c29522_n30b2

Tri-Continental Corporation

To the Stockholders:

     Your third quarter Stockholder report for Tri-Continental Corporation follows this letter. This report contains Tri-Continental’s investment results and its portfolio of investments at September 30, 2003.

     For the three months ended September 30, 2003, Tri-Continental posted a total return of 2.97% based on net asset value, the S&P 500 returned 2.65%, and the Lipper Closed-End Growth & Income Funds Average returned 3.34%. During the same time period, Tri-Continental returned 1.48% based on market price.

     We are pleased to announce that effective September 4, 2003, J. & W. Seligman & Co.’s Core Equity Group assumed responsibility for Tri-Continental’s portfolio. This change was made as part of the Manager’s commitment to improve Tri-Continental’s investment results. Paul Guidone, who is a Managing Director and the Chief Investment Officer of J. & W. Seligman & Co., will lead a team of six dedicated analysts responsible for researching companies in the various sectors of the economy. Tri-Continental’s investment objective remains unchanged, and it will continue to pursue a total return strategy in order to invest primarily to produce long-term growth of both capital and income, while providing reasonable current income.

     Tri-Continental’s net asset value increased 12.49% during the first three quarters of this year. However, the Corporation has a significant tax loss carryforward from net capital losses realized during the severe bear market of recent years. As a consequence, Tri-Continental will not have a capital gain payout this December. We realize that many Stockholders look forward to a capital gain payment in December, and we understand their disappointment.

     Over time, we are confident that we will be able to offset Tri-Continental’s net realized capital loss carryforward with realized gains and resume capital gain payments, though we cannot predict with any certainty when this will occur. In the interim, any net realized capital gains, like any unrealized gains, will be reflected in an increase in Tri-Continental’s NAV and, importantly, will not be taxable to Stockholders who maintain their investment.

     We thank you for your continued support of Tri-Continental Corporation and look forward to serving your investment needs for many years to come.

By order of the Board of Directors,

William C. Morris
Chairman

Brian T. Zino
President

November 4, 2003

1


Tri-Continental Corporation

Investment Results For Common Stock (unaudited)              
                       
TOTAL RETURNS                      
For Periods Ended September 30, 2003                      
              Average Annual
             
  Three   Nine   One   Five   Ten
  Months*   Months*   Year   Years   Years
 
 
 
 
 

   Market Price**
1.48
%
 
13.96
%
15.23
%
 
(1.15)
%
 
6.66
%
                                 
   Net Asset Value**
2.97
 
12.49
16.68
 
(1.98)
 
6.73
 
                                 
   Lipper Closed-End
 
 
 
 
      Growth & Income
 
 
 
 
      Funds Average***
3.34
 
15.52
21.35
 
1.70
 
7.10
 
                                 
   S&P 500***
2.65
 
14.71
24.37
 
1.00
 
10.04
 
                                 
PRICE PER SHARE
               
 
September 30, 2003
June 30, 2003
March 31, 2003
 
December 31, 2002
 
 
 
 
   Market Price
$14.96
$14.78
$12.81
$13.25
               
   Net Asset Value
17.52
17.06
14.98
15.72

DIVIDEND AND CAPITAL GAIN (LOSS) AND YIELD INFORMATION PER SHARE
For the Nine Months Ended September 30, 2003

       
Capital Gain (Loss)
     
       
     
   
Dividends Paid
 
Realized
Unrealized
 
YieldØ
 
   
 
 
 
 
    
 $0.13
 
$(0.43)
 
$0.37††
 
0.96%
 

The rates of return will vary and the principal value of an investment will fluctuate. Shares, if sold, may be worth more or less than their original cost. Performance data quoted does not reflect the deduction of taxes that a stockholder may pay on Corporation distributions or on the sale of Corporation shares. Past performance is not indicative of future investment results. Due to market volatility, current performance may be higher or lower than the performance quoted above.
*
  
