As filed with the Securities and Exchange Commission on August 28, 2014.
Registration Nos. 2-99356
811-04367
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 | x | |||||
Pre-Effective Amendment No. | ¨ | |||||
Post-Effective Amendment No. 205 | x |
and/or
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 | x | |||||
Amendment No. 206 | x |
(Check Appropriate Box or Boxes)
COLUMBIA FUNDS SERIES TRUST I
(Exact Name of Registrant as Specified in Charter)
225 Franklin Street, Boston, Massachusetts 02110
(Address of Principal Executive Officers) (Zip Code)
Registrants Telephone Number, Including Area Code: (800) 345-6611
Christopher O. Petersen, Esq.
c/o Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, Massachusetts 02110
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
¨ | Immediately upon filing pursuant to paragraph (b) |
x | On September 1, 2014 pursuant to paragraph (b) |
¨ | 60 days after filing pursuant to paragraph (a)(1) |
¨ | On (date) pursuant to paragraph (a)(1) |
¨ | 75 days after filing pursuant to paragraph (a)(2) |
¨ | On (date) pursuant to paragraph (a)(2) of rule 485. |
If appropriate, check the following box:
¨ | This post-effective amendment designates a new effective date for a previously filed post-effective amendment. |
This Post-Effective Amendment relates solely to the Registrants Columbia Bond Fund, Columbia Corporate Income Fund, Columbia Intermediate Bond Fund, Columbia Small Cap Value Fund I and Columbia U.S. Treasury Index Fund series. Information contained in the Registrants Registration Statement relating to any other series of the Registrant is neither amended nor superseded hereby.
Class | Ticker Symbol | |
Class A Shares | CNDAX | |
Class B Shares | CNDBX | |
Class C Shares | CNDCX | |
Class I Shares | CBNIX | |
Class R Shares | CBFRX | |
Class R4 Shares | CNDRX | |
Class R5 Shares | CNFRX | |
Class T Shares | CNDTX | |
Class W Shares | CBDWX | |
Class Y Shares | CBFYX | |
Class Z Shares | UMMGX |
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(a) | This charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months of purchase, as follows: 1.00% if redeemed within 12 months of purchase, and 0.50% if redeemed more than 12, but less than 18, months after purchase, with certain limited exceptions. |
(b) | This charge decreases over time. |
(c) | This charge applies to redemptions within one year of purchase, with certain limited exceptions. |
(d) | Other expenses for Class A, Class B, Class C, Class R, Class R4, Class R5, Class T, Class W and Class Z shares have been restated to reflect current fees paid by the Fund. |
(e) | Columbia Management Investment Advisers, LLC and certain of its affiliates have contractually agreed to waive fees and/or to reimburse expenses (excluding transaction costs and certain other investment related expenses, interest, taxes, acquired fund fees and expenses, and extraordinary expenses) until August 31, 2015, unless sooner terminated at the sole discretion of the Fund’s Board of Trustees. Under this agreement, the Fund’s net operating expenses, subject to applicable exclusions, will not exceed the annual rates of 0.93% for Class A, 1.68% for Class B, 1.68% for Class C, 0.52% for Class I, 1.18% for Class R, 0.68% for Class R4, 0.57% for Class R5, 0.83% for Class T, 0.93% for Class W, 0.52% for Class Y and 0.68% for Class Z. In addition, the Fund's expense ratio is subject to a voluntary expense reimbursement arrangement, as described under Additional Investment Strategies and Policies - Expense Reimbursement Arrangements and Impact on Past Performance . This voluntary arrangement may be revised or discontinued at any time. |
Prospectus 2014 | 3 |
■ | you invest $10,000 in the applicable class of Fund shares for the periods indicated, |
■ | your investment has a 5% return each year, and |
■ | the Fund’s total annual operating expenses remain the same as shown in the Annual Fund Operating Expenses table above. |
1 year | 3 years | 5 years | 10 years | |
Class A (whether or not shares are redeemed) | $565 | $768 | $ 986 | $1,615 |
Class B (assuming redemption of all shares at the end of the period) | $671 | $840 | $1,134 | $1,838 |
Class B (assuming no redemption of shares) | $171 | $540 | $ 934 | $1,838 |
Class C (assuming redemption of all shares at the end of the period) | $271 | $540 | $ 934 | $2,037 |
Class C (assuming no redemption of shares) | $171 | $540 | $ 934 | $2,037 |
Class I (whether or not shares are redeemed) | $ 53 | $169 | $ 295 | $ 664 |
Class R (whether or not shares are redeemed) | $120 | $385 | $ 671 | $1,484 |
Class R4 (whether or not shares are redeemed) | $ 69 | $228 | $ 401 | $ 902 |
Class R5 (whether or not shares are redeemed) | $ 58 | $185 | $ 323 | $ 725 |
Class T (whether or not shares are redeemed) | $556 | $738 | $ 935 | $1,503 |
Class W (whether or not shares are redeemed) | $ 95 | $307 | $ 537 | $1,197 |
Class Y (whether or not shares are redeemed) | $ 53 | $169 | $ 295 | $ 664 |
Class Z (whether or not shares are redeemed) | $ 69 | $228 | $ 401 | $ 902 |
4 | Prospectus 2014 |
Prospectus 2014 | 5 |
6 | Prospectus 2014 |
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8 | Prospectus 2014 |
Year
by Year Total Return (%)
as of December 31 Each Year* |
Best
and Worst Quarterly Returns
During the Period Shown in the Bar Chart |
||
|
Best | 3rd Quarter 2009 | 4.55% |
Worst
|
2nd Quarter 2013 | -2.68% |
* | Year to Date return as of June 30, 2014: 4.08% |
Prospectus 2014 | 9 |
Share
Class
Inception Date |
1 Year | 5 Years | 10 Years | |
Class Z | 01/09/1986 | |||
returns before taxes | -3.17% | 5.13% | 4.40% | |
returns after taxes on distributions | -4.79% | 3.41% | 2.72% | |
returns after taxes on distributions and sale of Fund shares | -1.18% | 3.51% | 2.88% | |
Class A returns before taxes | 03/31/2008 | -7.98% | 3.87% | 3.63% |
Class B returns before taxes | 03/07/2011 | -8.71% | 3.75% | 3.36% |
Class C returns before taxes | 03/31/2008 | -4.80% | 4.19% | 3.43% |
Class I returns before taxes | 09/27/2010 | -2.88% | 5.22% | 4.44% |
Class R returns before taxes | 11/16/2011 | -3.54% | 4.53% | 3.75% |
Class R4 returns before taxes | 11/08/2012 | -3.07% | 5.15% | 4.41% |
Class R5 returns before taxes | 11/08/2012 | -3.11% | 5.14% | 4.40% |
Class T returns before taxes | 03/07/2011 | -7.89% | 3.95% | 3.74% |
Class W returns before taxes | 09/27/2010 | -3.27% | 4.92% | 4.17% |
Class Y returns before taxes | 07/15/2009 | -2.88% | 5.24% | 4.46% |
Barclays U.S. Aggregate Bond Index (reflects no deductions for fees, expenses or taxes) | -2.02% | 4.44% | 4.55% |
Portfolio Manager | Title | Role with Fund | Managed Fund Since | |||
Carl Pappo, CFA | Senior Portfolio Manager and Head of Core Fixed Income | Lead Manager | 2010 | |||
Michael Zazzarino | Senior Portfolio Manager | Co-manager | 2005 |
Online | Regular Mail | Express Mail | By Telephone | |||
columbiamanagement.com |
Columbia
Funds,
c/o Columbia Management Investment Services Corp. P.O. Box 8081 Boston, MA 02266-8081 |
Columbia
Funds,
c/o Columbia Management Investment Services Corp. 30 Dan Road, Suite 8081 Canton, MA 02021-2809 |
800.422.3737 |
10 | Prospectus 2014 |
Class | Category of eligible account |
For
accounts other than
systematic investment plan accounts |
For
systematic investment
plan accounts |
Classes
A, B*, C
& T** |
All accounts other than IRAs | $2,000 | $100 |
IRAs | $1,000 | $100 | |
Classes I, R, R4 & Y | All eligible accounts | None | N/A |
Class R5 | Combined underlying accounts of eligible registered investment advisers | $100,000 | N/A |
Omnibus retirement plans | None | N/A | |
Class W | All eligible accounts | $500 | N/A |
Class Z | All eligible accounts |
$0,
$1,000 or $2,000
depending upon the category of eligible investor |
$100 |
* | Class B shares are generally closed to new and existing shareholders. |
** | Class T shares are generally closed to new investors. |
Prospectus 2014 | 11 |
12 | Prospectus 2014 |
Prospectus 2014 | 13 |
14 | Prospectus 2014 |
Prospectus 2014 | 15 |
16 | Prospectus 2014 |
Prospectus 2014 | 17 |
18 | Prospectus 2014 |
Prospectus 2014 | 19 |
20 | Prospectus 2014 |
Columbia Bond Fund | |
Class A | 0.93% |
Class B | 1.68% |
Class C | 1.68% |
Class I | 0.52% |
Class R | 1.18% |
Class R4 | 0.68% |
Class R5 | 0.57% |
Class T | 0.83% |
Class W | 0.93% |
Class Y | 0.52% |
Class Z | 0.68% |
Prospectus 2014 | 21 |
22 | Prospectus 2014 |
Portfolio Manager | Title | Role with Fund | Managed Fund Since | |||
Carl Pappo, CFA | Senior Portfolio Manager and Head of Core Fixed Income | Lead Manager | 2010 | |||
Michael Zazzarino | Senior Portfolio Manager | Co-manager | 2005 |
Prospectus 2014 | 23 |
■ | compensation and other benefits received by the Investment Manager and other Ameriprise Financial affiliates related to the management/administration of a Columbia Fund and the sale of its shares; |
■ | the allocation of, and competition for, investment opportunities among the Fund, other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates, or Ameriprise Financial itself and its affiliates; |
■ | separate and potentially divergent management of a Columbia Fund and other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates; |
■ | regulatory and other investment restrictions on investment activities of the Investment Manager and other Ameriprise Financial affiliates and accounts advised/managed by them; |
■ | insurance and other relationships of Ameriprise Financial affiliates with companies and other entities in which a Columbia Fund invests; and |
■ | regulatory and other restrictions relating to the sharing of information between Ameriprise Financial and its affiliates, including the Investment Manager, and a Columbia Fund. |
24 | Prospectus 2014 |
* | The website references in this prospectus are inactive links and information contained in or otherwise accessible through the referenced websites does not form a part of this prospectus. |
■ | The amount you plan to invest. |
■ | How long you intend to remain invested in the Fund. |
■ | The expenses for each share class. |
■ | Whether you may be eligible for a reduction or waiver of sales charges when you buy or sell shares. |
Prospectus 2014 | 25 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class A |
Eligibility:
Available to the general public for investment
|
5.75%
maximum, declining to 0.00% on investments of $1 million or more
|
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months of purchase charged as follows:
|
Distribution
and Service
Fees: up to 0.25% |
Class B |
Eligibility:
Closed to new investors
(f)
|
None | 5.00% maximum, gradually declining to 0.00% after six years (g) |
Distribution
Fee:
0.75%
|
Class C |
Eligibility:
Available to the general public for investment
|
None | 1.00% on certain investments redeemed within one year of purchase |
Distribution
Fee:
0.75%
|
Class I |
Eligibility:
Available only to other Funds (i.e., fund-of-fund investments)
|
None | None | None |
26 | Prospectus 2014 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class K |
Eligibility:
Closed to new investors; available only to qualified employee benefit plans, trust companies or similar institutions, 501(c)(3) charitable organizations, non-qualified deferred compensation plans whose participants
are included in a qualified employee benefit plan described above, 529 plans, and health savings accounts
(f)
|
None | None | Plan Administration Services Fee: 0.25% |
Class R |
Eligibility:
Available only to eligible retirement plans, health savings accounts and, in the sole discretion of the Distributor, other types of retirement accounts held through platforms maintained by selling agents approved by
the Distributor
|
None | None |
Series
of CFST & CFST I:
distribution fee of 0.50%
|
Class R4 |
Eligibility:
Available only to (i) omnibus retirement plans, (ii) trust companies or similar institutions, (iii) broker-dealers, banks, trust companies and similar institutions that clear Fund share transactions for their client
or customer investment advisory or similar accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the Transfer Agent with respect to Class R4 eligibility apart
from selling, servicing or similar agreements, (iv) 501(c)(3) charitable organizations, (v) 529 plans and (vi) health savings accounts
|
None | None | None |
Prospectus 2014 | 27 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class R5 |
Eligibility:
Available only to (i) certain registered investment advisers that clear Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that
have been granted specific written authorization from the Transfer Agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements and (ii) omnibus retirement
plans
(f)
|
None | None | None |
Class T |
Eligibility:
Generally closed to new investors
(f)
|
5.75% maximum, declining to 0.00% on investments of $1 million or more |
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months of purchase, charged as follows:
|
Service Fee: up to 0.50% |
Class W |
Eligibility:
Available only to investors purchasing through certain authorized investment programs managed by investment professionals, including discretionary managed account programs
|
None | None | Distribution and Service Fees: 0.25% |
Class Y |
Eligibility:
Available only to retirement plans that
maintain plan-level or omnibus
accounts with the Fund
(f)
|
None | None | None |
28 | Prospectus 2014 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class Z |
Eligibility:
Available only to certain eligible investors, which are subject to different minimum investment requirements, ranging from $0 to $2,000; effective March 29, 2013, closed to (i) accounts of selling agents that clear
Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been given specific written notice from the Transfer Agent of the termination of their eligibility for
new purchases of Class Z shares and (ii) omnibus retirement plans, subject to certain exceptions
(f)
|
None | None | None |
(a) | For Columbia Money Market Fund, new investments must be made in Class A, Class I, Class W or Class Z shares, subject to eligibility. Class C and Class R shares of Columbia Money Market Fund are available as a new investment only to investors in the Distributor's proprietary 401(k) products, provided that such investor is eligible to invest in the class and transact directly with the Fund or the Transfer Agent through a third party administrator or third party recordkeeper. Columbia Money Market Fund offers other classes of shares only to facilitate exchanges with other Funds offering such share classes. |
(b) | The minimum initial investment requirement is $5,000 for Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund, and $10,000 for Columbia Absolute Return Currency and Income Fund and Columbia Absolute Return Emerging Markets Macro Fund. See Buying, Selling and Exchanging Shares — Buying Shares for more details on the eligible investors and minimum initial investment requirements. Certain share classes are subject to minimum account balance requirements, as described in Buying, Selling and Exchanging Shares — Transaction Rules and Policies. |
(c) | Actual front-end sales charges and CDSCs vary among the Funds. For more information on applicable sales charges, see Choosing a Share Class — Sales Charges and Commissions and for information about certain exceptions to these sales charges, see Choosing a Share Class — Reductions/Waivers of Sales Charges. |
(d) | These are the maximum applicable distribution and/or service fees. Fee rates and fee components (i.e., the portion of a combined fee that is a distribution or service fee) may vary among Funds. Because these fees are paid out of Fund assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of distribution and/or shareholder service fees. Although Class A shares of certain series of CFST I are subject to a combined distribution and service fee of up to 0.35%, these Funds currently limit the combined fee to 0.25%. Columbia Money Market Fund pays a distribution and service fee of up to 0.10% on Class A shares, up to 0.75% distribution fee and up to 0.10% service fee on Class B shares, up to 0.75% distribution fee on Class C shares, and 0.10% distribution and service fees on Class W shares. Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia Tax-Exempt Fund pay a service fee of up to 0.20% on Class A, Class B and Class C shares. Columbia AMT-Free Intermediate Muni Bond Fund pays a distribution fee of up to 0.65% on Class B and Class C shares. For more information on distribution and service fees, see Choosing a Share Class — Distribution and Service Fees. |
(e) | The following Funds are not subject to a front-end sales charge or a CDSC on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund and Columbia Small Cap Index Fund. Columbia U.S. Treasury Index Fund is not subject to a CDSC. |
(f) | These share classes are closed to new accounts, or closed to previously eligible investors, subject to certain conditions, as summarized below and described in more detail under Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors: |
Prospectus 2014 | 29 |
(g) | Timing of conversion and CDSC schedules will vary depending on the Fund and the date of your original purchase of Class B shares. For more information on the conversion of Class B shares to Class A shares, see Choosing a Share Class — Sales Charges and Commissions. Class B shares of Columbia Short Term Municipal Bond Fund do not charge a CDSC and do not convert to Class A shares. |
30 | Prospectus 2014 |
■ | The net asset value (or NAV) per share is the price of a share calculated by the Fund every business day. |
■ | The offering price per share is the NAV per share plus any front-end sales charge that applies. |
■ | depends on the amount you're investing (generally, the larger the investment, the smaller the percentage sales charge), and |
■ | is based on the total amount of your purchase and the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund). |
Prospectus 2014 | 31 |
Class A Shares — Front-End Sales Charge — Breakpoint Schedule* | ||||
Breakpoint Schedule For: |
Dollar
amount of
shares bought (a) |
Sales
charge as a % of the offering price (b) |
Sales
charge as a % of the net amount invested (b) |
Amount
retained by or paid to selling agents as a % of the offering price |
Columbia
Absolute Return Currency and Income Fund,
Columbia Absolute Return Multi-Strategy Fund, Columbia Floating Rate Fund, Columbia Inflation Protected Securities Fund and Columbia Limited Duration Credit Fund |
$ 0-$99,999 | 3.00% | 3.09% | 2.50% |
$100,000–$249,999 | 2.50% | 2.56% | 2.15% | |
$250,000–$499,999 | 2.00% | 2.04% | 1.75% | |
$500,000–$999,999 | 1.50% | 1.52% | 1.25% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Columbia
Short Term Bond Fund and
Columbia Short Term Municipal Bond Fund |
$ 0-$99,999 | 1.00% | 1.01% | 0.75% |
$100,000–$249,999 | 0.75% | 0.76% | 0.50% | |
$250,000–$999,999 | 0.50% | 0.50% | 0.40% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
* | The following Funds are not subject to a front-end sales charge on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund and Columbia Small Cap Index Fund. The following Funds are not subject to a CDSC on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund, Columbia Small Cap Index Fund and Columbia U.S. Treasury Index Fund. "Funds-of-Funds (equity)" includes Columbia Capital Allocation Aggressive Portfolio, Columbia Capital Allocation Moderate Aggressive Portfolio, Columbia Capital Allocation Moderate Conservative Portfolio, Columbia Capital Allocation Moderate Portfolio and Columbia LifeGoal® Growth Portfolio . "Funds-of-Funds (fixed income)" includes Columbia Capital Allocation Conservative Portfolio and Columbia Income Builder Fund. Columbia Balanced Fund and Columbia Global Opportunities Fund are treated as equity Funds for purposes of the table. |
(a) | Purchase amounts and account values may be aggregated among all eligible Fund accounts for the purposes of this table. See Choosing a Share Class — Reductions/Waivers of Sales Charges for a discussion of account value aggregation. |
(b) | Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process. Purchase price includes the sales charge. |
(c) | For information regarding cumulative commissions paid to your selling agent when you buy $1 million or more of Class A shares of a Fund, see Class A Shares — Commissions below. |
■ | If you purchased Class A shares without an initial sales charge because your accounts aggregated between $1 million and $50 million at the time of purchase, you will incur a CDSC if you redeem those shares within 18 months of purchase, which is charged as follows: 1.00% CDSC if shares are redeemed within 12 months of purchase; and 0.50% CDSC if shares are redeemed more than 12, but less than 18, months after purchase. |
■ | Subsequent Class A share purchases that bring your aggregate account value to $1 million or more (but less than $50 million) will also be subject to a CDSC if you redeem them within the time periods noted above. |
32 | Prospectus 2014 |
* | Not applicable to Funds that do not assess a front-end sales charge. In addition, the Distributor does not make such payments on purchases of $1 million or more of Columbia U.S. Treasury Index Fund. |
Prospectus 2014 | 33 |
Class B Shares — CDSC Schedule for the Funds (except those listed below) | |
Number
of Years
Class B Shares Held |
Applicable
CDSC* |
One | 5.00% |
Two | 4.00% |
Three | 3.00% |
Four | 3.00% |
Five | 2.00% |
Six | 1.00% |
Seven | None |
Eight | None |
Nine | Conversion to Class A Shares |
* | Because of rounding in the calculation, the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. |
Class B Shares — CDSC Schedule for Columbia Intermediate Bond Fund, Columbia AMT-Free Intermediate Muni Bond Fund, Columbia Short Term Bond Fund and the AMT-Free State-specific Intermediate Muni Bond Funds | |
Number
of Years
Class B Shares Held |
Applicable
CDSC* |
One | 3.00% |
Two | 3.00% |
Three | 2.00% |
Four | 1.00% |
Five | None |
Six | None |
Seven | None |
Eight | None |
Nine | Conversion to Class A Shares |
* | Because of rounding in the calculation, the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. |
34 | Prospectus 2014 |
■ | depends on the amount you're investing (generally, the larger the investment, the smaller the percentage sales charge), and |
■ | is based on the total amount of your purchase and the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund). |
Prospectus 2014 | 35 |
Class T Shares — Front-End Sales Charge — Breakpoint Schedule | ||||
Breakpoint Schedule For: |
Dollar
amount of
shares bought (a) |
Sales
charge as a % of the offering price (b) |
Sales
charge as a % of the net amount invested (b) |
Amount
retained by or paid to selling agents as a % of the offering price |
Equity Funds | $ 0–$49,999 | 5.75% | 6.10% | 5.00% |
$ 50,000–$99,999 | 4.50% | 4.71% | 3.75% | |
$100,000–$249,999 | 3.50% | 3.63% | 2.75% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.00% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Fixed Income Funds | $ 0–$49,999 | 4.75% | 4.99% | 4.25% |
$ 50,000–$99,999 | 4.50% | 4.71% | 3.75% | |
$100,000–$249,999 | 3.50% | 3.63% | 2.75% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.00% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
(a) | Purchase amounts and account values are aggregated among all eligible Fund accounts for the purposes of this table. |
(b) | Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process. |
(c) | For more information regarding cumulative commissions paid to your selling agent when you buy $1 million or more of Class T shares, see Class T Shares — Commissions below. |
■ | If you purchased Class T shares without a front-end sales charge because your accounts aggregated between $1 million and $50 million at the time of purchase, you will incur a CDSC if you redeem those shares within 18 months of purchase, which is charged as follows: 1.00% CDSC if shares are redeemed within 12 months of purchase, and 0.50% CDSC if shares are redeemed more than 12, but less than 18, months after purchase. |
■ | Subsequent Class T share purchases that bring your aggregate account value to $1 million or more (but less than $50 million) will also be subject to a CDSC if you redeem them within the time periods noted above. |
36 | Prospectus 2014 |
Class T Shares — Commission Schedule (Paid by the Distributor to Selling Agents) | |
Purchase
Amount |
Commission
Level
(as a % of net asset value per share) |
$1 million – $2,999,999 | 1.00% |
$3 million – $49,999,999 | 0.50% |
$50 million or more | 0.25% |
Prospectus 2014 | 37 |
38 | Prospectus 2014 |
Distribution
Fee |
Service
Fee |
Combined
Total |
|
Class A | up to 0.25% | up to 0.25% | up to 0.35% (a)(b)(c) |
Class B | 0.75% (d) | 0.25% | 1.00% (b) |
Class C | 0.75% (c)(e) | 0.25% | 1.00% (b) |
Class I | None | None | None |
Class K | None | 0.25% (f) | 0.25% (f) |
Class R (series of CFST and CFST I) | 0.50% | — (g) | 0.50% |
Class R (series of CFST II) | up to 0.50% (c) | up to 0.25% | 0.50% (g) |
Class R4 | None | None | None |
Class R5 | None | None | None |
Class T | None | 0.50% (h) | 0.50% (h) |
Class W | up to 0.25% | up to 0.25% | 0.25% (c) |
Class Y | None | None | None |
Class Z | None | None | None |
Prospectus 2014 | 39 |
(a) | The maximum distribution and service fees of Class A shares varies among the Funds, as shown in the table below: |
Funds |
Maximum
Class A Distribution Fee |
Maximum
Class A Service Fee |
Maximum
Class A Combined Total |
Series of CFST | — | — |
0.25%;
these Funds pay a
combined distribution and service fee |
Series
of CFST II (other than Columbia
Money Market Fund) |
up to 0.25% | up to 0.25% | 0.25% |
Columbia Money Market Fund | — | — | 0.10% |
Columbia Balanced Fund, Columbia Contrarian Core Fund, Columbia Dividend Income Fund, Columbia Intermediate Bond Fund, Columbia Large Cap Growth Fund, Columbia Mid Cap Growth Fund, Columbia AMT-Free Oregon Intermediate Muni Bond Fund, Columbia Real Estate Equity Fund, Columbia Small Cap Core Fund, Columbia Small Cap Growth Fund I, Columbia Global Technology Growth Fund | up to 0.10% | up to 0.25% |
up
to 0.35%; these Funds may
pay distribution and service fees up to a maximum of 0.35% of their average daily net assets attributable to Class A shares (comprised of up to 0.10% for distribution services and up to 0.25% for shareholder liaison services) but currently limit such fees to an aggregate fee of not more than 0.25% for Class A shares |
Columbia Bond Fund, Columbia California Tax-Exempt Fund, Columbia AMT-Free Connecticut Intermediate Muni Bond Fund, Columbia Corporate Income Fund, Columbia Diversified Real Return Fund, Columbia Emerging Markets Fund, Columbia Global Dividend Opportunity Fund, Columbia Global Energy and Natural Resources Fund, Columbia Greater China Fund, Columbia International Bond Fund, Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund, Columbia AMT-Free New York Intermediate Muni Bond Fund, Columbia New York Tax-Exempt Fund, Columbia Risk Allocation Fund, Columbia Small Cap Value Fund I, Columbia Pacific/Asia Fund, Columbia Select Large Cap Growth Fund, Columbia Strategic Income Fund, Columbia U.S. Treasury Index Fund, Columbia Value and Restructuring Fund | — | 0.25% | 0.25% |
Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund, Columbia Tax Exempt Fund | — | 0.20% | 0.20% |
(b) | The service fees for Class A, Class B and Class C shares of certain Funds vary. Service Fee for Class A, Class B and Class C shares of Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia Tax-Exempt Fund — The annual service fee may equal up to 0.20% of the average daily net asset value of all shares of such Fund class. Distribution Fee for Class B and Class C shares for Columbia AMT-Free Intermediate Muni Bond Fund — The annual distribution fee shall be 0.65% of the average daily net assets of the Fund's Class B and Class C shares. Fee amounts noted apply to Class B shares of the Funds other than Class B shares of Columbia Money Market Fund, which pays distribution fees of up to 0.75% and service fees of up to 0.10% for a combined total of 0.85%. The Distributor has currently agreed not to be reimbursed by the Fund for 0.10% of the 0.85% fee for Class B shares of Columbia Money Market Fund. The Distributor has voluntarily agreed to waive the service fee for Class A, Class B and Class C shares of Columbia U.S. Treasury Index Fund so that the service fee does not exceed 0.15% annually. This arrangement may be modified or terminated by the Distributor at any time. |
(c) | Fee amounts noted apply to all Funds other than Columbia Money Market Fund, which, for each of Class A and Class W shares, pays distribution and service fees of 0.10%, and for Class C shares pays distribution fees of 0.75%. The Distributor has currently agreed not to be reimbursed by the Fund for 0.25% of the 0.50% fee for Class R shares of Columbia Money Market Fund. The Distributor has voluntarily agreed to waive the 12b-1 fees it receives from Class A, Class C, Class R and Class W shares of Columbia Money Market Fund. This arrangement may be modified or terminated by the Distributor at any time. Compensation paid to broker-dealers and other selling agents may be suspended to the extent of the Distributor's waiver of the 12b-1 fees on these specific share classes of these Funds. |
(d) | The Distributor has voluntarily agreed to waive the distribution fee it receives from Class B shares of Columbia Seligman Communications and Information Fund and Columbia Global Infrastructure Fund and a portion of the distribution fee for Class B shares of Columbia Short Term Bond Fund so that the distribution fee does not exceed 0.30% annually. These arrangements may be modified or terminated by the Distributor at any time. |
(e) | The Distributor has voluntarily agreed to waive a portion of the distribution fee for Class C shares of the following Funds so that the distribution fee does not exceed the specified percentage annually: 0.40% for Columbia AMT-Free Oregon Intermediate Muni Bond Fund; 0.45% for Columbia California Tax-Exempt Fund, Columbia AMT-Free Connecticut Intermediate Muni Bond Fund, Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund, Columbia AMT-Free New York Intermediate Muni Bond Fund, Columbia New York Tax-Exempt Fund and Columbia |
40 | Prospectus 2014 |
Tax-Exempt Fund; 0.60% for Columbia Corporate Income Fund, Columbia High Yield Bond Fund, Columbia High Yield Municipal Fund, Columbia Intermediate Bond Fund and Columbia Short Term Bond Fund; and 0.70% for Columbia U.S. Treasury Index Fund. These arrangements may be modified or terminated by the Distributor at any time. | |
(f) | The shareholder service fees for Class K shares are not paid pursuant to a 12b-1 plan. Under a plan administration services agreement, the Funds' Class K shares pay for plan administration services. See Class K Plan Administration Services Fee below for more information. |
(g) | Class R shares of series of CFST and CFST I pay a distribution fee pursuant to a distribution (Rule 12b-1) plan for Class R shares. The Funds do not have a shareholder service plan for Class R shares. Series of CFST II have a distribution and shareholder service plan for Class R shares, which, prior to the close of business on September 3, 2010, were known as Class R2 shares. For Class R shares of series of CFST II, the maximum fee under the plan reimbursed for distribution expenses is equal on an annual basis to 0.50% of the average daily net assets of the Fund attributable to Class R shares. Of that amount, up to 0.25% may be reimbursed for shareholder service expenses. |
(h) | The shareholder servicing fees for Class T shares are up to 0.50% of average daily net assets attributable to Class T shares for equity Funds and 0.40% for fixed income Funds. In general, the Funds currently limit such fees to a maximum of 0.30% for equity Funds and 0.15% for fixed-income Funds. See Class T Shareholder Service Fees below for more information. |
Prospectus 2014 | 41 |
42 | Prospectus 2014 |
Prospectus 2014 | 43 |
44 | Prospectus 2014 |
Minimum Account Balance | |
Minimum
Account Balance |
|
For all Funds, classes and account types except those listed below |
$250
(None for accounts with
Systematic Investment Plans) |
Individual Retirement Accounts for all Funds and classes except those listed below | None |
Columbia
Absolute Return Currency and Income Fund and
Columbia Absolute Return Emerging Markets Macro Fund |
$5,000 |
Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund | $2,500 |
Class I, Class K, Class R, Class R4, Class R5, Class W and Class Y | None |
Prospectus 2014 | 45 |
46 | Prospectus 2014 |
