TRI-CONTINENTAL Corp — Annual Report 2001

Mar 14, 2001

71ST ANNUAL REPORT 2000 [GRAPHIC] TRI-CONTINENTAL CORPORATION AN INVESTMENT YOU CAN LIVE WITH TRI-CONTINENTAL CORPORATION INVESTS TO PRODUCE FUTURE GROWTH OF BOTH CAPITAL AND INCOME, WHILE PROVIDING REASONABLE CURRENT INCOME. TY is Tri-Continental Corporation's symbol for its Common Stock on the New York Stock Exchange. TRI-CONTINENTAL CORPORATION February 9, 2001 TO THE STOCKHOLDERS: The past year was a difficult one for Tri-Continental Corporation, and for equities in general. Stock prices were volatile all year, as investors worried about the slowing economy and declining corporate profits. For the year ended December 31, 2000, Tri-Continental returned -8.29% based on net asset value and - -11.56% based on market price, while the Standard & Poor's 500 (S&P 500) returned -9.11% and the Lipper Closed-End Growth & Income Funds Average increased 3.30%. During 2000, Tri-Continental's discount ranged from 24.8% on April 4 to 13.0% on November 16, and ended the year at 18.1%. As of this writing, Tri-Continental's discount had narrowed to less than 13%. The year 2000 was a year of reversals. The collapse of the technology bubble in March and clear signs of a slowing US economy prompted investors to seek quality and value, focusing their attention on long-neglected "old economy" stocks. Value investing and small- and mid-cap stocks made major share price advances, while technology and large-cap growth stocks were battered. For the first time since 1990, the Standard & Poor's 500 Composite Stock Index (S&P 500) posted a negative return, as did the Nasdaq Composite Index and the Dow Jones Industrial Average. At the root of these shifts in the investment environment was the cooling US economy, slowed by a series of interest rate increases by the Federal Reserve Board. Higher energy prices also played a major role in precipitating the economic downshift, eating into both corporate earnings and consumers' disposable income. The slowdown was more abrupt than many expected. Industrial production and consumer confidence both declined sharply. Many companies missed earnings targets because their profits were squeezed by higher borrowing costs and weaker demand. In response to this economic deterioration, the Fed lowered the federal funds target rate by 0.50% to 6.00% on January 3, 2001, and by another 0.50% on January 31. This action was welcomed by investors, and, even though it did not immediately calm volatility, it will likely have a positive effect on liquidity and consumer confidence. Given the US budget surplus, the Fed has the flexibility to lower rates further, if necessary, to encourage economic growth. Looking ahead, we expect that economic activity will accelerate during the second half of 2001. While there are uncertainties (possible policy errors, high inventories, low consumer spending), we feel that there is ample reason for optimism. Energy prices should decrease because of lower demand, inflation is under control, and a federal tax cut under the new administration seems likely. On the global level, we think that central banks around the world will follow the Fed's lead and cut rates, providing a stimulus for continued growth. 1 TRI-CONTINENTAL CORPORATION The volatility and emotion of the past year have served to reinforce several lessons which are fundamental to Tri-Continental's philosophy. The market works in cycles, and valuations and earnings still matter. We believe that diversification among different asset classes and investment styles is the key to long-term investment success, and that it is important to maintain a long-term perspective. Tri-Continental Corporation paid $0.33 per share in dividends, and $3.30 per share in long-term capital gains during 2000. This is in keeping with our efforts to limit Stockholders' exposure to short-term capital gains (which are disadvantageous from a tax standpoint), within the boundaries of prudent portfolio management. Some Stockholders have expressed concern about Tri-Continental's declining dividend. This primarily reflects the decline of the dividend yield in the overall market, and, to a lesser extent, reflects Tri-Continental's increased focus on capital appreciation. However, under normal market conditions, we expect that the rate of dividend paid by Tri-Continental Corporation going forward, based on net asset value, will approximate the dividend rate of the S&P 500. We believe that our approach will benefit Stockholders over the long term in the form of higher total returns. Tri-Continental's commitment to produce future growth of both capital and income remains unchanged, and we continue to strive to provide reasonable current income to Stockholders. We are pleased to present the results of Tri-Continental's Mid-Year Survey on pages 10 and 11. Supplementing Tri-Continental's yearly phone survey of registered Stockholders, this survey also includes the responses of those who hold their Tri-Continental shares through a broker, and is part of our ongoing effort to gauge your satisfaction so that we may better serve your needs. We thank you for your continued support of Tri-Continental Corporation, and look forward to serving your investment needs for many years to come. A discussion with your Portfolio Managers regarding the Corporation's results follows this letter. By order of the Board of Directors, /s/ William C. Morris - --------------------- William C. Morris Chairman /s/ Brian T. Zino ----------------- Brian T. Zino President 2 TRI-CONTINENTAL CORPORATION INTERVIEW WITH YOUR PORTFOLIO MANAGERS - -------------------------------------------------------------------------------- [PHOTO] GROWTH AND INCOME TEAM: (STANDING, FROM LEFT) AMY FUJII, JOHN ROTH, MELANIE RAVENELL (ADMINISTRATIVE ASSISTANT), (SEATED, FROM LEFT) CHARLES SMITH (PORTFOLIO MANAGER), RODNEY COLLINS (CO-PORTFOLIO MANAGER) - -------------------------------------------------------------------------------- WHAT WERE TRI-CONTINENTAL'S INVESTMENT RESULTS IN 2000? For the 12 months ended December 31, 2000, Tri-Continental Corporation posted a total return of -8.29% based on net asset value and -11.56% based on market price. This compares to -9.11% for the Standard & Poor's 500 Composite Stock Price Index (S&P 500) and 3.30% during this same period for the net asset value return of the Corporation's peers, as measured by the Lipper Closed-End Growth & Income Funds Average. WHAT ECONOMIC AND MARKET FACTORS AFFECTED THE CORPORATION'S RESULTS DURING 2000? The Federal Reserve Board's series of interest rate hikes (the last, an increase of 0.5%, took place in May 2000) ultimately succeeded in slowing the US economy. Clear signs began to emerge in the third quarter that the economy was losing steam. Factory orders, manufacturing, and PC sales all fell, as did corporate profits, and tight credit affected many companies' ability to borrow. The annualized GDP growth rates of 5.6% in the second quarter, 2.2% in the third quarter, and 1.4% in the fourth quarter demonstrate the steady slowing. As the year wore on, some wondered if the Fed had been too successful in slowing the economy, as the fourth quarter witnessed rapid economic deceleration. A rash of corporate earnings shortfalls and the worst holiday shopping season in years for retailers, among other things, prompted the Fed to shift its inflation bias to neutral and, ultimately, to cut interest rates by 0.5% on January 3, 2001, and by an additional 0.5% on January 31. Market volatility was pronounced in 2000. The Nasdaq Composite Index lost nearly 40% of its value in 2000. Internet companies, particularly those without earnings, found it increasingly difficult to raise capital. At the same time, their stock prices plummeted and banks tightened lending practices. The S&P 500 declined for the first time since 1990, and the Dow Jones Industrials Average fell by 4.65%. The sectors that performed best in 1999 (technology and large-cap growth) performed poorly in 2000. Corporate profits were dampened by higher borrowing costs, rising energy prices, and a weak euro, and stocks fell with each earnings warning. WHAT WAS YOUR INVESTMENT STRATEGY? We continued to reposition Tri-Continental to be more total return oriented. We believe strongly that, over the long term, this emphasis on capital appreciation will benefit Stockholders by providing returns that are consistently competitive with the market. With this in mind, we added to our technology weighting throughout 2000, taking advantage of price weakness to add quality technology companies to the portfolio. In 2000, however, investors preferred traditional stocks to "new economy" 3 TRI-CONTINENTAL CORPORATION - -------------------------------------------------------------------------------- INVESTMENT RESULTS PER COMMON SHARE TOTAL RETURNS FOR PERIODS ENDED DECEMBER 31, 2000