Returns for periods of less than one year are not annualized.
**
  
These rates of return reflect changes in market price or net asset value, as applicable, and assume that all distributions within the period are taken in additional shares.
***
The Lipper Closed-End Growth & Income Funds Average and the S&P 500 are unmanaged benchmarks that assume reinvestment of all distributions. The Lipper Closed-End Growth & Income Funds Average excludes the effect of taxes and any costs associated with the purchase of shares, and the S&P 500 excludes the effect of taxes and fees. The Lipper Closed-End Growth & Income Funds Average measures the performance of closed-end mutual funds with objectives similar to the Corporation. The S&P 500 measures the performance of 500 of the largest US companies based on market capitalizations. Investors cannot invest directly in an index or an average.


  
Preferred Stockholders were paid dividends totaling $1.875 per share.
††
  
Represents the per share amount of net unrealized appreciation of portfolio securities as of September 30, 2003.
Ø
  
Current yield, representing the annualized yield (after dividends on preferred stock) for the 30-day period ended September 30, 2003, has been computed in accordance with SEC regulations and will vary.

2


Tri-Continental Corporation

Largest Portfolio Changes (unaudited)
July 1, 2003 to September 30, 2003

Largest Purchases
Largest Sales
Goldman Sachs Group, Inc. (The)* Bear Stearns Companies Inc. (The)**
SPDR Trust, Series 1* Devon Energy Corporation**
eBay Inc. Wal-Mart Stores, Inc.
Dean Foods Company* LSI Logic Corporation**
Kohl’s Corporation* Citigroup Inc.
International Game Technology* Bank of America Corporation
Wendy’s International, Inc.* J.P. Morgan Chase & Co.
Prudential Financial, Inc.* Limited Brands**
L-3 Communications Holdings, Inc.* General Electric Company
General Dynamics Corporation* Viacom Inc. Class B**

Largest portfolio changes from the previous period to the current period are based on cost of purchases and proceeds from sales of securities, listed in descending order.

*
  
Position added during the period.
**
  
Position eliminated during the period.

10 Largest Equity Holdings (unaudited)

September 30, 2003

Security
Value
 
Percent of Net Investment Assets
 

 
 
 
Citigroup Inc.  
$
77,559,507
 
3.6
 
Microsoft Corporation  
74,600,557
 
3.5
 
eBay Inc.  
61,144,662
 
2.9
 
Pfizer Inc.  
57,009,225
 
2.7
 
Altria Group, Inc.  
53,824,944
 
2.5
 
General Electric Company  
52,508,824
 
2.5
 
American Express Company  
51,216,548
 
2.4
 
Bank of America Corporation  
50,946,073
 
2.4
 
Dell Inc.  
42,955,144
 
2.0
 
SPDR Trust, Series 1  
42,698,640
 
2.0
 

3


Tri-Continental Corporation
Portfolio of Investments (unaudited)
September 30, 2003
  Shares   Value
 
 
COMMON STOCKS  93.0%    
AUTOMOBILES AND        
   COMPONENTS  0.7%        
Lear Corporation*
272,700
$
14,354,928
 


BANKS 6.8%
Bank of America Corporation
652,820
50,946,073
Fannie Mae
146,600
10,291,320
Radian Group Inc.
285,800
12,689,520
U.S. Bancorp
1,284,430
30,813,475
Wachovia Corporation
1,002,763
41,303,808
 


 
146,044,196
 


CAPITAL GOODS  7.6%
Deere & Company
239,300
12,757,083
General Dynamics Corporation
261,000
20,373,660
General Electric Company
1,761,450
52,508,824
Illinois Tool Works Inc.
311,180
20,618,787
L-3 Communications
      Holdings, Inc.*
465,300
20,124,225
PACCAR Inc.
111,700
8,326,118
Parker Hannifin Corporation
228,300
10,205,010
Tyco International Ltd.
837,740
17,115,028
 


 
162,028,735
 


CHEMICALS 1.9%
Air Products and Chemicals, Inc.
725,200
32,706,520
Praxair, Inc.
143,100
8,865,045
 