■ | negative impact on the Fund's performance; |
■ | potential dilution of the value of the Fund's shares; |
■ | interference with the efficient management of the Fund's portfolio, such as the need to maintain undesirably large cash positions, the need to use its line of credit or the need to buy or sell securities it otherwise would not have bought or sold; |
■ | losses on the sale of investments resulting from the need to sell securities at less favorable prices; |
■ | increased taxable gains to the Fund's remaining shareholders resulting from the need to sell securities to meet sell orders; and |
■ | increased brokerage and administrative costs. |
Prospectus 2014 | 47 |
48 | Prospectus 2014 |
Prospectus 2014 | 49 |
■ | Dividend and/or capital gain distributions may continue to be reinvested in Class B shares of a Fund. |
■ | Shareholders invested in Class B shares of a Fund may exchange those shares for Class B shares of other Funds offering such shares. Certain exceptions apply, including that not all Funds may permit exchanges. |
50 | Prospectus 2014 |
Prospectus 2014 | 51 |
52 | Prospectus 2014 |
Minimum Initial Investments | ||
Minimum
Initial Investment (a) |
Minimum
Initial Investment for Accounts with Systematic Investment Plans |
|
For all Funds, classes and account types except those listed below | $2,000 | $100 (b) |
Individual Retirement Accounts for all Funds and classes except those listed below | $1,000 | $100 (c) |
Columbia Absolute Return Currency and Income Fund and Columbia Absolute Return Emerging Markets Macro Fund | $10,000 | $10,000 |
Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund | $5,000 | $5,000 |
Class I, Class K, Class R, Class R4 and Class Y | None | N/A |
Class R5 | variable (d) | N/A |
Class W | $500 | N/A |
Class Z | variable (e) | $100 |
(a) | If your Class A, Class B, Class C, Class T or Class Z shares account balance falls below the minimum initial investment amount for any reason, including a market decline, you may be asked to increase it to the minimum initial investment amount or establish a monthly Systematic Investment Plan. If you do not do so, your account will be subject to a $20 annual low balance fee and/or shares may be automatically redeemed and the proceeds mailed to you if the account falls below the minimum account balance. See Buying, Selling and Exchanging Shares — Transaction Rules and Policies above. |
(b) | Columbia Money Market Fund — $2,000 |
(c) | Columbia Money Market Fund — $1,000 |
(d) | There is no minimum initial investment in Class R5 shares for omnibus retirement plans. A minimum initial investment of $100,000 applies to aggregate purchases of Class R5 shares of a Fund for combined underlying accounts of any registered investment adviser that clears Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the Transfer Agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements. |
(e) | The minimum initial investment amount for Class Z shares is $0, $1,000 or $2,000 depending upon the category of eligible investor. See — Class Z Shares Minimum Initial Investments below. The minimum initial investment amount for systematic investment plan accounts is the same as the amount set forth in the first two rows of the table, as applicable. |
■ | Any person investing all or part of the proceeds of a distribution, rollover or transfer of assets into a Columbia Management Individual Retirement Account, from any deferred compensation plan which was a shareholder of any of the Funds of Columbia Acorn Trust on September 29, 2000, in which the investor was a participant and through which the investor invested in one or more of the Funds of Columbia Acorn Trust immediately prior to the distribution, transfer or rollover. |
■ | Any health savings account sponsored by a third party platform. |
Prospectus 2014 | 53 |
■ | Any investor participating in a wrap program sponsored by a selling agent or other entity that is paid an asset-based fee by the investor and that is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent. |
■ | Any individual retirement plan for which a selling agent or other entity provides services and is not compensated by the Fund for those services, other than in the form of payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent. |
■ | Any employee of Columbia Management Investment Advisers, LLC, the Distributor or the Transfer Agent and immediate family members of any of the foregoing who share the same address and any persons employed as of April 30, 2010 by Columbia Management Advisors, LLC, Columbia Management Distributors, Inc., or Columbia Management Services, Inc., the adviser, distributor and transfer agent of series of CFST and CFST I prior to May 1, 2010 (the Previous Service Providers) and immediate family members of any of the foregoing who share the same address are eligible to make new and subsequent purchases in Class Z shares through an individual retirement account. If you maintain your account with a selling agent, you must contact that selling agent each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
■ | Any shareholder (as well as any family member of a shareholder or person listed on an account registration for any account of the shareholder) of another fund distributed by the Distributor (i) who holds Class Z shares; (ii) who held Primary A shares prior to the share class redesignation of Primary A shares as Class Z shares that occurred on August 22, 2005; (iii) who holds Class A shares that were obtained by an exchange of Class Z shares; or (iv) who bought shares of certain mutual funds that were not subject to sales charges and that merged with a series of CFST or CFST I distributed by the Distributor. |
■ | Any investor participating in an account offered by a selling agent or other entity that provides services to such an account, is paid an asset-based fee by the investor and is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent (each investor buying shares through a financial intermediary must independently satisfy the minimum investment requirement noted above). |
■ | Any institutional investor who is a corporation, partnership, trust, foundation, endowment, institution, government entity, or similar organization, which meets the respective qualifications for an accredited investor, as defined under the Securities Act of 1933. |
■ | Certain financial institutions and intermediaries, such as insurance companies, trust companies, banks, endowments, investment companies or foundations, buying shares for their own account, including Ameriprise Financial and its affiliates and/or subsidiaries. |
■ | Any employee of Columbia Management Investment Advisers, LLC, the Distributor or the Transfer Agent and immediate family members of any of the foregoing who share the same address and any persons employed as of April 30, 2010 by the Previous Service Providers and any of their immediate family members who share the same address are eligible to make new and subsequent purchases in Class Z shares through a non-retirement account. If you maintain your account with a selling agent, you must contact that selling agent each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
■ | Certain other investors as set forth in more detail in the SAI. |
54 | Prospectus 2014 |
■ | Once the Transfer Agent or your selling agent receives your buy order in “good form,” your purchase will be made at the next calculated public offering price per share, which is the net asset value per share plus any sales charge that applies. |
■ | You generally buy Class A and Class T shares at the public offering price per share because purchases of these share classes are generally subject to a front-end sales charge. |
■ | You buy Class B, Class C, Class I, Class K, Class R, Class R4, Class R5, Class W, Class Y and Class Z shares at net asset value per share because no front-end sales charge applies to purchases of these share classes. |
■ | The Distributor and the Transfer Agent reserve the right to cancel your order if the Fund doesn't receive payment within three business days of receiving your buy order. The Fund will return any payment received for orders that have been cancelled, but no interest will be paid on that money. |
■ | Selling agents are responsible for sending your buy orders to the Transfer Agent and ensuring that we receive your money on time. |
■ | Shares purchased are recorded on the books of the Fund. The Fund doesn't issue certificates. |
Prospectus 2014 | 55 |
■ | Once the Transfer Agent or your selling agent receives your redemption order in “good form,” your shares will be sold at the next calculated NAV per share. Any applicable CDSC will be deducted from the amount you're selling and the balance will be remitted to you. |
■ | If you sell your shares that are held directly with the Funds (through the Transfer Agent), we will normally send the redemption proceeds by mail or electronically transfer them to your bank account within three business days after the Transfer Agent or your selling agent receives your order in “good form.” |
■ | If you sell your shares through a selling agent, the Funds will normally send the redemption proceeds by Fedwire within three business days after the Transfer Agent or your selling agent receives your order in “good form.” |
■ | If you paid for your shares by check or from your bank account as an ACH transaction, the Funds will hold the redemption proceeds when you sell those shares for a period of time after the trade date of the purchase. |
■ | No interest will be paid on uncashed redemption checks. |
■ | The Funds can delay payment of the redemption proceeds for up to seven days and may suspend redemptions and/or further postpone payment of redemption proceeds when the NYSE is closed or trading thereon is restricted or during emergency or other circumstances, including as determined by the SEC. |
■ | Other restrictions may apply to retirement accounts. For information about these restrictions, contact your retirement plan administrator. |
■ | The Fund reserves the right to redeem your shares if your account falls below the Fund's minimum initial investment requirement. |
■ | Also keep in mind the Funds' Small Account Policy, which is described above in Buying, Selling and Exchanging Shares — Transaction Rules and Policies. |
56 | Prospectus 2014 |
■ | Exchanges are made at the NAV next calculated after your exchange order is received in “good form.” |
■ | Once the Fund receives your exchange request, you cannot cancel it after the market closes. |
■ | The rules for buying shares of a Fund generally apply to exchanges into that Fund, including, if your exchange creates a new Fund account, it must satisfy the minimum investment amount, unless a waiver applies. |
■ | Shares of the purchased Fund may not be used on the same day for another exchange or sale. |
■ | If you exchange shares from Class A shares of Columbia Money Market Fund to a non-money market Fund, any further exchanges must be between shares of the same class. For example, if you exchange from Class A shares of Columbia Money Market Fund into Class C shares of a non-money market Fund, you may not exchange from Class C shares of that non-money market Fund back to Class A shares of Columbia Money Market Fund. |
■ | A sales charge may apply when you exchange shares of a Fund that were not assessed a sales charge at the time of your initial purchase. For example, if your initial investment was in Columbia Money Market Fund and you exchange into a non-money market Fund, your transaction is subject to a front-end sales charge if you exchange into Class A shares and to a CDSC if you exchange into Class C shares of the Funds. |
■ | If your initial investment was in Class A shares of a non-money market Fund and you exchange shares into Columbia Money Market Fund, you may exchange that amount to another Fund, including dividends earned on that amount, without paying a sales charge. |
■ | If your shares are subject to a CDSC, you will not be charged a CDSC upon the exchange of those shares. Any CDSC will be deducted when you sell the shares you received from the exchange. The CDSC imposed at that time will be based on the period that begins when you bought shares of the original Fund and ends when you sell the shares of the Fund you received from the exchange. The applicable CDSC will be the CDSC of the original Fund. |
■ | You may make exchanges only into a Fund that is legally offered and sold in your state of residence. Contact the Transfer Agent or your selling agent for more information. |
■ | You generally may make an exchange only into a Fund that is accepting investments. |
■ | The Fund may change or cancel your right to make an exchange by giving the amount of notice required by regulatory authorities (generally 60 days for a material change or cancellation). |
■ | Unless your account is part of a tax-advantaged arrangement, an exchange for shares of another Fund is a taxable event, and you may recognize a gain or loss for tax purposes. |
■ | Changing your investment to a different Fund will be treated as a sale and purchase, and you will be subject to applicable taxes on the sale and sales charges on the purchase of the new Fund. |
■ | Class Z shares of a Fund may be exchanged for Class A or Class Z shares of another Fund. In certain circumstances, the front-end sales charge applicable to Class A shares may be waived on exchanges of Class Z shares for Class A shares. See Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors — Class Z Shares for details. |
■ | You may generally exchange Class T shares of a Fund for Class A shares of another Fund if the other Fund does not offer Class T shares. Class T shares exchanged into Class A shares cannot be exchanged back into Class T shares. |
■ | Class W shares originally purchased, but no longer held, in a discretionary managed account, may not be exchanged for Class W shares of another Fund. |
■ | Former CFIT Shareholders may not exchange Class Y shares of a Fund into Class Y shares of another Fund. |
Prospectus 2014 | 57 |
■ | No sales charges or other charges will apply to any such exchange, except that when Class B shares are exchanged, any CDSC applicable to Class B shares will be applied. |
■ | Ordinarily, shareholders will not recognize a gain or loss for U.S. federal income tax purposes upon such an exchange. You should consult your tax advisor about your particular exchanges. |
58 | Prospectus 2014 |
■ | It can earn income on its investments. Examples of fund income are interest paid on money market instruments and bonds, and dividends paid on common stocks. |
■ | A mutual fund can also have capital gains if the value of its investments increases. While a fund continues to hold an investment, any gain is generally unrealized. If the fund sells an investment, it generally will realize a capital gain if it sells that investment for a higher price than its adjusted cost basis, and will generally realize a capital loss if it sells that investment for a lower price than its adjusted cost basis. Capital gains and losses are either short-term or long-term, depending on whether the fund holds the securities for one year or less (short-term) or more than one year (long-term). |
Declaration and Distribution Schedule | |
Declarations | Daily |
Distributions | Monthly |
Prospectus 2014 | 59 |
■ | The Fund intends to qualify each year as a regulated investment company. A regulated investment company generally is not subject to tax at the fund level on income and gains from investments that are distributed to shareholders. However, the Fund's failure to qualify as a regulated investment company would result in Fund level taxation, and consequently, a reduction in income available for distribution to you and in the net asset value of your shares. Even if a fund qualifies as a regulated investment company, the Fund may be subject to federal excise tax on certain undistributed income or gains. For tax-exempt Funds: If a tax-exempt Fund were to fail to qualify as a regulated investment company, any dividends of net tax-exempt income would no longer be exempt from U.S. federal income tax and, instead, in general, would be taxable to you as ordinary income. |
■ | Distributions generally are taxable to you when paid, whether they are paid in cash or automatically reinvested in additional Fund shares. Dividends paid in January are deemed paid on December 31 of the prior year if the dividend was declared and payable to shareholders of record in October, November, or December of such prior year. In certain circumstances a Fund may retain its net capital gain and deem such gains to have been distributed to shareholders. In such case, the Fund will be required to pay a fund-level tax on any such retained net capital gain, and shareholders will be required to include in income their share of such retained capital gain and will be entitled to credit their share of tax paid by the Fund against their federal income tax liabilities. |
■ | Distributions of the Fund's ordinary income and net short-term capital gain, if any, generally are taxable to you as ordinary income. Distributions of the Fund's net long-term capital gain, if any, generally are taxable to you as long-term capital gain. Whether capital gains are long-term or short-term is determined by how long the Fund has owned the investments that generated them, rather than how long you have owned your shares. For taxable fixed income Funds: The Fund expects that distributions will consist primarily of ordinary income. |
■ | From time to time, a distribution from the Fund could constitute a return of capital, which is not taxable to you so long as the amount of the distribution does not exceed your tax basis in your Fund shares. A return of capital reduces your tax basis in your Fund shares, with any amounts exceeding such basis generally taxable as capital gain. |
■ | If you are an individual and you meet certain holding period and other requirements for your Fund shares, a portion of your distributions may be treated as “qualified dividend income” taxable at the lower net long-term capital gain rates instead of the higher ordinary income rates. Qualified dividend income is income attributable to the Fund's dividends received from certain U.S. and foreign corporations, as long as the Fund meets certain holding period and other requirements for the stock producing such dividends. For taxable fixed income and tax-exempt Funds: The Fund does not expect a significant portion of Fund distributions to be qualified dividend income. |
■ | Certain high-income individuals (as well as estates and trusts) are subject to a 3.8% tax on net investment income. For individuals, the 3.8% tax applies to the lesser of (1) the amount (if any) by which the taxpayer's modified adjusted gross income exceeds certain threshold amounts or (2) the taxpayer's “net investment income.” Net investment income generally includes for this purpose dividends, including any capital gain dividends, paid by the Fund, and net gains recognized on the sale, redemption or exchange of shares of the Fund. For tax-exempt Funds: Exempt interest dividends are not included in net investment income for this purpose, and are therefore not subject to the tax on net investment income. |
■ | Certain derivative instruments when held in a Fund's portfolio subject the Fund to special tax rules, the effect of which may be to, among other things, accelerate income to the Fund, defer Fund losses, cause adjustments in the holding periods of Fund portfolio securities, or convert capital gains into ordinary income, short-term capital losses into long-term capital losses or long-term capital gains into short-term capital gains. These rules could therefore affect the amount, timing and/or character of distributions to shareholders. For tax-exempt Funds: Derivative instruments held by a Fund may also generate taxable income to the Fund. |
60 | Prospectus 2014 |
■ | Certain Funds may purchase or write options, as described further in the SAI. Generally, a Fund realizes a capital gain or loss on an option when the option expires, or when it is exercised, sold or otherwise terminated. However, if an option is a “section 1256 contract,” which includes most traded options on a broad-based index, and the Fund holds such option at the end of its taxable year, the Fund is deemed to sell such option at fair market value at such time and recognize any gain or loss thereon, which is generally deemed to be 60% long-term and 40% short-term gain or loss, as described further in the SAI. |
■ | If at the end of the taxable year more than 50% of the value of the Fund's assets consists of securities of foreign corporations, and the Fund makes a special election, you will generally be required to include in your income for U.S. federal income tax purposes your share of the qualifying foreign income taxes paid by the Fund in respect of its foreign portfolio securities. You may be able to claim a foreign tax credit or deduction in respect of this amount, subject to certain limitations. There is no assurance that the Fund will make this election for a taxable year, even if it is eligible to do so. |
■ | For tax-exempt Funds: The Fund expects that distributions will consist primarily of exempt interest dividends. Distributions of the Fund's net interest income from tax-exempt securities generally are not subject to U.S. federal income tax, but may be subject to state and local income and other taxes, as well as federal and state alternative minimum tax. Similarly, distributions of interest income that is exempt from state and local income taxes of a particular state may be subject to other taxes, including income taxes of other states, and federal and state alternative minimum tax. Certain income generated by tax-exempt securities, including capital gains on sales and market discount, is taxable. The Fund may invest a portion of its assets in securities that generate income that is not exempt from federal or state income tax. Distributions by the Fund of this income generally are taxable to you as ordinary income or long-term capital gain. Distributions of capital gains realized by the Fund, including those generated from the sale or exchange of tax-exempt securities, generally also are taxable to you. Distributions of the Fund's net short-term capital gain, if any, generally are taxable to you as ordinary income. |
■ | For a Fund organized as a fund-of-funds: Because most of the Fund's investments are shares of underlying Funds, the tax treatment of the Fund's gains, losses, and distributions may differ from the tax treatment that would apply if either the Fund invested directly in the types of securities held by the underlying Funds or the Fund shareholders invested directly in the underlying Funds. As a result, you may receive taxable distributions earlier and recognize higher amounts of capital gain or ordinary income than you otherwise would. |
■ | A sale, redemption or exchange of Fund shares is a taxable event. This includes redemptions where you are paid in securities. Your sales, redemptions and exchanges of Fund shares (including those paid in securities) usually will result in a taxable capital gain or loss to you, equal to the difference between the amount you receive for your shares (or are deemed to have received in the case of exchanges) and the amount you paid (or are deemed to have paid in the case of exchanges) for them. Any such capital gain or loss generally will be long-term capital gain or loss if you have held your Fund shares for more than one year at the time of sale or exchange. In certain circumstances, capital losses may be converted from short-term to long-term; in other circumstances, capital losses may be disallowed under the “wash sale” rules. |
■ | The Fund generally is required to report to shareholders and the Internal Revenue Service (the IRS) upon the sale, exchange or redemption of Fund shares cost basis information with respect to those shares. The Fund uses average cost basis as its default method of calculating cost basis. Please see columbiamanagement.com or contact the Fund at 800.345.6611 for more information regarding average cost basis reporting, other available cost basis methods and how to select or change a particular method or to choose specific shares to sell, redeem or exchange. If you hold Fund shares through a selling agent, you should contact your selling agent to learn about its cost basis reporting default method and the reporting elections available to your account. |
■ | The Fund is required by federal law to withhold tax on any taxable or tax-exempt distributions and redemption proceeds paid to you (including amounts paid to you in securities and amounts deemed to be paid to you upon an exchange of shares) if: you haven't provided a correct TIN or haven't certified to the Fund that withholding doesn't apply; the IRS has notified us that the TIN listed on your account is incorrect according to its records; or the IRS informs the Fund that you are otherwise subject to backup withholding. |
Prospectus 2014 | 61 |
62 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class A | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $9.46 | $9.58 | $9.50 | $9.24 | $9.28 | $8.79 | |
Income from investment operations: | |||||||
Net investment income | 0.16 | 0.23 | 0.02 | 0.29 | 0.27 | 0.31 | |
Net realized and unrealized gain (loss) | (0.30) | 0.17 | 0.08 | 0.38 | 0.17 | 0.59 | |
Total from investment operations | (0.14) | 0.40 | 0.10 | 0.67 | 0.44 | 0.90 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.17) | (0.23) | (0.02) | (0.29) | (0.29) | (0.33) | |
Net realized gains | (0.29) | (0.29) | — | (0.12) | (0.19) | (0.08) | |
Total distributions to shareholders | (0.46) | (0.52) | (0.02) | (0.41) | (0.48) | (0.41) | |
Proceeds from regulatory settlements | — | — | — | — | — | 0.00 (b) | |
Net asset value, end of period | $8.86 | $9.46 | $9.58 | $9.50 | $9.24 | $9.28 | |
Total return | (1.42%) | 4.21% | 1.08% | 7.35% | 4.83% | 10.39% (c) | |
Ratios to average net assets (d) | |||||||
Total gross expenses | 0.98% | 0.98% | 1.01% (e) | 0.99% (f) | 1.09% | 1.12% | |
Total net expenses (g) | 0.96% (h) | 0.90% (h) | 0.80% (e) | 0.80% (f)(h) | 0.80% (h) | 0.82% (h) | |
Net investment income | 1.83% | 2.43% | 2.94% (e) | 3.07% | 2.97% | 3.43% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $61,159 | $82,739 | $82,929 | $82,041 | $75,770 | $15,362 | |
Portfolio turnover | 360% (i) | 221% (i) | 10% (i) | 136% (i) | 178% | 256% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | Total return includes a reimbursement of a loss experienced by the Fund due to a compliance violation. The reimbursement had an impact of less than 0.01% on total return. |
(d) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(e) | Annualized. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(i) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% and 119% for the years ended April 30, 2014 and 2013, respectively, and unchanged for the period ended April 30, 2012 and the year ended March 31, 2012. |
Prospectus 2014 | 63 |
Year Ended April 30, | Year Ended March 31, | |||||
Class B | 2014 | 2013 | 2012 (a) | 2012 | 2011 (b) | |
Per share data | ||||||
Net asset value, beginning of period | $9.46 | $9.58 | $9.50 | $9.24 | $9.24 | |
Income from investment operations: | ||||||
Net investment income (loss) | 0.10 | 0.16 | 0.02 | 0.22 | (0.00) (c) | |
Net realized and unrealized gain (loss) | (0.31) | 0.17 | 0.08 | 0.38 | 0.01 | |
Total from investment operations | (0.21) | 0.33 | 0.10 | 0.60 | 0.01 | |
Less distributions to shareholders: | ||||||
Net investment income | (0.10) | (0.16) | (0.02) | (0.22) | (0.01) | |
Net realized gains | (0.29) | (0.29) | — | (0.12) | — | |
Total distributions to shareholders | (0.39) | (0.45) | (0.02) | (0.34) | (0.01) | |
Net asset value, end of period | $8.86 | $9.46 | $9.58 | $9.50 | $9.24 | |
Total return | (2.15%) | 3.43% | 1.02% | 6.55% | 0.15% | |
Ratios to average net assets (d) | ||||||
Total gross expenses | 1.73% | 1.73% | 1.76% (e) | 1.74% (f) | 1.86% (e) | |
Total net expenses (g) | 1.71% (h) | 1.65% (h) | 1.55% (e) | 1.55% (f)(h) | 1.55% (e)(h) | |
Net investment income (loss) | 1.07% | 1.70% | 2.18% (e) | 2.35% | (0.95%) (e) | |
Supplemental data | ||||||
Net assets, end of period (in thousands) | $1,037 | $2,110 | $2,872 | $2,969 | $5,347 | |
Portfolio turnover | 360% (i) | 221% (i) | 10% (i) | 136% (i) | 178% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from March 7, 2011 (commencement of operations) to March 31, 2011. |
(c) | Rounds to zero. |
(d) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(e) | Annualized. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(i) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% and 119% for the years ended April 30, 2014 and 2013, respectively, and unchanged for the period ended April 30, 2012 and the year ended March 31, 2012. |
64 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class C | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $9.45 | $9.57 | $9.49 | $9.24 | $9.29 | $8.80 | |
Income from investment operations: | |||||||
Net investment income | 0.11 | 0.17 | 0.02 | 0.23 | 0.21 | 0.25 | |
Net realized and unrealized gain (loss) | (0.31) | 0.17 | 0.08 | 0.38 | 0.15 | 0.58 | |
Total from investment operations | (0.20) | 0.34 | 0.10 | 0.61 | 0.36 | 0.83 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.11) | (0.17) | (0.02) | (0.24) | (0.22) | (0.26) | |
Net realized gains | (0.29) | (0.29) | — | (0.12) | (0.19) | (0.08) | |
Total distributions to shareholders | (0.40) | (0.46) | (0.02) | (0.36) | (0.41) | (0.34) | |
Proceeds from regulatory settlements | — | — | — | — | — | 0.00 (b) | |
Net asset value, end of period | $8.85 | $9.45 | $9.57 | $9.49 | $9.24 | $9.29 | |
Total return | (2.01%) | 3.59% | 1.03% | 6.72% | 3.94% | 9.56% (c) | |
Ratios to average net assets (d) | |||||||
Total gross expenses | 1.73% | 1.73% | 1.75% (e) | 1.74% (f) | 1.84% | 1.87% | |
Total net expenses (g) | 1.56% (h) | 1.50% (h) | 1.40% (e) | 1.40% (f)(h) | 1.51% (h) | 1.57% (h) | |
Net investment income | 1.23% | 1.83% | 2.35% (e) | 2.46% | 2.26% | 2.71% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $10,917 | $15,812 | $17,129 | $16,872 | $13,398 | $2,226 | |
Portfolio turnover | 360% (i) | 221% (i) | 10% (i) | 136% (i) | 178% | 256% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | Total return includes a reimbursement of a loss experienced by the Fund due to a compliance violation. The reimbursement had an impact of less than 0.01% on total return. |
(d) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(e) | Annualized. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(i) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% and 119% for the years ended April 30, 2014 and 2013, respectively, and unchanged for the period ended April 30, 2012 and the year ended March 31, 2012. |
Prospectus 2014 | 65 |
Year Ended April 30, | Year Ended March 31, | |||||
Class I | 2014 | 2013 | 2012 (a) | 2012 | 2011 (b) | |
Per share data | ||||||
Net asset value, beginning of period | $9.48 | $9.59 | $9.50 | $9.25 | $9.58 | |
Income from investment operations: | ||||||
Net investment income | 0.21 | 0.30 | 0.03 | 0.33 | 0.14 | |
Net realized and unrealized gain (loss) | (0.31) | 0.14 | 0.09 | 0.36 | (0.18) | |
Total from investment operations | (0.10) | 0.44 | 0.12 | 0.69 | (0.04) | |
Less distributions to shareholders: | ||||||
Net investment income | (0.21) | (0.26) | (0.03) | (0.32) | (0.16) | |
Net realized gains | (0.29) | (0.29) | — | (0.12) | (0.13) | |
Total distributions to shareholders | (0.50) | (0.55) | (0.03) | (0.44) | (0.29) | |
Net asset value, end of period | $8.88 | $9.48 | $9.59 | $9.50 | $9.25 | |
Total return | (0.98%) | 4.71% | 1.21% | 7.55% | (0.44%) | |
Ratios to average net assets (c) | ||||||
Total gross expenses | 0.49% | 0.52% | 0.56% (d) | 0.51% (e) | 0.62% (d) | |
Total net expenses (f) | 0.49% | 0.51% | 0.51% (d) | 0.51% (e)(g) | 0.51% (d)(g) | |
Net investment income | 2.33% | 2.99% | 3.22% (d) | 3.51% | 2.89% (d) | |
Supplemental data | ||||||
Net assets, end of period (in thousands) | $10 | $2 | $15,545 | $15,931 | $284,143 | |
Portfolio turnover | 360% (h) | 221% (h) | 10% (h) | 136% (h) | 178% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from September 27, 2010 (commencement of operations) to March 31, 2011. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(h) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% and 119% for the years ended April 30, 2014 and 2013, respectively, and unchanged for the period ended April 30, 2012 and the year ended March 31, 2012. |