PRICE PER SHARE

DIVIDEND AND CAPITAL GAIN INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2000

THE NET REALIZED CAPITAL GAIN AND DIVIDEND DISTRIBUTIONS PAID IN 2000 TOTALED $3.63. THIS IS EQUAL TO 11.3% OF THE CORPORATION'S AVERAGE END-OF-QUARTER NET ASSET VALUES FOR THE PRIOR FOUR QUARTERS (DECEMBER 1999 TO SEPTEMBER 2000). - -------------------------------------------------------------------------------- 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. Past performance is not indicative of future investment results. * 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 investment of dividends. The Lipper Closed-End Growth & Income Funds Average excludes the effect of any costs associated with the purchase of shares, and the S&P 500 excludes the effect of fees and sales charges. Investors cannot invest directly in an index or an average. + Preferred Stockholders were paid dividends totaling $2.50 per share. +++ Includes $0.56 of undistributed realized capital gains from 1999, which were paid on June 22, 2000. +++ Represents the per share amount of net unrealized appreciation of portfolio securities as of December 31, 2000. - -------------------------------------------------------------------------------- 4 TRI-CONTINENTAL CORPORATION INTERVIEW WITH YOUR PORTFOLIO MANAGERS (CONTINUED) ones, and this negatively impacted Tri-Continental's performance over the short term. Tri-Continental had significant exposure to non-technology sectors as well. We took advantage of rising energy prices and strong demand by owning energy and utility stocks. In the finance arena, we chose financial services firms over bank stocks because we perceived banks to be at risk for bad loans, and favored insurance stocks because we anticipated premium increases boosting their earnings. WHAT SECTORS CONTRIBUTED POSITIVELY TO PORTFOLIO PERFORMANCE? "Old economy" stocks were the star performers in 2000, and Tri-Continental's overweightings in finance, energy, health care, and utilities were positive contributors to performance, as these sectors performed very strongly in 2000. Our decision to focus on natural gas over electricity also helped our results. Drug stocks did surprisingly well this year, given the political pressure on these companies to lower their prices; because of the likelihood of congressional action in the near future, our focus has now shifted away from pharmaceuticals and toward medical devices. Our underweighting in consumer cyclicals proved fortunate, as this sector was a poor performer in 2000. WHAT SECTORS DETRACTED FROM PORTFOLIO PERFORMANCE? Our exposure to technology, while below that of the market, clearly detracted from performance this year. Technology companies, after enjoying tremendous success in 1999 and the first quarter of 2000, suffered for the rest of the year as their stock prices posted sharp declines, earnings fell short of expectations, and investors sought refuge in securities perceived as higher quality and lower risk. Although Tri-Continental's technology additions hurt performance over the short term (tempered by the fact that we built our position gradually), we believe it would be a mistake to reverse course. This sector will likely produce the biggest growth areas, therefore benefiting Stockholders over the long term. WHAT IS YOUR OUTLOOK? We expect 2001 to be a transitional year for the economy and for the financial markets. The first two quarters will likely be marked by continued volatility, economic slowing, and declining corporate profits. The Fed's January 3 and January 31 rate cuts should help market sentiment, especially since the Fed has indicated a willingness to lower rates again, if necessary, to encourage growth. There likely will be a tug-of-war between weak earnings and falling interest rates, but we think economic indicators will improve during the second half of the year, as the economy starts to feel the effect of lower interest rates, a probable federal tax cut, increased capital spending, and renewed consumer confidence. Tri-Continental is positioning itself to take advantage of this expected economic upturn by focusing on early-cycle stocks, such as semiconductors, retailers, and media stocks, which typically perform well as the economy emerges from a slowdown. We will avoid areas such as consumer durables, which will probably remain weak longer. We are lowering our weightings in financials, energy, and utilities. After two difficult investment years, we believe that the excesses and speculation have finally come out of the market, and that investors have returned to fundamentals. The market has broadened substantially and should continue to do so. These factors should benefit Tri-Continental's diversified portfolio of quality stocks. 5 TRI-CONTINENTAL CORPORATION HIGHLIGHTS OF THE YEAR NET ASSET VALUE of each share of Common Stock was $25.87 at December 31, compared to $32.82 at the start of the year. If you took the June and December gain distributions in additional shares, the net asset value of each share you owned at the beginning of 2000 was equivalent to $29.71 at year end. Assuming the investment of dividends and gain distributions in shares, the total return was (8.29)%. DISTRIBUTION OF REALIZED GAIN Your Directors declared a net long-term distribution of $0.56 per Common share from the balance of taxable net gains realized from November 1, 1999, through December 31, 1999, which was paid on June 22, 2000, to Stockholders of record June 12, 2000. A net long-term distribution of $2.74 per Common share, realized on investments from January 1, 2000, through October 31, 2000, was paid on December 18, 2000, to Stockholders of record December 11, 2000. The Corporation is required to distribute to Common Stockholders substantially all of its undistributed net capital gains realized through October 31, 2000, to avoid a 4% federal excise tax. The undistributed net capital gain realized from November 1, 2000 to December 31, 2000, of $0.13 per Common share remains a part of the underlying market value of Common Stock shares as of December 31, 2000. This amount will be distributed to Common Stockholders during 2001, at which time Common Stockholders will be subject to federal income taxes on the amount distributed. For those Stockholders who took the June and December payments in shares, these gains were reinvested at $25.21875 and $22.1875, on June 8, 2000 and December 7, 2000, respectively. Distributions should be taken into account in measuring the results of an investment in Tri-Continental Common Stock, and should be taken in shares if you want your investment to benefit from the full effect of compounding. OPERATING EXPENSES for the year were $21,147,548. The ratio of expenses to the average value of net investment assets was 0.54%, down from 1999's expense ratio of 0.56%. COMMON STOCK DIVIDENDS, paid quarterly, totaled $0.33 per share on an average of 123,883,000 shares, compared to $0.48 in 1999 when, on average, there were approximately 7,528,000 fewer shares outstanding. Common Stock dividends paid in 2000 with the December 1999 and June 2000 capital gain distributions taken in additional shares were equivalent to $0.37 per share. PREFERRED STOCK DIVIDENDS, paid each quarter, completed 71 years of uninterrupted payments. Total net investment income available to cover the $2.50 Preferred Stock dividend was equivalent to $57.46 per Preferred share. STOCK REPURCHASE PROGRAM In 2000, under the Stock Repurchase Program, the Corporation repurchased 3,478,200 shares, representing 2.6% of outstanding shares in 2000. This compares to 2,919,000 shares repurchased in 1999, representing 2.3% of shares outstanding. 6 TRI-CONTINENTAL CORPORATION HIGHLIGHTS OF THE YEAR (continued) ASSETS AT YEAR END: 2000 1999 -------------- -------------- Total assets ................................. $3,537,559,628 $4,152,589,054 Amounts owed ................................. 41,914,001 5,088,570 -------------- -------------- NET INVESTMENT ASSETS ........................ $3,495,645,627 $4,147,500,484 Preferred Stock, at par value ................ 37,637,000 37,637,000 -------------- -------------- Net Assets for Common Stock .................. $3,458,008,627 $4,109,863,484 ============== ============== Common shares outstanding .................... 133,643,365 125,234,203 NET ASSETS BEHIND EACH COMMON SHARE .......... $25.87 $32.82 With 2000 gain distributions taken in shares . $29.71 -- TAXABLE GAIN: Net capital gain realized .................... $ 352,066,264 $ 434,056,822 Per Common share ............................. $2.63 $3.47 Undistributed capital gains, end of year ..... $ 17,959,101 $ 72,940,940 Per Common share, end of year ................ $0.13 $0.58 Unrealized capital gains, end of year ........ $ 375,514,894 $1,152,539,716 Per Common share, end of year ................ $2.81 $9.20 DISTRIBUTION OF GAIN: Per Common share* ............................ $3.30 $3.794 INCOME: Total income earned .......................... $ 64,398,298 $ 79,858,790 Expenses ..................................... 21,147,547 23,232,584 Preferred Stock dividends .................... 1,881,850 1,881,850 -------------- -------------- Income for Common Stock ...................... $ 41,368,901 $ 54,744,356 ============== ============== Expenses to average net investment assets .... 0.54% 0.56% Expenses to average net assets for Common Stock ........................... 0.54% 0.56% DIVIDENDS PER COMMON SHARE ................... $0.33 $0.48 With December 1999 and June 2000 gain distributions taken in shares .............. $0.37 -- - -------------------------------------------------------------------------------- * The Corporation's net capital gain realized for the year 2000 was $2.63 per share of Common Stock outstanding at December 31, 2000. However, the Corporation was required to distribute only the total undistributed net capital gain realized during the period from November 1, 1999, through October 31, 2000 ($3.30 per share), to avoid a 4% federal excise tax. The undistributed net realized capital gain as of year end ($0.13 per share) remains a part of the underlying market value of Common Stock shares as of December 31,2000. This amount will be distributed to common stockholders during 2001, at which time Common Stockholders will be subject to federal income taxes on the amount received. 7 TRI-CONTINENTAL CORPORATION STOCKHOLDER SERVICES Tri-Continental provides a number of services to make maintaining an investment in its Common Stock more convenient. PURCHASES OF COMMON STOCK. Under the Automatic Dividend Investment and Cash Purchase Plan, and other Stockholder plans, purchases of Common Stock are made by the Corporation in the open market and from Stockholders participating in withdrawal plans to satisfy Plan requirements. Those shares are then sold to Stockholders using the Plan. During 2000, 1,600,582 shares were purchased by Stockholders through the Plan. The Corporation may make additional purchases of its Common Stock in the open market at such prices and in such amounts as the Board of Directors may deem advisable. As discussed further under Stock Repurchase Program on page 13, during 2000 the Corporation purchased 3,478,200 additional shares. TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNT (IRA). You may contribute up to $2,000 per year to a Traditional IRAprovided you have earned income and are under age 701/2. A working or non-working spouse may also contribute up to $2,000 to a separate Traditional IRA. Contributions to a Traditional IRAmay be deductible or non-deductible. If you are 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 deductible if your modified adjusted gross income (MAGI) in 2000 is less than $32,000. For spouses who are both covered by a plan, contributions will be fully deductible if your MAGI is less than $52,000. 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 $2,000 per year to a Roth IRAprovided you have earned income and meet the eligibility requirements. Your modified adjusted gross income (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. Total contributions to a Roth IRA and a Traditional IRA cannot exceed $2,000 in any year. 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 591/2, 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 701/2 (if you have earned income), and you are not required to take minimum distributions at age 701/2. You may convert an existing Traditional IRAto a Roth IRAto take advantage of tax-free distributions. You must pay taxes on any earnings and deductible contributions in your Traditional IRAbefore converting it to a Roth IRA. Talk to your financial advisor for more details on converting your Traditional IRA. 8 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 25% of earned income (reduced by plan contributions), to a maximum of $35,000 per participant. For retirement plan purposes, no more than $170,000 may be taken into account as earned income under the plan in 2001 and future years (subject to adjustments to reflect cost of living increases). 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 Continental 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 $10,000 a year to as many individuals as desired free of federal gift tax, and a married couple may give up to $20,000 a year. THE AUTOMATIC CASH WITHDRAWAL PLAN enables owners of Common shares with a market value of $5,000 or more to receive a fixed amount from their investment at regular intervals. Investors use the plan to supplement current or retirement income, for educational expenses, or for other purposes. FEDERAL TAXES Quarterly dividends paid on both the Preferred and Common Stocks for 2000 are subject to federal income tax as "ordinary income." Under the Internal Revenue Code, 73.89% of the 2000 quarterly dividends paid to Common and Preferred Stockholders qualifies for the dividends received deduction available to corporate Stockholders. In order to claim the dividends received deduction for these distributions, corporate Stockholders must have held their shares for 46 days or more during the 90-day period beginning 45 days before each ex-dividend date. The distributions of $0.56 and $2.74 from net long-term gain, realized on investments from November 1, 1999 through December 31, 1999, and January 1, 2000 through October 31, 2000, respectively, were paid to Common Stockholders on June 22 and December 18, 2000, respectively. The long-term gain is designated as a "capital gain dividend" for federal income tax purposes and is taxable to Stockholders in 2000 as a long-term gain from the sale of capital assets, no matter how long Tri-Continental Common Stock may have been owned. However, if shares on which a capital gain distribution was received are subsequently sold, and such shares have been held for six months or less, any loss would be treated as long-term to the extent it offsets the long-term gain distribution. The tax cost basis of shares acquired by investing the June 22 and December 18 capital gain distributions in additional shares was $25.21875 and $22.1875 per share, respectively. 9 TRI-CONTINENTAL CORPORATION STOCKHOLDER SURVEY RESULTS In Tri-Continental's 2000 Mid-Year Report, the Corporation enclosed a survey card designed to garner feedback from Stockholders. We are pleased to announce that we received nearly 6,000 responses and would like to thank you for taking the time to respond. This survey card was designed as a way to complement the Corporation's yearly 20-minute phone survey of 500 randomly chosen Stockholders. Like the phone survey, the mail-in card allows us to track general trends in Stockholder demographics and satisfaction. However, where the phone survey is limited to Stockholders whose holdings are registered with the Manager, the mail-in card allows us to hear from the roughly 50% of our Stockholders who hold their shares "in street name" (investors who own their shares at a broker/dealer). Of the 6,000 Stockholders who responded, roughly 50% were registered and 50% were "street name." Below you will find a summary of the results.