 
41,571,565
 


COMMUNICATIONS
   EQUIPMENT  1.8%
Cisco Systems, Inc.*
1,619,280
31,624,538
Motorola, Inc.
518,510
6,206,565
 


 
37,831,103
 


COMPUTERS AND
   PERIPHERALS  5.5%
Dell Inc.*
1,286,660
42,955,144
Hewlett-Packard Company
1,040,930
20,152,405
International Business
Machines Corporation
423,820
37,436,020
Sun Microsystems, Inc.*
5,384,780
17,796,698
 


 
118,340,267
     

  Shares   Value
 
 
CONSUMER DURABLES      
   AND APPAREL 2.0%      
Mohawk Industries, Inc.*
286,000
$
20,397,520
Pulte Homes, Inc.
324,800
22,089,648
 


 
42,487,168
 


CONSUMER STAPLES 7.0%
Altria Group, Inc.
1,228,880
53,824,944
Dean Foods Company*
863,400
26,791,302
Procter & Gamble
      Company (The)
291,056
27,015,818
Wal-Mart Stores, Inc.
761,920
42,553,232
 


 
150,185,296
 


DIVERSIFIED
   FINANCIALS 12.6%
American Express Company
1,136,630
51,216,548
Bank of New York
      Company, Inc. (The)
328,380
9,559,142
Citigroup Inc.
1,704,230
77,559,507
Goldman Sachs
      Group, Inc. (The)
468,600
39,315,540
J.P. Morgan Chase & Co.
1,172,100
40,238,193
Mellon Financial Corporation
684,410
20,628,117
Merrill Lynch & Co., Inc.
393,100
21,042,643
Morgan Stanley
184,070
9,288,172
 


 
268,847,862
 


ELECTRONIC EQUIPMENT
      AND INSTRUMENTS 1.0%
Jabil Circuit, Inc.
822,940
21,437,587
 


ENERGY 7.2%
BP p.l.c. ADR (United Kingdom) 433,800
18,262,980
ChevronTexaco Corporation
150,200
10,731,790
ConocoPhillips
297,703
16,299,239
Exxon Mobil Corporation
734,525
26,883,615
Noble Energy, Inc.
391,880
15,009,004
Occidental Petroleum
      Corporation
304,200
10,716,966
Rowan Companies, Inc.*
1,019,600
25,061,768
Royal Dutch Petroleum
      Company NY shares
      (Netherlands)
383,100
16,933,020
Weatherford International Ltd.*
392,600
14,832,428
 


 
154,730,810
 




See footnotes on page 6.

4


Tri-Continental Corporation
Portfolio of Investments (unaudited) (continued)
September 30, 2003
  Shares   Value
 
 
HOTELS, RESTAURANTS      
   AND LEISURE  3.4%      
International Game Technology
805,200
$
22,666,380
Royal Caribbean Cruises Ltd.
988,850
27,796,574
Wendy’s International, Inc.
673,700
21,760,510
 


 
72,223,464
 


INSURANCE 5.2%
American International
      Group, Inc.
630,700
36,391,390
W. R. Berkley Corporation
717,645
24,586,518
Hartford Financial
Services Group, Inc. (The)
212,400
11,178,612
PartnerRe Ltd.
309,900
15,702,633
Prudential Financial, Inc.
595,800
22,259,088
 


 
110,118,241
 


MEDIA 3.0%
Clear Channel
Communications, Inc.
362,200
13,872,260
Time Warner Inc.*
1,074,100
16,229,651
Tribune Company
483,000
22,169,700
Univision Communications Inc.
      Class A*
373,300
11,919,469
 


