0.5% | ||||
Mattel, Inc.(c) | ||||
12/31/2025 | 6.750% | 8,042,000 | 7,188,929 | |
Electric 0.6% | ||||
Covanta Holding Corp. | ||||
07/01/2025 | 5.875% | 4,834,000 | 4,446,913 | |
01/01/2027 | 6.000% | 5,000,000 | 4,488,355 | |
Total | 8,935,268 | |||
Finance Companies 1.4% | ||||
Fortress Transportation & Infrastructure Investors LLC(c) | ||||
10/01/2025 | 6.500% | 6,000,000 | 5,658,258 | |
iStar, Inc. | ||||
04/01/2022 | 6.000% | 7,743,000 | 7,394,596 | |
Springleaf Finance Corp. | ||||
03/15/2025 | 6.875% | 8,400,000 | 7,498,940 | |
Total | 20,551,794 |
Corporate Bonds & Notes (continued) | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Food and Beverage 0.5% | ||||
Chobani LLC/Finance Corp., Inc.(c) | ||||
04/15/2025 | 7.500% | 4,097,000 | 3,226,388 | |
Lamb Weston Holdings, Inc.(c) | ||||
11/01/2026 | 4.875% | 3,900,000 | 3,760,454 | |
Total | 6,986,842 | |||
Health Care 0.6% | ||||
Quotient Ltd.(c),(e),(f) | ||||
04/15/2024 | 12.000% | 2,170,000 | 2,170,000 | |
04/15/2024 | 12.000% | 930,000 | 930,000 | |
Surgery Center Holdings, Inc.(c) | ||||
07/01/2025 | 6.750% | 6,600,000 | 5,631,041 | |
Total | 8,731,041 | |||
Healthcare Insurance 0.5% | ||||
Centene Corp. | ||||
01/15/2025 | 4.750% | 7,655,000 | 7,318,065 | |
Home Construction 0.3% | ||||
Lennar Corp. | ||||
11/29/2027 | 4.750% | 4,400,000 | 3,993,920 | |
Independent Energy 0.9% | ||||
Indigo Natural Resources LLC(c) | ||||
02/15/2026 | 6.875% | 8,200,000 | 7,062,061 | |
Talos Production LLC/Finance, Inc. | ||||
04/03/2022 | 11.000% | 6,136,177 | 5,890,730 | |
Total | 12,952,791 | |||
Lodging 0.2% | ||||
Marriott Ownership Resorts, Inc.(c) | ||||
09/15/2026 | 6.500% | 3,732,000 | 3,598,693 | |
Media and Entertainment 0.7% | ||||
Lions Gate Capital Holdings LLC(c) | ||||
11/01/2024 | 5.875% | 7,550,000 | 7,418,087 | |
Meredith Corp.(c) | ||||
02/01/2026 | 6.875% | 3,700,000 | 3,638,565 | |
Total | 11,056,652 | |||
Metals and Mining 1.1% | ||||
CONSOL Energy, Inc.(c) | ||||
11/15/2025 | 11.000% | 4,200,000 | 4,599,382 | |
Constellium NV(c) | ||||
03/01/2025 | 6.625% | 7,900,000 | 7,315,194 | |
Warrior Met Coal, Inc.(c) | ||||
11/01/2024 | 8.000% | 3,700,000 | 3,589,585 | |
Total | 15,504,161 |
Tri-Continental Corporation | Annual Report 2018 | 11 |
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December 31, 2018
Corporate Bonds & Notes (continued) | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Midstream 0.8% | ||||
Rockpoint Gas Storage Canada Ltd.(c) | ||||
03/31/2023 | 7.000% | 4,216,000 | 3,982,130 | |
Summit Midstream Partners LP(d) | ||||
Junior Subordinated | ||||
12/31/2049 | 9.500% | 8,400,000 | 7,763,750 | |
Total | 11,745,880 | |||
Oil Field Services 0.4% | ||||
Bristow Group, Inc.(c) | ||||
03/01/2023 | 8.750% | 4,200,000 | 3,014,390 | |
SESI LLC | ||||
09/15/2024 | 7.750% | 4,200,000 | 3,339,210 | |
Total | 6,353,600 | |||
Other Industry 0.5% | ||||
WeWork Companies, Inc.(c) | ||||
05/01/2025 | 7.875% | 8,500,000 | 7,541,055 | |
Packaging 1.0% | ||||
BWAY Holding Co.(c) | ||||
04/15/2025 | 7.250% | 8,300,000 | 7,469,087 | |
Novolex(c) | ||||
01/15/2025 | 6.875% | 8,490,000 | 7,567,884 | |
Total | 15,036,971 | |||
Pharmaceuticals 0.7% | ||||
Bausch Health Companies, Inc.(c) | ||||
01/31/2027 | 8.500% | 7,400,000 | 7,169,312 | |
Horizon Pharma, Inc.(c) | ||||
11/01/2024 | 8.750% | 3,700,000 | 3,761,779 | |
Total | 10,931,091 | |||
Restaurants 0.3% | ||||
IRB Holding Corp.(c) | ||||
02/15/2026 | 6.750% | 4,300,000 | 3,738,364 | |
Retailers 0.1% | ||||
Rite Aid Corp. | ||||
Junior Subordinated | ||||
02/15/2027 | 7.700% | 1,937,000 | 1,295,092 | |
Supermarkets 0.4% | ||||
Safeway, Inc. | ||||
02/01/2031 | 7.250% | 7,512,000 | 6,535,500 | |
Technology 0.9% | ||||
Diebold, Inc. | ||||
04/15/2024 | 8.500% | 8,100,000 | 4,876,961 |
Corporate Bonds & Notes (continued) | ||||
Issuer | Coupon Rate | Principal Amount ($) | Value ($) | |
Genesys Telecommunications Laboratories, Inc./Greeneden Lux 3 Sarl/U.S. Holdings I LLC(c) | ||||
11/30/2024 | 10.000% | 3,750,000 | 3,928,238 | |
Informatica LLC(c) | ||||
07/15/2023 | 7.125% | 3,838,000 | 3,741,060 | |
Total | 12,546,259 | |||
Transportation Services 0.5% | ||||
Hertz Corp. (The)(c) | ||||
06/01/2022 | 7.625% | 1,750,000 | 1,653,727 | |
Hertz Corp. (The) | ||||
