N-Q 1 c53721_nq.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-0266

Tri-Continental Corporation
(Exact name of Registrant as specified in charter)

100 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip code)

Lawrence P. Vogel
100 Park Avenue
New York, New York 10017
(Name and address of agent for service)

Registrant’s telephone number, including area code: (212) 850-1864

Date of fiscal year end: 12/31

Date of reporting period: 3/31/08



FORM N-Q

ITEM 1. SCHEDULE OF INVESTMENTS.

Tri-Continental Corporation  
Schedule of Investments (unaudited) March 31, 2008
  Shares, Shares Subject to Call,      
  Partnership Interest or      
  Principal Amount  
Value
COMMON STOCKS 94.1%         
         
AEROSPACE AND         
      DEFENSE 2.9%         
Boeing Company (The)  137,900  shs.  $  10,255,623 
General Dynamics Corporation  141,800      11,821,866 
Honeywell International Inc.  382,700      21,591,934 
United Technologies Corporation  237,200      16,324,104 
        59,993,527 
         
AIR FREIGHT AND         
      LOGISTICS 1.1%         
United Parcel Service Inc.         
     (Class B)  310,900      22,701,918 
         
AIRLINES 0.7%         
AMR Corporation*  606,600      5,471,532 
Delta Air Lines, Inc.*  466,329      4,010,429 
Northwest Airlines Corporation*  479,800      4,313,402 
        13,795,363 
         
AUTO COMPONENTS 0.6%         
Goodyear Tire & Rubber         
     Company (The)*  474,300      12,236,940 
         
AUTOMOBILES 0.4%         
General Motors Corporation  433,300      8,254,365 
         
BIOTECHNOLOGY 1.9%         
Amgen Inc.*  193,600      8,088,608 
Cephalon, Inc.*  346,700      22,327,480 
ImClone Systems Incorporated*  225,000      9,544,500 
        39,960,588 
         
CAPITAL MARKETS 3.0%         
Bank of New York Mellon         
     Corporation (The)  241,600      10,081,968 
Fortress Investment Group         
     LLC (Class A)  1,603,482      19,690,759 
Goldman Sachs Group,         
     Inc. (The)  52,350      8,658,167 
Lehman Brothers Holdings Inc.  192,500      7,245,700 
Morgan Stanley  377,300      17,242,610 
        62,919,204 
         
CHEMICALS 0.4%         
Monsanto Company  73,200      8,161,800 
         
         
COMMERCIAL BANKS 2.1%         
PNC Financial Services         
     Group, Inc. (The)  185,300      12,150,121 
Wachovia Corporation  508,363      13,725,801 
Wells Fargo & Company  600,700      17,480,370 
        43,356,292 
         
COMMERCIAL SERVICES         
      AND SUPPLIES 0.6%         
Waste Management Inc.  367,000      12,316,520 
         
COMMUNICATIONS         
      EQUIPMENT 6.9%         
Cisco Systems, Inc.*  1,107,180      26,671,966 
Comverse Technology, Inc.*  3,321,214      51,495,423 
Nokia Corporation (ADR)  604,000      19,225,320 
QUALCOMM Inc.  640,300      26,252,300 
Research in Motion Limited*  172,500      19,359,675 
        143,004,684 
         
COMPUTERS AND         
      PERIPHERALS 3.9%         
Apple Inc.*  153,100      21,969,850 
Hewlett-Packard Company  606,600      27,697,356 
International Business Machines  174,800      20,126,472 
Seagate Technology  488,858      10,236,687 
        80,030,365 
         
CONSTRUCTION AND         
      ENGINEERING 0.8%         
Foster Wheeler Ltd.*  165,400      9,364,948 
Quanta Services, Inc.*  289,600      6,710,032 
        16,074,980 
         
CONSUMER FINANCE 0.7%         
American Express Company  351,200      15,354,464 
         
CONTAINERS AND         
      PACKAGING 1.8%         
Smurfit-Stone Container         
     Company*  4,777,704      36,788,321 
         
DIVERSIFIED FINANCIAL         
      SERVICES 4.1%         
Bank of America Corporation  919,140      34,844,597 
CIT Group Inc.  248,800      2,948,280 
JPMorgan Chase & Co.  1,107,000      47,545,650 
        85,338,527 
                            
