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Tri-Continental Corporation is one of the oldest closed-end funds in the United States, having been launched in January 1929. It is traded on the New York Stock Exchange under the symbol TY. Long owned and managed by J & W Seligman, it is now owned and managed by Columbia Management, a large mutual fund complex, which is owned by Ameriprise Enterprises. Columbia Management was owned by Bank of America until being sold to Ameriprise.

For many years TY simply owned and held large-cap companies but in recent years, management has been gradually moving a portion of its assets into convertible and fixed income bonds. As of December 31, 2012, its portfolio breakdown was as follows:

Common Stocks68.6%
Convertible Bonds12.1
Convertible Preferreds5.5
Corporate Bonds11.9
Money Market Funds1.9

TY's ten largest holdings were as follows:

Apple3.0%
Pfizer2.2
JP Morgan Chase2.1
Chevron2.1
Verizon2.1
Microsoft2.0
Phillip Morris

1.8

BlackRock1.8
Amgen1.6
ConocoPhillips1.6

As of December 31, 2012, TY had gross assets of $1,220,922,216 of which $37,637,000 represents preferred stock issued a lifetime ago. Its investment portfolio of $1,216,283,608 has a cost basis of $1,108,599,978.

With a portfolio of large-cap stocks, its performance has been very mediocre but not terrible:

Mkt. ValueNAVS & P 500
1 Year16.77%16.24%16.00%
5 Years(0.65)0.611.66
10 years5.955.837.10

Five-year ratios show very low operating expenses, decent income and average portfolio turnover. It should be noted that TY has always had very low operating expenses:

Operating ExpensesInvestment IncomePortfolio Turnover
20120.52%3.28%68%
20110.591.8097
20100.601.8486
20090.981.4670
20080.732.90111

TY has always sold at a substantial discount from net asset value. Even in a rising market for large-cap stocks it still commands almost a 13% discount. In light of this balanced portfolio of convertibles, credit sensitive bonds and common stock, I strongly believe that TY is worth consideration. It is a nice portfolio with low operating expenses, which has been around for a long time. It is in the hands of a large strong management company.

I cannot see too much harm coming to anyone owning TY as part of a basket of other funds.

Source: Tri-Continental: Safety At A Discount