66 | Prospectus 2014 |
Year Ended April 30, |
Year
Ended
March 31, 2012 (b) |
|||
Class R | 2014 | 2013 | 2012 (a) | |
Per share data | ||||
Net asset value, beginning of period | $9.46 | $9.58 | $9.50 | $9.51 |
Income from investment operations: | ||||
Net investment income | 0.14 | 0.21 | 0.02 | 0.09 |
Net realized and unrealized gain (loss) | (0.31) | 0.16 | 0.08 | 0.07 |
Total from investment operations | (0.17) | 0.37 | 0.10 | 0.16 |
Less distributions to shareholders: | ||||
Net investment income | (0.14) | (0.20) | (0.02) | (0.09) |
Net realized gains | (0.29) | (0.29) | — | (0.08) |
Total distributions to shareholders | (0.43) | (0.49) | (0.02) | (0.17) |
Net asset value, end of period | $8.86 | $9.46 | $9.58 | $9.50 |
Total return | (1.66%) | 3.95% | 1.06% | 1.75% |
Ratios to average net assets (c) | ||||
Total gross expenses | 1.23% | 1.23% | 1.26% (d) | 1.40% (d)(e) |
Total net expenses (f) | 1.21% (g) | 1.15% (g) | 1.05% (d) | 1.03% (d)(e) |
Net investment income | 1.59% | 2.16% | 2.69% (d) | 2.69% (d) |
Supplemental data | ||||
Net assets, end of period (in thousands) | $2,498 | $2,558 | $2,553 | $2,506 |
Portfolio turnover | 360% (h) | 221% (h) | 10% (h) | 136% (h) |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from November 16, 2011 (commencement of operations) to March 31, 2012. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(h) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% and 119% for the years ended April 30, 2014 and 2013, respectively, and unchanged for the period ended April 30, 2012 and the year ended March 31, 2012. |
Prospectus 2014 | 67 |
Year
Ended April 30,
|
||
Class R4 | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $9.45 | $9.73 |
Income from investment operations: | ||
Net investment income | 0.18 | 0.10 |
Net realized and unrealized loss | (0.30) | (0.07) (b) |
Total from investment operations | (0.12) | 0.03 |
Less distributions to shareholders: | ||
Net investment income | (0.19) | (0.10) |
Net realized gains | (0.29) | (0.21) |
Total distributions to shareholders | (0.48) | (0.31) |
Net asset value, end of period | $8.85 | $9.45 |
Total return | (1.18%) | 0.36% |
Ratios to average net assets (c) | ||
Total gross expenses | 0.74% | 0.69% (d) |
Total net expenses (e) | 0.70% (f) | 0.69% (d) |
Net investment income | 1.99% | 2.38% (d) |
Supplemental data | ||
Net assets, end of period (in thousands) | $28 | $55 |
Portfolio turnover | 360% (g) | 221% (g) |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of sales and repurchases of Fund shares in relation to fluctuations in the market value of the portfolio. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(f) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(g) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% for the year ended April 30, 2014 and 119% for the period ended April 30, 2013. |
68 | Prospectus 2014 |
Year
Ended April 30,
|
||
Class R5 | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $9.45 | $9.73 |
Income from investment operations: | ||
Net investment income | 0.19 | 0.11 |
Net realized and unrealized loss | (0.31) | (0.07) (b) |
Total from investment operations | (0.12) | 0.04 |
Less distributions to shareholders: | ||
Net investment income | (0.20) | (0.11) |
Net realized gains | (0.29) | (0.21) |
Total distributions to shareholders | (0.49) | (0.32) |
Net asset value, end of period | $8.84 | $9.45 |
Total return | (1.10%) | 0.42% |
Ratios to average net assets (c) | ||
Total gross expenses | 0.57% | 0.55% (d) |
Total net expenses (e) | 0.57% | 0.55% (d) |
Net investment income | 2.09% | 2.71% (d) |
Supplemental data | ||
Net assets, end of period (in thousands) | $471 | $33,221 |
Portfolio turnover | 360% (f) | 221% (f) |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of sales and repurchases of Fund shares in relation to fluctuations in the market value of the portfolio. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(f) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% for the year ended April 30, 2014 and 119% for the period ended April 30, 2013. |
Prospectus 2014 | 69 |
Year Ended April 30, | Year Ended March 31, | |||||
Class T | 2014 | 2013 | 2012 (a) | 2012 | 2011 (b) | |
Per share data | ||||||
Net asset value, beginning of period | $9.45 | $9.57 | $9.48 | $9.23 | $9.23 | |
Income from investment operations: | ||||||
Net investment income (loss) | 0.17 | 0.24 | 0.02 | 0.30 | (0.00) (c) | |
Net realized and unrealized gain (loss) | (0.30) | 0.17 | 0.09 | 0.37 | 0.02 | |
Total from investment operations | (0.13) | 0.41 | 0.11 | 0.67 | 0.02 | |
Less distributions to shareholders: | ||||||
Net investment income | (0.18) | (0.24) | (0.02) | (0.30) | (0.02) | |
Net realized gains | (0.29) | (0.29) | — | (0.12) | — | |
Total distributions to shareholders | (0.47) | (0.53) | (0.02) | (0.42) | (0.02) | |
Net asset value, end of period | $8.85 | $9.45 | $9.57 | $9.48 | $9.23 | |
Total return | (1.32%) | 4.32% | 1.20% | 7.36% | 0.21% | |
Ratios to average net assets (d) | ||||||
Total gross expenses | 0.88% | 0.88% | 0.91% (e) | 0.89% (f) | 1.01% (e) | |
Total net expenses (g) | 0.86% (h) | 0.80% (h) | 0.70% (e) | 0.70% (f)(h) | 0.70% (e)(h) | |
Net investment income | 1.94% | 2.53% | 3.04% (e) | 3.17% | (0.07%) (e) | |
Supplemental data | ||||||
Net assets, end of period (in thousands) | $12,351 | $14,412 | $15,630 | $15,577 | $16,251 | |
Portfolio turnover | 360% (i) | 221% (i) | 10% (i) | 136% (i) | 178% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from March 7, 2011 (commencement of operations) to March 31, 2011. |
(c) | Rounds to zero. |
(d) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(e) | Annualized. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(i) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% and 119% for the years ended April 30, 2014 and 2013, respectively, and unchanged for the period ended April 30, 2012 and the year ended March 31, 2012. |
70 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | |||||
Class W | 2014 | 2013 | 2012 (a) | 2012 | 2011 (b) | |
Per share data | ||||||
Net asset value, beginning of period | $9.47 | $9.58 | $9.50 | $9.24 | $9.57 | |
Income from investment operations: | ||||||
Net investment income | 0.17 | 0.24 | 0.02 | 0.29 | 0.12 | |
Net realized and unrealized gain (loss) | (0.31) | 0.17 | 0.08 | 0.38 | (0.18) | |
Total from investment operations | (0.14) | 0.41 | 0.10 | 0.67 | (0.06) | |
Less distributions to shareholders: | ||||||
Net investment income | (0.17) | (0.23) | (0.02) | (0.29) | (0.14) | |
Net realized gains | (0.29) | (0.29) | — | (0.12) | (0.13) | |
Total distributions to shareholders | (0.46) | (0.52) | (0.02) | (0.41) | (0.27) | |
Net asset value, end of period | $8.87 | $9.47 | $9.58 | $9.50 | $9.24 | |
Total return | (1.40%) | 4.32% | 1.09% | 7.38% | (0.60%) | |
Ratios to average net assets (c) | ||||||
Total gross expenses | 0.90% | 0.90% | 0.90% (d) | 0.95% (e) | 1.08% (d) | |
Total net expenses (f) | 0.90% (g) | 0.88% (g) | 0.75% (d) | 0.79% (e) | 0.80% (d)(g) | |
Net investment income | 1.92% | 2.46% | 3.04% (d) | 3.08% | 2.63% (d) | |
Supplemental data | ||||||
Net assets, end of period (in thousands) | $10 | $2 | $3 | $2 | $2 | |
Portfolio turnover | 360% (h) | 221% (h) | 10% (h) | 136% (h) | 178% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from September 27, 2010 (commencement of operations) to March 31, 2011. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(h) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% and 119% for the years ended April 30, 2014 and 2013, respectively, and unchanged for the period ended April 30, 2012 and the year ended March 31, 2012. |
Prospectus 2014 | 71 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class Y | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 (b) | |
Per share data | |||||||
Net asset value, beginning of period | $9.47 | $9.59 | $9.51 | $9.25 | $9.30 | $8.93 | |
Income from investment operations: | |||||||
Net investment income | 0.20 | 0.27 | 0.03 | 0.32 | 0.30 | 0.24 | |
Net realized and unrealized gain (loss) | (0.30) | 0.16 | 0.08 | 0.38 | 0.16 | 0.38 | |
Total from investment operations | (0.10) | 0.43 | 0.11 | 0.70 | 0.46 | 0.62 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.21) | (0.26) | (0.03) | (0.32) | (0.32) | (0.25) | |
Net realized gains | (0.29) | (0.29) | — | (0.12) | (0.19) | — | |
Total distributions to shareholders | (0.50) | (0.55) | (0.03) | (0.44) | (0.51) | (0.25) | |
Net asset value, end of period | $8.87 | $9.47 | $9.59 | $9.51 | $9.25 | $9.30 | |
Total return | (0.99%) | 4.60% | 1.11% | 7.66% | 5.01% | 7.00% | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 0.53% | 0.53% | 0.56% (d) | 0.53% (e) | 0.76% | 0.81% (d) | |
Total net expenses (f) | 0.53% | 0.52% | 0.51% (d) | 0.51% (e) | 0.53% (g) | 0.55% (d)(g) | |
Net investment income | 2.27% | 2.80% | 3.23% (d) | 3.38% | 3.21% | 3.58% (d) | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $25,147 | $24,368 | $22,718 | $22,474 | $24,717 | $14,913 | |
Portfolio turnover | 360% (h) | 221% (h) | 10% (h) | 136% (h) | 178% | 256% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from July 15, 2009 (commencement of operations) to March 31, 2010. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(h) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% and 119% for the years ended April 30, 2014 and 2013, respectively, and unchanged for the period ended April 30, 2012 and the year ended March 31, 2012. |
72 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class Z | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $9.46 | $9.58 | $9.50 | $9.24 | $9.29 | $8.80 | |
Income from investment operations: | |||||||
Net investment income | 0.19 | 0.26 | 0.03 | 0.31 | 0.29 | 0.34 | |
Net realized and unrealized gain (loss) | (0.31) | 0.16 | 0.07 | 0.38 | 0.17 | 0.58 | |
Total from investment operations | (0.12) | 0.42 | 0.10 | 0.69 | 0.46 | 0.92 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.19) | (0.25) | (0.02) | (0.31) | (0.32) | (0.35) | |
Net realized gains | (0.29) | (0.29) | — | (0.12) | (0.19) | (0.08) | |
Total distributions to shareholders | (0.48) | (0.54) | (0.02) | (0.43) | (0.51) | (0.43) | |
Proceeds from regulatory settlements | — | — | — | — | — | 0.00 (b) | |
Net asset value, end of period | $8.86 | $9.46 | $9.58 | $9.50 | $9.24 | $9.29 | |
Total return | (1.17%) | 4.47% | 1.10% | 7.63% | 4.98% | 10.66% (c) | |
Ratios to average net assets (d) | |||||||
Total gross expenses | 0.73% | 0.73% | 0.75% (e) | 0.73% (f) | 0.84% | 0.87% | |
Total net expenses (g) | 0.71% (h) | 0.65% (h) | 0.55% (e) | 0.55% (f)(h) | 0.55% (h) | 0.57% (h) | |
Net investment income | 2.07% | 2.69% | 3.14% (e) | 3.33% | 3.21% | 3.72% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $659,538 | $1,077,125 | $1,599,267 | $1,733,175 | $2,120,951 | $581,596 | |
Portfolio turnover | 360% (i) | 221% (i) | 10% (i) | 136% (i) | 178% | 256% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | Total return includes a reimbursement of a loss experienced by the Fund due to a compliance violation. The reimbursement had an impact of less than 0.01% on total return. |
(d) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(e) | Annualized. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(i) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 234% and 119% for the years ended April 30, 2014 and 2013, respectively, and unchanged for the period ended April 30, 2012 and the year ended March 31, 2012. |
Prospectus 2014 | 73 |
Class | Ticker Symbol | |
Class A Shares | LIIAX | |
Class B Shares | CIOBX | |
Class C Shares | CIOCX | |
Class I Shares | CPTIX | |
Class R4 Shares | CIFRX | |
Class R5 Shares | CPIRX | |
Class W Shares | CPIWX | |
Class Y Shares | CRIYX | |
Class Z Shares | SRINX |
|
3 |
|
3 |
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3 |
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4 |
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5 |
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7 |
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8 |
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8 |
|
9 |
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9 |
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10 |
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10 |
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10 |
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11 |
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14 |
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18 |
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19 |
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20 |
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21 |
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21 |
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21 |
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26 |
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33 |
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35 |
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38 |
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39 |
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39 |
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40 |
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44 |
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46 |
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51 |
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52 |
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55 |
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55 |
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56 |
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59 |
2 | Prospectus 2014 |
Shareholder Fees (fees paid directly from your investment) | ||||
Class A | Class B | Class C |
Classes
I,
R4, R5, W, Y and Z |
|
Maximum sales charge (load) imposed on purchases (as a % of offering price) | 4.75% | None | None | None |
Maximum deferred sales charge (load) imposed on redemptions (as a % of the lower of the original purchase price or current net asset value) | 1.00% (a) | 5.00% (b) | 1.00% (c) | None |
(a) | This charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months of purchase, as follows: 1.00% if redeemed within 12 months of purchase, and 0.50% if redeemed more than 12, but less than 18, months after purchase, with certain limited exceptions. |
(b) | This charge decreases over time. |
(c) | This charge applies to redemptions within one year of purchase, with certain limited exceptions. |
(d) | Other expenses for Class A, Class B, Class C, Class R4, Class R5, Class W and Class Z shares have been restated to reflect current fees paid by the Fund. |
Prospectus 2014 | 3 |
■ | you invest $10,000 in the applicable class of Fund shares for the periods indicated, |
■ | your investment has a 5% return each year, and |
■ | the Fund’s total annual operating expenses remain the same as shown in the Annual Fund Operating Expenses table above. |
1 year | 3 years | 5 years | 10 years | |
Class A (whether or not shares are redeemed) | $568 | $766 | $ 981 | $1,597 |
Class B (assuming redemption of all shares at the end of the period) | $674 | $839 | $1,128 | $1,821 |
Class B (assuming no redemption of shares) | $174 | $539 | $ 928 | $1,821 |
Class C (assuming redemption of all shares at the end of the period) | $274 | $539 | $ 928 | $2,019 |
Class C (assuming no redemption of shares) | $174 | $539 | $ 928 | $2,019 |
Class I (whether or not shares are redeemed) | $ 53 | $167 | $ 291 | $ 653 |
Class R4 (whether or not shares are redeemed) | $ 73 | $227 | $ 395 | $ 883 |
Class R5 (whether or not shares are redeemed) | $ 58 | $183 | $ 318 | $ 714 |
Class W (whether or not shares are redeemed) | $ 98 | $306 | $ 531 | $1,178 |
Class Y (whether or not shares are redeemed) | $ 53 | $167 | $ 291 | $ 653 |
Class Z (whether or not shares are redeemed) | $ 73 | $227 | $ 395 | $ 883 |
4 | Prospectus 2014 |
Prospectus 2014 | 5 |
6 | Prospectus 2014 |
Year
by Year Total Return (%)
as of December 31 Each Year* |
Best
and Worst Quarterly Returns
During the Period Shown in the Bar Chart |
||
|
Best | 2nd Quarter 2009 | 14.15% |
Worst
|
3rd Quarter 2008 | -7.67% |
* | Year to Date return as of June 30, 2014: 5.15% |
Prospectus 2014 | 7 |
Share
Class
Inception Date |
1 Year | 5 Years | 10 Years | |
Class A | 07/31/2000 | |||
returns before taxes | -5.02% | 9.66% | 4.88% | |
returns after taxes on distributions | -7.05% | 7.60% | 2.92% | |
returns after taxes on distributions and sale of Fund shares | -2.41% | 6.85% | 3.02% | |
Class B returns before taxes | 07/15/2002 | -5.69% | 9.64% | 4.60% |
Class C returns before taxes | 07/15/2002 | -1.79% | 10.08% | 4.76% |
Class I returns before taxes | 09/27/2010 | 0.18% | 11.12% | 5.71% |
Class R4 returns before taxes | 11/08/2012 | 0.10% | 11.03% | 5.67% |
Class R5 returns before taxes | 11/08/2012 | 0.23% | 11.06% | 5.68% |
Class W returns before taxes | 09/27/2010 | -0.25% | 10.74% | 5.40% |
Class Y returns before taxes | 11/08/2012 | 0.18% | 11.07% | 5.69% |
Class Z returns before taxes | 03/05/1986 | -0.01% | 11.01% | 5.66% |
Blended Benchmark (85% Barclays U.S. Corporate Index and 15% BofA Merrill Lynch U.S. High Yield Cash Pay Constrained Index) (reflects no deductions for fees, expenses or taxes) | -0.24% | 10.09% | 5.82% | |
Barclays U.S. Corporate Index (reflects no deductions for fees, expenses or taxes) | -1.53% | 8.63% | 5.33% |
Portfolio Manager | Title | Role with Fund | Managed Fund Since | |||
Tom Murphy, CFA | Vice President, Senior Portfolio Manager and Head of Investment Grade Credit | Lead Manager | 2011 | |||
Timothy Doubek, CFA | Senior Portfolio Manager | Co-manager | 2011 | |||
Brian Lavin, CFA | Senior Portfolio Manager | Co-manager | 2010 |
Online | Regular Mail | Express Mail | By Telephone | |||
columbiamanagement.com |
Columbia
Funds,
c/o Columbia Management Investment Services Corp. P.O. Box 8081 Boston, MA 02266-8081 |
Columbia
Funds,
c/o Columbia Management Investment Services Corp. 30 Dan Road, Suite 8081 Canton, MA 02021-2809 |
800.422.3737 |
8 | Prospectus 2014 |
Class | Category of eligible account |
For
accounts other than
systematic investment plan accounts |
For
systematic investment
plan accounts |
Classes A, B* & C | All accounts other than IRAs | $2,000 | $100 |
IRAs | $1,000 | $100 | |
Classes I, R4 & Y | All eligible accounts | None | N/A |
Class R5 | Combined underlying accounts of eligible registered investment advisers | $100,000 | N/A |
Omnibus retirement plans | None | N/A | |
Class W | All eligible accounts | $500 | N/A |
Class Z | All eligible accounts |
$0,
$1,000 or $2,000
depending upon the category of eligible investor |
$100 |
* | Class B shares are generally closed to new and existing shareholders. |
Prospectus 2014 | 9 |
10 | Prospectus 2014 |
Prospectus 2014 | 11 |
12 | Prospectus 2014 |
Prospectus 2014 | 13 |
14 | Prospectus 2014 |
Prospectus 2014 | 15 |
16 | Prospectus 2014 |
Columbia Corporate Income Fund | |
Class A | 0.96% |
Class B | 1.71% |
Class C | 1.71% |
Class I | 0.57% |
Class R4 | 0.71% |
Class R5 | 0.62% |
Class W | 0.96% |
Class Y | 0.57% |
Class Z | 0.71% |
Prospectus 2014 | 17 |
Portfolio Manager | Title | Role with Fund | Managed Fund Since | |||
Tom Murphy, CFA | Vice President, Senior Portfolio Manager and Head of Investment Grade Credit | Lead Manager | 2011 | |||
Timothy Doubek, CFA | Senior Portfolio Manager | Co-manager | 2011 | |||
Brian Lavin, CFA | Senior Portfolio Manager | Co-manager | 2010 |
18 | Prospectus 2014 |
■ | compensation and other benefits received by the Investment Manager and other Ameriprise Financial affiliates related to the management/administration of a Columbia Fund and the sale of its shares; |
■ | the allocation of, and competition for, investment opportunities among the Fund, other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates, or Ameriprise Financial itself and its affiliates; |
■ | separate and potentially divergent management of a Columbia Fund and other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates; |
■ | regulatory and other investment restrictions on investment activities of the Investment Manager and other Ameriprise Financial affiliates and accounts advised/managed by them; |
■ | insurance and other relationships of Ameriprise Financial affiliates with companies and other entities in which a Columbia Fund invests; and |
Prospectus 2014 | 19 |
■ | regulatory and other restrictions relating to the sharing of information between Ameriprise Financial and its affiliates, including the Investment Manager, and a Columbia Fund. |
20 | Prospectus 2014 |
* | The website references in this prospectus are inactive links and information contained in or otherwise accessible through the referenced websites does not form a part of this prospectus. |
■ | The amount you plan to invest. |
■ | How long you intend to remain invested in the Fund. |
■ | The expenses for each share class. |
■ | Whether you may be eligible for a reduction or waiver of sales charges when you buy or sell shares. |
Prospectus 2014 | 21 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class A |
Eligibility:
Available to the general public for investment
|
5.75%
maximum, declining to 0.00% on investments of $1 million or more
|
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months of purchase charged as follows:
|
Distribution
and Service
Fees: up to 0.25% |
Class B |
Eligibility:
Closed to new investors
(f)
|
None | 5.00% maximum, gradually declining to 0.00% after six years (g) |
Distribution
Fee:
0.75%
|
Class C |
Eligibility:
Available to the general public for investment
|
None | 1.00% on certain investments redeemed within one year of purchase |
Distribution
Fee:
0.75%
|
Class I |
Eligibility:
Available only to other Funds (i.e., fund-of-fund investments)
|
None | None | None |
22 | Prospectus 2014 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class K |
Eligibility:
Closed to new investors; available only to qualified employee benefit plans, trust companies or similar institutions, 501(c)(3) charitable organizations, non-qualified deferred compensation plans whose participants
are included in a qualified employee benefit plan described above, 529 plans, and health savings accounts
(f)
|
None | None | Plan Administration Services Fee: 0.25% |
Class R |
Eligibility:
Available only to eligible retirement plans, health savings accounts and, in the sole discretion of the Distributor, other types of retirement accounts held through platforms maintained by selling agents approved by
the Distributor
|
None | None |
Series
of CFST & CFST I:
distribution fee of 0.50%
|
Class R4 |
Eligibility:
Available only to (i) omnibus retirement plans, (ii) trust companies or similar institutions, (iii) broker-dealers, banks, trust companies and similar institutions that clear Fund share transactions for their client
or customer investment advisory or similar accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the Transfer Agent with respect to Class R4 eligibility apart
from selling, servicing or similar agreements, (iv) 501(c)(3) charitable organizations, (v) 529 plans and (vi) health savings accounts
|
None | None | None |
Prospectus 2014 | 23 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class R5 |
Eligibility:
Available only to (i) certain registered investment advisers that clear Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that
have been granted specific written authorization from the Transfer Agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements and (ii) omnibus retirement
plans
(f)
|
None | None | None |
Class T |
Eligibility:
Generally closed to new investors
(f)
|
5.75% maximum, declining to 0.00% on investments of $1 million or more |
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months of purchase, charged as follows:
|
Service Fee: up to 0.50% |
Class W |
Eligibility:
Available only to investors purchasing through certain authorized investment programs managed by investment professionals, including discretionary managed account programs
|
None | None | Distribution and Service Fees: 0.25% |
Class Y |
Eligibility:
Available only to retirement plans that
maintain plan-level or omnibus
accounts with the Fund
(f)
|
None | None | None |
24 | Prospectus 2014 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class Z |
Eligibility:
Available only to certain eligible investors, which are subject to different minimum investment requirements, ranging from $0 to $2,000; effective March 29, 2013, closed to (i) accounts of selling agents that clear
Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been given specific written notice from the Transfer Agent of the termination of their eligibility for
new purchases of Class Z shares and (ii) omnibus retirement plans, subject to certain exceptions
(f)
|
None | None | None |
(a) | For Columbia Money Market Fund, new investments must be made in Class A, Class I, Class W or Class Z shares, subject to eligibility. Class C and Class R shares of Columbia Money Market Fund are available as a new investment only to investors in the Distributor's proprietary 401(k) products, provided that such investor is eligible to invest in the class and transact directly with the Fund or the Transfer Agent through a third party administrator or third party recordkeeper. Columbia Money Market Fund offers other classes of shares only to facilitate exchanges with other Funds offering such share classes. |
(b) | The minimum initial investment requirement is $5,000 for Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund, and $10,000 for Columbia Absolute Return Currency and Income Fund and Columbia Absolute Return Emerging Markets Macro Fund. See Buying, Selling and Exchanging Shares — Buying Shares for more details on the eligible investors and minimum initial investment requirements. Certain share classes are subject to minimum account balance requirements, as described in Buying, Selling and Exchanging Shares — Transaction Rules and Policies. |
(c) | Actual front-end sales charges and CDSCs vary among the Funds. For more information on applicable sales charges, see Choosing a Share Class — Sales Charges and Commissions and for information about certain exceptions to these sales charges, see Choosing a Share Class — Reductions/Waivers of Sales Charges. |
(d) | These are the maximum applicable distribution and/or service fees. Fee rates and fee components (i.e., the portion of a combined fee that is a distribution or service fee) may vary among Funds. Because these fees are paid out of Fund assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of distribution and/or shareholder service fees. Although Class A shares of certain series of CFST I are subject to a combined distribution and service fee of up to 0.35%, these Funds currently limit the combined fee to 0.25%. Columbia Money Market Fund pays a distribution and service fee of up to 0.10% on Class A shares, up to 0.75% distribution fee and up to 0.10% service fee on Class B shares, up to 0.75% distribution fee on Class C shares, and 0.10% distribution and service fees on Class W shares. Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia Tax-Exempt Fund pay a service fee of up to 0.20% on Class A, Class B and Class C shares. Columbia AMT-Free Intermediate Muni Bond Fund pays a distribution fee of up to 0.65% on Class B and Class C shares. For more information on distribution and service fees, see Choosing a Share Class — Distribution and Service Fees. |
(e) | The following Funds are not subject to a front-end sales charge or a CDSC on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund and Columbia Small Cap Index Fund. Columbia U.S. Treasury Index Fund is not subject to a CDSC. |
(f) | These share classes are closed to new accounts, or closed to previously eligible investors, subject to certain conditions, as summarized below and described in more detail under Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors: |
Prospectus 2014 | 25 |
(g) | Timing of conversion and CDSC schedules will vary depending on the Fund and the date of your original purchase of Class B shares. For more information on the conversion of Class B shares to Class A shares, see Choosing a Share Class — Sales Charges and Commissions. Class B shares of Columbia Short Term Municipal Bond Fund do not charge a CDSC and do not convert to Class A shares. |
26 | Prospectus 2014 |
■ | The net asset value (or NAV) per share is the price of a share calculated by the Fund every business day. |
■ | The offering price per share is the NAV per share plus any front-end sales charge that applies. |
■ | depends on the amount you're investing (generally, the larger the investment, the smaller the percentage sales charge), and |
■ | is based on the total amount of your purchase and the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund). |
Prospectus 2014 | 27 |
Class A Shares — Front-End Sales Charge — Breakpoint Schedule* | ||||
Breakpoint Schedule For: |
Dollar
amount of
shares bought (a) |
Sales
charge as a % of the offering price (b) |
Sales
charge as a % of the net amount invested (b) |
Amount
retained by or paid to selling agents as a % of the offering price |
Columbia
Absolute Return Currency and Income Fund,
Columbia Absolute Return Multi-Strategy Fund, Columbia Floating Rate Fund, Columbia Inflation Protected Securities Fund and Columbia Limited Duration Credit Fund |
$ 0-$99,999 | 3.00% | 3.09% | 2.50% |
$100,000–$249,999 | 2.50% | 2.56% | 2.15% | |
$250,000–$499,999 | 2.00% | 2.04% | 1.75% | |
$500,000–$999,999 | 1.50% | 1.52% | 1.25% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Columbia
Short Term Bond Fund and
Columbia Short Term Municipal Bond Fund |
$ 0-$99,999 | 1.00% | 1.01% | 0.75% |
$100,000–$249,999 | 0.75% | 0.76% | 0.50% | |
$250,000–$999,999 | 0.50% | 0.50% | 0.40% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
* | The following Funds are not subject to a front-end sales charge on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund and Columbia Small Cap Index Fund. The following Funds are not subject to a CDSC on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund, Columbia Small Cap Index Fund and Columbia U.S. Treasury Index Fund. "Funds-of-Funds (equity)" includes Columbia Capital Allocation Aggressive Portfolio, Columbia Capital Allocation Moderate Aggressive Portfolio, Columbia Capital Allocation Moderate Conservative Portfolio, Columbia Capital Allocation Moderate Portfolio and Columbia LifeGoal® Growth Portfolio . "Funds-of-Funds (fixed income)" includes Columbia Capital Allocation Conservative Portfolio and Columbia Income Builder Fund. Columbia Balanced Fund and Columbia Global Opportunities Fund are treated as equity Funds for purposes of the table. |
(a) | Purchase amounts and account values may be aggregated among all eligible Fund accounts for the purposes of this table. See Choosing a Share Class — Reductions/Waivers of Sales Charges for a discussion of account value aggregation. |
(b) | Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process. Purchase price includes the sales charge. |
(c) | For information regarding cumulative commissions paid to your selling agent when you buy $1 million or more of Class A shares of a Fund, see Class A Shares — Commissions below. |
■ | If you purchased Class A shares without an initial sales charge because your accounts aggregated between $1 million and $50 million at the time of purchase, you will incur a CDSC if you redeem those shares within 18 months of purchase, which is charged as follows: 1.00% CDSC if shares are redeemed within 12 months of purchase; and 0.50% CDSC if shares are redeemed more than 12, but less than 18, months after purchase. |
■ | Subsequent Class A share purchases that bring your aggregate account value to $1 million or more (but less than $50 million) will also be subject to a CDSC if you redeem them within the time periods noted above. |
28 | Prospectus 2014 |
* | Not applicable to Funds that do not assess a front-end sales charge. In addition, the Distributor does not make such payments on purchases of $1 million or more of Columbia U.S. Treasury Index Fund. |
Prospectus 2014 | 29 |
Class B Shares — CDSC Schedule for the Funds (except those listed below) | |
Number
of Years
Class B Shares Held |
Applicable
CDSC* |
One | 5.00% |
Two | 4.00% |
Three | 3.00% |
Four | 3.00% |
Five | 2.00% |
Six | 1.00% |
Seven | None |
Eight | None |
Nine | Conversion to Class A Shares |
* | Because of rounding in the calculation, the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. |