10/15/2022 | 6.250% | 6,700,000 | 5,780,955 | |
Total | 7,434,682 | |||
Wirelines 0.4% | ||||
Frontier Communications Corp. | ||||
09/15/2025 | 11.000% | 8,360,000 | 5,209,442 | |
Total Corporate Bonds & Notes (Cost $246,777,079) | 222,584,276 |
Limited Partnerships 0.3% | ||
Issuer | Shares | Value ($) |
Energy 0.2% | ||
Oil, Gas & Consumable Fuels 0.2% | ||
Enviva Partners LP | 135,000 | 3,746,250 |
Total Energy | 3,746,250 | |
Industrials 0.1% | ||
Trading Companies & Distributors 0.1% | ||
Fortress Transportation & Infrastructure Investors LLC | 75,630 | 1,084,534 |
Total Industrials | 1,084,534 | |
Total Limited Partnerships (Cost $4,900,748) | 4,830,784 |
Preferred Debt 0.6% | ||||
Issuer | Coupon Rate | Shares | Value ($) | |
Banking 0.4% | ||||
Citigroup Capital XIII(d) | ||||
10/30/2040 | 8.890% | 215,000 | 5,682,450 | |
Finance Companies 0.2% | ||||
GMAC Capital Trust I(d) | ||||
02/15/2040 | 8.099% | 150,000 | 3,802,500 | |
Total Preferred Debt (Cost $9,408,817) | 9,484,950 |
12 | Tri-Continental Corporation | Annual Report 2018 |
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December 31, 2018
Senior Loans 0.5% | ||||
Borrower | Coupon Rate | Principal Amount ($) | Value ($) | |
Oil Field Services 0.5% | ||||
BCP Raptor LLC/EagleClaw Midstream Ventures(g),(h) | ||||
Term Loan | ||||
06/24/2024 | 6.869% | 7,883,940 | 7,341,919 | |
Total Senior Loans (Cost $7,821,600) | 7,341,919 |
Warrants —% | ||
Issuer | Shares | Value ($) |
Energy —% | ||
Oil, Gas & Consumable Fuels —% | ||
Goodrich Petroleum Corp.(a),(e),(f),(i) | 16,334 | 0 |
Total Energy | 0 | |
Total Warrants (Cost $—) | 0 | |
Money Market Funds 2.0% | ||
Shares | Value ($) | |
Columbia Short-Term Cash Fund, 2.459%(j),(k) | 25,992,417 | 25,989,818 |
JPMorgan U.S. Government Money Market Fund, Agency Shares, 2.273%(j) | 3,537,779 | 3,537,779 |
Total Money Market Funds (Cost $29,527,597) | 29,527,597 | |
Total Investments in Securities (Cost: $1,501,596,406) | 1,461,143,130 | |
Other Assets & Liabilities, Net | 7,705,083 | |
Net Assets | 1,468,848,213 |
Long futures contracts | ||||||
Description | Number of contracts | Expiration date | Trading currency | Notional amount | Value/Unrealized appreciation ($) | Value/Unrealized depreciation ($) |
S&P 500 E-mini | 209 | 03/2019 | USD | 26,179,340 | 285,306 | — |
(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 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, 2018, the total value of these securities amounted to $160,780,528, which represents 10.95% of total net assets. |
(d) | Represents a variable rate security with a step coupon where the 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. The interest rate shown was the current rate as of December 31, 2018. |
(e) | Represents fair value as determined in good faith under procedures approved by the Board of Trustees. At December 31, 2018, the total value of these securities amounted to $3,100,000, which represents 0.21% of total net assets. |
(f) | Valuation based on significant unobservable inputs. |
(g) | The stated interest rate represents the weighted average interest rate at December 31, 2018 of contracts within the senior loan facility. Interest rates on contracts are primarily determined either weekly, monthly or quarterly by reference to the indicated base lending rate and spread and the reset period. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and other short-term rates. Base lending rates may be subject to a floor or minimum rate. The interest rate for senior loans purchased on a when-issued or delayed delivery basis will be determined upon settlement, therefore no interest rate is disclosed. Senior loans often require prepayments from excess cash flows or permit the borrowers to repay at their election. The degree to which borrowers repay, cannot be predicted with accuracy. As a result, remaining maturities of senior loans may be less than the stated maturities. |
(h) | Variable rate security. The interest rate shown was the current rate as of December 31, 2018. |
(i) | Negligible market value. |
(j) | The rate shown is the seven-day current annualized yield at December 31, 2018. |
Tri-Continental Corporation | Annual Report 2018 | 13 |