DIVERSIFIED         
      TELECOMMUNICATION         
      SERVICES 3.1%         
AT&T Inc.  1,114,300      42,677,690 
Qwest Communications         
     International Inc.  1,996,996      9,046,392 
Time Warner Telecom,         
     Inc. (Class A)*  813,500      12,601,115 
        64,325,197 
         
ELECTRIC UTILITIES 0.8%         
Exelon Corporation  208,700      16,961,049 
         
ENERGY EQUIPMENT         
      AND SERVICES 3.2%         
Baker Hughes Incorporated  154,200      10,562,700 
Halliburton Company  376,700      14,815,611 
Noble Corporation  251,600      12,496,972 
Schlumberger Limited  184,700      16,068,900 
Transocean Inc.*  94,400      12,762,880 
        66,707,063 
         
FOOD AND STAPLES         
      RETAILING 3.3%         
CVS Caremark Corporation  395,800      16,033,858 
Rite Aid Corporation*  17,821,351      52,394,772 
        68,428,630 
         
HEALTH CARE EQUIPMENT         
      AND SUPPLIES 1.7%         
Baxter International Inc.  160,200      9,262,764 
St. Jude Medical, Inc.*  334,400      14,442,736 
Zimmer Holdings, Inc.*  161,800      12,597,748 
        36,303,248 
         
HEALTH CARE PROVIDERS         
      AND SERVICES 1.4%         
Express Scripts, Inc.*  168,700      10,850,784 
Health Net. Inc.*  84,975      2,617,230 
Quest Diagnostics Inc.  233,500      10,570,545 
UnitedHealth Group         
     Incorporated  119,980      4,122,513 
        28,161,072 
         
HOTELS, RESTAURANTS         
      AND LEISURE 0.8%         
Wynn Resorts, Limited*  169,900      17,098,736 
                            
INDEPENDENT POWER         
      PRODUCERS AND         
      ENERGY TRADERS 0.5%         
AES Corporation (The)*  669,600      11,162,232 
         
INDUSTRIAL         
      CONGLOMERATES 2.6%         
3M Company  109,600      8,674,840 
General Electric Company  1,202,100      44,489,721 
        53,164,561 
         
INSURANCE 3.6%         
American International         
     Group, Inc.  483,300      20,902,725 
Hartford Financial Services         
     Group, Inc.  283,100      21,450,487 
MetLife, Inc.  314,600      18,957,796 
Prudential Financial, Inc.  176,434      13,805,961 
        75,116,969 
         
INTERNET SOFTWARE         
      AND SERVICES 2.6%         
Google Inc. (Class A)*  29,100      12,817,677 
SAVVIS, Inc.*  1,309,970      21,313,212 
Yahoo!, Inc.*  707,712      20,474,108 
        54,604,997 
         
LIFE SCIENCES TOOLS         
      AND SERVICES 0.7%         
Applera Corporation  471,300      15,486,918 
         
MACHINERY 0.9%         
Caterpillar Inc.  155,300      12,158,437 
Deere & Company  86,700      6,974,148 
        19,132,585 
         
MEDIA 3.8%         
Comcast Corporation (Class A)  381,400      7,376,276 
Gemstar-TV Guide         
     International, Inc.*  13,086,820      61,508,054 
Time Warner Inc.  736,700      10,328,534 
        79,212,864 
         
METALS AND MINING 2.3%         
Alcoa Inc.  529,613      19,097,845 
Freeport-McMoRan Copper         
     & Gold, Inc. (Class B)  299,900      28,856,378 
        47,954,223 
                            
MULTILINE RETAIL 2.2%         
Kohl’s Corporation*  496,211      21,282,490 
Target Corporation  501,900      25,436,292 
        46,718,782 
         
OIL, GAS AND         
      CONSUMABLE FUELS 8.5%         
Chevron Corporation  407,700      34,801,272 
ConocoPhillips  337,100      25,690,391 
El Paso Corporation  1,268,700      21,111,168 
Exxon Mobil Corporation  795,000      67,241,100 
Valero Energy Corporation  196,100      9,630,471 
XTO Energy Inc.  276,125      17,081,092 
        175,555,494 
         