Class B Shares — CDSC Schedule for Columbia Intermediate Bond Fund, Columbia AMT-Free Intermediate Muni Bond Fund, Columbia Short Term Bond Fund and the AMT-Free State-specific Intermediate Muni Bond Funds | |
Number
of Years
Class B Shares Held |
Applicable
CDSC* |
One | 3.00% |
Two | 3.00% |
Three | 2.00% |
Four | 1.00% |
Five | None |
Six | None |
Seven | None |
Eight | None |
Nine | Conversion to Class A Shares |
* | Because of rounding in the calculation, the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. |
30 | Prospectus 2014 |
■ | depends on the amount you're investing (generally, the larger the investment, the smaller the percentage sales charge), and |
■ | is based on the total amount of your purchase and the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund). |
Prospectus 2014 | 31 |
Class T Shares — Front-End Sales Charge — Breakpoint Schedule | ||||
Breakpoint Schedule For: |
Dollar
amount of
shares bought (a) |
Sales
charge as a % of the offering price (b) |
Sales
charge as a % of the net amount invested (b) |
Amount
retained by or paid to selling agents as a % of the offering price |
Equity Funds | $ 0–$49,999 | 5.75% | 6.10% | 5.00% |
$ 50,000–$99,999 | 4.50% | 4.71% | 3.75% | |
$100,000–$249,999 | 3.50% | 3.63% | 2.75% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.00% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Fixed Income Funds | $ 0–$49,999 | 4.75% | 4.99% | 4.25% |
$ 50,000–$99,999 | 4.50% | 4.71% | 3.75% | |
$100,000–$249,999 | 3.50% | 3.63% | 2.75% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.00% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
(a) | Purchase amounts and account values are aggregated among all eligible Fund accounts for the purposes of this table. |
(b) | Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process. |
(c) | For more information regarding cumulative commissions paid to your selling agent when you buy $1 million or more of Class T shares, see Class T Shares — Commissions below. |
■ | If you purchased Class T shares without a front-end sales charge because your accounts aggregated between $1 million and $50 million at the time of purchase, you will incur a CDSC if you redeem those shares within 18 months of purchase, which is charged as follows: 1.00% CDSC if shares are redeemed within 12 months of purchase, and 0.50% CDSC if shares are redeemed more than 12, but less than 18, months after purchase. |
■ | Subsequent Class T share purchases that bring your aggregate account value to $1 million or more (but less than $50 million) will also be subject to a CDSC if you redeem them within the time periods noted above. |
Class T Shares — Commission Schedule (Paid by the Distributor to Selling Agents) | |
Purchase
Amount |
Commission
Level
(as a % of net asset value per share) |
$1 million – $2,999,999 | 1.00% |
32 | Prospectus 2014 |
Class T Shares — Commission Schedule (Paid by the Distributor to Selling Agents) | |
Purchase
Amount |
Commission
Level
(as a % of net asset value per share) |
$3 million – $49,999,999 | 0.50% |
$50 million or more | 0.25% |
Prospectus 2014 | 33 |
34 | Prospectus 2014 |
Distribution
Fee |
Service
Fee |
Combined
Total |
|
Class A | up to 0.25% | up to 0.25% | up to 0.35% (a)(b)(c) |
Class B | 0.75% (d) | 0.25% | 1.00% (b) |
Class C | 0.75% (c)(e) | 0.25% | 1.00% (b) |
Class I | None | None | None |
Class K | None | 0.25% (f) | 0.25% (f) |
Class R (series of CFST and CFST I) | 0.50% | — (g) | 0.50% |
Class R (series of CFST II) | up to 0.50% (c) | up to 0.25% | 0.50% (g) |
Class R4 | None | None | None |
Class R5 | None | None | None |
Class T | None | 0.50% (h) | 0.50% (h) |
Class W | up to 0.25% | up to 0.25% | 0.25% (c) |
Class Y | None | None | None |
Class Z | None | None | None |
Prospectus 2014 | 35 |
(a) | The maximum distribution and service fees of Class A shares varies among the Funds, as shown in the table below: |
Funds |
Maximum
Class A Distribution Fee |
Maximum
Class A Service Fee |
Maximum
Class A Combined Total |
Series of CFST | — | — |
0.25%;
these Funds pay a
combined distribution and service fee |
Series
of CFST II (other than Columbia
Money Market Fund) |
up to 0.25% | up to 0.25% | 0.25% |
Columbia Money Market Fund | — | — | 0.10% |
Columbia Balanced Fund, Columbia Contrarian Core Fund, Columbia Dividend Income Fund, Columbia Intermediate Bond Fund, Columbia Large Cap Growth Fund, Columbia Mid Cap Growth Fund, Columbia AMT-Free Oregon Intermediate Muni Bond Fund, Columbia Real Estate Equity Fund, Columbia Small Cap Core Fund, Columbia Small Cap Growth Fund I, Columbia Global Technology Growth Fund | up to 0.10% | up to 0.25% |
up
to 0.35%; these Funds may
pay distribution and service fees up to a maximum of 0.35% of their average daily net assets attributable to Class A shares (comprised of up to 0.10% for distribution services and up to 0.25% for shareholder liaison services) but currently limit such fees to an aggregate fee of not more than 0.25% for Class A shares |
Columbia Bond Fund, Columbia California Tax-Exempt Fund, Columbia AMT-Free Connecticut Intermediate Muni Bond Fund, Columbia Corporate Income Fund, Columbia Diversified Real Return Fund, Columbia Emerging Markets Fund, Columbia Global Dividend Opportunity Fund, Columbia Global Energy and Natural Resources Fund, Columbia Greater China Fund, Columbia International Bond Fund, Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund, Columbia AMT-Free New York Intermediate Muni Bond Fund, Columbia New York Tax-Exempt Fund, Columbia Risk Allocation Fund, Columbia Small Cap Value Fund I, Columbia Pacific/Asia Fund, Columbia Select Large Cap Growth Fund, Columbia Strategic Income Fund, Columbia U.S. Treasury Index Fund, Columbia Value and Restructuring Fund | — | 0.25% | 0.25% |
Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund, Columbia Tax Exempt Fund | — | 0.20% | 0.20% |
(b) | The service fees for Class A, Class B and Class C shares of certain Funds vary. Service Fee for Class A, Class B and Class C shares of Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia Tax-Exempt Fund — The annual service fee may equal up to 0.20% of the average daily net asset value of all shares of such Fund class. Distribution Fee for Class B and Class C shares for Columbia AMT-Free Intermediate Muni Bond Fund — The annual distribution fee shall be 0.65% of the average daily net assets of the Fund's Class B and Class C shares. Fee amounts noted apply to Class B shares of the Funds other than Class B shares of Columbia Money Market Fund, which pays distribution fees of up to 0.75% and service fees of up to 0.10% for a combined total of 0.85%. The Distributor has currently agreed not to be reimbursed by the Fund for 0.10% of the 0.85% fee for Class B shares of Columbia Money Market Fund. The Distributor has voluntarily agreed to waive the service fee for Class A, Class B and Class C shares of Columbia U.S. Treasury Index Fund so that the service fee does not exceed 0.15% annually. This arrangement may be modified or terminated by the Distributor at any time. |
(c) | Fee amounts noted apply to all Funds other than Columbia Money Market Fund, which, for each of Class A and Class W shares, pays distribution and service fees of 0.10%, and for Class C shares pays distribution fees of 0.75%. The Distributor has currently agreed not to be reimbursed by the Fund for 0.25% of the 0.50% fee for Class R shares of Columbia Money Market Fund. The Distributor has voluntarily agreed to waive the 12b-1 fees it receives from Class A, Class C, Class R and Class W shares of Columbia Money Market Fund. This arrangement may be modified or terminated by the Distributor at any time. Compensation paid to broker-dealers and other selling agents may be suspended to the extent of the Distributor's waiver of the 12b-1 fees on these specific share classes of these Funds. |
(d) | The Distributor has voluntarily agreed to waive the distribution fee it receives from Class B shares of Columbia Seligman Communications and Information Fund and Columbia Global Infrastructure Fund and a portion of the distribution fee for Class B shares of Columbia Short Term Bond Fund so that the distribution fee does not exceed 0.30% annually. These arrangements may be modified or terminated by the Distributor at any time. |
(e) | The Distributor has voluntarily agreed to waive a portion of the distribution fee for Class C shares of the following Funds so that the distribution fee does not exceed the specified percentage annually: 0.40% for Columbia AMT-Free Oregon Intermediate Muni Bond Fund; 0.45% for Columbia California Tax-Exempt Fund, Columbia AMT-Free Connecticut Intermediate Muni Bond Fund, Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund, Columbia AMT-Free New York Intermediate Muni Bond Fund, Columbia New York Tax-Exempt Fund and Columbia |
36 | Prospectus 2014 |
Tax-Exempt Fund; 0.60% for Columbia Corporate Income Fund, Columbia High Yield Bond Fund, Columbia High Yield Municipal Fund, Columbia Intermediate Bond Fund and Columbia Short Term Bond Fund; and 0.70% for Columbia U.S. Treasury Index Fund. These arrangements may be modified or terminated by the Distributor at any time. | |
(f) | The shareholder service fees for Class K shares are not paid pursuant to a 12b-1 plan. Under a plan administration services agreement, the Funds' Class K shares pay for plan administration services. See Class K Plan Administration Services Fee below for more information. |
(g) | Class R shares of series of CFST and CFST I pay a distribution fee pursuant to a distribution (Rule 12b-1) plan for Class R shares. The Funds do not have a shareholder service plan for Class R shares. Series of CFST II have a distribution and shareholder service plan for Class R shares, which, prior to the close of business on September 3, 2010, were known as Class R2 shares. For Class R shares of series of CFST II, the maximum fee under the plan reimbursed for distribution expenses is equal on an annual basis to 0.50% of the average daily net assets of the Fund attributable to Class R shares. Of that amount, up to 0.25% may be reimbursed for shareholder service expenses. |
(h) | The shareholder servicing fees for Class T shares are up to 0.50% of average daily net assets attributable to Class T shares for equity Funds and 0.40% for fixed income Funds. In general, the Funds currently limit such fees to a maximum of 0.30% for equity Funds and 0.15% for fixed-income Funds. See Class T Shareholder Service Fees below for more information. |
Prospectus 2014 | 37 |
38 | Prospectus 2014 |
Prospectus 2014 | 39 |
40 | Prospectus 2014 |
Minimum Account Balance | |
Minimum
Account Balance |
|
For all Funds, classes and account types except those listed below |
$250
(None for accounts with
Systematic Investment Plans) |
Individual Retirement Accounts for all Funds and classes except those listed below | None |
Columbia
Absolute Return Currency and Income Fund and
Columbia Absolute Return Emerging Markets Macro Fund |
$5,000 |
Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund | $2,500 |
Class I, Class K, Class R, Class R4, Class R5, Class W and Class Y | None |
Prospectus 2014 | 41 |
42 | Prospectus 2014 |
■ | negative impact on the Fund's performance; |
■ | potential dilution of the value of the Fund's shares; |
■ | interference with the efficient management of the Fund's portfolio, such as the need to maintain undesirably large cash positions, the need to use its line of credit or the need to buy or sell securities it otherwise would not have bought or sold; |
■ | losses on the sale of investments resulting from the need to sell securities at less favorable prices; |
■ | increased taxable gains to the Fund's remaining shareholders resulting from the need to sell securities to meet sell orders; and |
■ | increased brokerage and administrative costs. |
Prospectus 2014 | 43 |
44 | Prospectus 2014 |
Prospectus 2014 | 45 |
■ | Dividend and/or capital gain distributions may continue to be reinvested in Class B shares of a Fund. |
■ | Shareholders invested in Class B shares of a Fund may exchange those shares for Class B shares of other Funds offering such shares. Certain exceptions apply, including that not all Funds may permit exchanges. |
46 | Prospectus 2014 |
Prospectus 2014 | 47 |
48 | Prospectus 2014 |
Minimum Initial Investments | ||
Minimum
Initial Investment (a) |
Minimum
Initial Investment for Accounts with Systematic Investment Plans |
|
For all Funds, classes and account types except those listed below | $2,000 | $100 (b) |
Individual Retirement Accounts for all Funds and classes except those listed below | $1,000 | $100 (c) |
Columbia Absolute Return Currency and Income Fund and Columbia Absolute Return Emerging Markets Macro Fund | $10,000 | $10,000 |
Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund | $5,000 | $5,000 |
Class I, Class K, Class R, Class R4 and Class Y | None | N/A |
Class R5 | variable (d) | N/A |
Class W | $500 | N/A |
Class Z | variable (e) | $100 |
(a) | If your Class A, Class B, Class C, Class T or Class Z shares account balance falls below the minimum initial investment amount for any reason, including a market decline, you may be asked to increase it to the minimum initial investment amount or establish a monthly Systematic Investment Plan. If you do not do so, your account will be subject to a $20 annual low balance fee and/or shares may be automatically redeemed and the proceeds mailed to you if the account falls below the minimum account balance. See Buying, Selling and Exchanging Shares — Transaction Rules and Policies above. |
(b) | Columbia Money Market Fund — $2,000 |
(c) | Columbia Money Market Fund — $1,000 |
(d) | There is no minimum initial investment in Class R5 shares for omnibus retirement plans. A minimum initial investment of $100,000 applies to aggregate purchases of Class R5 shares of a Fund for combined underlying accounts of any registered investment adviser that clears Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the Transfer Agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements. |
(e) | The minimum initial investment amount for Class Z shares is $0, $1,000 or $2,000 depending upon the category of eligible investor. See — Class Z Shares Minimum Initial Investments below. The minimum initial investment amount for systematic investment plan accounts is the same as the amount set forth in the first two rows of the table, as applicable. |
Prospectus 2014 | 49 |
■ | Any person investing all or part of the proceeds of a distribution, rollover or transfer of assets into a Columbia Management Individual Retirement Account, from any deferred compensation plan which was a shareholder of any of the Funds of Columbia Acorn Trust on September 29, 2000, in which the investor was a participant and through which the investor invested in one or more of the Funds of Columbia Acorn Trust immediately prior to the distribution, transfer or rollover. |
■ | Any health savings account sponsored by a third party platform. |
■ | Any investor participating in a wrap program sponsored by a selling agent or other entity that is paid an asset-based fee by the investor and that is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent. |
■ | Any individual retirement plan for which a selling agent or other entity provides services and is not compensated by the Fund for those services, other than in the form of payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent. |
■ | Any employee of Columbia Management Investment Advisers, LLC, the Distributor or the Transfer Agent and immediate family members of any of the foregoing who share the same address and any persons employed as of April 30, 2010 by Columbia Management Advisors, LLC, Columbia Management Distributors, Inc., or Columbia Management Services, Inc., the adviser, distributor and transfer agent of series of CFST and CFST I prior to May 1, 2010 (the Previous Service Providers) and immediate family members of any of the foregoing who share the same address are eligible to make new and subsequent purchases in Class Z shares through an individual retirement account. If you maintain your account with a selling agent, you must contact that selling agent each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
■ | Any shareholder (as well as any family member of a shareholder or person listed on an account registration for any account of the shareholder) of another fund distributed by the Distributor (i) who holds Class Z shares; (ii) who held Primary A shares prior to the share class redesignation of Primary A shares as Class Z shares that occurred on August 22, 2005; (iii) who holds Class A shares that were obtained by an exchange of Class Z shares; or (iv) who bought shares of certain mutual funds that were not subject to sales charges and that merged with a series of CFST or CFST I distributed by the Distributor. |
■ | Any investor participating in an account offered by a selling agent or other entity that provides services to such an account, is paid an asset-based fee by the investor and is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent (each investor buying shares through a financial intermediary must independently satisfy the minimum investment requirement noted above). |
■ | Any institutional investor who is a corporation, partnership, trust, foundation, endowment, institution, government entity, or similar organization, which meets the respective qualifications for an accredited investor, as defined under the Securities Act of 1933. |
■ | Certain financial institutions and intermediaries, such as insurance companies, trust companies, banks, endowments, investment companies or foundations, buying shares for their own account, including Ameriprise Financial and its affiliates and/or subsidiaries. |
■ | Any employee of Columbia Management Investment Advisers, LLC, the Distributor or the Transfer Agent and immediate family members of any of the foregoing who share the same address and any persons employed as of April 30, 2010 by the Previous Service Providers and any of their immediate family members who share the same address are eligible to make new and subsequent purchases in Class Z shares through a non-retirement account. If you maintain your account with a selling agent, you must contact that selling agent each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
■ | Certain other investors as set forth in more detail in the SAI. |
50 | Prospectus 2014 |
■ | Once the Transfer Agent or your selling agent receives your buy order in “good form,” your purchase will be made at the next calculated public offering price per share, which is the net asset value per share plus any sales charge that applies. |
■ | You generally buy Class A and Class T shares at the public offering price per share because purchases of these share classes are generally subject to a front-end sales charge. |
■ | You buy Class B, Class C, Class I, Class K, Class R, Class R4, Class R5, Class W, Class Y and Class Z shares at net asset value per share because no front-end sales charge applies to purchases of these share classes. |
■ | The Distributor and the Transfer Agent reserve the right to cancel your order if the Fund doesn't receive payment within three business days of receiving your buy order. The Fund will return any payment received for orders that have been cancelled, but no interest will be paid on that money. |
■ | Selling agents are responsible for sending your buy orders to the Transfer Agent and ensuring that we receive your money on time. |
■ | Shares purchased are recorded on the books of the Fund. The Fund doesn't issue certificates. |
Prospectus 2014 | 51 |
■ | Once the Transfer Agent or your selling agent receives your redemption order in “good form,” your shares will be sold at the next calculated NAV per share. Any applicable CDSC will be deducted from the amount you're selling and the balance will be remitted to you. |
■ | If you sell your shares that are held directly with the Funds (through the Transfer Agent), we will normally send the redemption proceeds by mail or electronically transfer them to your bank account within three business days after the Transfer Agent or your selling agent receives your order in “good form.” |
■ | If you sell your shares through a selling agent, the Funds will normally send the redemption proceeds by Fedwire within three business days after the Transfer Agent or your selling agent receives your order in “good form.” |
■ | If you paid for your shares by check or from your bank account as an ACH transaction, the Funds will hold the redemption proceeds when you sell those shares for a period of time after the trade date of the purchase. |
■ | No interest will be paid on uncashed redemption checks. |
■ | The Funds can delay payment of the redemption proceeds for up to seven days and may suspend redemptions and/or further postpone payment of redemption proceeds when the NYSE is closed or trading thereon is restricted or during emergency or other circumstances, including as determined by the SEC. |
■ | Other restrictions may apply to retirement accounts. For information about these restrictions, contact your retirement plan administrator. |
■ | The Fund reserves the right to redeem your shares if your account falls below the Fund's minimum initial investment requirement. |
■ | Also keep in mind the Funds' Small Account Policy, which is described above in Buying, Selling and Exchanging Shares — Transaction Rules and Policies. |
52 | Prospectus 2014 |
■ | Exchanges are made at the NAV next calculated after your exchange order is received in “good form.” |
■ | Once the Fund receives your exchange request, you cannot cancel it after the market closes. |
■ | The rules for buying shares of a Fund generally apply to exchanges into that Fund, including, if your exchange creates a new Fund account, it must satisfy the minimum investment amount, unless a waiver applies. |
■ | Shares of the purchased Fund may not be used on the same day for another exchange or sale. |
■ | If you exchange shares from Class A shares of Columbia Money Market Fund to a non-money market Fund, any further exchanges must be between shares of the same class. For example, if you exchange from Class A shares of Columbia Money Market Fund into Class C shares of a non-money market Fund, you may not exchange from Class C shares of that non-money market Fund back to Class A shares of Columbia Money Market Fund. |
■ | A sales charge may apply when you exchange shares of a Fund that were not assessed a sales charge at the time of your initial purchase. For example, if your initial investment was in Columbia Money Market Fund and you exchange into a non-money market Fund, your transaction is subject to a front-end sales charge if you exchange into Class A shares and to a CDSC if you exchange into Class C shares of the Funds. |
■ | If your initial investment was in Class A shares of a non-money market Fund and you exchange shares into Columbia Money Market Fund, you may exchange that amount to another Fund, including dividends earned on that amount, without paying a sales charge. |
■ | If your shares are subject to a CDSC, you will not be charged a CDSC upon the exchange of those shares. Any CDSC will be deducted when you sell the shares you received from the exchange. The CDSC imposed at that time will be based on the period that begins when you bought shares of the original Fund and ends when you sell the shares of the Fund you received from the exchange. The applicable CDSC will be the CDSC of the original Fund. |
■ | You may make exchanges only into a Fund that is legally offered and sold in your state of residence. Contact the Transfer Agent or your selling agent for more information. |
■ | You generally may make an exchange only into a Fund that is accepting investments. |
■ | The Fund may change or cancel your right to make an exchange by giving the amount of notice required by regulatory authorities (generally 60 days for a material change or cancellation). |
■ | Unless your account is part of a tax-advantaged arrangement, an exchange for shares of another Fund is a taxable event, and you may recognize a gain or loss for tax purposes. |
■ | Changing your investment to a different Fund will be treated as a sale and purchase, and you will be subject to applicable taxes on the sale and sales charges on the purchase of the new Fund. |
■ | Class Z shares of a Fund may be exchanged for Class A or Class Z shares of another Fund. In certain circumstances, the front-end sales charge applicable to Class A shares may be waived on exchanges of Class Z shares for Class A shares. See Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors — Class Z Shares for details. |
Prospectus 2014 | 53 |
■ | You may generally exchange Class T shares of a Fund for Class A shares of another Fund if the other Fund does not offer Class T shares. Class T shares exchanged into Class A shares cannot be exchanged back into Class T shares. |
■ | Class W shares originally purchased, but no longer held, in a discretionary managed account, may not be exchanged for Class W shares of another Fund. |
■ | Former CFIT Shareholders may not exchange Class Y shares of a Fund into Class Y shares of another Fund. |
■ | No sales charges or other charges will apply to any such exchange, except that when Class B shares are exchanged, any CDSC applicable to Class B shares will be applied. |
■ | Ordinarily, shareholders will not recognize a gain or loss for U.S. federal income tax purposes upon such an exchange. You should consult your tax advisor about your particular exchanges. |
54 | Prospectus 2014 |
■ | It can earn income on its investments. Examples of fund income are interest paid on money market instruments and bonds, and dividends paid on common stocks. |
■ | A mutual fund can also have capital gains if the value of its investments increases. While a fund continues to hold an investment, any gain is generally unrealized. If the fund sells an investment, it generally will realize a capital gain if it sells that investment for a higher price than its adjusted cost basis, and will generally realize a capital loss if it sells that investment for a lower price than its adjusted cost basis. Capital gains and losses are either short-term or long-term, depending on whether the fund holds the securities for one year or less (short-term) or more than one year (long-term). |
Declaration and Distribution Schedule | |
Declarations | Daily |
Distributions | Monthly |
Prospectus 2014 | 55 |
■ | The Fund intends to qualify each year as a regulated investment company. A regulated investment company generally is not subject to tax at the fund level on income and gains from investments that are distributed to shareholders. However, the Fund's failure to qualify as a regulated investment company would result in Fund level taxation, and consequently, a reduction in income available for distribution to you and in the net asset value of your shares. Even if a fund qualifies as a regulated investment company, the Fund may be subject to federal excise tax on certain undistributed income or gains. For tax-exempt Funds: If a tax-exempt Fund were to fail to qualify as a regulated investment company, any dividends of net tax-exempt income would no longer be exempt from U.S. federal income tax and, instead, in general, would be taxable to you as ordinary income. |
■ | Distributions generally are taxable to you when paid, whether they are paid in cash or automatically reinvested in additional Fund shares. Dividends paid in January are deemed paid on December 31 of the prior year if the dividend was declared and payable to shareholders of record in October, November, or December of such prior year. In certain circumstances a Fund may retain its net capital gain and deem such gains to have been distributed to shareholders. In such case, the Fund will be required to pay a fund-level tax on any such retained net capital gain, and shareholders will be required to include in income their share of such retained capital gain and will be entitled to credit their share of tax paid by the Fund against their federal income tax liabilities. |
■ | Distributions of the Fund's ordinary income and net short-term capital gain, if any, generally are taxable to you as ordinary income. Distributions of the Fund's net long-term capital gain, if any, generally are taxable to you as long-term capital gain. Whether capital gains are long-term or short-term is determined by how long the Fund has owned the investments that generated them, rather than how long you have owned your shares. For taxable fixed income Funds: The Fund expects that distributions will consist primarily of ordinary income. |
■ | From time to time, a distribution from the Fund could constitute a return of capital, which is not taxable to you so long as the amount of the distribution does not exceed your tax basis in your Fund shares. A return of capital reduces your tax basis in your Fund shares, with any amounts exceeding such basis generally taxable as capital gain. |
■ | If you are an individual and you meet certain holding period and other requirements for your Fund shares, a portion of your distributions may be treated as “qualified dividend income” taxable at the lower net long-term capital gain rates instead of the higher ordinary income rates. Qualified dividend income is income attributable to the Fund's dividends received from certain U.S. and foreign corporations, as long as the Fund meets certain holding period and other requirements for the stock producing such dividends. For taxable fixed income and tax-exempt Funds: The Fund does not expect a significant portion of Fund distributions to be qualified dividend income. |
■ | Certain high-income individuals (as well as estates and trusts) are subject to a 3.8% tax on net investment income. For individuals, the 3.8% tax applies to the lesser of (1) the amount (if any) by which the taxpayer's modified adjusted gross income exceeds certain threshold amounts or (2) the taxpayer's “net investment income.” Net investment income generally includes for this purpose dividends, including any capital gain dividends, paid by the Fund, and net gains recognized on the sale, redemption or exchange of shares of the Fund. For tax-exempt Funds: Exempt interest dividends are not included in net investment income for this purpose, and are therefore not subject to the tax on net investment income. |
■ | Certain derivative instruments when held in a Fund's portfolio subject the Fund to special tax rules, the effect of which may be to, among other things, accelerate income to the Fund, defer Fund losses, cause adjustments in the holding periods of Fund portfolio securities, or convert capital gains into ordinary income, short-term capital losses into long-term capital losses or long-term capital gains into short-term capital gains. These rules could therefore affect the amount, timing and/or character of distributions to shareholders. For tax-exempt Funds: Derivative instruments held by a Fund may also generate taxable income to the Fund. |
56 | Prospectus 2014 |
■ | Certain Funds may purchase or write options, as described further in the SAI. Generally, a Fund realizes a capital gain or loss on an option when the option expires, or when it is exercised, sold or otherwise terminated. However, if an option is a “section 1256 contract,” which includes most traded options on a broad-based index, and the Fund holds such option at the end of its taxable year, the Fund is deemed to sell such option at fair market value at such time and recognize any gain or loss thereon, which is generally deemed to be 60% long-term and 40% short-term gain or loss, as described further in the SAI. |
■ | If at the end of the taxable year more than 50% of the value of the Fund's assets consists of securities of foreign corporations, and the Fund makes a special election, you will generally be required to include in your income for U.S. federal income tax purposes your share of the qualifying foreign income taxes paid by the Fund in respect of its foreign portfolio securities. You may be able to claim a foreign tax credit or deduction in respect of this amount, subject to certain limitations. There is no assurance that the Fund will make this election for a taxable year, even if it is eligible to do so. |