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(k) | As defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and transactions in these affiliated companies during the year ended December 31, 2018 are as follows: |
Issuer | Beginning shares | Shares purchased | Shares sold | Ending shares | Realized gain (loss) — affiliated issuers ($) | Net change in unrealized appreciation (depreciation) — affiliated issuers ($) | Dividends — affiliated issuers ($) | Value — affiliated issuers at end of period ($) |
Columbia Short-Term Cash Fund, 2.459% | ||||||||
13,847,965 | 122,498,836 | (110,354,384) | 25,992,417 | 113 | (1,042) | 126,793 | 25,989,818 |
ADR | American Depositary Receipt |
USD | US Dollar |
■ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. |
■ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
■ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
14 | Tri-Continental Corporation | Annual Report 2018 |
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For investments categorized as Level 3, the Committee monitors information similar to that described above, which may include: (i) data specific to the issuer or comparable issuers, (ii) general market or specific sector news and (iii) quoted prices and specific or similar security transactions. The Committee considers this data and any changes from prior periods in order to assess the reasonableness of observable and unobservable inputs, any assumptions or internal models used to value those securities and changes in fair value. This data is also used to corroborate, when available, information received from approved pricing vendors and brokers. Various factors impact the frequency of monitoring this information (which may occur as often as daily). However, the Committee may determine that changes to inputs, assumptions and models are not required as a result of the monitoring procedures performed.
Level 1 quoted prices in active markets for identical assets ($) | Level 2 other significant observable inputs ($) | Level 3 significant unobservable inputs ($) | Investments measured at net asset value ($) | Total ($) | |
Investments in Securities | |||||
Common Stocks | |||||
Communication Services | 83,359,727 | — | — | — | 83,359,727 |
Consumer Discretionary | 98,799,918 | — | — | — | 98,799,918 |
Consumer Staples | 68,358,918 | — | — | — | 68,358,918 |
Energy | 51,890,456 | — | — | — | 51,890,456 |
Financials | 147,256,021 | — | — | — | 147,256,021 |
Health Care | 145,169,496 | — | — | — | 145,169,496 |
Industrials | 81,435,222 | — | — | — | 81,435,222 |
Information Technology | 206,400,119 | — | — | — | 206,400,119 |
Materials | 21,549,404 | — | — | — | 21,549,404 |
Real Estate | 31,830,752 | — | — | — | 31,830,752 |
Utilities | 38,566,477 | — | — | — | 38,566,477 |
Total Common Stocks | 974,616,510 | — | — | — | 974,616,510 |
Convertible Bonds | — | 128,569,751 | — | — | 128,569,751 |
Convertible Preferred Stocks | |||||
Consumer Staples | — | 7,283,370 | — | — | 7,283,370 |
Energy | — | 6,750,344 | — | — | 6,750,344 |
Financials | 7,139,250 | 21,244,429 | — | — | 28,383,679 |
Health Care | — | 7,748,487 | — | — | 7,748,487 |
Industrials | — | 9,226,215 | — | — | 9,226,215 |
Information Technology | — | 5,168,700 | — | — | 5,168,700 |
Real Estate | — | 7,338,770 | — | — | 7,338,770 |
Utilities | — | 12,287,778 | — | — | 12,287,778 |
Total Convertible Preferred Stocks | 7,139,250 | 77,048,093 | — | — | 84,187,343 |
Corporate Bonds & Notes | — | 219,484,276 | 3,100,000 | — | 222,584,276 |
Limited Partnerships | |||||
Energy | 3,746,250 | — | — | — | 3,746,250 |
Industrials | 1,084,534 | — | — | — | 1,084,534 |
Total Limited Partnerships | 4,830,784 | — | — | — | 4,830,784 |
Preferred Debt | 9,484,950 | — | — | — | 9,484,950 |
Senior Loans | — | 7,341,919 | — | — | 7,341,919 |
Warrants | |||||
Energy | — | — | 0* | — | 0* |
Money Market Funds | 3,537,779 | — | — | 25,989,818 | 29,527,597 |
Total Investments in Securities | 999,609,273 | 432,444,039 | 3,100,000 | 25,989,818 | 1,461,143,130 |
Investments in Derivatives | |||||
Asset | |||||
Futures Contracts | 285,306 | — | — | — | 285,306 |
Total | 999,894,579 | 432,444,039 | 3,100,000 | 25,989,818 | 1,461,428,436 |
* | Rounds to zero. |
Tri-Continental Corporation | Annual Report 2018 | 15 |
Table of Contents
December 31, 2018
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.
