If You Invested in Tri-Continental Corporation (TY)

Tri-Continental Corporation (NYSE: TY) is a United States-based closed-end management investment company. According to its stated objectives, the Corporation invests with the goal of producing future growth of both capital and income while also seeking to provide reasonable current income. Its shares of common stock and preferred stock are listed on the New York Stock Exchange, and it operates within the broader finance and investment management space.

The Corporation’s investment activities are organized into two equal segments. The equity segment uses quantitative models to select individual stocks. These quantitative methods can cause the selected securities to perform differently from the overall market, and there is no assurance that this methodology will enable the Corporation to achieve its objectives. The flexible capital income segment invests across a company’s investable capital structure, including stocks, bonds, and convertible securities. Through these segments, the Corporation allocates capital across a variety of asset types in pursuit of growth and income.

Tri-Continental Corporation invests in a range of sectors, including consumer discretionary, consumer staples, energy, financials, healthcare, industrials, information technology, materials, real estate, telecommunication services, utilities, aerospace and defense, banking, chemicals, and other areas. This sector diversification exposes the portfolio to market risk that may affect a single issuer, a sector of the economy, an industry, or the market as a whole.

Management and structure

The Corporation is managed by Columbia Management Investment Advisers, LLC, which is a wholly owned subsidiary of Ameriprise Financial, Inc. Columbia Management Investment Advisers, LLC serves as the investment manager, overseeing portfolio construction and the use of quantitative methods within the equity segment and the allocation decisions within the flexible capital income segment.

The Corporation has both common stock and preferred stock outstanding. Its preferred stock is one source of leverage, and the Corporation’s use of leverage exposes it to greater risks from unanticipated market movements. This leverage can magnify losses and increase the volatility of returns for common shareholders.

Investment objectives and risks

The Corporation states that investors should carefully consider its investment objectives, risks, charges, and expenses before investing. A prospectus containing information about these items is available through financial intermediaries, the transfer agent, or the Securities and Exchange Commission’s EDGAR database. The Corporation notes that there is no guarantee its investment goals or objectives will be met or that distributions will be made, and investors could lose money.

The Corporation’s portfolio includes fixed-income investments, including convertible securities. These securities are subject to credit risk, interest rate risk, and prepayment and extension risk. These risks may be more pronounced for longer-term securities and high-yield securities, sometimes referred to as “junk bonds.” In general, bond prices tend to rise when interest rates fall and fall when interest rates rise. Convertible securities are subject to the risks of their security type prior to conversion as well as the risks of the security type into which they may convert.

The Corporation emphasizes that its investment products are not insured by the FDIC, the NCUA, or any federal agency, are not deposits or obligations of, or guaranteed by, any financial institution, and involve investment risks including possible loss of principal and fluctuation in value. Past performance does not guarantee future results.

Trading characteristics and discounts

The Corporation notes that the net asset value (NAV) of its common shares may not always correspond to the market price of those shares. Shares of many closed-end funds frequently trade at a discount from their net asset value. As a result, the market price of Tri-Continental Corporation’s common shares may differ from the underlying value of its portfolio, and an investment in the Corporation is subject to stock market risk over both short and long periods.

Distributions and income characteristics

Tri-Continental Corporation has paid dividends on its common stock for many consecutive years and has described a distribution policy that governs ordinary income and capital gain distributions. The Corporation has stated that its distributions on common stock will vary over time. It has also indicated that, based on its own estimates and current information at the time of a specific announcement, certain distributions were from the earnings and profits of the Corporation and that no portion of those particular distributions consisted of a return of capital. However, the Corporation also notes that there is no guarantee that distributions will be made in the future.

The Corporation may declare ordinary income distributions and capital gain distributions on its common stock and preferred stock. In at least one instance, it described a special capital gain distribution that would be paid in stock by default, with stockholders given the option to elect different combinations of stock and cash. Such details are set forth in specific distribution announcements and related materials.

Governance and regulatory reporting

Tri-Continental Corporation is organized under the laws of Maryland and files reports with the Securities and Exchange Commission. Its common stock (trading symbol TY) and preferred stock (trading symbol TYPR) are registered under Section 12(b) of the Securities Exchange Act of 1934 and are listed on the New York Stock Exchange. The Corporation periodically furnishes press releases as exhibits to its current reports on Form 8-K, including information on distributions and stockholder meetings.

The Corporation holds annual meetings of stockholders at which stockholders vote on matters such as the election of directors and the ratification of the selection of the independent registered public accounting firm. For example, stockholders have voted on the re-election of directors for multi-year terms and on the ratification of PricewaterhouseCoopers LLP as the Corporation’s independent registered public accounting firm for a given fiscal year. These governance actions are documented in the Corporation’s public disclosures.

Role within the investment management sector

As a closed-end management investment company, Tri-Continental Corporation offers investors access to a professionally managed portfolio that spans equity and fixed-income securities across multiple sectors. Its structure as a closed-end fund means that its shares trade on an exchange and that the market price may differ from the underlying net asset value. The Corporation’s use of quantitative models in its equity segment and its flexible approach to investing across the capital structure in its income segment are central features of its stated investment approach.