PHARMACEUTICALS 7.4%         
Abbott Laboratories  356,100      19,638,915 
Bristol-Myers Squibb Company  907,800      19,336,140 
Forest Laboratories, Inc.*  234,900      9,398,349 
Johnson & Johnson  215,400      13,972,998 
Merck & Co., Inc.  470,800      17,866,860 
Mylan Laboratories Inc.*  892,100      10,348,360 
Pfizer Inc.  1,145,138      23,967,738 
Schering-Plough Corporation  503,300      7,252,553 
Sepracor Inc.*  259,900      5,073,248 
Wyeth  640,434      26,744,524 
        153,599,685 
         
SEMICONDUCTORS AND         
      SEMICONDUCTOR         
      EQUIPMENT 3.5%         
Intel Corporation  971,800      20,582,724 
Marvell Technology         
      Group Ltd.*  3,520,581      38,303,921 
NVIDIA Corporation*  428,000      8,470,120 
QIMONDA AG (ADR)*  1,042,521      4,493,266 
        71,850,031 
         
SOFTWARE 3.4%         
Adobe Systems Incorporated*  42,965      1,529,124 
BMC Software Inc.*  280,200      9,112,104 
Microsoft Corporation  1,479,856      41,998,313 
Oracle Corporation*  900,100      17,605,956 
        70,245,497 
                            
SPECIALTY RETAIL 1.7%         
Home Depot, Inc. (The)  308,200        8,620,354 
OfficeMax Incorporated  1,344,192      25,727,835 
        34,348,189 
         
THRIFTS AND         
      MORTGAGE         
      FINANCE 0.0%         
Countrywide Financial         
     Corporation  1      6 
         
TOBACCO 3.8%         
Altria Group, Inc.  838,480      18,614,256 
Philip Morris International         
     Inc.*  838,480      42,410,318 
UST Inc.  338,600      18,460,472 
        79,485,046 
         
WIRELESS         
      TELECOMMUNICATION         
      SERVICES 0.4%         
NII Holdings, Inc.*  264,700      8,412,166 
         
TOTAL COMMON STOCKS        1,954,323,098 
         
         
OPTIONS PURCHASED* 0.9%         
         
BIOTECHNOLOGY 0.0%         
Amgen Inc., Call expiring         
     January 2009 at $60  394,300      264,181 
         
CAPITAL MARKETS 0.0%         
Lehman Brothers Holdings         
     Inc., Call expiring         
     January 2009 at $80  387,300      213,015 
         
COMMUNICATIONS         
      EQUIPMENT 0.2%         
JDS Uniphase Corporation, Call         
     expiring January 2009 at $15  994,900      1,492,350 
Motorola, Inc., Call expiring         
     January 2009 at $20  1,096,200      109,620 
QUALCOMM Inc., Call         
     expiring January 2009 at $40  313,200      1,847,880 
        3,449,850 
                            
DIVERSIFIED FINANCIAL         
      SERVICES 0.0%         
CIT Group Inc., Call expiring         
     January 2009 at $35  303,600      151,800 
Citigroup Inc., Call expiring         
     January 2009 at $30  323,900      411,353 
        563,153 
         
FOOD AND STAPLES         
      RETAILING 0.0%         
Rite Aid Corporation, Call         
     expiring January 2009 at $5  3,495,200      1,223,320 
         
HOTELS, RESTAURANTS         
      AND LEISURE 0.0%         
Starbucks Corporation, Call         
     expiring January 2009 at $30  583,400      116,680 
         
INDEX DERIVATIVES 0.2%         
Financial Select Sector SPDR,         
     Call expiring January 2009         
     at $30  714,300      964,305 
Powershares, Call expiring         
     December 2008 at $48  646,500      1,593,621 
SPDR Trust, Call expiring         
     December 2008 at $140  161,600      1,163,520 
        3,721,446 
         
INTERNET SOFTWARE         
      AND SERVICES 0.3%         
Yahoo!, Inc., Call expiring         
     January 2009 at $25  728,200      4,369,200 
Yahoo!, Inc., Call expiring         
     January 2009 at $30  556,300      1,418,565 
        5,787,765 
         