Transfers In | Transfers Out | ||
Level 1 ($) | Level 2 ($) | Level 1 ($) | Level 2 ($) |
— | 51,521,675 | 51,521,675 | — |
16 | Tri-Continental Corporation | Annual Report 2018 |
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December 31, 2018
Assets | |
Investments in securities, at value | |
Unaffiliated issuers (cost $1,475,606,588) | $1,435,153,312 |
Affiliated issuers (cost $25,989,818) | 25,989,818 |
Receivable for: | |
Investments sold | 3,866,190 |
Dividends | 2,247,041 |
Interest | 6,587,462 |
Variation margin for futures contracts | 123,961 |
Prepaid expenses | 66,199 |
Other assets | 43,681 |
Total assets | 1,474,077,664 |
Liabilities | |
Due to custodian | 65,684 |
Payable for: | |
Investments purchased | 3,588,351 |
Common Stock payable | 788,664 |
Preferred Stock dividends | 470,463 |
Management services fees | 49,241 |
Stockholder servicing and transfer agent fees | 8,564 |
Compensation of board members | 157,593 |
Compensation of chief compliance officer | 352 |
Other expenses | 100,539 |
Total liabilities | 5,229,451 |
Net assets | $1,468,848,213 |
Preferred Stock | 37,637,000 |
Net assets for Common Stock | 1,431,211,213 |
Represented by | |
$2.50 Cumulative Preferred Stock, $50 par value, assets coverage per share $1,951 | |
Shares issued and outstanding — 752,740 | 37,637,000 |
Common Stock, $0.50 par value: | |
Shares issued and outstanding — 53,853,372 | 26,926,686 |
Capital surplus | 1,443,998,576 |
Total distributable earnings (loss) (Note 2) | (39,714,049) |
Net assets | $1,468,848,213 |
Net asset value per share of outstanding Common Stock | $26.58 |
Market price per share of Common Stock | $23.52 |
Tri-Continental Corporation | Annual Report 2018 | 17 |
Table of Contents
Year Ended December 31, 2018
Net investment income | |
Income: | |
Dividends — unaffiliated issuers | $36,301,048 |
Dividends — affiliated issuers | 126,793 |
Interest | 24,901,078 |
Interfund lending | 330 |
Foreign taxes withheld | (39,115) |
Total income | 61,290,134 |
Expenses: | |
Management services fees | 6,852,625 |
Stockholder servicing and transfer agent fees | 568,481 |
Compensation of board members | 58,561 |
Custodian fees | 21,606 |
Printing and postage fees | 102,195 |
Stockholders’ meeting fees | 48,089 |
Audit fees | 46,719 |
Legal fees | 30,555 |
Compensation of chief compliance officer | 341 |
Other | 269,583 |
Total expenses | 7,998,755 |
Net investment income(a) | 53,291,379 |
Realized and unrealized gain (loss) — net | |
Net realized gain (loss) on: | |
Investments — unaffiliated issuers | 42,660,449 |
Investments — affiliated issuers | 113 |
Foreign currency translations | (2,559) |
Futures contracts | 321,497 |
Net realized gain | 42,979,500 |
Net change in unrealized appreciation (depreciation) on: | |
Investments — unaffiliated issuers | (169,994,191) |
Investments — affiliated issuers | (1,042) |
Futures contracts | 273,157 |
Net change in unrealized appreciation (depreciation) | (169,722,076) |
Net realized and unrealized loss | (126,742,576) |
Net decrease in net assets resulting from operations | $(73,451,197) |
(a) | Net investment income for Common Stock is $51,409,529, which is net of Preferred Stock dividends of $1,881,850. |
18 | Tri-Continental Corporation | Annual Report 2018 |
Table of Contents
Year Ended December 31, 2018 | Year Ended December 31, 2017 | |
Operations | ||
Net investment income | $53,291,379 | $51,619,806 |
Net realized gain | 42,979,500 | 182,595,612 |
Net change in unrealized appreciation (depreciation) | (169,722,076) | 46,743,025 |
Net increase (decrease) in net assets resulting from operations | (73,451,197) | 280,958,443 |
Distributions to stockholders | ||
Net investment income and net realized gains | ||
Preferred Stock | (1,881,850) | |
Common Stock | (102,042,429) | |
Net investment income | ||
Preferred Stock | (1,881,850) | |
Common Stock | (59,435,096) | |
Net realized gains | ||
Common Stock | (5,188,617) | |
Total distributions to stockholders (Note 2) | (103,924,279) | (66,505,563) |
Decrease in net assets from capital stock activity | (28,966,569) | (47,742,610) |
Total increase (decrease) in net assets | (206,342,045) | 166,710,270 |
Net assets at beginning of year | 1,675,190,258 | 1,508,479,988 |
Net assets at end of year | $1,468,848,213 | $1,675,190,258 |
Undistributed (excess of distributions over) net investment income | $400,114 | $(1,472,724) |
Year Ended | Year Ended | |||
December 31, 2018 | December 31, 2017 | |||
Shares | Dollars ($) | Shares | Dollars ($) | |
Capital stock activity | ||||
Common Stock issued at market price in distributions | 1,724,141 | 42,787,965 | 811,797 | 20,317,190 |
Common Stock issued to cash purchase plan participants | 48,611 | 1,303,543 | 75,986 | 1,801,761 |
Common Stock purchased from cash purchase plan participants | (628,726) | (16,823,299) | (768,195) | (18,577,483) |
Common Stock purchased in the open market | (2,101,263) | (56,237,073) | (2,070,003) | (51,284,146) |
Net proceeds from issuance of shares of Common Stock upon exercise of warrants | 2,467 | 2,295 | 73 | 68 |
Total net decrease | (954,770) | (28,966,569) | (1,950,342) | (47,742,610) |
Tri-Continental Corporation | Annual Report 2018 | 19 |
Table of Contents