10 TRI-CONTINENTAL CORPORATION STOCKHOLDER SURVEY RESULTS (continued)

11 TRI-CONTINENTAL CORPORATION A HISTORY OF BUILDING LONG-TERM WEALTH AND INCOME Tri-Continental invests primarily to produce long-term growth of both capital and income, while providing reasonable current income. The chart below shows the growth of Tri-Continental Stockholders' capital over the past 20 years. The total cost of 1,000 shares of Tri-Continental purchased on December 31, 1980, was $23,625. Stockholders who took capital gains distributions in shares would have realized a seven-fold increase in the market value of these 1,000 shares to $182,435 by year-end 2000. For those who chose to take their dividends as well as capital gains in additional shares, the value of their investment in Tri-Continental Corporation would have grown to a market value of $350,605 at the end of 2000. [The following table represents a line graph in the printed piece.] A HISTORY OF BUILDING WEALTH Reinvest Capital Gains Reinvest Capital Gains & Market Value Only, Market Value Dividends Market Value without reinvestment 12/31/80 23625 23970 23625 3/31/81 25212 25854 23350 6/30/81 25007 25943 23160 9/30/81 21347 22459 19770 12/31/81 22362 23925 20710 3/31/82 23615 25603 19000 6/30/82 23392 25724 18820 9/30/82 28463 31684 22900 12/31/82 33403 37570 26875 3/31/83 35175 39918 26730 6/30/83 36518 41815 27750 9/30/83 38767 42206 27730 12/31/83 38656 45181 29375 3/31/84 36512 43115 23310 6/30/84 34852 41628 22250 9/30/84 38767 46851 24750 12/31/84 38963 47726 24875 3/31/85 42116 52090 24500 6/30/85 45554 56879 26500 9/30/85 43835 55272 25500 12/31/85 50496 64321 29375 3/31/86 56098 72005 29875 6/30/86 56802 73463 30250 9/30/86 56802 74021 30250 12/31/86 61865 81321 28625 3/31/87 69266 91674 32000 6/30/87 71431 95169 33000 9/30/87 70348 94303 32500 12/31/87 52155 70639 20625 3/31/88 54367 74251 21500 6/30/88 56580 77929 22375 9/30/88 54051 75107 21375 12/31/88 51739 72772 19250 3/31/89 53083 75380 19750 6/30/89 59802 85685 22250 9/30/89 65178 94235 24250 12/31/89 68824 100395 23000 3/31/90 68076 100132 22750 6/30/90 72939 108164 24375 9/30/90 63588 95271 21250 12/31/90 68587 103868 21375 3/31/91 77411 118105 24125 6/30/91 80620 123881 25125 9/30/91 84230 130364 26250 12/31/91 95207 148511 27750 3/31/92 90061 141446 26250 6/30/92 90919 143762 26500 9/30/92 94778 150894 27625 12/31/92 89895 144362 25500 3/31/93 90777 146853 25750 6/30/93 87692 142946 24875 9/30/93 88133 144814 25000 12/31/93 90122 149364 23750 3/31/94 83007 138766 21875 6/30/94 83481 140763 22000 9/30/94 84430 143641 22250 12/31/94 82560 141796 19875 3/31/95 87233 151176 21000 6/30/95 93983 164170 22625 9/30/95 97618 171825 23500 12/31/95 102333 181425 22625 3/31/96 107987 192811 23875 6/30/96 111119 199763 24000 9/30/96 115749 209430 25000 12/31/96 121575 221297 24125 3/31/97 123465 226147 24500 6/30/97 140401 258538 27063 9/30/97 152074 281481 29313 12/31/97 152246 283157 26688 3/31/98 168648 315064 29563 6/30/98 169384 317802 27875 9/30/98 154953 292307 25500 12/31/98 188601 357320 28500 3/31/99 191910 365083 29000 6/30/99 204300 390194 30188 9/30/99 197956 379558 29250 12/31/99 208994 402230 27875 3/31/2000 191187 369318 25500 6/30/2000 193517 374982 25250 9/30/2000 200223 389159 26125 12/31/00 182435 350605 21188 * ASSUMES THE STOCKHOLDER DID NOT EXERCISE OR SELL THE TRANSFERABLE RIGHTS DISTRIBUTED IN CONNECTION WITH THE 1992 RIGHTS OFFERING. EITHER THE EXERCISE OR SALE OF THE RIGHTS WOULD IMPROVE THE ABOVE RESULTS. FOR THE 20-YEAR PERIOD ENDED DECEMBER 31, 2000. THE INFORMATION PROVIDED ABOVE IS BASED ON PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS, AND EXCLUDES ANY COMMISSIONS OR SALES CHARGES ASSOCIATED WITH THE PURCHASE OF TRI-CONTINENTAL SHARES. THE RATE 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. IF SALES CHARGES HAD BEEN