PHARMACEUTICALS 0.1%         
Bristol-Myers Squibb Company,         
     Call expiring January 2009         
     at $25  454,000      426,760 
Wyeth, Call expiring July 2008         
     at $42.50  413,100      1,321,920 
        1,748,680 
         
SEMICONDUCTORS AND        
      SEMICONDUCTOR         
      EQUIPMENT 0.1%         
Marvell Technology         
     Group, Ltd., Call expiring         
     January 2009 at $15  996,400        846,940 
Marvell Technology         
     Group, Ltd., Call expiring         
     January 2009 at $20  908,200      227,050 
Micron Technology Inc.,         
     Call expiring         
     January 2009 at $15  2,142,400      321,360 
        1,395,350 
         
TOTAL OPTIONS PURCHASED        18,483,440 
         
         
LIMITED PARTNERSHIP† 0.1%         
WCAS Capital         
     Partners II, L.P.  $4,292,803      2,572,454 
         
         
SHORT-TERM HOLDINGS 6.3%         
         
EQUITY-LINKED NOTES†† 3.5%         
Deutsche Bank:         
     39%, 9/5/08 (a)  14,844,000      12,797,012 
Goldman Sachs Group:         
     35.5%, 4/21/08 (b)  19,446,000      8,248,021 
     34.6%, 10/2/08 (c)  14,844,000      14,461,619 
Lehman Brothers:         
     53.51%, 9/14/08 (d)  14,844,000      11,231,267 
     39.5%, 10/2/08 (e)  14,844,000      14,406,102 
Morgan Stanley:         
     43.3%, 5/15/08 (f)  18,564,000      10,464,713 
         
TOTAL EQUITY LINKED NOTES       71,608,734 
         
TIME DEPOSIT 2.8%        
Bank of Montreal, 
58,973,000 
    58,973,000
     2.25%, 4/1/2008         
TOTAL SHORT-TERM HOLDINGS        130,581,734
         
        2,105,960,726
TOTAL INVESTMENTS 101.4%         
         
OTHER ASSETS LESS        (29,144,178)
      LIABILITIES (1.4)%         
         
NET INVESTMENT ASSETS 100.0%     
$
2,076,816,548
              

            

At March 31, 2008, the cost of investments for federal income tax purposes was $2,499,949,837. The tax basis gross unrealized appreciation and depreciation of portfolio securities were $70,031,216 and $464,020,327, respectively.

          
*       

Non-income producing security.

          
†       

At March 31, 2008, Tri-Continental Corporation owned one limited partnership investment that was purchased through a private offering and cannot be sold without prior registration under the Securities Act of 1933 or pursuant to an exemption therefrom. The investment is valued at fair value as determined in accordance with procedures approved by the Board of Directors of the Corporation. The acquisition dates of investment in the limited partnership, along with the cost and value at March 31, 2008, was as follows:


      Investment         Acquisition Dates        Cost       Value
  WCAS Capital Partners II, L.P.    12/11/90 to 3/24/98    $ 4,292,803    $ 2,572,454 

††     

The security may be offered and sold only to a “qualified institutional buyer” under Rule 144A of the Securities Act of 1933. These notes are exchangeable at maturity, based on the terms of the respective notes, for shares of common stock of a company or cash at a maturity value which is generally determined as follows:

The principal amount of the notes plus or minus the lowest return of the companies’ respective stock prices determined at maturity from the date of purchase of the notes:

          
  (a)      Oracle Corporation, Schering-Plough Corporation and Target Corporation
          
  (b)

Comverse Technology, Inc., Northwest Airlines Corporation and Qwest Communications International Inc.

          
  (c)

Adobe Systems Incorporated, UnitedHealth Group Incorporated and Wyeth

          
  (d)

Delta Air Lines, Inc., Intel Corporation and Mylan Inc.

          
  (e)

Health Net, Inc., Kohl’s Corporation and Prudential Financial, Inc.

          
  (f)

NII Holdings, Inc., Office Depot, Inc. and Qwest Communications International Inc.

 

ADR — American Depositary Receipts.