Year ended December 31, | |||||
2018 | 2017 | 2016 | 2015 | 2014 | |
Per share data | |||||
Net asset value, beginning of period | $29.88 | $25.91 | $23.49 | $24.76 | $23.11 |
Income from investment operations: | |||||
Net investment income | 0.99 | 0.93 | 0.90 | 0.81 | 0.73 |
Net realized and unrealized gain (loss) | (2.35) | 4.24 | 2.33 | (1.37) | 1.70 |
Total from investment operations | (1.36) | 5.17 | 3.23 | (0.56) | 2.43 |
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 | (0.96) | (1.07) | (0.91) | (0.81) | (0.75) |
Net realized gains — Common Stock | (0.95) | (0.10) | — | — | — |
Total distributions to Stockholders | (1.94) | (1.20) | (0.94) | (0.84) | (0.78) |
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 | $26.58 | $29.88 | $25.91 | $23.49 | $24.76 |
Adjusted net asset value, end of period(a) | $26.48 | $29.77 | $25.83 | $23.42 | $24.68 |
Market price, end of period | $23.52 | $26.94 | $22.05 | $20.02 | $21.41 |
Total return | |||||
Based upon net asset value | (4.10%) | 20.82% | 15.25% | (1.36%) | 11.09% |
Based upon market price | (5.88%) | 28.00% | 15.08% | (2.78%) | 11.11% |
Ratios to average net assets | |||||
Expenses to average net assets for Common Stock(b) | 0.49% | 0.49% | 0.50% | 0.50% | 0.49% |
Net investment income to average net assets for Common Stock | 3.14% | 3.21% | 3.59% | 3.16% | 2.91% |
Supplemental data | |||||
Net assets, end of period (000’s): | |||||
Common Stock | $1,431,211 | $1,637,553 | $1,470,843 | $1,382,712 | $1,511,285 |
Preferred Stock | $37,637 | $37,637 | $37,637 | $37,637 | $37,637 |
Total net assets | $1,468,848 | $1,675,190 | $1,508,480 | $1,420,349 | $1,548,922 |
Portfolio turnover | 63% | 95% | 82% | 76% | 76% |
Notes to Financial Highlights | |
(a) | Assumes the exercise of outstanding warrants. |
(b) | In addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense ratios. |
20 | Tri-Continental Corporation | Annual Report 2018 |
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December 31, 2018
Tri-Continental Corporation | Annual Report 2018 | 21 |
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December 31, 2018
22 | Tri-Continental Corporation | Annual Report 2018 |
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Tri-Continental Corporation | Annual Report 2018 | 23 |
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December 31, 2018
Asset derivatives | ||
Risk exposure category | Statement of assets and liabilities location | Fair value ($) |
Equity risk | Component of total distributable earnings (loss) — unrealized appreciation on futures contracts | 285,306* |
* | 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 ($) |
Equity risk | 321,497 |
Change in unrealized appreciation (depreciation) on derivatives recognized in income | |
Risk exposure category | Futures contracts ($) |
Equity risk | 273,157 |
Derivative instrument | Average notional amounts ($)* |
Futures contracts — long | 14,372,765 |
* | Based on the ending quarterly outstanding amounts for the year ended December 31, 2018. |
24 | Tri-Continental Corporation | Annual Report 2018 |
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Tri-Continental Corporation | Annual Report 2018 | 25 |
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December 31, 2018
26 | Tri-Continental Corporation | Annual Report 2018 |
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Tri-Continental Corporation | Annual Report 2018 | 27 |
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December 31, 2018
Undistributed net investment income ($) | Accumulated net realized gain ($) | Paid in capital ($) |
1,023,853 | (1,206,137) | 182,284 |
Year Ended December 31, 2018 | Year Ended December 31, 2017 | ||||
Ordinary income ($) | Long-term capital gains ($) | Total ($) | Ordinary income ($) | Long-term capital gains ($) | Total ($) |
59,037,194 | 44,887,085 | 103,924,279 | 61,316,946 | 5,188,617 | 66,505,563 |
Undistributed ordinary income ($) | Undistributed long-term capital gains ($) | Capital loss carryforwards ($) | Net unrealized (depreciation) ($) |
1,862,392 | 5,219,786 | — | (46,187,015) |
Federal tax cost ($) | Gross unrealized appreciation ($) | Gross unrealized (depreciation) ($) | Net unrealized (depreciation) ($) |
1,507,615,451 | 96,352,396 | (142,539,411) | (46,187,015) |
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December 31, 2018
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December 31, 2018
Borrower or lender | Average loan balance ($) | Weighted average interest rate (%) | Days outstanding |
Lender | 1,025,000 | 2.90 | 4 |
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December 31, 2018
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December 31, 2018
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(Unaudited)
Qualified dividend income | Dividends received deduction | Section 199A dividends | Capital gain dividend |
47.51% | 44.99% | 3.85% | $39,826,357 |
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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 | 123 | 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; former Advisory Board Member, University of Colorado Business School, 2015-2018 |