INCLUDED, PERFORMANCE WOULD HAVE BEEN LOWER. IN ADDITION, CAPITAL GAIN AND DIVIDEND DISTRIBUTIONS TAKEN IN ADDITIONAL SHARES ARE SUBJECT TO PERSONAL INCOME TAX IN THE YEAR EARNED. THE EXAMPLES SHOWN DO NOT REFLECT THE EFFECT OF SUCH TAXES. The chart above illustrates that Tri-Continental's performance cannot be judged based upon stock-price appreciation alone. Indeed, stock-price appreciation is a small component of Tri-Continental's total return. For Stockholders who take their capital gains in additional shares, and particularly for Stockholders who are able to take both their capital gains and their dividends in additional shares, the value of an investment in Tri-Continental has appreciated steadily over the years. This is because, while Tri-Continental's stock price may not increase significantly, investors who take their distributions in additional shares may benefit from an increasing number of shares owned. 12 TRI-CONTINENTAL CORPORATION STOCK REPURCHASE PROGRAM In November 2000, 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 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. The Board of Directors also approved several changes to the stock repurchase program. These amendments are intended to allow an increase in the number of shares bought back annually. During the first two years that the program has been in place, the Corporation bought back 4.3% of the stock outstanding in the first year and 4.5% in the second year, compared to our stated limit of 7.5%. We believe that these changes to the stock repurchase program will result in a significant increase in the number of shares that the Corporation is able to repurchase. INTRODUCE TRI-CONTINENTAL TO A FRIEND "Introduce Tri-Continental to a Friend" is a program designed to help encourage potential investors to consider investing in Tri-Continental. The initiative targets the more than 44,000 current Stockholders of record, individual investors, Wall Street analysts, and financial consultants through a comprehensive effort including advertising, direct mail, and one-on-one meetings. Tri-Continental has also published a brochure that traces its history since its launch in 1929. Reply cards allowing Stockholders to request "The Story of Tri-Continental" brochure and the "Introduce Tri-Continental to a Friend" investor package have been inserted in the Mid-Year and Annual Reports since the program's inception. Response has been excellent, with several thousand copies of the brochure and the investor package distributed to date. A new reply card is inserted in this Annual Report. Stockholders are invited to request that an investor package be sent to one or more family members, friends, or associates. This package includes a letter from Mr. William C. Morris, Tri-Continental's Chairman, a copy of the most recent Stockholder Report, a Prospectus, "The Story of Tri-Continental" brochure, and a pamphlet explaining the attributes of closed-end funds. WWW.TRI-CONTINENTAL.COM Now Stockholders can get the latest Tri-Continental information-- including daily net asset values, monthly fact sheets, portfolio manager commentary, recent reports, and more -- over the Internet, 24 hours a day, seven days a week. Tri-Continental's website has been developed for the convenience of current Stockholders and to let the world know about Tri-Continental. In addition to up-to-date practical information, the site contains interesting facts about Tri-Continental, including a complete history. Please stop by www.tri-continental.com. We hope you find the site a useful one that you will want to visit often. 13 TRI-CONTINENTAL CORPORATION DIVERSIFICATION OF NET INVESTMENT ASSETS The diversification of portfolio holdings by industry on December 31, 2000, was as follows. Individual securities owned are listed on pages 16 to 20.