 
64,191,080
 


PAPER AND FOREST
   PRODUCTS  1.6%
Weyerhaeuser Company
568,220
33,212,459
 


PHARMACEUTICALS AND
BIOTECHNOLOGY 7.4%
Cephalon, Inc.*
262,630
12,052,091
Johnson & Johnson
625,463
30,972,928
Merck & Co., Inc.
414,720
20,993,126
Pfizer Inc.
1,876,538
57,009,225
Teva Pharmaceutical
      Industries Ltd.
      ADR (Israel)
225,080
12,875,701
Wyeth
530,100
24,437,610
 


 
158,340,681
 


RETAILING 4.9%
eBay Inc.*
1,143,960
61,144,662
Kohl’s Corporation*
441,100
23,598,850
Michaels Stores, Inc.
504,500
20,563,420
 


 
105,306,932
 


  Shares or      
  Partnership Interest  
Value
 
 
SEMICONDUCTORS AND          
   SEMICONDUCTOR          
   EQUIPMENT 4.7%
Analog Devices, Inc.*
89,550 shs.
$
3,404,691
Intel Corporation
1,177,590
32,377,837
KLA-Tencor Corporation*
49,200
2,532,570
Maxim Integrated
      Products, Inc.
560,300
22,067,416
National Semiconductor
      Corporation*
632,300
20,416,967
Taiwan Semiconductor
      Manufacturing
      Company Ltd.
      ADR (Taiwan)*
845,800
9,160,014
Texas Instruments
      Incorporated
413,180
9,420,504
 


 
99,379,999
 


SOFTWARE AND
   SERVICES 6.7%
Adobe Systems Incorporated
672,940
26,412,895
Check Point Software
      Technologies Ltd. (Israel)*
1,284,330
21,583,166
Microsoft Corporation
2,683,956
74,600,557
Oracle Corporation*
1,880,000
21,084,200
 


 
143,680,818
 


MISCELLANEOUS 2.0%
SPDR Trust, Series 1
427,200
42,698,640
 


TOTAL COMMON STOCKS
   (Cost $1,939,098,401)
1,987,011,831
 
   

TRI-CONTINENTAL
   FINANCIAL
   DIVISION 0.2%
WCAS Capital
      Partners II, L.P.†
$
4,727,686
2,377,648
Whitney Subordinated
      Debt Fund, L.P.†
2,464,665
1,708,809
 


TOTAL TRI-CONTINENTAL
   FINANCIAL DIVISION
   (Cost $7,192,351)
4,086,457
 




See footnotes on page 6.

5


Tri-Continental Corporation
Portfolio of Investments (unaudited) (continued)
September 30, 2003
  Principal    
  Amount   Value
 
 
FIXED TIME          
      DEPOSIT 5.1%          
BNP Paribas, Grand Cayman        
         1.1%, 10/1/03          
         (Cost $109,600,000)
$
109,600,000
$
109,600,000
 


TOTAL
      INVESTMENTS  98.3%
      (Cost $2,055,890,752)
2,100,698,288
OTHER ASSETS
         LESS LIABILITIES  1.7%
36,271,173
 


NET ASSETS 100.0%
$
2,136,969,461
       


         
* Non-income producing security.          
   Restricted security.          
Note:Investments in common stocks, American Depository Receipts
(ADR), limited partnership interests, and short-term holdings maturing
in more than 60 days are valued at current market value or, in their
absence, fair values determined in accordance with procedures
approved by the Board of Directors. Securities traded on an exchange
are valued at last sales price or, in their absence and in the case of over-
the-counter securities, at the mean of bid and ask prices. Short-term
holdings maturing in 60 days or less are valued at amortized cost.

6


Tri-Continental Corporation

Stockholder Services

     Tri-Continental provides a number of services to make maintaining an investment in its Common Stock more convenient.

Automatic Dividend Investment and Cash Purchase Plan. Stockholders may automatically purchase additional shares with dividends and capital gains. There is no charge for this service. Stockholders may also purchase additional shares directly from the Corporation. There is a service fee of a maximum of $2.00 for each cash purchase transaction.

Automatic Cash Withdrawal Plan. Stockholders who hold common shares with a market value of $5,000 or more may elect to receive a fixed amount from their investment at regular intervals by selling their shares to the Corporation.