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; Member and interim Chair, Minnesota Sports Facilities Authority, January-July 2017; Interim President and Chief Executive Officer, BlueCross BlueShield of Minnesota (health Care insurance), February-July 2018 | 123 | Trustee, BlueCross BluesShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota Sports Facilities Authority, January-July 2017 |
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 | 123 | 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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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 |
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 | 123 | Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 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 | 123 | 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. | 123 | 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) |
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 | 123 | Director, BlueCross BlueShield of South Carolina since April 2008; 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; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018 |
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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 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. | 192 | 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 | Chief Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019) | Vice President — Accounting and Tax, Columbia Management Investment Advisers, LLC, since May 2010; senior officer of Columbia Funds and affiliated funds since 2002 (previously, Treasurer and Chief Accounting Officer, January 2009-January 2019 and December 2015-January 2019, respectively). |
Joseph Beranek 5890 Ameriprise Financial Center Minneapolis, MN 55474 Born 1965 | Treasurer and Chief Accounting Officer (Principal Accounting Officer) (2019) | Vice President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously, Vice President — Pricing and Corporate Actions, May 2010-March 2017). |
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); 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. |
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 Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously, Vice President and Group Counsel, August 2011 - August 2018); 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 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 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, 2018 and December 31, 2017 are approximately as follows:
2018 | 2017 | |
$37,500 | $37,400 |
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.
(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, 2018 and December 31, 2017 are approximately as follows:
2018 | 2017 | |
$0 | $0 |
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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.
During the fiscal years ended December 31, 2018 and December 31, 2017, there were no Audit-Related Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including anysub-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, 2018 and December 31, 2017 are approximately as follows:
2018 | 2017 | |
$9,100 | $6,200 |
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, 2018 and December 31, 2017, there were no Tax Fees billed by the registrant’s principal accountant to the registrant’s investment adviser (not including anysub-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, 2018 and December 31, 2017 are approximately as follows:
2018 | 2017 | |
$0 | $0 |
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 anysub-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
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operations and financial reporting of the registrant during the fiscal years ended December 31, 2018 and December 31, 2017 are approximately as follows:
2018 | 2017 | |
$225,000 | $225,000 |
In both fiscal years 2018 and 2017, All Other Fees primarily consist of fees billed for internal control examinations of the registrant’s transfer agent and investment advisor.
(e)(1) Audit CommitteePre-Approval Policies and Procedures
The registrant’s Audit Committee is required topre-approve the engagement of the registrant’s independent auditors to provide audit andnon-audit services to the registrant andnon-audit services to its investment adviser (excluding anysub-adviser whose role is primarily portfolio management and issub-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 andNon-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 andnon-audit services to the registrant’s Adviser and its Control Affiliates. A service will require specificpre-approval by the Audit Committee if it is to be provided by the Fund’s independent auditor; provided, however, thatpre-approval ofnon-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 delegatepre-approval authority to anypre-designated member or members who are independent board members. The member(s) to whom such authority is delegated must report, for informational purposes only, anypre-approval decisions to the Audit Committee at its next regular meeting. The Audit Committee’s responsibilities with respect to thepre-approval of services performed by the independent auditor may not be delegated to management.