Security Valuation — Securities traded on an exchange are valued at the last sales price on the primary exchange or market on which they are traded. Securities not listed on an exchange or security market, or securities for which there is no last sales price, are valued at the mean of the most recent bid and asked prices or are valued by J. & W. Seligman & Co. Incorporated (the “Manager”) based on quotations provided by primary market makers in such securities. Securities for which market quotations are not readily available (or are otherwise no longer valid or reliable) are valued at fair value determined in accordance with procedures approved by the Board of Directors. This can occur in the event of, among other things, natural disasters, acts of terrorism, market disruptions, intra-day trading halts, and extreme market volatility. The determination of fair value involves subjective judgments. As a result, using fair value to price a security may result in a price materially different from the prices used by other investment companies to determine net asset value or the price that may be realized upon the actual sale of the security. Short-term holdings maturing in 60 days or less are valued at current market quotations or amortized cost if the Manager believes it approximates fair value. Short-term holdings that mature in more than 60 days are valued at current market quotations until the 60th day prior to maturity and are then valued as described above for securities maturing in 60 days or less.

Fair Value Measurement — On January 1, 2008, the Corporation adopted Statement of Financial Accounting Standards No. 157 (“SFAS 157”), “Fair Value Measurements.” SFAS 157 establishes a three-tier hierarchy to classify the assumptions, referred to as inputs, used in valuation techniques (see Security Valuation above) to measure fair value of the Corporation’s investments. These inputs are summarized in three broad levels: Level 1 – quoted prices in active markets for identical investments; Level 2 – other significant observable inputs (including quoted prices in inactive markets or for similar investments); and Level 3 – significant unobservable inputs (including the Corporation’s own assumptions in determining fair value). The inputs or methodology used for valuing securities may not be an indication of the risk associated with investing in those securities.

The following is a summary of the value of the Corporation’s investments as of March 31, 2008 based on the level of inputs used:

    Valuation Inputs    Value
Level 1   Quoted Prices   $ 1,972,806,538 
Level 2   Other Significant Observable Inputs     130,581,734 
Level 3   Significant Unobservable Inputs     2,572,454 
    Total   $ 2,105,960,726 

As required by SFAS 157, the following is a reconciliation of investments for which significant unobservable inputs (Level 3) were used to determine the fair value of investments classified as Level 3 at either the beginning or end of the period:

Balance as of December 31, 2007    $ 1,784,956 
Net change in unrealized depreciation      787,498 
Balance as of March 31, 2008    $ 2,572,454 
Net change in unrealized depreciation from
      investments still held as of March 31, 2008
  $ 787,498 

Risk — To the extent that the Corporation invests a substantial percentage of its assets in an industry, the Corporation’s performance may be negatively affected if that industry falls out of favor. Stocks of large-capitalization companies have at times experienced periods of volatility and negative performance. During such periods, the value of such stocks may decline and the Corporation’s performance may be negatively affected.

 



ITEM 2. CONTROLS AND PROCEDURES.

      a.    

The registrant’s principal executive officer and principal financial officer have concluded, based upon their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures provide reasonable assurance that material information required to be disclosed by the registrant in the report it files or submits on Form N-Q is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms and that such material information is accumulated and communicated to the registrant’s management, including its principal executive officer and principal financial officer, as appropriate, in order to allow timely decisions regarding required disclosure.

 
  b.

The registrant’s principal executive officer and principal financial officer are aware of no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

ITEM 3. EXHIBITS.

      (a)   

Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.

 


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.

TRI-CONTINENTAL CORPORATION


By:    /S/ BRIAN T. ZINO 
    Brian T. Zino 
    President and Chief Executive Officer 
 
Date:    May 27, 2008 

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 in the capacities and on the dates indicated.


By:    /S/ BRIAN T. ZINO 
    Brian T. Zino 
    President and Chief Executive Officer 
 
Date:    May 27, 2008 



By:    /S/ LAWRENCE P. VOGEL 
    Lawrence P. Vogel 
    Vice President, Treasurer and Chief Financial Officer 
 
Date:    May 27, 2008 



TRI-CONTINENTAL CORPORATION

EXHIBIT INDEX

      (a)   

Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940.