Traditional Individual Retirement Account (IRA). Stockholders who have earned income and are under age 70 1 / 2 may contribute up to $3,000 per year to a Traditional IRA for 2003. A working or non-working spouse may also contribute up to $3,000 to a separate Traditional IRA for 2003. Individuals who reach age 50 prior to the end of a taxable year may make additional “catch-up contributions” to a Traditional IRA of up to $500 (increasing to $1,000 for years beginning after 2005). Contributions to a Traditional IRA may be deductible or non-deductible. If you are single and not covered by an employer’s retirement plan, your contribution will always be deductible. For individuals who are covered by a plan, contributions will be fully deductible if your modified adjusted gross income (MAGI) in 2003 is less than $40,000. For spouses who are both covered by a plan, contributions will be fully deductible if your MAGI is less than $60,000. If one spouse does not work or is not covered by a retirement plan, that spouse’s contribution will be fully deductible provided your household MAGI does not exceed $150,000. If your contribution is not deductible, you may still take advantage of the tax-deferred accumulation of earnings in your Traditional IRA.

Rollover IRA. You may be eligible to roll over a distribution of assets received from another IRA, a qualified employee benefit plan, or tax-deferred annuity into a Rollover IRA with Tri-Continental. To avoid a tax penalty, the transfer to a Rollover IRA must occur within 60 days of receipt of the qualifying distribution. If you do not make a direct transfer of a distribution from a qualified employee benefit plan or a tax-deferred annuity to a Rollover IRA, the payor of the distribution must withhold 20% of the distribution.

Roth IRA. You (and a working or non-working spouse) may each make an after-tax contribution of up to $3,000 per year to a Roth IRA provided you have earned income and meet the eligibility requirements. Your MAGI must be less than $95,000 (individuals) or $150,000 (married couples) to be eligible to make a full contribution to a Roth IRA. You are eligible to make a partial Roth IRA contribution if your MAGI is below $110,000 (individuals) or $160,000 (married couples). Total combined contributions to a Roth IRA and a Traditional IRA cannot exceed $3,000 in any year. Individuals who reach age 50 prior to the end of a taxable year may make additional “catch-up contributions” to a Roth IRA of up to $500 (increasing to $1,000 for years beginning after 2005). Earnings grow tax-free and will be distributed to you tax-free and penalty-free provided that you hold your account for at least five years and you take the distribution either after age 59 1 / 2 , for disability, upon death, or to make a first-time home purchase (up to $10,000). Unlike a Traditional IRA, you may contribute to a Roth IRA even if you are over age 70 1 / 2 (if you have earned income), and you are not required to take minimum distributions at age 70 1 / 2 . You may convert an existing Traditional IRA to a Roth IRA to take advantage of tax-free distributions. You must pay taxes on any earnings and deductible contributions in your Traditional IRA when converting it to a Roth IRA. Talk to your financial advisor for more details on converting your Traditional IRA.

7


Tri-Continental Corporation

Stockholder Services (continued)

Retirement Planning — Qualified Plans. Unincorporated businesses and the self-employed may take advantage of the same benefits in their retirement plans that are available to corporations. Contribution levels can go as high as 100% of earned income (reduced by plan contributions), to a maximum of $40,000 per participant. For retirement plan purposes, no more than $200,000 may be taken into account as earned income under the plan in 2003 (this amount will be increased to $205,000 for 2004). Social Security integration and employee vesting schedules are also available as options in the Tri-Continental prototype retirement plans. Although you already may be participating in an employer’s retirement plan, you may be eligible to establish another plan based upon income from other sources, such as director’s fees.

Retirement Plan Services provides information about our prototype retirement plans. The toll-free telephone number is (800) 445-1777 in the US and (212) 682-7600 outside the US.

Gifts Free of Federal Tax are often made using Tri-Continental Common Stock. You may give as much as $11,000 a year to as many individuals as desired free of federal gift tax, and a married couple may give up to $22,000 a year.