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 specificpre-approval. This schedule will provide a description of each type of service that is subject to specificpre-approval, along with total projected fees for each service. The pre-approval will generally cover aone-year period. The Audit Committee will review and approve the types of services and the projected fees for the nextone-year period and may add to, or subtract from, the list ofpre-approved services from time to time, based on
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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 specificpre-approval and a description of services provided by the independent auditor, by category, with actual fees during the current reporting period.
*****
(e)(2) 100% of the services performed for items (b) through (d) above during 2018 and 2017 werepre-approved by the registrant’s Audit Committee.
(f) Not applicable.
(g) The aggregatenon-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including anysub-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, 2018 and December 31, 2017 are approximately as follows:
2018 | 2017 | |
$234,100 | $231,200 |
(h) The registrant’s Audit Committee of the Board of Directors has considered whether the provision ofnon-audit services that were rendered to the registrant’s adviser (not including anysub-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 notpre-approved pursuant to paragraph (c)(7)(ii) of Rule2-01 of RegulationS-X, is compatible with maintaining the principal accountant’s independence.
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 and Catherine James Paglia are each independent trustees and collectively constitute the entire Audit Committee. |
(b) | Not applicable. |
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Item 6. | Investments |
(a) | The registrant’s “Schedule I – Investments in securities of unaffiliated issuers” (as set forth in 17 CFR210.12-12) is included in Item 1 of this FormN-CSR. |
(b) | Not applicable. |
Item 7. | Disclosure of Proxy Voting Policies and Procedures forClosed-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. In deciding to delegate this responsibility to the Investment Manager, the Board reviewed the policies adopted by the Investment Manager. These included the procedures that the Investment Manager follows when a vote presents a conflict between the interests of the Funds and their shareholders and the Investment Manager and its affiliates.
The Investment Manager’s policy is to vote all proxies for Fund securities in a manner considered by the Investment Manager to be in the best economic interests of its clients, including the Funds, without regard to any benefit or detriment to the Investment Manager, its employees or its affiliates. The best economic interests of clients is defined for this purpose as the interest of enhancing or protecting the value of client accounts, considered as a group rather than individually, as the Investment Manager determines in its discretion. The Investment Manager endeavors to vote all proxies of which it becomes aware prior to the vote deadline; provided, however, that in certain circumstances the Investment Manager may refrain from voting securities. For instance, the Investment Manager may refrain from voting foreign securities if it determines that the costs of voting outweigh the expected benefits of voting and typically will not vote securities if voting would impose trading restrictions.
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.
Oversight. The operation of the Investment Manager’s proxy voting policy and procedures is overseen by a committee (the Proxy Voting Committee) composed of representatives of the Investment Manager’s equity investments, equity research, responsible investment, compliance, legal and operations functions. The Proxy Voting Committee has the responsibility to review, at least annually, the Investment Manager’s proxy voting policies to ensure consistency with internal policies, regulatory requirements, conflicts of interest and client disclosures. The Board reviews on an annual basis, or more frequently as determined appropriate, the Investment Manager’s administration of the proxy voting process.
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Corporate Governance and Proxy Voting Principles (the Principles). The Investment Manager has adopted the Principles, which set out the Investment Manager’s views on key issues and the broad principles shaping its approach, as well as the types of related voting action the Investment Manager may take. The Principles also provide indicative examples of key guidelines used in any given region, which illustrate the standards against which voting decisions are considered. The Investment Manager has developed voting stances that align with the Principles and will generally vote in accordance with such voting stances. The Proxy Voting Committee or investment professionals may determine to vote differently from the voting stances on particular proposals in the event it determines that doing so is in the clients’ best economic interests. The Investment Manager 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 stances or a voting determination must be made on acase-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 may determine proxy votes when proposals require special consideration.
Addressing Conflicts of Interest. The Investment Manager seeks to address potential material conflicts of interest by voting in accordance with predetermined voting stances. In addition, if the Investment Manager determines that a material conflict of interest exists, the Investment Manager will invoke one or more of the following conflict management practices: (i) causing the proxies to be voted in accordance with the recommendations of an independent third party (which may be the Investment Manager’s proxy voting administrator or research provider); (ii) causing the proxies to be delegated to an independent third party (which may be the Investment Manager’s proxy voting administrator or research provider); and (iii) in infrequent cases, forwarding the proxies to an Independent Trustee authorized to vote the proxies for the Funds. A member of the Proxy Voting Committee is prohibited from voting on any proposal for which he or she has a conflict of interest by reason of a direct relationship with the issuer or other party affected by a given proposal. Persons making recommendations to the Proxy Voting Committee or its members are required to disclose to the committee any relationship with a party making a proposal or other matter known to the person that would create a potential conflict of interest.
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 holding Funds will typically vote proxies of the underlying funds in the same proportion as the vote of all other holders of the underlying fund’s shares, unless the Board otherwise instructs.