14 TRI-CONTINENTAL CORPORATION LARGEST PORTFOLIO CHANGES OCTOBER 1 TO DECEMBER 31, 2000 TEN LARGEST PURCHASES TEN LARGEST SALES - ---------------------- ----------------- Conexant Systems, Inc. Applied Materials, Inc. Gillette Company (The) Citigroup Inc. McDonald's Corporation Qualcomm Inc. Calpine Corporation Cisco Systems, Inc. Comcast Corporation (Class A) Bristol-Myers Squibb Company Sun Microsystems, Inc. General Electric Company Home Depot, Inc. (The) Merrill Lynch & Co. Incorporated Costco Wholesale Corporation Chubb Corporation (The) May Department Stores Company Unicom Corporation Rohm and Haas Company Bank of America Corporation** 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 DECEMBER 31, 2000

15 TRI-CONTINENTAL CORPORATION PORTFOLIO OF INVESTMENTS DECEMBER 31, 2000

• ---------- See footnotes on page 20. 16 TRI-CONTINENTAL CORPORATION PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 2000

• ---------- See footnotes on page 20. 17 TRI-CONTINENTAL CORPORATION PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 2000

• ---------- See footnotes on page 20. 18 TRI-CONTINENTAL CORPORATION PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 2000

• ---------- See footnotes on page 20. 19 TRI-CONTINENTAL CORPORATION PORTFOLIO OF INVESTMENTS (continued) DECEMBER 31, 2000

• ---------- * Non-income producing security. + Restricted security. Descriptions of companies have not been audited by Deloitte & Touche LLP. See Notes to Financial Statements. 20 TRI-CONTINENTAL CORPORATION STATEMENT OF ASSETS AND LIABILITIES December 31, 2000 ASSETS: Investments at value: Common stocks (cost--$2,836,392,412) ..... $ 3,211,763,474 Tri-Continental Financial Division (cost--$10,068,729) .................... 10,212,561 Short-Term Holdings (cost--$310,000,000) 310,000,000 --------------- Total Investments (cost--$3,156,461,141) .................. $ 3,531,976,035 Cash ...................................................... 349,134 Receivable for dividends and interest ..................... 4,799,515 Investment in, and expenses prepaid to, stockholder service agent ............................... 336,236 Other ..................................................... 98,708 --------------- TOTAL ASSETS .............................................. $ 3,537,559,628 --------------- LIABILITIES: Payable for securities purchased .......................... $ 36,515,499 Payable for Common Stock repurchased ...................... 2,162,732 Management fee payable .................................... 1,190,727 Preferred dividends payable ............................... 470,463 Accrued expenses and other ................................ 1,574,580 --------------- TOTAL LIABILITIES ......................................... $ 41,914,001 --------------- NET INVESTMENT ASSETS ..................................... $ 3,495,645,627 Preferred Stock, at $50 par value ......................... 37,637,000 --------------- NET ASSETS FOR COMMON STOCK ............................... $ 3,458,008,627 =============== NET ASSETS PER SHARE OF COMMON STOCK (MARKET VALUE--$21.1875) ................................ $25.87 ====== STATEMENT OF CAPITAL STOCK AND SURPLUS December 31, 2000 CAPITAL STOCK: $2.50 Cumulative Preferred Stock, $50 par value, asset coverage per share--$4,643.90 Shares authorized--1,000,000; issued and outstanding--752,740 ................................ $ 37,637,000 Common Stock, $0.50 par value: Shares authorized--159,000,000; issued and outstanding--133,643,365 ............................ 66,821,683 SURPLUS: Capital surplus .......................................... 2,998,713,489 Dividends in excess of net investment income ............. (1,000,540) Undistributed net realized gain .......................... 17,959,101 Net unrealized appreciation of investments ............... 375,514,894 --------------- $ 3,495,645,627 =============== - ---------- See Notes to Financial Statements 21 TRI-CONTINENTAL CORPORATION STATEMENT OF OPERATIONS For the Year Ended December 31, 2000 INVESTMENT INCOME: Dividends (net of foreign taxes withheld of $331,428) .................. $ 48,984,501 Interest ................................. 15,413,797 ------------- TOTAL INVESTMENT INCOME ................................... $ 64,398,298 EXPENSES: Management fee ........................... $ 15,398,779 Stockholder account and registrar services 3,572,392 Stockholder reports and communications ... 725,015 Custody and related services ............. 459,404 Stockholders' meeting .................... 331,379 Auditing and legal fees .................. 253,431 Directors' fees and expenses ............. 219,321 Registration ............................. 77,597 Miscellaneous ............................ 110,229 ------------- TOTAL EXPENSES ............................................ 21,147,547 ------------- NET INVESTMENT INCOME ..................................... $ 43,250,751* NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investments ......... $ 352,066,264 Net change in unrealized appreciation of investments .......................... (777,024,822) ------------- NET LOSS ON INVESTMENTS ................................... (424,958,558) ------------- DECREASE IN NET INVESTMENT ASSETS FROM OPERATIONS .......................................... $(381,707,807) ============= - ---------- * Net investment income available for Common Stock is $41,368,901, which is net of Preferred Stock dividends of $1,881,850. See Notes to Financial Statements. 22 TRI-CONTINENTAL CORPORATION STATEMENTS OF CHANGES IN NET INVESTMENT ASSETS