■ | For tax-exempt Funds: The Fund expects that distributions will consist primarily of exempt interest dividends. Distributions of the Fund's net interest income from tax-exempt securities generally are not subject to U.S. federal income tax, but may be subject to state and local income and other taxes, as well as federal and state alternative minimum tax. Similarly, distributions of interest income that is exempt from state and local income taxes of a particular state may be subject to other taxes, including income taxes of other states, and federal and state alternative minimum tax. Certain income generated by tax-exempt securities, including capital gains on sales and market discount, is taxable. The Fund may invest a portion of its assets in securities that generate income that is not exempt from federal or state income tax. Distributions by the Fund of this income generally are taxable to you as ordinary income or long-term capital gain. Distributions of capital gains realized by the Fund, including those generated from the sale or exchange of tax-exempt securities, generally also are taxable to you. Distributions of the Fund's net short-term capital gain, if any, generally are taxable to you as ordinary income. |
■ | For a Fund organized as a fund-of-funds: Because most of the Fund's investments are shares of underlying Funds, the tax treatment of the Fund's gains, losses, and distributions may differ from the tax treatment that would apply if either the Fund invested directly in the types of securities held by the underlying Funds or the Fund shareholders invested directly in the underlying Funds. As a result, you may receive taxable distributions earlier and recognize higher amounts of capital gain or ordinary income than you otherwise would. |
■ | A sale, redemption or exchange of Fund shares is a taxable event. This includes redemptions where you are paid in securities. Your sales, redemptions and exchanges of Fund shares (including those paid in securities) usually will result in a taxable capital gain or loss to you, equal to the difference between the amount you receive for your shares (or are deemed to have received in the case of exchanges) and the amount you paid (or are deemed to have paid in the case of exchanges) for them. Any such capital gain or loss generally will be long-term capital gain or loss if you have held your Fund shares for more than one year at the time of sale or exchange. In certain circumstances, capital losses may be converted from short-term to long-term; in other circumstances, capital losses may be disallowed under the “wash sale” rules. |
■ | The Fund generally is required to report to shareholders and the Internal Revenue Service (the IRS) upon the sale, exchange or redemption of Fund shares cost basis information with respect to those shares. The Fund uses average cost basis as its default method of calculating cost basis. Please see columbiamanagement.com or contact the Fund at 800.345.6611 for more information regarding average cost basis reporting, other available cost basis methods and how to select or change a particular method or to choose specific shares to sell, redeem or exchange. If you hold Fund shares through a selling agent, you should contact your selling agent to learn about its cost basis reporting default method and the reporting elections available to your account. |
■ | The Fund is required by federal law to withhold tax on any taxable or tax-exempt distributions and redemption proceeds paid to you (including amounts paid to you in securities and amounts deemed to be paid to you upon an exchange of shares) if: you haven't provided a correct TIN or haven't certified to the Fund that withholding doesn't apply; the IRS has notified us that the TIN listed on your account is incorrect according to its records; or the IRS informs the Fund that you are otherwise subject to backup withholding. |
Prospectus 2014 | 57 |
58 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class A | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $10.67 | $10.30 | $10.19 | $9.71 | $9.53 | $7.61 | |
Income from investment operations: | |||||||
Net investment income | 0.29 | 0.32 | 0.03 | 0.35 | 0.50 | 0.54 | |
Net realized and unrealized gain (loss) | (0.14) | 0.59 | 0.11 | 0.49 | 0.19 | 1.95 | |
Total from investment operations | 0.15 | 0.91 | 0.14 | 0.84 | 0.69 | 2.49 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.29) | (0.32) | (0.03) | (0.36) | (0.51) | (0.57) | |
Net realized gains | (0.33) | (0.22) | — | — | — | — | |
Total distributions to shareholders | (0.62) | (0.54) | (0.03) | (0.36) | (0.51) | (0.57) | |
Proceeds from regulatory settlements | — | — | — | — | — | 0.00 (b) | |
Net asset value, end of period | $10.20 | $10.67 | $10.30 | $10.19 | $9.71 | $9.53 | |
Total return | 1.60% | 8.97% | 1.35% | 8.83% | 7.43% | 33.42% | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 0.96% | 0.96% | 0.97% (d) | 0.98% (e) | 1.03% (f) | 0.95% (e) | |
Total net expenses (g) | 0.96% (h) | 0.95% (h) | 0.92% (d) | 0.93% (e)(h) | 0.96% (f)(h) | 0.95% (e)(h) | |
Net investment income | 2.80% | 3.04% | 3.30% (d) | 3.54% | 5.14% | 6.04% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $120,603 | $140,322 | $123,974 | $119,473 | $81,879 | $85,361 | |
Portfolio turnover | 105% | 109% | 6% | 183% | 108% | 131% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Ratios include line of credit interest expense. If line of credit interest expense had been excluded, expenses would have been lower by 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 59 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class B | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $10.67 | $10.30 | $10.19 | $9.71 | $9.53 | $7.61 | |
Income from investment operations: | |||||||
Net investment income | 0.21 | 0.24 | 0.02 | 0.28 | 0.43 | 0.48 | |
Net realized and unrealized gain (loss) | (0.14) | 0.59 | 0.11 | 0.49 | 0.19 | 1.95 | |
Total from investment operations | 0.07 | 0.83 | 0.13 | 0.77 | 0.62 | 2.43 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.21) | (0.24) | (0.02) | (0.29) | (0.44) | (0.51) | |
Net realized gains | (0.33) | (0.22) | — | — | — | — | |
Total distributions to shareholders | (0.54) | (0.46) | (0.02) | (0.29) | (0.44) | (0.51) | |
Proceeds from regulatory settlements | — | — | — | — | — | 0.00 (b) | |
Net asset value, end of period | $10.20 | $10.67 | $10.30 | $10.19 | $9.71 | $9.53 | |
Total return | 0.84% | 8.16% | 1.29% | 8.02% | 6.64% | 32.44% | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 1.71% | 1.71% | 1.72% (d) | 1.75% (e) | 1.78% (f) | 1.70% (e) | |
Total net expenses (g) | 1.71% (h) | 1.70% (h) | 1.67% (d) | 1.68% (e)(h) | 1.71% (f)(h) | 1.70% (e)(h) | |
Net investment income | 2.04% | 2.32% | 2.55% (d) | 2.84% | 4.42% | 5.33% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $1,259 | $2,455 | $3,129 | $3,173 | $4,344 | $6,583 | |
Portfolio turnover | 105% | 109% | 6% | 183% | 108% | 131% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Ratios include line of credit interest expense. If line of credit interest expense had been excluded, expenses would have been lower by 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
60 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class C | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $10.67 | $10.30 | $10.19 | $9.71 | $9.53 | $7.61 | |
Income from investment operations: | |||||||
Net investment income | 0.22 | 0.26 | 0.02 | 0.29 | 0.44 | 0.49 | |
Net realized and unrealized gain (loss) | (0.13) | 0.58 | 0.11 | 0.49 | 0.20 | 1.95 | |
Total from investment operations | 0.09 | 0.84 | 0.13 | 0.78 | 0.64 | 2.44 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.23) | (0.25) | (0.02) | (0.30) | (0.46) | (0.52) | |
Net realized gains | (0.33) | (0.22) | — | — | — | — | |
Total distributions to shareholders | (0.56) | (0.47) | (0.02) | (0.30) | (0.46) | (0.52) | |
Proceeds from regulatory settlements | — | — | — | — | — | 0.00 (b) | |
Net asset value, end of period | $10.20 | $10.67 | $10.30 | $10.19 | $9.71 | $9.53 | |
Total return | 0.99% | 8.32% | 1.30% | 8.18% | 6.79% | 32.63% | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 1.71% | 1.71% | 1.72% (d) | 1.73% (e) | 1.78% (f) | 1.70% (e) | |
Total net expenses (g) | 1.56% (h) | 1.55% (h) | 1.52% (d) | 1.53% (e)(h) | 1.56% (f)(h) | 1.55% (e)(h) | |
Net investment income | 2.20% | 2.42% | 2.69% (d) | 2.93% | 4.55% | 5.45% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $15,587 | $24,821 | $17,062 | $16,074 | $9,952 | $11,265 | |
Portfolio turnover | 105% | 109% | 6% | 183% | 108% | 131% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Ratios include line of credit interest expense. If line of credit interest expense had been excluded, expenses would have been lower by 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 61 |
Year Ended April 30, | Year Ended March 31, | |||||
Class I | 2014 | 2013 | 2012 (a) | 2012 | 2011 (b) | |
Per share data | ||||||
Net asset value, beginning of period | $10.67 | $10.30 | $10.19 | $9.71 | $9.84 | |
Income from investment operations: | ||||||
Net investment income | 0.33 | 0.37 | 0.03 | 0.38 | 0.25 | |
Net realized and unrealized gain (loss) | (0.14) | 0.58 | 0.11 | 0.50 | (0.11) | |
Total from investment operations | 0.19 | 0.95 | 0.14 | 0.88 | 0.14 | |
Less distributions to shareholders: | ||||||
Net investment income | (0.33) | (0.36) | (0.03) | (0.40) | (0.27) | |
Net realized gains | (0.33) | (0.22) | — | — | — | |
Total distributions to shareholders | (0.66) | (0.58) | (0.03) | (0.40) | (0.27) | |
Net asset value, end of period | $10.20 | $10.67 | $10.30 | $10.19 | $9.71 | |
Total return | 2.04% | 9.43% | 1.38% | 9.23% | 1.50% | |
Ratios to average net assets (c) | ||||||
Total gross expenses | 0.52% | 0.53% | 0.55% (d) | 0.54% (e) | 0.65% (d)(e) | |
Total net expenses (f) | 0.52% | 0.53% | 0.55% (d) | 0.54% (e)(g) | 0.65% (d)(e)(g) | |
Net investment income | 3.25% | 3.47% | 3.68% (d) | 3.81% | 5.15% (d) | |
Supplemental data | ||||||
Net assets, end of period (in thousands) | $676,153 | $608,842 | $576,449 | $560,564 | $98,729 | |
Portfolio turnover | 105% | 109% | 6% | 183% | 108% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from September 27, 2010 (commencement of operations) to March 31, 2011. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
62 | Prospectus 2014 |
Year
Ended April 30,
|
||
Class R4 | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $10.65 | $10.81 |
Income from investment operations: | ||
Net investment income | 0.31 | 0.14 |
Net realized and unrealized gain (loss) | (0.13) | 0.07 |
Total from investment operations | 0.18 | 0.21 |
Less distributions to shareholders: | ||
Net investment income | (0.31) | (0.15) |
Net realized gains | (0.33) | (0.22) |
Total distributions to shareholders | (0.64) | (0.37) |
Net asset value, end of period | $10.19 | $10.65 |
Total return | 1.95% | 2.03% |
Ratios to average net assets (b) | ||
Total gross expenses | 0.72% | 0.74% (c) |
Total net expenses (d) | 0.71% (e) | 0.71% (c) |
Net investment income | 3.13% | 2.97% (c) |
Supplemental data | ||
Net assets, end of period (in thousands) | $11,454 | $865 |
Portfolio turnover | 105% | 109% |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(c) | Annualized. |
(d) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(e) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 63 |
Year
Ended April 30,
|
||
Class R5 | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $10.65 | $10.81 |
Income from investment operations: | ||
Net investment income | 0.33 | 0.14 |
Net realized and unrealized gain (loss) | (0.13) | 0.08 |
Total from investment operations | 0.20 | 0.22 |
Less distributions to shareholders: | ||
Net investment income | (0.33) | (0.16) |
Net realized gains | (0.33) | (0.22) |
Total distributions to shareholders | (0.66) | (0.38) |
Net asset value, end of period | $10.19 | $10.65 |
Total return | 2.09% | 2.08% |
Ratios to average net assets (b) | ||
Total gross expenses | 0.57% | 0.58% (c) |
Total net expenses (d) | 0.57% | 0.58% (c) |
Net investment income | 3.17% | 3.05% (c) |
Supplemental data | ||
Net assets, end of period (in thousands) | $1,630 | $117 |
Portfolio turnover | 105% | 109% |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(c) | Annualized. |
(d) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
64 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | |||||
Class W | 2014 | 2013 | 2012 (a) | 2012 | 2011 (b) | |
Per share data | ||||||
Net asset value, beginning of period | $10.67 | $10.30 | $10.19 | $9.71 | $9.84 | |
Income from investment operations: | ||||||
Net investment income | 0.29 | 0.32 | 0.03 | 0.35 | 0.23 | |
Net realized and unrealized gain (loss) | (0.14) | 0.59 | 0.11 | 0.49 | (0.10) | |
Total from investment operations | 0.15 | 0.91 | 0.14 | 0.84 | 0.13 | |
Less distributions to shareholders: | ||||||
Net investment income | (0.29) | (0.32) | (0.03) | (0.36) | (0.26) | |
Net realized gains | (0.33) | (0.22) | — | — | — | |
Total distributions to shareholders | (0.62) | (0.54) | (0.03) | (0.36) | (0.26) | |
Net asset value, end of period | $10.20 | $10.67 | $10.30 | $10.19 | $9.71 | |
Total return | 1.60% | 8.97% | 1.35% | 8.83% | 1.31% | |
Ratios to average net assets (c) | ||||||
Total gross expenses | 0.96% | 0.96% | 0.97% (d) | 0.98% (e) | 1.06% (d)(e) | |
Total net expenses (f) | 0.96% (g) | 0.95% (g) | 0.92% (d) | 0.93% (e)(g) | 0.95% (d)(e)(g) | |
Net investment income | 2.81% | 3.06% | 3.30% (d) | 3.50% | 4.70% (d) | |
Supplemental data | ||||||
Net assets, end of period (in thousands) | $132,166 | $159,179 | $162,775 | $159,553 | $104,340 | |
Portfolio turnover | 105% | 109% | 6% | 183% | 108% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from September 27, 2010 (commencement of operations) to March 31, 2011. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 65 |
Year
Ended April 30,
|
||
Class Y | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $10.66 | $10.82 |
Income from investment operations: | ||
Net investment income | 0.33 | 0.17 |
Net realized and unrealized gain (loss) | (0.13) | 0.05 |
Total from investment operations | 0.20 | 0.22 |
Less distributions to shareholders: | ||
Net investment income | (0.33) | (0.16) |
Net realized gains | (0.33) | (0.22) |
Total distributions to shareholders | (0.66) | (0.38) |
Net asset value, end of period | $10.20 | $10.66 |
Total return | 2.14% | 2.09% |
Ratios to average net assets (b) | ||
Total gross expenses | 0.51% | 0.45% (c) |
Total net expenses (d) | 0.51% | 0.45% (c) |
Net investment income | 3.30% | 3.35% (c) |
Supplemental data | ||
Net assets, end of period (in thousands) | $28 | $2 |
Portfolio turnover | 105% | 109% |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(c) | Annualized. |
(d) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
66 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class Z | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $10.67 | $10.30 | $10.19 | $9.71 | $9.53 | $7.61 | |
Income from investment operations: | |||||||
Net investment income | 0.31 | 0.35 | 0.03 | 0.38 | 0.52 | 0.56 | |
Net realized and unrealized gain (loss) | (0.14) | 0.58 | 0.11 | 0.49 | 0.20 | 1.96 | |
Total from investment operations | 0.17 | 0.93 | 0.14 | 0.87 | 0.72 | 2.52 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.31) | (0.34) | (0.03) | (0.39) | (0.54) | (0.60) | |
Net realized gains | (0.33) | (0.22) | — | — | — | — | |
Total distributions to shareholders | (0.64) | (0.56) | (0.03) | (0.39) | (0.54) | (0.60) | |
Proceeds from regulatory settlements | — | — | — | — | — | 0.00 (b) | |
Net asset value, end of period | $10.20 | $10.67 | $10.30 | $10.19 | $9.71 | $9.53 | |
Total return | 1.85% | 9.24% | 1.37% | 9.10% | 7.70% | 33.74% | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 0.71% | 0.71% | 0.72% (d) | 0.73% (e) | 0.78% (f) | 0.70% (e) | |
Total net expenses (g) | 0.71% (h) | 0.70% (h) | 0.67% (d) | 0.68% (e)(h) | 0.71% (f)(h) | 0.70% (e)(h) | |
Net investment income | 3.05% | 3.30% | 3.55% (d) | 3.80% | 5.37% | 6.29% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $462,215 | $537,860 | $524,432 | $515,700 | $396,952 | $451,195 | |
Portfolio turnover | 105% | 109% | 6% | 183% | 108% | 131% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Ratios include line of credit interest expense. If line of credit interest expense had been excluded, expenses would have been lower by 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 67 |
Class | Ticker Symbol | |
Class A Shares | LIBAX | |
Class B Shares | LIBBX | |
Class C Shares | LIBCX | |
Class I Shares | CIMIX | |
Class K Shares | CIBKX | |
Class R Shares | CIBRX | |
Class R4 Shares | CBNRX | |
Class R5 Shares | CTBRX | |
Class W Shares | CIBWX | |
Class Y Shares | CTBYX | |
Class Z Shares | SRBFX |
|
3 |
|
3 |
|
3 |
|
4 |
|
5 |
|
8 |
|
9 |
|
10 |
|
10 |
|
10 |
|
11 |
|
11 |
|
11 |
|
12 |
|
17 |
|
21 |
|
23 |
|
24 |
|
25 |
|
25 |
|
25 |
|
30 |
|
37 |
|
39 |
|
42 |
|
43 |
|
43 |
|
44 |
|
48 |
|
50 |
|
55 |
|
56 |
|
59 |
|
59 |
|
60 |
|
63 |
2 | Prospectus 2014 |
Shareholder Fees (fees paid directly from your investment) | ||||
Class A | Class B | Class C |
Classes
I,
K, R, R4, R5, W, Y and Z |
|
Maximum sales charge (load) imposed on purchases (as a % of offering price) | 3.25% | None | None | None |
Maximum deferred sales charge (load) imposed on redemptions (as a % of the lower of the original purchase price or current net asset value) | 1.00% (a) | 3.00% (b) | 1.00% (c) | None |
(a) | This charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months of purchase, as follows: 1.00% if redeemed within 12 months of purchase, and 0.50% if redeemed more than 12, but less than 18, months after purchase, with certain limited exceptions. |
(b) | This charge decreases over time. |
(c) | This charge applies to redemptions within one year of purchase, with certain limited exceptions. |
(d) | Other expenses for Class A, Class B, Class C, Class K, Class R, Class R4, Class R5, Class W and Class Z shares have been restated to reflect current fees paid by the Fund. |
■ | you invest $10,000 in the applicable class of Fund shares for the periods indicated, |
■ | your investment has a 5% return each year, and |
■ | the Fund’s total annual operating expenses remain the same as shown in the Annual Fund Operating Expenses table above. |
Prospectus 2014 | 3 |
1 year | 3 years | 5 years | 10 years | |
Class A (whether or not shares are redeemed) | $415 | $606 | $812 | $1,408 |
Class B (assuming redemption of all shares at the end of the period) | $469 | $723 | $902 | $1,766 |
Class B (assuming no redemption of shares) | $169 | $523 | $902 | $1,766 |
Class C (assuming redemption of all shares at the end of the period) | $269 | $523 | $902 | $1,965 |
Class C (assuming no redemption of shares) | $169 | $523 | $902 | $1,965 |
Class I (whether or not shares are redeemed) | $ 51 | $160 | $280 | $ 628 |
Class K (whether or not shares are redeemed) | $ 82 | $255 | $444 | $ 990 |
Class R (whether or not shares are redeemed) | $118 | $368 | $638 | $1,409 |
Class R4 (whether or not shares are redeemed) | $ 67 | $211 | $368 | $ 822 |
Class R5 (whether or not shares are redeemed) | $ 56 | $176 | $307 | $ 689 |
Class W (whether or not shares are redeemed) | $ 93 | $290 | $504 | $1,120 |
Class Y (whether or not shares are redeemed) | $ 51 | $160 | $280 | $ 628 |
Class Z (whether or not shares are redeemed) | $ 67 | $211 | $368 | $ 822 |
4 | Prospectus 2014 |
Prospectus 2014 | 5 |
6 | Prospectus 2014 |
Prospectus 2014 | 7 |
8 | Prospectus 2014 |
Year
by Year Total Return (%)
as of December 31 Each Year* |
Best
and Worst Quarterly Returns
During the Period Shown in the Bar Chart |
||
|
Best | 2nd Quarter 2009 | 8.13% |
Worst
|
3rd Quarter 2008 | -5.30% |
* | Year to Date return as of June 30, 2014: 4.28% |
Share
Class
Inception Date |
1 Year | 5 Years | 10 Years | |
Class A | 07/31/2000 | |||
returns before taxes | -5.74% | 6.57% | 3.99% | |
returns after taxes on distributions | -6.86% | 4.98% | 2.33% | |
returns after taxes on distributions and sale of Fund shares | -3.12% | 4.56% | 2.46% | |
Class B returns before taxes | 02/01/2002 | -6.11% | 6.47% | 3.72% |
Class C returns before taxes | 02/01/2002 | -4.07% | 6.64% | 3.88% |
Class I returns before taxes | 09/27/2010 | -2.20% | 7.64% | 4.81% |
Class K returns before taxes | 02/28/2013 | -2.38% | 7.34% | 4.56% |
Class R returns before taxes | 01/23/2006 | -2.79% | 7.00% | 4.24% |
Class R4 returns before taxes | 11/08/2012 | -2.32% | 7.53% | 4.76% |
Class R5 returns before taxes | 11/08/2012 | -2.22% | 7.56% | 4.77% |
Class W returns before taxes | 09/27/2010 | -2.55% | 7.32% | 4.55% |
Class Y returns before taxes | 11/08/2012 | -2.20% | 7.56% | 4.77% |
Class Z returns before taxes | 12/05/1978 | -2.31% | 7.54% | 4.76% |
Barclays U.S. Aggregate Bond Index (reflects no deductions for fees, expenses or taxes) | -2.02% | 4.44% | 4.55% |
Portfolio Manager | Title | Role with Fund | Managed Fund Since | |||
Carl Pappo, CFA | Senior Portfolio Manager and Head of Core Fixed Income | Lead Manager | 2005 | |||
Brian Lavin, CFA | Senior Portfolio Manager | Co-manager | 2010 | |||
Michael Zazzarino | Senior Portfolio Manager | Co-manager | 2010 |
Prospectus 2014 | 9 |
Online | Regular Mail | Express Mail | By Telephone | |||
columbiamanagement.com |
Columbia
Funds,
c/o Columbia Management Investment Services Corp. P.O. Box 8081 Boston, MA 02266-8081 |
Columbia
Funds,
c/o Columbia Management Investment Services Corp. 30 Dan Road, Suite 8081 Canton, MA 02021-2809 |
800.422.3737 |
Class | Category of eligible account |
For
accounts other than
systematic investment plan accounts |
For
systematic investment
plan accounts |
Classes A, B* & C | All accounts other than IRAs | $2,000 | $100 |
IRAs | $1,000 | $100 | |
Classes I, K**, R, R4 & Y | All eligible accounts | None | N/A |
Class R5 | Combined underlying accounts of eligible registered investment advisers | $100,000 | N/A |
Omnibus retirement plans | None | N/A | |
Class W | All eligible accounts | $500 | N/A |
Class Z | All eligible accounts |
$0,
$1,000 or $2,000
depending upon the category of eligible investor |
$100 |
* | Class B shares are generally closed to new and existing shareholders. |
** | Class K shares are generally closed to new investors. |
10 | Prospectus 2014 |
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14 | Prospectus 2014 |
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16 | Prospectus 2014 |
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20 | Prospectus 2014 |
Columbia Intermediate Bond Fund | |
Class A | 0.85% |
Class B | 1.60% |
Class C | 1.60% |
Class I | 0.50% |
Class K | 0.80% |
Class R | 1.10% |
Class R4 | 0.60% |
Class R5 | 0.55% |
Class W | 0.85% |
Class Y | 0.50% |
Class Z | 0.60% |
Prospectus 2014 | 21 |
Portfolio Manager | Title | Role with Fund | Managed Fund Since | |||
Carl Pappo, CFA | Senior Portfolio Manager and Head of Core Fixed Income | Lead Manager | 2005 | |||
Brian Lavin, CFA | Senior Portfolio Manager | Co-manager | 2010 | |||
Michael Zazzarino | Senior Portfolio Manager | Co-manager | 2010 |
22 | Prospectus 2014 |
■ | compensation and other benefits received by the Investment Manager and other Ameriprise Financial affiliates related to the management/administration of a Columbia Fund and the sale of its shares; |
■ | the allocation of, and competition for, investment opportunities among the Fund, other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates, or Ameriprise Financial itself and its affiliates; |
■ | separate and potentially divergent management of a Columbia Fund and other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates; |
■ | regulatory and other investment restrictions on investment activities of the Investment Manager and other Ameriprise Financial affiliates and accounts advised/managed by them; |
■ | insurance and other relationships of Ameriprise Financial affiliates with companies and other entities in which a Columbia Fund invests; and |
■ | regulatory and other restrictions relating to the sharing of information between Ameriprise Financial and its affiliates, including the Investment Manager, and a Columbia Fund. |
Prospectus 2014 | 23 |
24 | Prospectus 2014 |
* | The website references in this prospectus are inactive links and information contained in or otherwise accessible through the referenced websites does not form a part of this prospectus. |
■ | The amount you plan to invest. |
■ | How long you intend to remain invested in the Fund. |
■ | The expenses for each share class. |
■ | Whether you may be eligible for a reduction or waiver of sales charges when you buy or sell shares. |
Prospectus 2014 | 25 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class A |
Eligibility:
Available to the general public for investment
|
5.75%
maximum, declining to 0.00% on investments of $1 million or more
|
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months of purchase charged as follows:
|
Distribution
and Service
Fees: up to 0.25% |
Class B |
Eligibility:
Closed to new investors
(f)
|
None | 5.00% maximum, gradually declining to 0.00% after six years (g) |
Distribution
Fee:
0.75%
|
Class C |
Eligibility:
Available to the general public for investment
|
None | 1.00% on certain investments redeemed within one year of purchase |
Distribution
Fee:
0.75%
|
Class I |
Eligibility:
Available only to other Funds (i.e., fund-of-fund investments)
|
None | None | None |
26 | Prospectus 2014 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class K |
Eligibility:
Closed to new investors; available only to qualified employee benefit plans, trust companies or similar institutions, 501(c)(3) charitable organizations, non-qualified deferred compensation plans whose participants
are included in a qualified employee benefit plan described above, 529 plans, and health savings accounts
(f)
|
None | None | Plan Administration Services Fee: 0.25% |
Class R |
Eligibility:
Available only to eligible retirement plans, health savings accounts and, in the sole discretion of the Distributor, other types of retirement accounts held through platforms maintained by selling agents approved by
the Distributor
|
None | None |
Series
of CFST & CFST I:
distribution fee of 0.50%
|
Class R4 |
Eligibility:
Available only to (i) omnibus retirement plans, (ii) trust companies or similar institutions, (iii) broker-dealers, banks, trust companies and similar institutions that clear Fund share transactions for their client
or customer investment advisory or similar accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the Transfer Agent with respect to Class R4 eligibility apart
from selling, servicing or similar agreements, (iv) 501(c)(3) charitable organizations, (v) 529 plans and (vi) health savings accounts
|
None | None | None |
Prospectus 2014 | 27 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class R5 |
Eligibility:
Available only to (i) certain registered investment advisers that clear Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that
have been granted specific written authorization from the Transfer Agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements and (ii) omnibus retirement
plans
(f)
|
None | None | None |
Class T |
Eligibility:
Generally closed to new investors
(f)
|
5.75% maximum, declining to 0.00% on investments of $1 million or more |
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months of purchase, charged as follows:
|
Service Fee: up to 0.50% |
Class W |
Eligibility:
Available only to investors purchasing through certain authorized investment programs managed by investment professionals, including discretionary managed account programs
|
None | None | Distribution and Service Fees: 0.25% |
Class Y |
Eligibility:
Available only to retirement plans that
maintain plan-level or omnibus
accounts with the Fund
(f)
|
None | None | None |
28 | Prospectus 2014 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class Z |
Eligibility:
Available only to certain eligible investors, which are subject to different minimum investment requirements, ranging from $0 to $2,000; effective March 29, 2013, closed to (i) accounts of selling agents that clear
Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been given specific written notice from the Transfer Agent of the termination of their eligibility for
new purchases of Class Z shares and (ii) omnibus retirement plans, subject to certain exceptions
(f)
|
None | None | None |
(a) | For Columbia Money Market Fund, new investments must be made in Class A, Class I, Class W or Class Z shares, subject to eligibility. Class C and Class R shares of Columbia Money Market Fund are available as a new investment only to investors in the Distributor's proprietary 401(k) products, provided that such investor is eligible to invest in the class and transact directly with the Fund or the Transfer Agent through a third party administrator or third party recordkeeper. Columbia Money Market Fund offers other classes of shares only to facilitate exchanges with other Funds offering such share classes. |
(b) | The minimum initial investment requirement is $5,000 for Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund, and $10,000 for Columbia Absolute Return Currency and Income Fund and Columbia Absolute Return Emerging Markets Macro Fund. See Buying, Selling and Exchanging Shares — Buying Shares for more details on the eligible investors and minimum initial investment requirements. Certain share classes are subject to minimum account balance requirements, as described in Buying, Selling and Exchanging Shares — Transaction Rules and Policies. |
(c) | Actual front-end sales charges and CDSCs vary among the Funds. For more information on applicable sales charges, see Choosing a Share Class — Sales Charges and Commissions and for information about certain exceptions to these sales charges, see Choosing a Share Class — Reductions/Waivers of Sales Charges. |
(d) | These are the maximum applicable distribution and/or service fees. Fee rates and fee components (i.e., the portion of a combined fee that is a distribution or service fee) may vary among Funds. Because these fees are paid out of Fund assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of distribution and/or shareholder service fees. Although Class A shares of certain series of CFST I are subject to a combined distribution and service fee of up to 0.35%, these Funds currently limit the combined fee to 0.25%. Columbia Money Market Fund pays a distribution and service fee of up to 0.10% on Class A shares, up to 0.75% distribution fee and up to 0.10% service fee on Class B shares, up to 0.75% distribution fee on Class C shares, and 0.10% distribution and service fees on Class W shares. Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia Tax-Exempt Fund pay a service fee of up to 0.20% on Class A, Class B and Class C shares. Columbia AMT-Free Intermediate Muni Bond Fund pays a distribution fee of up to 0.65% on Class B and Class C shares. For more information on distribution and service fees, see Choosing a Share Class — Distribution and Service Fees. |
(e) | The following Funds are not subject to a front-end sales charge or a CDSC on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund and Columbia Small Cap Index Fund. Columbia U.S. Treasury Index Fund is not subject to a CDSC. |
(f) | These share classes are closed to new accounts, or closed to previously eligible investors, subject to certain conditions, as summarized below and described in more detail under Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors: |
Prospectus 2014 | 29 |
(g) | Timing of conversion and CDSC schedules will vary depending on the Fund and the date of your original purchase of Class B shares. For more information on the conversion of Class B shares to Class A shares, see Choosing a Share Class — Sales Charges and Commissions. Class B shares of Columbia Short Term Municipal Bond Fund do not charge a CDSC and do not convert to Class A shares. |
30 | Prospectus 2014 |
■ | The net asset value (or NAV) per share is the price of a share calculated by the Fund every business day. |
■ | The offering price per share is the NAV per share plus any front-end sales charge that applies. |
■ | depends on the amount you're investing (generally, the larger the investment, the smaller the percentage sales charge), and |
■ | is based on the total amount of your purchase and the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund). |
Prospectus 2014 | 31 |
Class A Shares — Front-End Sales Charge — Breakpoint Schedule* | ||||
Breakpoint Schedule For: |
Dollar
amount of
shares bought (a) |
Sales
charge as a % of the offering price (b) |
Sales
charge as a % of the net amount invested (b) |
Amount
retained by or paid to selling agents as a % of the offering price |
Columbia
Absolute Return Currency and Income Fund,
Columbia Absolute Return Multi-Strategy Fund, Columbia Floating Rate Fund, Columbia Inflation Protected Securities Fund and Columbia Limited Duration Credit Fund |
$ 0-$99,999 | 3.00% | 3.09% | 2.50% |