Proxy Voting Agents. The Investment Manager has retained Institutional Shareholder Services Inc., a third-party vendor, as its proxy voting administrator to implement its
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proxy voting process and to provide recordkeeping and vote disclosure services. The Investment Manager has retained both Institutional Shareholder Services Inc. and Glass Lewis & Company, LLC 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 columbiathreadneedleus.com and/or (ii) on the SEC’s website at www.sec.gov. For a copy of the Investment Manager’s Principles in effect on the date of this SAI, see Appendix B to the SAI.
Item 8. | Portfolio Managers ofClosed-End Management Investment Companies. |
Portfolio Managers
Portfolio Manager | Title | Role with the Corporation | Managed the Corporation Since | |||
Brian Condon, CFA, CAIA | 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. Albanesejoined 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 an 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.
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Other Accounts Managed by the Portfolio Managers:
Fund | Portfolio Manager | Other Accounts Managed | Performance Based Accounts | Ownership of Fund Shares | ||||||
Number and type of account | Approximate Total Net Assets (excluding the fund) | |||||||||
For fiscal period ending December 31, 2018, unless otherwise noted | ||||||||||
Tri-Continental Corporation | Brian Condon | 22 RICs 2 PIVs 66 Other accounts | $11.30 billion $94.13 million $6.74 billion | None | $100,001- $500,000 | |||||
David King | 5 RICs 7 Other accounts | $5.64 billion $24.17 million | None | Over $1,000,000 | ||||||
Yan Jin | 5 RICs 10 Other accounts | $5.64 billion $4.39 million | None | $100,001- $500,000 | ||||||
Peter Albanese | 16 RICs 2 PIVs 64 Other accounts | $11.25 billion $94.13 million $6.73 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.
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
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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 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 offunds-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.
Under the Columbia Management annual incentive plan for investment professionals, awards are discretionary, and the amount of incentive awards for investment team members is variable based on (1) an evaluation of the investment performance of the investment team of which the investment professional is a member, reflecting the performance (and client experience) of the funds or accounts the investment professional manages and, if applicable, reflecting the individual’s work as an investment research analyst, (2) the results of a peer and/or management review of the individual, taking into account attributes such as team participation, investment process followed, communications,
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and leadership, and (3) the amount of aggregate funding of the plan determined by senior management of Columbia Threadneedle Investments and Ameriprise Financial, which takes into account Columbia Threadneedle Investments revenues and profitability, as well as Ameriprise Financial profitability, historical plan funding levels and other factors. Columbia Threadneedle Investments revenues and profitability are largely determined by assets under management. In determining the allocation of incentive compensation to investment teams, the amount of assets and related revenues managed by the team is also considered. Individual awards are subject to a comprehensive risk adjustment review process to ensure proper reflection in remuneration of adherence to our controls and Code of Conduct.
Investment performance for a fund or other account is measured using a scorecard that compares account performance against benchmarks and/or peer groups. Account performance may also be compared to unaffiliated passively managed ETFs, taking into consideration the management fees of comparable passively managed ETFs, when available and as determined by the Investment Manager. Consideration is given to relative performance over theone-, three- and five-year periods, with the largest weighting on the three-year comparison. For individuals and teams that manage multiple strategies and accounts, relative asset size is a key determinant in calculating the aggregate score, with weighting typically proportionate to actual assets. For investment leaders who have group management responsibilities, another factor in their evaluation is an assessment of the group’s overall investment performance. Exceptions to this general approach to bonuses exist for certain teams and individuals.
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.
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.
Item 9. | Purchases of Equity Securities byClosed-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) | ||||||||||||
07-01-18 to07-31-18 | 245,762 | $ | 26.96 | 245,762 | 1,237,493 | |||||||||||
08-01-18 to08-31-18 | 275,724 | $ | 27.61 | 275,724 | 961,769 | |||||||||||
09-01-18 to09-30-18 | 120,836 | $ | 27.77 | 120,836 | 840,933 | |||||||||||
10-01-18 to10-31-18 | 314,890 | $ | 26.76 | 314,890 | 526,043 | |||||||||||
11-01-18 to11-30-18 | 312,541 | $ | 26.13 | 312,541 | 213,502 | |||||||||||
12-01-18 to12-31-18 | 209,580 | $ | 24.29 | 209,580 | 3,922 |
(1) | The registrant has a stock repurchase program. For 2018, 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 the financial statement purposes; therefore, shares reflected may vary from capital stock activity presented in the shareholder report. |
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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 FormN-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 control over financial reporting that occurred during 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 forClosed-End Management Investment Companies |
Not applicable.
Item 13. | Exhibits. |
(a)(1) Code of ethics required to be disclosed under Item 2 of FormN-CSR attached hereto as Exhibit 99.CODE ETH.
(a)(2) Certifications pursuant to Rule30a-2(a) under the Investment Company Act of 1940 (17 CFR270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) None.
(b) Certification pursuant to Rule30a-2(b) under the Investment Company Act of 1940 (17 CFR270.30a-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, 2019 |
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, 2019 |
By (Signature and Title) | /s/ Michael G. Clarke | |
Michael G. Clarke, Chief Financial Officer |
Date | February 21, 2019 |