• ---------- See Notes to Financial Statements. 23 TRI-CONTINENTAL CORPORATION NOTES TO FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES -- The financial statements have been prepared in conformity with generally accepted accounting principles which require management to make certain estimates and assumptions at the date of the financial statements. The following summarizes the significant accounting policies of the Corporation: a. SECURITY VALUATION -- Investments in stocks, limited partnership interests, and short-term holdings maturing in more than 60 days are valued at current market values or, in their absence, fair value determined in accordance with procedures approved by the Board of Directors. Securities traded on an exchange are valued at last sales prices or, in their absence and in the case of over-the-counter securities, at the mean of bid and asked prices. Short-term holdings maturing in 60 days or less are valued at amortized cost. b. FEDERAL TAXES -- There is no provision for federal income tax. The Corporation has elected to be taxed as a regulated investment company and intends to distribute substantially all taxable net income and net gain realized. c. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Investment transactions are recorded on trade dates. Identified cost of investments sold is used for both financial statements and federal income tax purposes. Dividends receivable and payable are recorded on ex-dividend dates. Interest income is recorded on the accrual basis. d. DISTRIBUTIONS TO STOCKHOLDERS -- The treatment for financial statement purposes of distributions made during the year from net investment income or net realized gains may differ from their ultimate treatment for federal income tax purposes. These differences are caused primarily by differences in the timing of the recognition of certain components of income, expense or capital gain, and the recharacterization of foreign exchange gains or losses to either ordinary income or realized capital gain for federal income tax purposes. Where such differences are permanent in nature, they are reclassified in the components of net investment assets based on their ultimate characterization for federal income tax purposes. Any such reclassification will have no effect on net assets, results of operations, or net asset value per share of the Corporation. 2. CAPITAL STOCK TRANSACTIONS -- Under the Corporation's Charter, dividends on the Common Stock cannot be declared unless net assets, after such dividends and dividends on Preferred Stock, equal at least $100 per share of Preferred Stock outstanding. The Preferred Stock is subject to redemption at the Corporation's option at any time on 30 days' notice at $55 per share (or a total of $41,400,700 for the shares outstanding) plus accrued dividends, and entitled in liquidation to $50 per share plus accrued dividends. The Corporation, in connection with its Automatic Dividend Investment and Cash Purchase Plan and other Stockholder plans, acquires and issues shares of its own Common Stock, as needed, to satisfy Plan requirements. For the year ended December 31, 2000, 2,360,838 shares were purchased from Plan participants at a cost of $59,186,968, which represented a weighted average discount of 18.88% from the net asset value of those acquired shares. A total of 1,600,582 shares were issued to Plan participants during the year for proceeds of $39,883,293, at a discount of 18.41% from the net asset value of those shares. For the year ended December 31, 2000, the Corporation purchased 3,478,200 shares of its Common Stock in the open market at an aggregate cost of $87,100,541, which represented a weighted average discount of 18.43% from the net asset value of those acquired shares. At December 31, 2000, 290,231 shares of Common Stock were reserved for issuance upon exercise of 13,418 Warrants, each of which entitled the holder to purchase 21.63 shares of Common Stock at $1.04 per share. Assuming the exercise of all Warrants outstanding at December 31, 2000, net investment assets would have increased by $301,840 and the net asset value of the Common Stock would have been $25.82 per share. The number of Warrants exercised during the years 2000 and 1999, was 125 and 268, respectively. 24 TRI-CONTINENTAL CORPORATION NOTES TO FINANCIAL STATEMENTS (continued) 3. PURCHASES AND SALES OF SECURITIES-- Purchases and sales of portfolio securities, excluding short-term investments, amounted to $2,004,683,697 and $2,406,978,282, respectively. At December 31, 2000, the cost of investments for federal income tax purposes was substantially the same as the cost for financial reporting purposes, and the tax basis gross unrealized appreciation and depreciation of portfolio securities amounted to $848,801,715 and $473,286,821, respectively. 4. MANAGEMENT FEE,ADMINISTRATIVE SERVICES, AND OTHER TRANSACTIONS -- J. & W. Seligman & Co. Incorporated (the "Manager") manages the affairs of the Corporation and provides for the necessary personnel and facilities. Compensation of all officers of the Corporation, all directors of the Corporation who are employees of the Manager, and all personnel of the Corporation and the Manager is paid by the Manager. The Manager receives a fee, calculated daily and payable monthly, equal to a percentage of the Corporation's daily net assets at the close of business on the previous business day. The management fee rate is calculated on a sliding scale of 0.45% to 0.375%, based on average daily net assets of all the investment companies managed by the Manager. The management fee for the year ended December 31, 2000, was equivalent to an annual rate of 0.39% of the average daily net assets of the Corporation. Seligman Data Corp., owned by the Corporation and certain associated investment companies, charged the Corporation at cost $3,375,054 for stockholder account services. The Corporation's investment in Seligman Data Corp. is recorded at a cost of $43,681. Certain officers and directors of the Corporation are officers or directors of the Manager and/or Seligman Data Corp. The Corporation has a compensation arrangement under which directors who receive fees may elect to defer receiving such fees. Directors may elect to have their deferred fees accrue interest or earn a return based on the performance of the Corporation or other funds in the Seligman Group of Investment Companies. The cost of such fees and earnings accrued thereon is included in directors' fees and expenses, and the accumulated balance thereof at December 31, 2000, of $416,829 is included in other liabilities. Deferred fees and related accrued earnings are not deductible for federal income tax purposes until such amounts are paid. 5. RESTRICTED SECURITIES -- At December 31, 2000, the Tri-Continental Financial Division of the Corporation was comprised of two investments that were purchased through private offerings and cannot be sold without prior registration under the Securities Act of 1933 or pursuant to an exemption therefrom. These investments are valued at fair value as determined in accordance with procedures approved by the Board of Directors of the Corporation. The acquisition dates of investments in the limited partnerships, along with their cost and values at December 31, 2000, are as follows:

25 TRI-CONTINENTAL CORPORATION FINANCIAL HIGHLIGHTS The Corporation's financial highlights are presented below. "Per share operating performance" data is designed to allow investors to trace the operating performance, on a per Common share basis, from the beginning net asset value to the ending net asset value, so that investors can understand what effect the individual items have on their investment, assuming it was held throughout the period. Generally, the per share amounts are derived by converting the actual dollar amounts incurred for each item, as disclosed in the financial statements, to their equivalent per Common share amounts, using average shares outstanding. "Total investment return" measures the Corporation's performance assuming that investors purchased shares of the Corporation at the market value or net asset value as of the beginning of the period, invested dividends and capital gains paid, as provided for in the Corporation's Prospectus and Automatic Dividend Investment and Cash Purchase Plan, and then sold their shares at the closing market value or net asset value per share on the last day of the period. The computations do not reflect any sales commissions investors may incur in purchasing or selling shares of the Corporation. The ratios of expenses and net investment income to average net investment assets and to average net assets for Common Stock, for the years presented do not reflect the effect of dividends paid to Preferred Stockholders.

• ---------- See footnotes on page 27. 26 TRI-CONTINENTAL CORPORATION FINANCIAL HIGHLIGHTS

• ---------- * Assumes the exercise of outstanding warrants. See Notes to Financial Statements. 27 TRI-CONTINENTAL CORPORATION REPORT OF INDEPENDENT AUDITORS THE BOARD OF DIRECTORS AND SECURITY HOLDERS, Tri-Continental Corporation: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, and the statement of capital stock and surplus of Tri-Continental Corporation as of December 31, 2000, the related statements of operations for the year then ended and of changes in net investment assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2000, by correspondence with the Corporation's custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Tri-Continental Corporation as of December 31, 2000, the results of its operations, the changes in its net investment assets, and the financial highlights for the respective-stated periods in conformity with generally accepted accounting principles. DELOITTE & Touche LLP New York, New York February 9, 2001 - -------------------------------------------------------------------------------- FOR MORE INFORMATION MANAGER J. & W. Seligman & Co. Incorporated 100 Park Avenue New York, NY 10017 STOCKHOLDER SERVICE AGENT Seligman Data Corp. 100 Park Avenue New York, NY 10017 IMPORTANT TELEPHONE NUMBERS (800) TRI-1092 Stockholder Services (800) 445-1777 Retirement Plan Services (212) 682-7600 Outside the United States (800) 622-4597 24-Hour Automated Telephone Access Service WWW.TRI-CONTINENTAL.COM 28 TRI-CONTINENTAL CORPORATION BOARD OF DIRECTORS JOHN R. GALVIN (2,4) DIRECTOR, Raytheon Company DEAN EMERITUS, Fletcher School of Law and Diplomacy at Tufts University ALICE S. ILCHMAN (3,4) CHAIRMAN, The Rockefeller Foundation TRUSTEE, Committee for Economic Development FRANK A. MCPHERSON (2,4) DIRECTOR, Kimberly-Clark Corporation DIRECTOR, Baptist Medical Center DIRECTOR, Conoco Inc. JOHN E. MEROW (2,4) DIRECTOR, Commonwealth Industries, Inc. TRUSTEE, New York-Presbyterian Hospital RETIRED CHAIRMAN AND SENIOR PARTNER, Sullivan & Cromwell, Law Firm BETSY S. MICHEL (2,4) TRUSTEE, The Geraldine R. Dodge Foundation WILLIAM C. MORRIS (1) CHAIRMAN CHAIRMAN OF THE BOARD, J. & W. Seligman & Co. Incorporated CHAIRMAN, Carbo Ceramics Inc. DIRECTOR, Kerr-McGee Corporation JAMES C. PITNEY (3,4) Retired Partner, Pitney, Hardin, Kipp & Szuch, Law Firm LEROY C. RICHIE (4) CHAIRMAN AND CEO, Q Standards Worldwide, Inc. JAMES Q. RIORDAN (3,4) DIRECTOR, KeySpan Energy Corporation TRUSTEE, Committee for Economic Development DIRECTOR, Public Broadcasting Service RICHARD R.SCHMALTZ (1) MANAGING DIRECTOR, DIRECTOR OF INVESTMENTS, J. & W. Seligman & Co. Incorporated TRUSTEE EMERITUS,Colby College ROBERT L. SHAFER (3,4) RETIRED VICE PRESIDENT, Pfizer Inc. JAMES N. WHITSON (2,4) DIRECTOR AND CONSULTANT, Sammons Enterprises, Inc. DIRECTOR, C-SPAN DIRECTOR, CommScope, Inc. BRIAN T. ZINO (1) PRESIDENT PRESIDENT, J. & W. Seligman & Co. Incorporated CHAIRMAN, Seligman Data Corp. VICE CHAIRMAN, ICI Mutual Insurance Company MEMBER OF THE BOARD OF GOVERNORS, Investment Company Institute FRED E. BROWN DIRECTOR EMERITUS - -------------------- Member: (1) Executive Committee (2) Audit Committee (3) Director Nominating Committee (4) Board Operations Committee EXECUTIVE OFFICERS WILLIAM C. MORRIS CHAIRMAN BRIAN T. ZINO PRESIDENT CHARLES W. KADLEC VICE PRESIDENT THOMAS G. ROSE VICE PRESIDENT CHARLES C. SMITH, JR. VICE PRESIDENT LAWRENCE P. VOGEL VICE PRESIDENT AND TREASURER FRANK J. NASTA SECRETARY 29 TRI-CONTINENTAL CORPORATION MANAGED BY [LOGO] 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 CETRI2 12/00