$100,000–$249,999 | 2.50% | 2.56% | 2.15% | |
$250,000–$499,999 | 2.00% | 2.04% | 1.75% | |
$500,000–$999,999 | 1.50% | 1.52% | 1.25% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Columbia
Short Term Bond Fund and
Columbia Short Term Municipal Bond Fund |
$ 0-$99,999 | 1.00% | 1.01% | 0.75% |
$100,000–$249,999 | 0.75% | 0.76% | 0.50% | |
$250,000–$999,999 | 0.50% | 0.50% | 0.40% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
* | The following Funds are not subject to a front-end sales charge on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund and Columbia Small Cap Index Fund. The following Funds are not subject to a CDSC on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund, Columbia Small Cap Index Fund and Columbia U.S. Treasury Index Fund. "Funds-of-Funds (equity)" includes Columbia Capital Allocation Aggressive Portfolio, Columbia Capital Allocation Moderate Aggressive Portfolio, Columbia Capital Allocation Moderate Conservative Portfolio, Columbia Capital Allocation Moderate Portfolio and Columbia LifeGoal® Growth Portfolio . "Funds-of-Funds (fixed income)" includes Columbia Capital Allocation Conservative Portfolio and Columbia Income Builder Fund. Columbia Balanced Fund and Columbia Global Opportunities Fund are treated as equity Funds for purposes of the table. |
(a) | Purchase amounts and account values may be aggregated among all eligible Fund accounts for the purposes of this table. See Choosing a Share Class — Reductions/Waivers of Sales Charges for a discussion of account value aggregation. |
(b) | Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process. Purchase price includes the sales charge. |
(c) | For information regarding cumulative commissions paid to your selling agent when you buy $1 million or more of Class A shares of a Fund, see Class A Shares — Commissions below. |
■ | If you purchased Class A shares without an initial sales charge because your accounts aggregated between $1 million and $50 million at the time of purchase, you will incur a CDSC if you redeem those shares within 18 months of purchase, which is charged as follows: 1.00% CDSC if shares are redeemed within 12 months of purchase; and 0.50% CDSC if shares are redeemed more than 12, but less than 18, months after purchase. |
■ | Subsequent Class A share purchases that bring your aggregate account value to $1 million or more (but less than $50 million) will also be subject to a CDSC if you redeem them within the time periods noted above. |
32 | Prospectus 2014 |
* | Not applicable to Funds that do not assess a front-end sales charge. In addition, the Distributor does not make such payments on purchases of $1 million or more of Columbia U.S. Treasury Index Fund. |
Prospectus 2014 | 33 |
Class B Shares — CDSC Schedule for the Funds (except those listed below) | |
Number
of Years
Class B Shares Held |
Applicable
CDSC* |
One | 5.00% |
Two | 4.00% |
Three | 3.00% |
Four | 3.00% |
Five | 2.00% |
Six | 1.00% |
Seven | None |
Eight | None |
Nine | Conversion to Class A Shares |
* | Because of rounding in the calculation, the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. |
Class B Shares — CDSC Schedule for Columbia Intermediate Bond Fund, Columbia AMT-Free Intermediate Muni Bond Fund, Columbia Short Term Bond Fund and the AMT-Free State-specific Intermediate Muni Bond Funds | |
Number
of Years
Class B Shares Held |
Applicable
CDSC* |
One | 3.00% |
Two | 3.00% |
Three | 2.00% |
Four | 1.00% |
Five | None |
Six | None |
Seven | None |
Eight | None |
Nine | Conversion to Class A Shares |
* | Because of rounding in the calculation, the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. |
34 | Prospectus 2014 |
■ | depends on the amount you're investing (generally, the larger the investment, the smaller the percentage sales charge), and |
■ | is based on the total amount of your purchase and the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund). |
Prospectus 2014 | 35 |
Class T Shares — Front-End Sales Charge — Breakpoint Schedule | ||||
Breakpoint Schedule For: |
Dollar
amount of
shares bought (a) |
Sales
charge as a % of the offering price (b) |
Sales
charge as a % of the net amount invested (b) |
Amount
retained by or paid to selling agents as a % of the offering price |
Equity Funds | $ 0–$49,999 | 5.75% | 6.10% | 5.00% |
$ 50,000–$99,999 | 4.50% | 4.71% | 3.75% | |
$100,000–$249,999 | 3.50% | 3.63% | 2.75% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.00% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Fixed Income Funds | $ 0–$49,999 | 4.75% | 4.99% | 4.25% |
$ 50,000–$99,999 | 4.50% | 4.71% | 3.75% | |
$100,000–$249,999 | 3.50% | 3.63% | 2.75% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.00% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
(a) | Purchase amounts and account values are aggregated among all eligible Fund accounts for the purposes of this table. |
(b) | Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process. |
(c) | For more information regarding cumulative commissions paid to your selling agent when you buy $1 million or more of Class T shares, see Class T Shares — Commissions below. |
■ | If you purchased Class T shares without a front-end sales charge because your accounts aggregated between $1 million and $50 million at the time of purchase, you will incur a CDSC if you redeem those shares within 18 months of purchase, which is charged as follows: 1.00% CDSC if shares are redeemed within 12 months of purchase, and 0.50% CDSC if shares are redeemed more than 12, but less than 18, months after purchase. |
■ | Subsequent Class T share purchases that bring your aggregate account value to $1 million or more (but less than $50 million) will also be subject to a CDSC if you redeem them within the time periods noted above. |
36 | Prospectus 2014 |
Class T Shares — Commission Schedule (Paid by the Distributor to Selling Agents) | |
Purchase
Amount |
Commission
Level
(as a % of net asset value per share) |
$1 million – $2,999,999 | 1.00% |
$3 million – $49,999,999 | 0.50% |
$50 million or more | 0.25% |
Prospectus 2014 | 37 |
38 | Prospectus 2014 |
Distribution
Fee |
Service
Fee |
Combined
Total |
|
Class A | up to 0.25% | up to 0.25% | up to 0.35% (a)(b)(c) |
Class B | 0.75% (d) | 0.25% | 1.00% (b) |
Class C | 0.75% (c)(e) | 0.25% | 1.00% (b) |
Class I | None | None | None |
Class K | None | 0.25% (f) | 0.25% (f) |
Class R (series of CFST and CFST I) | 0.50% | — (g) | 0.50% |
Class R (series of CFST II) | up to 0.50% (c) | up to 0.25% | 0.50% (g) |
Class R4 | None | None | None |
Class R5 | None | None | None |
Class T | None | 0.50% (h) | 0.50% (h) |
Class W | up to 0.25% | up to 0.25% | 0.25% (c) |
Class Y | None | None | None |
Class Z | None | None | None |
Prospectus 2014 | 39 |
(a) | The maximum distribution and service fees of Class A shares varies among the Funds, as shown in the table below: |
Funds |
Maximum
Class A Distribution Fee |
Maximum
Class A Service Fee |
Maximum
Class A Combined Total |
Series of CFST | — | — |
0.25%;
these Funds pay a
combined distribution and service fee |
Series
of CFST II (other than Columbia
Money Market Fund) |
up to 0.25% | up to 0.25% | 0.25% |
Columbia Money Market Fund | — | — | 0.10% |
Columbia Balanced Fund, Columbia Contrarian Core Fund, Columbia Dividend Income Fund, Columbia Intermediate Bond Fund, Columbia Large Cap Growth Fund, Columbia Mid Cap Growth Fund, Columbia AMT-Free Oregon Intermediate Muni Bond Fund, Columbia Real Estate Equity Fund, Columbia Small Cap Core Fund, Columbia Small Cap Growth Fund I, Columbia Global Technology Growth Fund | up to 0.10% | up to 0.25% |
up
to 0.35%; these Funds may
pay distribution and service fees up to a maximum of 0.35% of their average daily net assets attributable to Class A shares (comprised of up to 0.10% for distribution services and up to 0.25% for shareholder liaison services) but currently limit such fees to an aggregate fee of not more than 0.25% for Class A shares |
Columbia Bond Fund, Columbia California Tax-Exempt Fund, Columbia AMT-Free Connecticut Intermediate Muni Bond Fund, Columbia Corporate Income Fund, Columbia Diversified Real Return Fund, Columbia Emerging Markets Fund, Columbia Global Dividend Opportunity Fund, Columbia Global Energy and Natural Resources Fund, Columbia Greater China Fund, Columbia International Bond Fund, Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund, Columbia AMT-Free New York Intermediate Muni Bond Fund, Columbia New York Tax-Exempt Fund, Columbia Risk Allocation Fund, Columbia Small Cap Value Fund I, Columbia Pacific/Asia Fund, Columbia Select Large Cap Growth Fund, Columbia Strategic Income Fund, Columbia U.S. Treasury Index Fund, Columbia Value and Restructuring Fund | — | 0.25% | 0.25% |
Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund, Columbia Tax Exempt Fund | — | 0.20% | 0.20% |
(b) | The service fees for Class A, Class B and Class C shares of certain Funds vary. Service Fee for Class A, Class B and Class C shares of Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia Tax-Exempt Fund — The annual service fee may equal up to 0.20% of the average daily net asset value of all shares of such Fund class. Distribution Fee for Class B and Class C shares for Columbia AMT-Free Intermediate Muni Bond Fund — The annual distribution fee shall be 0.65% of the average daily net assets of the Fund's Class B and Class C shares. Fee amounts noted apply to Class B shares of the Funds other than Class B shares of Columbia Money Market Fund, which pays distribution fees of up to 0.75% and service fees of up to 0.10% for a combined total of 0.85%. The Distributor has currently agreed not to be reimbursed by the Fund for 0.10% of the 0.85% fee for Class B shares of Columbia Money Market Fund. The Distributor has voluntarily agreed to waive the service fee for Class A, Class B and Class C shares of Columbia U.S. Treasury Index Fund so that the service fee does not exceed 0.15% annually. This arrangement may be modified or terminated by the Distributor at any time. |
(c) | Fee amounts noted apply to all Funds other than Columbia Money Market Fund, which, for each of Class A and Class W shares, pays distribution and service fees of 0.10%, and for Class C shares pays distribution fees of 0.75%. The Distributor has currently agreed not to be reimbursed by the Fund for 0.25% of the 0.50% fee for Class R shares of Columbia Money Market Fund. The Distributor has voluntarily agreed to waive the 12b-1 fees it receives from Class A, Class C, Class R and Class W shares of Columbia Money Market Fund. This arrangement may be modified or terminated by the Distributor at any time. Compensation paid to broker-dealers and other selling agents may be suspended to the extent of the Distributor's waiver of the 12b-1 fees on these specific share classes of these Funds. |
(d) | The Distributor has voluntarily agreed to waive the distribution fee it receives from Class B shares of Columbia Seligman Communications and Information Fund and Columbia Global Infrastructure Fund and a portion of the distribution fee for Class B shares of Columbia Short Term Bond Fund so that the distribution fee does not exceed 0.30% annually. These arrangements may be modified or terminated by the Distributor at any time. |
(e) | The Distributor has voluntarily agreed to waive a portion of the distribution fee for Class C shares of the following Funds so that the distribution fee does not exceed the specified percentage annually: 0.40% for Columbia AMT-Free Oregon Intermediate Muni Bond Fund; 0.45% for Columbia California Tax-Exempt Fund, Columbia AMT-Free Connecticut Intermediate Muni Bond Fund, Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund, Columbia AMT-Free New York Intermediate Muni Bond Fund, Columbia New York Tax-Exempt Fund and Columbia |
40 | Prospectus 2014 |
Tax-Exempt Fund; 0.60% for Columbia Corporate Income Fund, Columbia High Yield Bond Fund, Columbia High Yield Municipal Fund, Columbia Intermediate Bond Fund and Columbia Short Term Bond Fund; and 0.70% for Columbia U.S. Treasury Index Fund. These arrangements may be modified or terminated by the Distributor at any time. | |
(f) | The shareholder service fees for Class K shares are not paid pursuant to a 12b-1 plan. Under a plan administration services agreement, the Funds' Class K shares pay for plan administration services. See Class K Plan Administration Services Fee below for more information. |
(g) | Class R shares of series of CFST and CFST I pay a distribution fee pursuant to a distribution (Rule 12b-1) plan for Class R shares. The Funds do not have a shareholder service plan for Class R shares. Series of CFST II have a distribution and shareholder service plan for Class R shares, which, prior to the close of business on September 3, 2010, were known as Class R2 shares. For Class R shares of series of CFST II, the maximum fee under the plan reimbursed for distribution expenses is equal on an annual basis to 0.50% of the average daily net assets of the Fund attributable to Class R shares. Of that amount, up to 0.25% may be reimbursed for shareholder service expenses. |
(h) | The shareholder servicing fees for Class T shares are up to 0.50% of average daily net assets attributable to Class T shares for equity Funds and 0.40% for fixed income Funds. In general, the Funds currently limit such fees to a maximum of 0.30% for equity Funds and 0.15% for fixed-income Funds. See Class T Shareholder Service Fees below for more information. |
Prospectus 2014 | 41 |
42 | Prospectus 2014 |
Prospectus 2014 | 43 |
44 | Prospectus 2014 |
Minimum Account Balance | |
Minimum
Account Balance |
|
For all Funds, classes and account types except those listed below |
$250
(None for accounts with
Systematic Investment Plans) |
Individual Retirement Accounts for all Funds and classes except those listed below | None |
Columbia
Absolute Return Currency and Income Fund and
Columbia Absolute Return Emerging Markets Macro Fund |
$5,000 |
Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund | $2,500 |
Class I, Class K, Class R, Class R4, Class R5, Class W and Class Y | None |
Prospectus 2014 | 45 |
46 | Prospectus 2014 |
■ | negative impact on the Fund's performance; |
■ | potential dilution of the value of the Fund's shares; |
■ | interference with the efficient management of the Fund's portfolio, such as the need to maintain undesirably large cash positions, the need to use its line of credit or the need to buy or sell securities it otherwise would not have bought or sold; |
■ | losses on the sale of investments resulting from the need to sell securities at less favorable prices; |
■ | increased taxable gains to the Fund's remaining shareholders resulting from the need to sell securities to meet sell orders; and |
■ | increased brokerage and administrative costs. |
Prospectus 2014 | 47 |
48 | Prospectus 2014 |
Prospectus 2014 | 49 |
■ | Dividend and/or capital gain distributions may continue to be reinvested in Class B shares of a Fund. |
■ | Shareholders invested in Class B shares of a Fund may exchange those shares for Class B shares of other Funds offering such shares. Certain exceptions apply, including that not all Funds may permit exchanges. |
50 | Prospectus 2014 |
Prospectus 2014 | 51 |
52 | Prospectus 2014 |
Minimum Initial Investments | ||
Minimum
Initial Investment (a) |
Minimum
Initial Investment for Accounts with Systematic Investment Plans |
|
For all Funds, classes and account types except those listed below | $2,000 | $100 (b) |
Individual Retirement Accounts for all Funds and classes except those listed below | $1,000 | $100 (c) |
Columbia Absolute Return Currency and Income Fund and Columbia Absolute Return Emerging Markets Macro Fund | $10,000 | $10,000 |
Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund | $5,000 | $5,000 |
Class I, Class K, Class R, Class R4 and Class Y | None | N/A |
Class R5 | variable (d) | N/A |
Class W | $500 | N/A |
Class Z | variable (e) | $100 |
(a) | If your Class A, Class B, Class C, Class T or Class Z shares account balance falls below the minimum initial investment amount for any reason, including a market decline, you may be asked to increase it to the minimum initial investment amount or establish a monthly Systematic Investment Plan. If you do not do so, your account will be subject to a $20 annual low balance fee and/or shares may be automatically redeemed and the proceeds mailed to you if the account falls below the minimum account balance. See Buying, Selling and Exchanging Shares — Transaction Rules and Policies above. |
(b) | Columbia Money Market Fund — $2,000 |
(c) | Columbia Money Market Fund — $1,000 |
(d) | There is no minimum initial investment in Class R5 shares for omnibus retirement plans. A minimum initial investment of $100,000 applies to aggregate purchases of Class R5 shares of a Fund for combined underlying accounts of any registered investment adviser that clears Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the Transfer Agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements. |
(e) | The minimum initial investment amount for Class Z shares is $0, $1,000 or $2,000 depending upon the category of eligible investor. See — Class Z Shares Minimum Initial Investments below. The minimum initial investment amount for systematic investment plan accounts is the same as the amount set forth in the first two rows of the table, as applicable. |
■ | Any person investing all or part of the proceeds of a distribution, rollover or transfer of assets into a Columbia Management Individual Retirement Account, from any deferred compensation plan which was a shareholder of any of the Funds of Columbia Acorn Trust on September 29, 2000, in which the investor was a participant and through which the investor invested in one or more of the Funds of Columbia Acorn Trust immediately prior to the distribution, transfer or rollover. |
■ | Any health savings account sponsored by a third party platform. |
Prospectus 2014 | 53 |
■ | Any investor participating in a wrap program sponsored by a selling agent or other entity that is paid an asset-based fee by the investor and that is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent. |
■ | Any individual retirement plan for which a selling agent or other entity provides services and is not compensated by the Fund for those services, other than in the form of payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent. |
■ | Any employee of Columbia Management Investment Advisers, LLC, the Distributor or the Transfer Agent and immediate family members of any of the foregoing who share the same address and any persons employed as of April 30, 2010 by Columbia Management Advisors, LLC, Columbia Management Distributors, Inc., or Columbia Management Services, Inc., the adviser, distributor and transfer agent of series of CFST and CFST I prior to May 1, 2010 (the Previous Service Providers) and immediate family members of any of the foregoing who share the same address are eligible to make new and subsequent purchases in Class Z shares through an individual retirement account. If you maintain your account with a selling agent, you must contact that selling agent each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
■ | Any shareholder (as well as any family member of a shareholder or person listed on an account registration for any account of the shareholder) of another fund distributed by the Distributor (i) who holds Class Z shares; (ii) who held Primary A shares prior to the share class redesignation of Primary A shares as Class Z shares that occurred on August 22, 2005; (iii) who holds Class A shares that were obtained by an exchange of Class Z shares; or (iv) who bought shares of certain mutual funds that were not subject to sales charges and that merged with a series of CFST or CFST I distributed by the Distributor. |
■ | Any investor participating in an account offered by a selling agent or other entity that provides services to such an account, is paid an asset-based fee by the investor and is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent (each investor buying shares through a financial intermediary must independently satisfy the minimum investment requirement noted above). |
■ | Any institutional investor who is a corporation, partnership, trust, foundation, endowment, institution, government entity, or similar organization, which meets the respective qualifications for an accredited investor, as defined under the Securities Act of 1933. |
■ | Certain financial institutions and intermediaries, such as insurance companies, trust companies, banks, endowments, investment companies or foundations, buying shares for their own account, including Ameriprise Financial and its affiliates and/or subsidiaries. |
■ | Any employee of Columbia Management Investment Advisers, LLC, the Distributor or the Transfer Agent and immediate family members of any of the foregoing who share the same address and any persons employed as of April 30, 2010 by the Previous Service Providers and any of their immediate family members who share the same address are eligible to make new and subsequent purchases in Class Z shares through a non-retirement account. If you maintain your account with a selling agent, you must contact that selling agent each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
■ | Certain other investors as set forth in more detail in the SAI. |
54 | Prospectus 2014 |
■ | Once the Transfer Agent or your selling agent receives your buy order in “good form,” your purchase will be made at the next calculated public offering price per share, which is the net asset value per share plus any sales charge that applies. |
■ | You generally buy Class A and Class T shares at the public offering price per share because purchases of these share classes are generally subject to a front-end sales charge. |
■ | You buy Class B, Class C, Class I, Class K, Class R, Class R4, Class R5, Class W, Class Y and Class Z shares at net asset value per share because no front-end sales charge applies to purchases of these share classes. |
■ | The Distributor and the Transfer Agent reserve the right to cancel your order if the Fund doesn't receive payment within three business days of receiving your buy order. The Fund will return any payment received for orders that have been cancelled, but no interest will be paid on that money. |
■ | Selling agents are responsible for sending your buy orders to the Transfer Agent and ensuring that we receive your money on time. |
■ | Shares purchased are recorded on the books of the Fund. The Fund doesn't issue certificates. |
Prospectus 2014 | 55 |
■ | Once the Transfer Agent or your selling agent receives your redemption order in “good form,” your shares will be sold at the next calculated NAV per share. Any applicable CDSC will be deducted from the amount you're selling and the balance will be remitted to you. |
■ | If you sell your shares that are held directly with the Funds (through the Transfer Agent), we will normally send the redemption proceeds by mail or electronically transfer them to your bank account within three business days after the Transfer Agent or your selling agent receives your order in “good form.” |
■ | If you sell your shares through a selling agent, the Funds will normally send the redemption proceeds by Fedwire within three business days after the Transfer Agent or your selling agent receives your order in “good form.” |
■ | If you paid for your shares by check or from your bank account as an ACH transaction, the Funds will hold the redemption proceeds when you sell those shares for a period of time after the trade date of the purchase. |
■ | No interest will be paid on uncashed redemption checks. |
■ | The Funds can delay payment of the redemption proceeds for up to seven days and may suspend redemptions and/or further postpone payment of redemption proceeds when the NYSE is closed or trading thereon is restricted or during emergency or other circumstances, including as determined by the SEC. |
■ | Other restrictions may apply to retirement accounts. For information about these restrictions, contact your retirement plan administrator. |
■ | The Fund reserves the right to redeem your shares if your account falls below the Fund's minimum initial investment requirement. |
■ | Also keep in mind the Funds' Small Account Policy, which is described above in Buying, Selling and Exchanging Shares — Transaction Rules and Policies. |
■ | Exchanges are made at the NAV next calculated after your exchange order is received in “good form.” |
56 | Prospectus 2014 |
■ | Once the Fund receives your exchange request, you cannot cancel it after the market closes. |
■ | The rules for buying shares of a Fund generally apply to exchanges into that Fund, including, if your exchange creates a new Fund account, it must satisfy the minimum investment amount, unless a waiver applies. |
■ | Shares of the purchased Fund may not be used on the same day for another exchange or sale. |
■ | If you exchange shares from Class A shares of Columbia Money Market Fund to a non-money market Fund, any further exchanges must be between shares of the same class. For example, if you exchange from Class A shares of Columbia Money Market Fund into Class C shares of a non-money market Fund, you may not exchange from Class C shares of that non-money market Fund back to Class A shares of Columbia Money Market Fund. |
■ | A sales charge may apply when you exchange shares of a Fund that were not assessed a sales charge at the time of your initial purchase. For example, if your initial investment was in Columbia Money Market Fund and you exchange into a non-money market Fund, your transaction is subject to a front-end sales charge if you exchange into Class A shares and to a CDSC if you exchange into Class C shares of the Funds. |
■ | If your initial investment was in Class A shares of a non-money market Fund and you exchange shares into Columbia Money Market Fund, you may exchange that amount to another Fund, including dividends earned on that amount, without paying a sales charge. |
■ | If your shares are subject to a CDSC, you will not be charged a CDSC upon the exchange of those shares. Any CDSC will be deducted when you sell the shares you received from the exchange. The CDSC imposed at that time will be based on the period that begins when you bought shares of the original Fund and ends when you sell the shares of the Fund you received from the exchange. The applicable CDSC will be the CDSC of the original Fund. |
■ | You may make exchanges only into a Fund that is legally offered and sold in your state of residence. Contact the Transfer Agent or your selling agent for more information. |
■ | You generally may make an exchange only into a Fund that is accepting investments. |
■ | The Fund may change or cancel your right to make an exchange by giving the amount of notice required by regulatory authorities (generally 60 days for a material change or cancellation). |
■ | Unless your account is part of a tax-advantaged arrangement, an exchange for shares of another Fund is a taxable event, and you may recognize a gain or loss for tax purposes. |
■ | Changing your investment to a different Fund will be treated as a sale and purchase, and you will be subject to applicable taxes on the sale and sales charges on the purchase of the new Fund. |
■ | Class Z shares of a Fund may be exchanged for Class A or Class Z shares of another Fund. In certain circumstances, the front-end sales charge applicable to Class A shares may be waived on exchanges of Class Z shares for Class A shares. See Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors — Class Z Shares for details. |
■ | You may generally exchange Class T shares of a Fund for Class A shares of another Fund if the other Fund does not offer Class T shares. Class T shares exchanged into Class A shares cannot be exchanged back into Class T shares. |
■ | Class W shares originally purchased, but no longer held, in a discretionary managed account, may not be exchanged for Class W shares of another Fund. |
■ | Former CFIT Shareholders may not exchange Class Y shares of a Fund into Class Y shares of another Fund. |
Prospectus 2014 | 57 |
■ | No sales charges or other charges will apply to any such exchange, except that when Class B shares are exchanged, any CDSC applicable to Class B shares will be applied. |
■ | Ordinarily, shareholders will not recognize a gain or loss for U.S. federal income tax purposes upon such an exchange. You should consult your tax advisor about your particular exchanges. |
58 | Prospectus 2014 |
■ | It can earn income on its investments. Examples of fund income are interest paid on money market instruments and bonds, and dividends paid on common stocks. |
■ | A mutual fund can also have capital gains if the value of its investments increases. While a fund continues to hold an investment, any gain is generally unrealized. If the fund sells an investment, it generally will realize a capital gain if it sells that investment for a higher price than its adjusted cost basis, and will generally realize a capital loss if it sells that investment for a lower price than its adjusted cost basis. Capital gains and losses are either short-term or long-term, depending on whether the fund holds the securities for one year or less (short-term) or more than one year (long-term). |
Declaration and Distribution Schedule | |
Declarations | Daily |
Distributions | Monthly |
Prospectus 2014 | 59 |
■ | The Fund intends to qualify each year as a regulated investment company. A regulated investment company generally is not subject to tax at the fund level on income and gains from investments that are distributed to shareholders. However, the Fund's failure to qualify as a regulated investment company would result in Fund level taxation, and consequently, a reduction in income available for distribution to you and in the net asset value of your shares. Even if a fund qualifies as a regulated investment company, the Fund may be subject to federal excise tax on certain undistributed income or gains. For tax-exempt Funds: If a tax-exempt Fund were to fail to qualify as a regulated investment company, any dividends of net tax-exempt income would no longer be exempt from U.S. federal income tax and, instead, in general, would be taxable to you as ordinary income. |
■ | Distributions generally are taxable to you when paid, whether they are paid in cash or automatically reinvested in additional Fund shares. Dividends paid in January are deemed paid on December 31 of the prior year if the dividend was declared and payable to shareholders of record in October, November, or December of such prior year. In certain circumstances a Fund may retain its net capital gain and deem such gains to have been distributed to shareholders. In such case, the Fund will be required to pay a fund-level tax on any such retained net capital gain, and shareholders will be required to include in income their share of such retained capital gain and will be entitled to credit their share of tax paid by the Fund against their federal income tax liabilities. |
■ | Distributions of the Fund's ordinary income and net short-term capital gain, if any, generally are taxable to you as ordinary income. Distributions of the Fund's net long-term capital gain, if any, generally are taxable to you as long-term capital gain. Whether capital gains are long-term or short-term is determined by how long the Fund has owned the investments that generated them, rather than how long you have owned your shares. For taxable fixed income Funds: The Fund expects that distributions will consist primarily of ordinary income. |
■ | From time to time, a distribution from the Fund could constitute a return of capital, which is not taxable to you so long as the amount of the distribution does not exceed your tax basis in your Fund shares. A return of capital reduces your tax basis in your Fund shares, with any amounts exceeding such basis generally taxable as capital gain. |
■ | If you are an individual and you meet certain holding period and other requirements for your Fund shares, a portion of your distributions may be treated as “qualified dividend income” taxable at the lower net long-term capital gain rates instead of the higher ordinary income rates. Qualified dividend income is income attributable to the Fund's dividends received from certain U.S. and foreign corporations, as long as the Fund meets certain holding period and other requirements for the stock producing such dividends. For taxable fixed income and tax-exempt Funds: The Fund does not expect a significant portion of Fund distributions to be qualified dividend income. |