Stock Repurchase Program. On November 21, 2002, the Board of Directors authorized the renewal of Tri-Continental’s ongoing share repurchase program. The program authorizes the Corporation to repurchase up to 7.5% of the Corporation’s shares over a 12-month period, provided that the discount of a share’s market price to its net asset value (“NAV”) remains wider than 10%. The Board’s decision benefits all Stockholders, allowing them to continue to enjoy the advantages of Tri-Continental’s closed-end structure, while increasing the NAV of the Corporation’s outstanding shares.

     Between November 21, 2002 and September 30, 2003, 6.7 million shares were repurchased. This is approximately 5.3% of the shares outstanding at the beginning of the period. The repurchase of additional shares is expected to continue during October and November 2003, as long as the discount remains above 10%.

8


Tri-Continental Corporation

Board of Directors  
   
Robert B. Catell (3,4)
William C. Morris (1)
Chairman and Chief Executive Officer,
Chairman of the Board,
   KeySpan Corporation   J. & W. Seligman & Co. Incorporated
  Chairman, Carbo Ceramics Inc.
John R. Galvin (2,4)  
Dean Emeritus, Fletcher School of Law and Leroy C. Richie (2,4)
   Diplomacy at Tufts University Chairman and CEO, Q Standards
    Worldwide, Inc.
Paul C. Guidone (1) Director, Kerr-McGee Corporation
Chief Investment Officer,  
   J. & W. Seligman & Co. Incorporated Robert L. Shafer (3,4)
  Retired Vice President, Pfizer Inc.
Alice S. Ilchman (3,4)  
President Emerita, Sarah Lawrence College James N. Whitson (2,4)
Trustee, Committee for Economic Director, C-SPAN
   Development Director, CommScope, Inc.
   
Frank A. McPherson (3,4) Brian T. Zino (1)
Director, ConocoPhillips President, J. & W. Seligman & Co. Incorporated
Director, Integris Health Chairman, Seligman Data Corp.
  Chairman, ICI Mutual Insurance Company
John E. Merow (2,4) Member of the Board of Governors,
Director, Commonwealth Industries, Inc.   Investment Company Institute
Trustee, New York-Presbyterian Hospital  
Retired Chairman and Senior Partner,
   Sullivan & Cromwell LLP Member: (1) Executive Committee
    (2) Audit Committee
Betsy S. Michel (2,4)   (3) Director Nominating Committee
Trustee, The Geraldine R. Dodge Foundation   (4) Board Operations Committee

9


Tri-Continental Corporation

Executive Officers

William C. Morris
Thomas G. Rose
Chairman Vice President
   
Brian T. Zino Lawrence P. Vogel
President and Chief Executive Officer Vice President and Treasurer
   
Paul C. Guidone Frank J. Nasta
Vice President Secretary
   
Charles W. Kadlec  
Vice President  


For More Information
Manager
Important Telephone Numbers
J. & W. Seligman & Co. Incorporated (800) TRI-1092 Stockholder Services
100 Park Avenue (800) 445-1777 Retirement Plan Services
New York, NY 10017 (212) 682-7600 Outside the United States
  (800) 622-4597 24-Hour Automated
Stockholder Service Agent Telephone Access Service
Seligman Data Corp.  
100 Park Avenue    
New York, NY 10017    

www.tri-continental.com

10


Tri-Continental Corporation
Managed by

J. & W. SELIGMAN CO.
INCORPORATED
INVESTMENT MANAGERS AND ADVISORS
ESTABLISHED 1864

100 Park Avenue, New York, NY 10017

 

This report is intended only for the information of Stockholders or those who have received the current prospectus covering shares of Common Stock of Tri-Continental Corporation, which contains information about management fees and other costs.

 www.tri-continental.com

CETRI3c 9/03
 


 

Third Quarter Report 2003

 

 

 

 

 

Tri-Continental
Corporation

 

 

 

 

 

an investment you can live with