■ | Certain high-income individuals (as well as estates and trusts) are subject to a 3.8% tax on net investment income. For individuals, the 3.8% tax applies to the lesser of (1) the amount (if any) by which the taxpayer's modified adjusted gross income exceeds certain threshold amounts or (2) the taxpayer's “net investment income.” Net investment income generally includes for this purpose dividends, including any capital gain dividends, paid by the Fund, and net gains recognized on the sale, redemption or exchange of shares of the Fund. For tax-exempt Funds: Exempt interest dividends are not included in net investment income for this purpose, and are therefore not subject to the tax on net investment income. |
■ | Certain derivative instruments when held in a Fund's portfolio subject the Fund to special tax rules, the effect of which may be to, among other things, accelerate income to the Fund, defer Fund losses, cause adjustments in the holding periods of Fund portfolio securities, or convert capital gains into ordinary income, short-term capital losses into long-term capital losses or long-term capital gains into short-term capital gains. These rules could therefore affect the amount, timing and/or character of distributions to shareholders. For tax-exempt Funds: Derivative instruments held by a Fund may also generate taxable income to the Fund. |
60 | Prospectus 2014 |
■ | Certain Funds may purchase or write options, as described further in the SAI. Generally, a Fund realizes a capital gain or loss on an option when the option expires, or when it is exercised, sold or otherwise terminated. However, if an option is a “section 1256 contract,” which includes most traded options on a broad-based index, and the Fund holds such option at the end of its taxable year, the Fund is deemed to sell such option at fair market value at such time and recognize any gain or loss thereon, which is generally deemed to be 60% long-term and 40% short-term gain or loss, as described further in the SAI. |
■ | If at the end of the taxable year more than 50% of the value of the Fund's assets consists of securities of foreign corporations, and the Fund makes a special election, you will generally be required to include in your income for U.S. federal income tax purposes your share of the qualifying foreign income taxes paid by the Fund in respect of its foreign portfolio securities. You may be able to claim a foreign tax credit or deduction in respect of this amount, subject to certain limitations. There is no assurance that the Fund will make this election for a taxable year, even if it is eligible to do so. |
■ | For tax-exempt Funds: The Fund expects that distributions will consist primarily of exempt interest dividends. Distributions of the Fund's net interest income from tax-exempt securities generally are not subject to U.S. federal income tax, but may be subject to state and local income and other taxes, as well as federal and state alternative minimum tax. Similarly, distributions of interest income that is exempt from state and local income taxes of a particular state may be subject to other taxes, including income taxes of other states, and federal and state alternative minimum tax. Certain income generated by tax-exempt securities, including capital gains on sales and market discount, is taxable. The Fund may invest a portion of its assets in securities that generate income that is not exempt from federal or state income tax. Distributions by the Fund of this income generally are taxable to you as ordinary income or long-term capital gain. Distributions of capital gains realized by the Fund, including those generated from the sale or exchange of tax-exempt securities, generally also are taxable to you. Distributions of the Fund's net short-term capital gain, if any, generally are taxable to you as ordinary income. |
■ | For a Fund organized as a fund-of-funds: Because most of the Fund's investments are shares of underlying Funds, the tax treatment of the Fund's gains, losses, and distributions may differ from the tax treatment that would apply if either the Fund invested directly in the types of securities held by the underlying Funds or the Fund shareholders invested directly in the underlying Funds. As a result, you may receive taxable distributions earlier and recognize higher amounts of capital gain or ordinary income than you otherwise would. |
■ | A sale, redemption or exchange of Fund shares is a taxable event. This includes redemptions where you are paid in securities. Your sales, redemptions and exchanges of Fund shares (including those paid in securities) usually will result in a taxable capital gain or loss to you, equal to the difference between the amount you receive for your shares (or are deemed to have received in the case of exchanges) and the amount you paid (or are deemed to have paid in the case of exchanges) for them. Any such capital gain or loss generally will be long-term capital gain or loss if you have held your Fund shares for more than one year at the time of sale or exchange. In certain circumstances, capital losses may be converted from short-term to long-term; in other circumstances, capital losses may be disallowed under the “wash sale” rules. |
■ | The Fund generally is required to report to shareholders and the Internal Revenue Service (the IRS) upon the sale, exchange or redemption of Fund shares cost basis information with respect to those shares. The Fund uses average cost basis as its default method of calculating cost basis. Please see columbiamanagement.com or contact the Fund at 800.345.6611 for more information regarding average cost basis reporting, other available cost basis methods and how to select or change a particular method or to choose specific shares to sell, redeem or exchange. If you hold Fund shares through a selling agent, you should contact your selling agent to learn about its cost basis reporting default method and the reporting elections available to your account. |
■ | The Fund is required by federal law to withhold tax on any taxable or tax-exempt distributions and redemption proceeds paid to you (including amounts paid to you in securities and amounts deemed to be paid to you upon an exchange of shares) if: you haven't provided a correct TIN or haven't certified to the Fund that withholding doesn't apply; the IRS has notified us that the TIN listed on your account is incorrect according to its records; or the IRS informs the Fund that you are otherwise subject to backup withholding. |
Prospectus 2014 | 61 |
62 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class A | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $9.49 | $9.39 | $9.33 | $9.08 | $8.95 | $7.72 | |
Income from investment operations: | |||||||
Net investment income | 0.24 | 0.28 | 0.03 | 0.33 | 0.36 | 0.43 | |
Net realized and unrealized gain (loss) | (0.31) | 0.23 | 0.05 | 0.28 | 0.15 | 1.26 | |
Total from investment operations | (0.07) | 0.51 | 0.08 | 0.61 | 0.51 | 1.69 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.21) | (0.26) | (0.02) | (0.36) | (0.38) | (0.46) | |
Net realized gains | (0.06) | (0.15) | — | — | — | — | |
Total distributions to shareholders | (0.27) | (0.41) | (0.02) | (0.36) | (0.38) | (0.46) | |
Proceeds from regulatory settlements | — | — | — | 0.00 (b) | — | 0.00 (b) | |
Net asset value, end of period | $9.15 | $9.49 | $9.39 | $9.33 | $9.08 | $8.95 | |
Total return | (0.62%) | 5.52% | 0.91% | 6.82% | 5.80% | 22.31% | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 0.91% | 0.94% | 0.96% (d) | 0.95% (e) | 0.97% (e) | 1.00% (e) | |
Total net expenses (f) | 0.85% (g) | 0.86% (g) | 0.84% (d) | 0.84% (e)(g) | 0.92% (e)(g) | 0.90% (e)(g) | |
Net investment income | 2.67% | 2.94% | 3.35% (d) | 3.62% | 4.02% | 5.01% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $1,473,961 | $2,168,079 | $352,338 | $338,578 | $201,506 | $163,333 | |
Portfolio turnover | 274% (h) | 239% (h) | 10% (h) | 170% (h) | 177% | 160% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(h) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191%, 205%, 9% and 157% for the years ended April 30, 2014, 2013, 2012 and March 31, 2012, respectively. |
Prospectus 2014 | 63 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class B | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $9.49 | $9.39 | $9.33 | $9.08 | $8.95 | $7.72 | |
Income from investment operations: | |||||||
Net investment income | 0.17 | 0.21 | 0.02 | 0.27 | 0.30 | 0.37 | |
Net realized and unrealized gain (loss) | (0.30) | 0.23 | 0.06 | 0.27 | 0.15 | 1.26 | |
Total from investment operations | (0.13) | 0.44 | 0.08 | 0.54 | 0.45 | 1.63 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.15) | (0.19) | (0.02) | (0.29) | (0.32) | (0.40) | |
Net realized gains | (0.06) | (0.15) | — | — | — | — | |
Total distributions to shareholders | (0.21) | (0.34) | (0.02) | (0.29) | (0.32) | (0.40) | |
Proceeds from regulatory settlements | — | — | — | 0.00 (b) | — | 0.00 (b) | |
Net asset value, end of period | $9.15 | $9.49 | $9.39 | $9.33 | $9.08 | $8.95 | |
Total return | (1.36%) | 4.74% | 0.85% | 6.01% | 5.03% | 21.41% | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 1.66% | 1.69% | 1.71% (d) | 1.72% (e) | 1.68% (e) | 1.65% (e) | |
Total net expenses (f) | 1.60% (g) | 1.61% (g) | 1.59% (d) | 1.59% (e)(g) | 1.67% (e)(g) | 1.65% (e)(g) | |
Net investment income | 1.90% | 2.20% | 2.59% (d) | 2.93% | 3.32% | 4.29% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $18,976 | $41,955 | $6,081 | $6,253 | $14,779 | $31,476 | |
Portfolio turnover | 274% (h) | 239% (h) | 10% (h) | 170% (h) | 177% | 160% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(h) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191%, 205%, 9% and 157% for the years ended April 30, 2014, 2013, 2012 and March 31, 2012, respectively. |
64 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class C | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $9.49 | $9.39 | $9.33 | $9.08 | $8.95 | $7.72 | |
Income from investment operations: | |||||||
Net investment income | 0.19 | 0.22 | 0.02 | 0.28 | 0.31 | 0.38 | |
Net realized and unrealized gain (loss) | (0.31) | 0.23 | 0.06 | 0.28 | 0.15 | 1.26 | |
Total from investment operations | (0.12) | 0.45 | 0.08 | 0.56 | 0.46 | 1.64 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.16) | (0.20) | (0.02) | (0.31) | (0.33) | (0.41) | |
Net realized gains | (0.06) | (0.15) | — | — | — | — | |
Total distributions to shareholders | (0.22) | (0.35) | (0.02) | (0.31) | (0.33) | (0.41) | |
Proceeds from regulatory settlements | — | — | — | 0.00 (b) | — | 0.00 (b) | |
Net asset value, end of period | $9.15 | $9.49 | $9.39 | $9.33 | $9.08 | $8.95 | |
Total return | (1.21%) | 4.90% | 0.86% | 6.20% | 5.17% | 21.59% | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 1.66% | 1.69% | 1.71% (d) | 1.70% (e) | 1.68% (e) | 1.65% (e) | |
Total net expenses (f) | 1.45% (g) | 1.46% (g) | 1.44% (d) | 1.44% (e)(g) | 1.52% (e)(g) | 1.50% (e)(g) | |
Net investment income | 2.07% | 2.37% | 2.75% (d) | 3.04% | 3.42% | 4.43% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $64,739 | $95,745 | $35,579 | $35,304 | $33,885 | $30,731 | |
Portfolio turnover | 274% (h) | 239% (h) | 10% (h) | 170% (h) | 177% | 160% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(h) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191%, 205%, 9% and 157% for the years ended April 30, 2014, 2013, 2012 and March 31, 2012, respectively. |
Prospectus 2014 | 65 |
Year Ended April 30, | Year Ended March 31, | |||||
Class I | 2014 | 2013 | 2012 (a) | 2012 | 2011 (b) | |
Per share data | ||||||
Net asset value, beginning of period | $9.50 | $9.39 | $9.33 | $9.08 | $9.21 | |
Income from investment operations: | ||||||
Net investment income | 0.28 | 0.31 | 0.03 | 0.37 | 0.19 | |
Net realized and unrealized gain (loss) | (0.31) | 0.24 | 0.06 | 0.27 | (0.11) | |
Total from investment operations | (0.03) | 0.55 | 0.09 | 0.64 | 0.08 | |
Less distributions to shareholders: | ||||||
Net investment income | (0.25) | (0.29) | (0.03) | (0.39) | (0.21) | |
Net realized gains | (0.06) | (0.15) | — | — | — | |
Total distributions to shareholders | (0.31) | (0.44) | (0.03) | (0.39) | (0.21) | |
Proceeds from regulatory settlements | — | — | — | 0.00 (c) | — | |
Net asset value, end of period | $9.16 | $9.50 | $9.39 | $9.33 | $9.08 | |
Total return | (0.27%) | 6.00% | 0.94% | 7.17% | 0.87% | |
Ratios to average net assets (d) | ||||||
Total gross expenses | 0.50% | 0.50% | 0.52% (e) | 0.51% (f) | 0.53% (e)(f) | |
Total net expenses (g) | 0.50% | 0.50% | 0.52% (e) | 0.51% (f)(h) | 0.52% (e)(f)(h) | |
Net investment income | 3.05% | 3.31% | 3.68% (e) | 4.01% | 4.05% (e) | |
Supplemental data | ||||||
Net assets, end of period (in thousands) | $576,729 | $459,989 | $90,345 | $86,768 | $26,866 | |
Portfolio turnover | 274% (i) | 239% (i) | 10% (i) | 170% (i) | 177% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from September 27, 2010 (commencement of operations) to March 31, 2011. |
(c) | Rounds to zero. |
(d) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(e) | Annualized. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(i) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191%, 205%, 9% and 157% for the years ended April 30, 2014, 2013, 2012 and March 31, 2012, respectively. |
66 | Prospectus 2014 |
Year
Ended April 30,
|
||
Class K | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $9.49 | $9.42 |
Income from investment operations: | ||
Net investment income | 0.25 | 0.05 |
Net realized and unrealized gain (loss) | (0.31) | 0.06 |
Total from investment operations | (0.06) | 0.11 |
Less distributions to shareholders: | ||
Net investment income | (0.22) | (0.04) |
Net realized gains | (0.06) | — |
Total distributions to shareholders | (0.28) | (0.04) |
Net asset value, end of period | $9.15 | $9.49 |
Total return | (0.53%) | 1.19% |
Ratios to average net assets (b) | ||
Total gross expenses | 0.74% | 0.79% (c) |
Total net expenses (d) | 0.74% | 0.79% (c) |
Net investment income | 2.67% | 2.97% (c) |
Supplemental data | ||
Net assets, end of period (in thousands) | $14,168 | $75,741 |
Portfolio turnover | 274% (e) | 239% (e) |
(a) | For the period from February 28, 2013 (commencement of operations) to April 30, 2013. |
(b) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(c) | Annualized. |
(d) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(e) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191% and 205% for the years ended April 30, 2014 and 2013, respectively. |
Prospectus 2014 | 67 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class R | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $9.49 | $9.39 | $9.33 | $9.08 | $8.95 | $7.72 | |
Income from investment operations: | |||||||
Net investment income | 0.22 | 0.26 | 0.02 | 0.31 | 0.34 | 0.41 | |
Net realized and unrealized gain (loss) | (0.31) | 0.23 | 0.06 | 0.28 | 0.15 | 1.26 | |
Total from investment operations | (0.09) | 0.49 | 0.08 | 0.59 | 0.49 | 1.67 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.19) | (0.24) | (0.02) | (0.34) | (0.36) | (0.44) | |
Net realized gains | (0.06) | (0.15) | — | — | — | — | |
Total distributions to shareholders | (0.25) | (0.39) | (0.02) | (0.34) | (0.36) | (0.44) | |
Proceeds from regulatory settlements | — | — | — | 0.00 (b) | — | 0.00 (b) | |
Net asset value, end of period | $9.15 | $9.49 | $9.39 | $9.33 | $9.08 | $8.95 | |
Total return | (0.87%) | 5.26% | 0.89% | 6.55% | 5.54% | 22.01% | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 1.16% | 1.20% | 1.21% (d) | 1.20% (e) | 1.18% (e) | 1.15% (e) | |
Total net expenses (f) | 1.10% (g) | 1.12% (g) | 1.09% (d) | 1.09% (e)(g) | 1.17% (e)(g) | 1.15% (e)(g) | |
Net investment income | 2.43% | 2.73% | 3.08% (d) | 3.39% | 3.75% | 4.78% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $2,750 | $3,052 | $2,631 | $2,786 | $2,969 | $1,694 | |
Portfolio turnover | 274% (h) | 239% (h) | 10% (h) | 170% (h) | 177% | 160% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(h) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191%, 205%, 9% and 157% for the years ended April 30, 2014, 2013, 2012 and March 31, 2012, respectively. |
68 | Prospectus 2014 |
Year
Ended April 30,
|
||
Class R4 | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $9.48 | $9.66 |
Income from investment operations: | ||
Net investment income | 0.27 | 0.14 |
Net realized and unrealized loss | (0.31) | (0.05) (b) |
Total from investment operations | (0.04) | 0.09 |
Less distributions to shareholders: | ||
Net investment income | (0.24) | (0.12) |
Net realized gains | (0.06) | (0.15) |
Total distributions to shareholders | (0.30) | (0.27) |
Net asset value, end of period | $9.14 | $9.48 |
Total return | (0.38%) | 0.99% |
Ratios to average net assets (c) | ||
Total gross expenses | 0.67% | 0.67% (d) |
Total net expenses (e) | 0.60% (f) | 0.60% (d) |
Net investment income | 3.02% | 3.26% (d) |
Supplemental data | ||
Net assets, end of period (in thousands) | $7,477 | $57 |
Portfolio turnover | 274% (g) | 239% (g) |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of sales and repurchases of Fund shares in relation to fluctuations in the market value of the portfolio. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(f) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(g) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191% and 205% for the years ended April 30, 2014 and 2013, respectively. |
Prospectus 2014 | 69 |
Year
Ended April 30,
|
||
Class R5 | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $9.48 | $9.66 |
Income from investment operations: | ||
Net investment income | 0.28 | 0.15 |
Net realized and unrealized loss | (0.31) | (0.05) (b) |
Total from investment operations | (0.03) | 0.10 |
Less distributions to shareholders: | ||
Net investment income | (0.25) | (0.13) |
Net realized gains | (0.06) | (0.15) |
Total distributions to shareholders | (0.31) | (0.28) |
Net asset value, end of period | $9.14 | $9.48 |
Total return | (0.28%) | 1.03% |
Ratios to average net assets (c) | ||
Total gross expenses | 0.51% | 0.54% (d) |
Total net expenses (e) | 0.50% | 0.54% (d) |
Net investment income | 3.15% | 3.30% (d) |
Supplemental data | ||
Net assets, end of period (in thousands) | $15,980 | $318 |
Portfolio turnover | 274% (f) | 239% (f) |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of sales and repurchases of Fund shares in relation to fluctuations in the market value of the portfolio. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(f) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191% and 205% for the years ended April 30, 2014 and 2013, respectively. |
70 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | |||||
Class W | 2014 | 2013 | 2012 (a) | 2012 | 2011 (b) | |
Per share data | ||||||
Net asset value, beginning of period | $9.50 | $9.39 | $9.33 | $9.08 | $9.21 | |
Income from investment operations: | ||||||
Net investment income | 0.24 | 0.27 | 0.03 | 0.34 | 0.17 | |
Net realized and unrealized gain (loss) | (0.30) | 0.25 | 0.05 | 0.27 | (0.11) | |
Total from investment operations | (0.06) | 0.52 | 0.08 | 0.61 | 0.06 | |
Less distributions to shareholders: | ||||||
Net investment income | (0.22) | (0.26) | (0.02) | (0.36) | (0.19) | |
Net realized gains | (0.06) | (0.15) | — | — | — | |
Total distributions to shareholders | (0.28) | (0.41) | (0.02) | (0.36) | (0.19) | |
Proceeds from regulatory settlements | — | — | — | 0.00 (c) | — | |
Net asset value, end of period | $9.16 | $9.50 | $9.39 | $9.33 | $9.08 | |
Total return | (0.62%) | 5.59% | 0.91% | 6.84% | 0.69% | |
Ratios to average net assets (d) | ||||||
Total gross expenses | 0.91% | 0.92% | 0.94% (e) | 0.94% (f) | 0.89% (e)(f) | |
Total net expenses (g) | 0.85% (h) | 0.85% (h) | 0.82% (e) | 0.83% (f)(h) | 0.87% (e)(f)(h) | |
Net investment income | 2.68% | 2.91% | 3.38% (e) | 3.64% | 3.62% (e) | |
Supplemental data | ||||||
Net assets, end of period (in thousands) | $507,419 | $752,819 | $3 | $3 | $2 | |
Portfolio turnover | 274% (i) | 239% (i) | 10% (i) | 170% (i) | 177% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from September 27, 2010 (commencement of operations) to March 31, 2011. |
(c) | Rounds to zero. |
(d) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(e) | Annualized. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(i) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191%, 205%, 9% and 157% for the years ended April 30, 2014, 2013, 2012 and March 31, 2012, respectively. |
Prospectus 2014 | 71 |
Year
Ended April 30,
|
||
Class Y | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $9.49 | $9.67 |
Income from investment operations: | ||
Net investment income | 0.29 | 0.14 |
Net realized and unrealized loss | (0.31) | (0.04) (b) |
Total from investment operations | (0.02) | 0.10 |
Less distributions to shareholders: | ||
Net investment income | (0.25) | (0.13) |
Net realized gains | (0.06) | (0.15) |
Total distributions to shareholders | (0.31) | (0.28) |
Net asset value, end of period | $9.16 | $9.49 |
Total return | (0.17%) | 1.05% |
Ratios to average net assets (c) | ||
Total gross expenses | 0.51% | 0.45% (d) |
Total net expenses (e) | 0.50% | 0.45% (d) |
Net investment income | 3.21% | 3.18% (d) |
Supplemental data | ||
Net assets, end of period (in thousands) | $15,642 | $2 |
Portfolio turnover | 274% (f) | 239% (f) |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of sales and repurchases of Fund shares in relation to fluctuations in the market value of the portfolio. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(f) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191% and 205% for the years ended April 30, 2014 and 2013, respectively. |
72 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class Z | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $9.49 | $9.39 | $9.33 | $9.08 | $8.95 | $7.72 | |
Income from investment operations: | |||||||
Net investment income | 0.27 | 0.31 | 0.03 | 0.36 | 0.39 | 0.45 | |
Net realized and unrealized gain (loss) | (0.31) | 0.23 | 0.06 | 0.27 | 0.15 | 1.26 | |
Total from investment operations | (0.04) | 0.54 | 0.09 | 0.63 | 0.54 | 1.71 | |
Less distributions to shareholders: | |||||||
Net investment income | (0.24) | (0.29) | (0.03) | (0.38) | (0.41) | (0.48) | |
Net realized gains | (0.06) | (0.15) | — | — | — | — | |
Total distributions to shareholders | (0.30) | (0.44) | (0.03) | (0.38) | (0.41) | (0.48) | |
Proceeds from regulatory settlements | — | — | — | 0.00 (b) | — | 0.00 (b) | |
Net asset value, end of period | $9.15 | $9.49 | $9.39 | $9.33 | $9.08 | $8.95 | |
Total return | (0.37%) | 5.79% | 0.93% | 7.08% | 6.07% | 22.62% | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 0.66% | 0.70% | 0.71% (d) | 0.70% (e) | 0.68% (e) | 0.65% (e) | |
Total net expenses (f) | 0.60% (g) | 0.62% (g) | 0.59% (d) | 0.59% (e)(g) | 0.67% (e)(g) | 0.65% (e)(g) | |
Net investment income | 2.92% | 3.23% | 3.60% (d) | 3.89% | 4.28% | 5.26% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $1,289,621 | $1,915,534 | $2,881,803 | $2,853,669 | $2,835,104 | $1,973,020 | |
Portfolio turnover | 274% (h) | 239% (h) | 10% (h) | 170% (h) | 177% | 160% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
(h) | Includes mortgage dollar rolls. If mortgage dollar roll transactions were excluded, the portfolio turnover would have been 191%, 205%, 9% and 157% for the years ended April 30, 2014, 2013, 2012 and March 31, 2012, respectively. |
Prospectus 2014 | 73 |
Class | Ticker Symbol | |
Class A Shares | CSMIX | |
Class B Shares | CSSBX | |
Class C Shares | CSSCX | |
Class I Shares | CVUIX | |
Class R Shares | CSVRX | |
Class R4 Shares | CVVRX | |
Class R5 Shares | CUURX | |
Class Y Shares | CSVYX | |
Class Z Shares | CSCZX |
|
3 |
|
3 |
|
3 |
|
4 |
|
4 |
|
5 |
|
7 |
|
7 |
|
8 |
|
8 |
|
9 |
|
9 |
|
9 |
|
9 |
|
11 |
|
15 |
|
16 |
|
17 |
|
18 |
|
18 |
|
19 |
|
23 |
|
30 |
|
32 |
|
35 |
|
36 |
|
36 |
|
37 |
|
41 |
|
43 |
|
48 |
|
49 |
|
52 |
|
52 |
|
53 |
|
56 |
2 | Prospectus 2014 |
Shareholder Fees (fees paid directly from your investment) | ||||
Class A | Class B | Class C |
Classes
I,
R, R4, R5, Y and Z |
|
Maximum sales charge (load) imposed on purchases (as a % of offering price) | 5.75% | None | None | None |
Maximum deferred sales charge (load) imposed on redemptions (as a % of the lower of the original purchase price or current net asset value) | 1.00% (a) | 5.00% (b) | 1.00% (c) | None |
(a) | This charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months of purchase, as follows: 1.00% if redeemed within 12 months of purchase, and 0.50% if redeemed more than 12, but less than 18, months after purchase, with certain limited exceptions. |
(b) | This charge decreases over time. |
(c) | This charge applies to redemptions within one year of purchase, with certain limited exceptions. |
(d) | Other expenses for Class A, Class B, Class C, Class R, Class R4, Class R5 and Class Z shares have been restated to reflect current fees paid by the Fund. |
■ | you invest $10,000 in the applicable class of Fund shares for the periods indicated, |
■ | your investment has a 5% return each year, and |
■ | the Fund’s total annual operating expenses remain the same as shown in the Annual Fund Operating Expenses table above. |
1 year | 3 years | 5 years | 10 years | |
Class A (whether or not shares are redeemed) | $701 | $966 | $1,252 | $2,063 |
Class B (assuming redemption of all shares at the end of the period) | $709 | $946 | $1,308 | $2,197 |
Class B (assuming no redemption of shares) | $209 | $646 | $1,108 | $2,197 |
Class C (assuming redemption of all shares at the end of the period) | $309 | $646 | $1,108 | $2,390 |
Prospectus 2014 | 3 |
1 year | 3 years | 5 years | 10 years | |
Class C (assuming no redemption of shares) | $209 | $646 | $1,108 | $2,390 |
Class I (whether or not shares are redeemed) | $ 88 | $274 | $ 477 | $1,061 |
Class R (whether or not shares are redeemed) | $159 | $493 | $ 850 | $1,856 |
Class R4 (whether or not shares are redeemed) | $108 | $337 | $ 585 | $1,294 |
Class R5 (whether or not shares are redeemed) | $ 93 | $290 | $ 504 | $1,120 |
Class Y (whether or not shares are redeemed) | $ 88 | $274 | $ 477 | $1,061 |
Class Z (whether or not shares are redeemed) | $108 | $337 | $ 585 | $1,294 |
4 | Prospectus 2014 |
Prospectus 2014 | 5 |
Year
by Year Total Return (%)
as of December 31 Each Year* |
Best
and Worst Quarterly Returns
During the Period Shown in the Bar Chart |
||
|
Best | 3rd Quarter 2009 | 20.59% |
Worst
|
4th Quarter 2008 | -24.09% |
* | Year to Date return as of June 30, 2014: 5.61% |
6 | Prospectus 2014 |
Share
Class
Inception Date |
1 Year | 5 Years | 10 Years | |
Class A | 07/25/1986 | |||
returns before taxes | 26.17% | 15.51% | 8.28% | |
returns after taxes on distributions | 21.23% | 14.10% | 6.98% | |
returns after taxes on distributions and sale of Fund shares | 17.38% | 12.40% | 6.64% | |
Class B returns before taxes | 11/09/1992 | 27.86% | 15.79% | 8.11% |
Class C returns before taxes | 01/15/1996 | 31.87% | 16.01% | 8.11% |
Class I returns before taxes | 09/27/2010 | 34.43% | 17.23% | 9.08% |
Class R returns before taxes | 09/27/2010 | 33.54% | 16.62% | 8.66% |
Class R4 returns before taxes | 11/08/2012 | 34.22% | 16.96% | 8.96% |
Class R5 returns before taxes | 11/08/2012 | 34.41% | 17.00% | 8.98% |
Class Y returns before taxes | 07/15/2009 | 34.48% | 17.35% | 9.14% |
Class Z returns before taxes | 07/31/1995 | 34.20% | 17.18% | 9.20% |
Russell 2000 Value Index (reflects no deductions for fees, expenses or taxes) | 34.52% | 17.64% | 8.61% |
Portfolio Manager | Title | Role with Fund | Managed Fund Since | |||
Jeremy Javidi, CFA | Senior Portfolio Manager | Lead Manager | 2005 | |||
John Barrett, CFA | Senior Portfolio Manager | Co-manager | 2011 |
Online | Regular Mail | Express Mail | By Telephone | |||
columbiamanagement.com |
Columbia
Funds,
c/o Columbia Management Investment Services Corp. P.O. Box 8081 Boston, MA 02266-8081 |
Columbia
Funds,
c/o Columbia Management Investment Services Corp. 30 Dan Road, Suite 8081 Canton, MA 02021-2809 |
800.422.3737 |
Class | Category of eligible account |
For
accounts other than
systematic investment plan accounts |
For
systematic investment
plan accounts |
Classes A, B* & C | All accounts other than IRAs | $2,000 | $100 |
IRAs | $1,000 | $100 | |
Classes I, R, R4 & Y | All eligible accounts | None | N/A |
Prospectus 2014 | 7 |
Class | Category of eligible account |
For
accounts other than
systematic investment plan accounts |
For
systematic investment
plan accounts |
Class R5 | Combined underlying accounts of eligible registered investment advisers | $100,000 | N/A |
Omnibus retirement plans | None | N/A | |
Class Z | All eligible accounts |
$0,
$1,000 or $2,000
depending upon the category of eligible investor |
$100 |
* | Class B shares are generally closed to new and existing shareholders. |
8 | Prospectus 2014 |
■ | businesses that are believed to be fundamentally sound and undervalued due to investor indifference, investor misperception of company prospects, or other factors; |
■ | various measures of valuation, including price-to-cash flow, price-to-earnings, price-to-sales, and price-to-book value. The Investment Manager believes that companies with lower valuations are generally more likely to provide opportunities for capital appreciation; |
■ | a company’s current operating margins relative to its historic range and future potential; and |
■ | potential indicators of stock price appreciation, such as anticipated earnings growth, company restructuring, changes in management, business model changes, new product opportunities or anticipated improvements in macroeconomic factors. |
Prospectus 2014 | 9 |
10 | Prospectus 2014 |
Prospectus 2014 | 11 |
12 | Prospectus 2014 |
Prospectus 2014 | 13 |
14 | Prospectus 2014 |
Prospectus 2014 | 15 |
Portfolio Manager | Title | Role with Fund | Managed Fund Since | |||
Jeremy Javidi, CFA | Senior Portfolio Manager | Lead Manager | 2005 | |||
John Barrett, CFA | Senior Portfolio Manager | Co-manager | 2011 |
16 | Prospectus 2014 |
■ | compensation and other benefits received by the Investment Manager and other Ameriprise Financial affiliates related to the management/administration of a Columbia Fund and the sale of its shares; |
■ | the allocation of, and competition for, investment opportunities among the Fund, other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates, or Ameriprise Financial itself and its affiliates; |
■ | separate and potentially divergent management of a Columbia Fund and other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates; |
■ | regulatory and other investment restrictions on investment activities of the Investment Manager and other Ameriprise Financial affiliates and accounts advised/managed by them; |
■ | insurance and other relationships of Ameriprise Financial affiliates with companies and other entities in which a Columbia Fund invests; and |
■ | regulatory and other restrictions relating to the sharing of information between Ameriprise Financial and its affiliates, including the Investment Manager, and a Columbia Fund. |
Prospectus 2014 | 17 |
* | The website references in this prospectus are inactive links and information contained in or otherwise accessible through the referenced websites does not form a part of this prospectus. |
18 | Prospectus 2014 |
■ | The amount you plan to invest. |
■ | How long you intend to remain invested in the Fund. |
■ | The expenses for each share class. |
■ | Whether you may be eligible for a reduction or waiver of sales charges when you buy or sell shares. |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class A |
Eligibility:
Available to the general public for investment
|
5.75%
maximum, declining to 0.00% on investments of $1 million or more
|
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months of purchase charged as follows:
|
Distribution
and Service
Fees: up to 0.25% |
Class B |
Eligibility:
Closed to new investors
(f)
|
None | 5.00% maximum, gradually declining to 0.00% after six years (g) |
Distribution
Fee:
0.75%
|
Prospectus 2014 | 19 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class C |
Eligibility:
Available to the general public for investment
|
None | 1.00% on certain investments redeemed within one year of purchase |
Distribution
Fee:
0.75%
|
Class I |
Eligibility:
Available only to other Funds (i.e., fund-of-fund investments)
|
None | None | None |
Class K |
Eligibility:
Closed to new investors; available only to qualified employee benefit plans, trust companies or similar institutions, 501(c)(3) charitable organizations, non-qualified deferred compensation plans whose participants
are included in a qualified employee benefit plan described above, 529 plans, and health savings accounts
(f)
|
None | None | Plan Administration Services Fee: 0.25% |
Class R |
Eligibility:
Available only to eligible retirement plans, health savings accounts and, in the sole discretion of the Distributor, other types of retirement accounts held through platforms maintained by selling agents approved by
the Distributor
|
None | None |
Series
of CFST & CFST I:
distribution fee of 0.50%
|
20 | Prospectus 2014 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class R4 |
Eligibility:
Available only to (i) omnibus retirement plans, (ii) trust companies or similar institutions, (iii) broker-dealers, banks, trust companies and similar institutions that clear Fund share transactions for their client
or customer investment advisory or similar accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the Transfer Agent with respect to Class R4 eligibility apart
from selling, servicing or similar agreements, (iv) 501(c)(3) charitable organizations, (v) 529 plans and (vi) health savings accounts
|
None | None | None |
Class R5 |
Eligibility:
Available only to (i) certain registered investment advisers that clear Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that
have been granted specific written authorization from the Transfer Agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements and (ii) omnibus retirement
plans
(f)
|
None | None | None |
Class T |
Eligibility:
Generally closed to new investors
(f)
|
5.75% maximum, declining to 0.00% on investments of $1 million or more |
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months of purchase, charged as follows:
|
Service Fee: up to 0.50% |
Prospectus 2014 | 21 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class W |
Eligibility:
Available only to investors purchasing through certain authorized investment programs managed by investment professionals, including discretionary managed account programs
|
None | None | Distribution and Service Fees: 0.25% |
Class Y |
Eligibility:
Available only to retirement plans that
maintain plan-level or omnibus
accounts with the Fund
(f)
|
None | None | None |
Class Z |
Eligibility:
Available only to certain eligible investors, which are subject to different minimum investment requirements, ranging from $0 to $2,000; effective March 29, 2013, closed to (i) accounts of selling agents that clear
Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been given specific written notice from the Transfer Agent of the termination of their eligibility for
new purchases of Class Z shares and (ii) omnibus retirement plans, subject to certain exceptions
(f)
|
None | None | None |
(a) | For Columbia Money Market Fund, new investments must be made in Class A, Class I, Class W or Class Z shares, subject to eligibility. Class C and Class R shares of Columbia Money Market Fund are available as a new investment only to investors in the Distributor's proprietary 401(k) products, provided that such investor is eligible to invest in the class and transact directly with the Fund or the Transfer Agent through a third party administrator or third party recordkeeper. Columbia Money Market Fund offers other classes of shares only to facilitate exchanges with other Funds offering such share classes. |
(b) | The minimum initial investment requirement is $5,000 for Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund, and $10,000 for Columbia Absolute Return Currency and Income Fund and Columbia Absolute Return Emerging Markets Macro Fund. See Buying, Selling and Exchanging Shares — Buying Shares for more details on the eligible investors and minimum initial investment requirements. Certain share classes are subject to minimum account balance requirements, as described in Buying, Selling and Exchanging Shares — Transaction Rules and Policies. |
22 | Prospectus 2014 |
(c) | Actual front-end sales charges and CDSCs vary among the Funds. For more information on applicable sales charges, see Choosing a Share Class — Sales Charges and Commissions and for information about certain exceptions to these sales charges, see Choosing a Share Class — Reductions/Waivers of Sales Charges. |
(d) | These are the maximum applicable distribution and/or service fees. Fee rates and fee components (i.e., the portion of a combined fee that is a distribution or service fee) may vary among Funds. Because these fees are paid out of Fund assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of distribution and/or shareholder service fees. Although Class A shares of certain series of CFST I are subject to a combined distribution and service fee of up to 0.35%, these Funds currently limit the combined fee to 0.25%. Columbia Money Market Fund pays a distribution and service fee of up to 0.10% on Class A shares, up to 0.75% distribution fee and up to 0.10% service fee on Class B shares, up to 0.75% distribution fee on Class C shares, and 0.10% distribution and service fees on Class W shares. Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia Tax-Exempt Fund pay a service fee of up to 0.20% on Class A, Class B and Class C shares. Columbia AMT-Free Intermediate Muni Bond Fund pays a distribution fee of up to 0.65% on Class B and Class C shares. For more information on distribution and service fees, see Choosing a Share Class — Distribution and Service Fees. |
(e) | The following Funds are not subject to a front-end sales charge or a CDSC on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund and Columbia Small Cap Index Fund. Columbia U.S. Treasury Index Fund is not subject to a CDSC. |
(f) | These share classes are closed to new accounts, or closed to previously eligible investors, subject to certain conditions, as summarized below and described in more detail under Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors: |
(g) | Timing of conversion and CDSC schedules will vary depending on the Fund and the date of your original purchase of Class B shares. For more information on the conversion of Class B shares to Class A shares, see Choosing a Share Class — Sales Charges and Commissions. Class B shares of Columbia Short Term Municipal Bond Fund do not charge a CDSC and do not convert to Class A shares. |
Prospectus 2014 | 23 |
■ | The net asset value (or NAV) per share is the price of a share calculated by the Fund every business day. |
■ | The offering price per share is the NAV per share plus any front-end sales charge that applies. |
■ | depends on the amount you're investing (generally, the larger the investment, the smaller the percentage sales charge), and |
■ | is based on the total amount of your purchase and the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund). |
24 | Prospectus 2014 |
Class A Shares — Front-End Sales Charge — Breakpoint Schedule* | ||||
Breakpoint Schedule For: |
Dollar
amount of
shares bought (a) |
Sales
charge as a % of the offering price (b) |
Sales
charge as a % of the net amount invested (b) |
Amount
retained by or paid to selling agents as a % of the offering price |
Fixed
Income Funds (except those listed below) and
Funds-of-Funds (fixed income)* |
$ 0-$49,999 | 4.75% | 4.99% | 4.00% |
$ 50,000–$99,999 | 4.25% | 4.44% | 3.50% | |
$100,000–$249,999 | 3.50% | 3.63% | 3.00% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.15% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Columbia
Intermediate Bond Fund,
Columbia AMT-Free Intermediate Muni Bond Fund and each of the AMT-Free State-Specific Intermediate Muni Bond Funds |
$ 0-$99,999 | 3.25% | 3.36% | 2.75% |
$100,000–$249,999 | 2.50% | 2.56% | 2.15% | |
$250,000–$499,999 | 2.00% | 2.04% | 1.75% | |
$500,000–$999,999 | 1.50% | 1.53% | 1.25% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Columbia
Absolute Return Currency and Income Fund,
Columbia Absolute Return Multi-Strategy Fund, Columbia Floating Rate Fund, Columbia Inflation Protected Securities Fund and Columbia Limited Duration Credit Fund |
$ 0-$99,999 | 3.00% | 3.09% | 2.50% |
$100,000–$249,999 | 2.50% | 2.56% | 2.15% | |
$250,000–$499,999 | 2.00% | 2.04% | 1.75% | |
$500,000–$999,999 | 1.50% | 1.52% | 1.25% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Columbia
Short Term Bond Fund and
Columbia Short Term Municipal Bond Fund |
$ 0-$99,999 | 1.00% | 1.01% | 0.75% |
$100,000–$249,999 | 0.75% | 0.76% | 0.50% | |
$250,000–$999,999 | 0.50% | 0.50% | 0.40% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
* | The following Funds are not subject to a front-end sales charge on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund and Columbia Small Cap Index Fund. The following Funds are not subject to a CDSC on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund, Columbia Small Cap Index Fund and Columbia U.S. Treasury Index Fund. "Funds-of-Funds (equity)" includes Columbia Capital Allocation Aggressive Portfolio, Columbia Capital Allocation Moderate Aggressive Portfolio, Columbia Capital Allocation Moderate Conservative Portfolio, Columbia Capital Allocation Moderate Portfolio and Columbia LifeGoal® Growth Portfolio . "Funds-of-Funds (fixed income)" includes Columbia Capital Allocation Conservative Portfolio and Columbia Income Builder Fund. Columbia Balanced Fund and Columbia Global Opportunities Fund are treated as equity Funds for purposes of the table. |
(a) | Purchase amounts and account values may be aggregated among all eligible Fund accounts for the purposes of this table. See Choosing a Share Class — Reductions/Waivers of Sales Charges for a discussion of account value aggregation. |
(b) | Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process. Purchase price includes the sales charge. |
(c) | For information regarding cumulative commissions paid to your selling agent when you buy $1 million or more of Class A shares of a Fund, see Class A Shares — Commissions below. |
Prospectus 2014 | 25 |
■ | If you purchased Class A shares without an initial sales charge because your accounts aggregated between $1 million and $50 million at the time of purchase, you will incur a CDSC if you redeem those shares within 18 months of purchase, which is charged as follows: 1.00% CDSC if shares are redeemed within 12 months of purchase; and 0.50% CDSC if shares are redeemed more than 12, but less than 18, months after purchase. |
■ | Subsequent Class A share purchases that bring your aggregate account value to $1 million or more (but less than $50 million) will also be subject to a CDSC if you redeem them within the time periods noted above. |
* | Not applicable to Funds that do not assess a front-end sales charge. In addition, the Distributor does not make such payments on purchases of $1 million or more of Columbia U.S. Treasury Index Fund. |
26 | Prospectus 2014 |
Class B Shares — CDSC Schedule for the Funds (except those listed below) | |
Number
of Years
Class B Shares Held |
Applicable
CDSC* |
One | 5.00% |
Two | 4.00% |
Three | 3.00% |
Four | 3.00% |
Five | 2.00% |
Six | 1.00% |
Seven | None |
Eight | None |
Nine | Conversion to Class A Shares |
* | Because of rounding in the calculation, the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. |
Class B Shares — CDSC Schedule for Columbia Intermediate Bond Fund, Columbia AMT-Free Intermediate Muni Bond Fund, Columbia Short Term Bond Fund and the AMT-Free State-specific Intermediate Muni Bond Funds | |
Number
of Years
Class B Shares Held |
Applicable
CDSC* |
One | 3.00% |
Two | 3.00% |
Three | 2.00% |
Four | 1.00% |
Five | None |
Six | None |
Seven | None |
Eight | None |
Nine | Conversion to Class A Shares |
* | Because of rounding in the calculation, the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. |
Prospectus 2014 | 27 |
■ | depends on the amount you're investing (generally, the larger the investment, the smaller the percentage sales charge), and |
■ | is based on the total amount of your purchase and the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund). |
28 | Prospectus 2014 |
Class T Shares — Front-End Sales Charge — Breakpoint Schedule | ||||
Breakpoint Schedule For: |
Dollar
amount of
shares bought (a) |
Sales
charge as a % of the offering price (b) |
Sales
charge as a % of the net amount invested (b) |
Amount
retained by or paid to selling agents as a % of the offering price |
Equity Funds | $ 0–$49,999 | 5.75% | 6.10% | 5.00% |
$ 50,000–$99,999 | 4.50% | 4.71% | 3.75% | |
$100,000–$249,999 | 3.50% | 3.63% | 2.75% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.00% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Fixed Income Funds | $ 0–$49,999 | 4.75% | 4.99% | 4.25% |
$ 50,000–$99,999 | 4.50% | 4.71% | 3.75% | |
$100,000–$249,999 | 3.50% | 3.63% | 2.75% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.00% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
(a) | Purchase amounts and account values are aggregated among all eligible Fund accounts for the purposes of this table. |
(b) | Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process. |
(c) | For more information regarding cumulative commissions paid to your selling agent when you buy $1 million or more of Class T shares, see Class T Shares — Commissions below. |
■ | If you purchased Class T shares without a front-end sales charge because your accounts aggregated between $1 million and $50 million at the time of purchase, you will incur a CDSC if you redeem those shares within 18 months of purchase, which is charged as follows: 1.00% CDSC if shares are redeemed within 12 months of purchase, and 0.50% CDSC if shares are redeemed more than 12, but less than 18, months after purchase. |
■ | Subsequent Class T share purchases that bring your aggregate account value to $1 million or more (but less than $50 million) will also be subject to a CDSC if you redeem them within the time periods noted above. |
Class T Shares — Commission Schedule (Paid by the Distributor to Selling Agents) | |
Purchase
Amount |
Commission
Level
(as a % of net asset value per share) |
$1 million – $2,999,999 | 1.00% |
Prospectus 2014 | 29 |
Class T Shares — Commission Schedule (Paid by the Distributor to Selling Agents) | |
Purchase
Amount |
Commission
Level
(as a % of net asset value per share) |
$3 million – $49,999,999 | 0.50% |
$50 million or more | 0.25% |
30 | Prospectus 2014 |
Prospectus 2014 | 31 |
Distribution
Fee |
Service
Fee |
Combined
Total |
|
Class A | up to 0.25% | up to 0.25% | up to 0.35% (a)(b)(c) |
Class B | 0.75% (d) | 0.25% | 1.00% (b) |
Class C | 0.75% (c)(e) | 0.25% | 1.00% (b) |
Class I | None | None | None |
Class K | None | 0.25% (f) | 0.25% (f) |
Class R (series of CFST and CFST I) | 0.50% | — (g) | 0.50% |
Class R (series of CFST II) | up to 0.50% (c) | up to 0.25% | 0.50% (g) |
Class R4 | None | None | None |
Class R5 | None | None | None |
Class T | None | 0.50% (h) | 0.50% (h) |
Class W | up to 0.25% | up to 0.25% | 0.25% (c) |
Class Y | None | None | None |
Class Z | None | None | None |
32 | Prospectus 2014 |
(a) | The maximum distribution and service fees of Class A shares varies among the Funds, as shown in the table below: |
Funds |
Maximum
Class A Distribution Fee |
Maximum
Class A Service Fee |
Maximum
Class A Combined Total |
Series of CFST | — | — |
0.25%;
these Funds pay a
combined distribution and service fee |
Series
of CFST II (other than Columbia
Money Market Fund) |
up to 0.25% | up to 0.25% | 0.25% |
Columbia Money Market Fund | — | — | 0.10% |
Columbia Balanced Fund, Columbia Contrarian Core Fund, Columbia Dividend Income Fund, Columbia Intermediate Bond Fund, Columbia Large Cap Growth Fund, Columbia Mid Cap Growth Fund, Columbia AMT-Free Oregon Intermediate Muni Bond Fund, Columbia Real Estate Equity Fund, Columbia Small Cap Core Fund, Columbia Small Cap Growth Fund I, Columbia Global Technology Growth Fund | up to 0.10% | up to 0.25% |
up
to 0.35%; these Funds may
pay distribution and service fees up to a maximum of 0.35% of their average daily net assets attributable to Class A shares (comprised of up to 0.10% for distribution services and up to 0.25% for shareholder liaison services) but currently limit such fees to an aggregate fee of not more than 0.25% for Class A shares |
Columbia Bond Fund, Columbia California Tax-Exempt Fund, Columbia AMT-Free Connecticut Intermediate Muni Bond Fund, Columbia Corporate Income Fund, Columbia Diversified Real Return Fund, Columbia Emerging Markets Fund, Columbia Global Dividend Opportunity Fund, Columbia Global Energy and Natural Resources Fund, Columbia Greater China Fund, Columbia International Bond Fund, Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund, Columbia AMT-Free New York Intermediate Muni Bond Fund, Columbia New York Tax-Exempt Fund, Columbia Risk Allocation Fund, Columbia Small Cap Value Fund I, Columbia Pacific/Asia Fund, Columbia Select Large Cap Growth Fund, Columbia Strategic Income Fund, Columbia U.S. Treasury Index Fund, Columbia Value and Restructuring Fund | — | 0.25% | 0.25% |
Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund, Columbia Tax Exempt Fund | — | 0.20% | 0.20% |
(b) | The service fees for Class A, Class B and Class C shares of certain Funds vary. Service Fee for Class A, Class B and Class C shares of Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia Tax-Exempt Fund — The annual service fee may equal up to 0.20% of the average daily net asset value of all shares of such Fund class. Distribution Fee for Class B and Class C shares for Columbia AMT-Free Intermediate Muni Bond Fund — The annual distribution fee shall be 0.65% of the average daily net assets of the Fund's Class B and Class C shares. Fee amounts noted apply to Class B shares of the Funds other than Class B shares of Columbia Money Market Fund, which pays distribution fees of up to 0.75% and service fees of up to 0.10% for a combined total of 0.85%. The Distributor has currently agreed not to be reimbursed by the Fund for 0.10% of the 0.85% fee for Class B shares of Columbia Money Market Fund. The Distributor has voluntarily agreed to waive the service fee for Class A, Class B and Class C shares of Columbia U.S. Treasury Index Fund so that the service fee does not exceed 0.15% annually. This arrangement may be modified or terminated by the Distributor at any time. |
(c) | Fee amounts noted apply to all Funds other than Columbia Money Market Fund, which, for each of Class A and Class W shares, pays distribution and service fees of 0.10%, and for Class C shares pays distribution fees of 0.75%. The Distributor has currently agreed not to be reimbursed by the Fund for 0.25% of the 0.50% fee for Class R shares of Columbia Money Market Fund. The Distributor has voluntarily agreed to waive the 12b-1 fees it receives from Class A, Class C, Class R and Class W shares of Columbia Money Market Fund. This arrangement may be modified or terminated by the Distributor at any time. Compensation paid to broker-dealers and other selling agents may be suspended to the extent of the Distributor's waiver of the 12b-1 fees on these specific share classes of these Funds. |
(d) | The Distributor has voluntarily agreed to waive the distribution fee it receives from Class B shares of Columbia Seligman Communications and Information Fund and Columbia Global Infrastructure Fund and a portion of the distribution fee for Class B shares of Columbia Short Term Bond Fund so that the distribution fee does not exceed 0.30% annually. These arrangements may be modified or terminated by the Distributor at any time. |
(e) | The Distributor has voluntarily agreed to waive a portion of the distribution fee for Class C shares of the following Funds so that the distribution fee does not exceed the specified percentage annually: 0.40% for Columbia AMT-Free Oregon Intermediate Muni Bond Fund; 0.45% for Columbia California Tax-Exempt Fund, Columbia AMT-Free Connecticut Intermediate Muni Bond Fund, Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund, Columbia AMT-Free New York Intermediate Muni Bond Fund, Columbia New York Tax-Exempt Fund and Columbia |
Prospectus 2014 | 33 |
Tax-Exempt Fund; 0.60% for Columbia Corporate Income Fund, Columbia High Yield Bond Fund, Columbia High Yield Municipal Fund, Columbia Intermediate Bond Fund and Columbia Short Term Bond Fund; and 0.70% for Columbia U.S. Treasury Index Fund. These arrangements may be modified or terminated by the Distributor at any time. | |
(f) | The shareholder service fees for Class K shares are not paid pursuant to a 12b-1 plan. Under a plan administration services agreement, the Funds' Class K shares pay for plan administration services. See Class K Plan Administration Services Fee below for more information. |
(g) | Class R shares of series of CFST and CFST I pay a distribution fee pursuant to a distribution (Rule 12b-1) plan for Class R shares. The Funds do not have a shareholder service plan for Class R shares. Series of CFST II have a distribution and shareholder service plan for Class R shares, which, prior to the close of business on September 3, 2010, were known as Class R2 shares. For Class R shares of series of CFST II, the maximum fee under the plan reimbursed for distribution expenses is equal on an annual basis to 0.50% of the average daily net assets of the Fund attributable to Class R shares. Of that amount, up to 0.25% may be reimbursed for shareholder service expenses. |
(h) | The shareholder servicing fees for Class T shares are up to 0.50% of average daily net assets attributable to Class T shares for equity Funds and 0.40% for fixed income Funds. In general, the Funds currently limit such fees to a maximum of 0.30% for equity Funds and 0.15% for fixed-income Funds. See Class T Shareholder Service Fees below for more information. |
34 | Prospectus 2014 |
Prospectus 2014 | 35 |
36 | Prospectus 2014 |
Prospectus 2014 | 37 |
Minimum Account Balance | |
Minimum
Account Balance |
|
For all Funds, classes and account types except those listed below |
$250
(None for accounts with
Systematic Investment Plans) |
Individual Retirement Accounts for all Funds and classes except those listed below | None |
Columbia
Absolute Return Currency and Income Fund and
Columbia Absolute Return Emerging Markets Macro Fund |
$5,000 |
Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund | $2,500 |
Class I, Class K, Class R, Class R4, Class R5, Class W and Class Y | None |
38 | Prospectus 2014 |
Prospectus 2014 | 39 |
■ | negative impact on the Fund's performance; |
■ | potential dilution of the value of the Fund's shares; |
■ | interference with the efficient management of the Fund's portfolio, such as the need to maintain undesirably large cash positions, the need to use its line of credit or the need to buy or sell securities it otherwise would not have bought or sold; |
■ | losses on the sale of investments resulting from the need to sell securities at less favorable prices; |
■ | increased taxable gains to the Fund's remaining shareholders resulting from the need to sell securities to meet sell orders; and |
■ | increased brokerage and administrative costs. |
40 | Prospectus 2014 |
Prospectus 2014 | 41 |
42 | Prospectus 2014 |
■ | Dividend and/or capital gain distributions may continue to be reinvested in Class B shares of a Fund. |
■ | Shareholders invested in Class B shares of a Fund may exchange those shares for Class B shares of other Funds offering such shares. Certain exceptions apply, including that not all Funds may permit exchanges. |
Prospectus 2014 | 43 |
44 | Prospectus 2014 |
Prospectus 2014 | 45 |
Minimum Initial Investments | ||
Minimum
Initial Investment (a) |
Minimum
Initial Investment for Accounts with Systematic Investment Plans |
|
For all Funds, classes and account types except those listed below | $2,000 | $100 (b) |
Individual Retirement Accounts for all Funds and classes except those listed below | $1,000 | $100 (c) |
Columbia Absolute Return Currency and Income Fund and Columbia Absolute Return Emerging Markets Macro Fund | $10,000 | $10,000 |
Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund | $5,000 | $5,000 |
Class I, Class K, Class R, Class R4 and Class Y | None | N/A |
Class R5 | variable (d) | N/A |
Class W | $500 | N/A |
Class Z | variable (e) | $100 |
(a) | If your Class A, Class B, Class C, Class T or Class Z shares account balance falls below the minimum initial investment amount for any reason, including a market decline, you may be asked to increase it to the minimum initial investment amount or establish a monthly Systematic Investment Plan. If you do not do so, your account will be subject to a $20 annual low balance fee and/or shares may be automatically redeemed and the proceeds mailed to you if the account falls below the minimum account balance. See Buying, Selling and Exchanging Shares — Transaction Rules and Policies above. |
(b) | Columbia Money Market Fund — $2,000 |
(c) | Columbia Money Market Fund — $1,000 |
(d) | There is no minimum initial investment in Class R5 shares for omnibus retirement plans. A minimum initial investment of $100,000 applies to aggregate purchases of Class R5 shares of a Fund for combined underlying accounts of any registered investment adviser that clears Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the Transfer Agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements. |
(e) | The minimum initial investment amount for Class Z shares is $0, $1,000 or $2,000 depending upon the category of eligible investor. See — Class Z Shares Minimum Initial Investments below. The minimum initial investment amount for systematic investment plan accounts is the same as the amount set forth in the first two rows of the table, as applicable. |
46 | Prospectus 2014 |
■ | Any person investing all or part of the proceeds of a distribution, rollover or transfer of assets into a Columbia Management Individual Retirement Account, from any deferred compensation plan which was a shareholder of any of the Funds of Columbia Acorn Trust on September 29, 2000, in which the investor was a participant and through which the investor invested in one or more of the Funds of Columbia Acorn Trust immediately prior to the distribution, transfer or rollover. |
■ | Any health savings account sponsored by a third party platform. |
■ | Any investor participating in a wrap program sponsored by a selling agent or other entity that is paid an asset-based fee by the investor and that is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent. |
■ | Any individual retirement plan for which a selling agent or other entity provides services and is not compensated by the Fund for those services, other than in the form of payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent. |
■ | Any employee of Columbia Management Investment Advisers, LLC, the Distributor or the Transfer Agent and immediate family members of any of the foregoing who share the same address and any persons employed as of April 30, 2010 by Columbia Management Advisors, LLC, Columbia Management Distributors, Inc., or Columbia Management Services, Inc., the adviser, distributor and transfer agent of series of CFST and CFST I prior to May 1, 2010 (the Previous Service Providers) and immediate family members of any of the foregoing who share the same address are eligible to make new and subsequent purchases in Class Z shares through an individual retirement account. If you maintain your account with a selling agent, you must contact that selling agent each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
■ | Any shareholder (as well as any family member of a shareholder or person listed on an account registration for any account of the shareholder) of another fund distributed by the Distributor (i) who holds Class Z shares; (ii) who held Primary A shares prior to the share class redesignation of Primary A shares as Class Z shares that occurred on August 22, 2005; (iii) who holds Class A shares that were obtained by an exchange of Class Z shares; or (iv) who bought shares of certain mutual funds that were not subject to sales charges and that merged with a series of CFST or CFST I distributed by the Distributor. |
■ | Any investor participating in an account offered by a selling agent or other entity that provides services to such an account, is paid an asset-based fee by the investor and is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent (each investor buying shares through a financial intermediary must independently satisfy the minimum investment requirement noted above). |
■ | Any institutional investor who is a corporation, partnership, trust, foundation, endowment, institution, government entity, or similar organization, which meets the respective qualifications for an accredited investor, as defined under the Securities Act of 1933. |
■ | Certain financial institutions and intermediaries, such as insurance companies, trust companies, banks, endowments, investment companies or foundations, buying shares for their own account, including Ameriprise Financial and its affiliates and/or subsidiaries. |
■ | Any employee of Columbia Management Investment Advisers, LLC, the Distributor or the Transfer Agent and immediate family members of any of the foregoing who share the same address and any persons employed as of April 30, 2010 by the Previous Service Providers and any of their immediate family members who share the same address are eligible to make new and subsequent purchases in Class Z shares through a non-retirement account. If you maintain your account with a selling agent, you must contact that selling agent each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
■ | Certain other investors as set forth in more detail in the SAI. |
Prospectus 2014 | 47 |
■ | Once the Transfer Agent or your selling agent receives your buy order in “good form,” your purchase will be made at the next calculated public offering price per share, which is the net asset value per share plus any sales charge that applies. |
■ | You generally buy Class A and Class T shares at the public offering price per share because purchases of these share classes are generally subject to a front-end sales charge. |
■ | You buy Class B, Class C, Class I, Class K, Class R, Class R4, Class R5, Class W, Class Y and Class Z shares at net asset value per share because no front-end sales charge applies to purchases of these share classes. |
■ | The Distributor and the Transfer Agent reserve the right to cancel your order if the Fund doesn't receive payment within three business days of receiving your buy order. The Fund will return any payment received for orders that have been cancelled, but no interest will be paid on that money. |
■ | Selling agents are responsible for sending your buy orders to the Transfer Agent and ensuring that we receive your money on time. |
■ | Shares purchased are recorded on the books of the Fund. The Fund doesn't issue certificates. |
48 | Prospectus 2014 |
■ | Once the Transfer Agent or your selling agent receives your redemption order in “good form,” your shares will be sold at the next calculated NAV per share. Any applicable CDSC will be deducted from the amount you're selling and the balance will be remitted to you. |
■ | If you sell your shares that are held directly with the Funds (through the Transfer Agent), we will normally send the redemption proceeds by mail or electronically transfer them to your bank account within three business days after the Transfer Agent or your selling agent receives your order in “good form.” |
■ | If you sell your shares through a selling agent, the Funds will normally send the redemption proceeds by Fedwire within three business days after the Transfer Agent or your selling agent receives your order in “good form.” |
■ | If you paid for your shares by check or from your bank account as an ACH transaction, the Funds will hold the redemption proceeds when you sell those shares for a period of time after the trade date of the purchase. |
■ | No interest will be paid on uncashed redemption checks. |
■ | The Funds can delay payment of the redemption proceeds for up to seven days and may suspend redemptions and/or further postpone payment of redemption proceeds when the NYSE is closed or trading thereon is restricted or during emergency or other circumstances, including as determined by the SEC. |
■ | Other restrictions may apply to retirement accounts. For information about these restrictions, contact your retirement plan administrator. |
■ | The Fund reserves the right to redeem your shares if your account falls below the Fund's minimum initial investment requirement. |
■ | Also keep in mind the Funds' Small Account Policy, which is described above in Buying, Selling and Exchanging Shares — Transaction Rules and Policies. |
Prospectus 2014 | 49 |
■ | Exchanges are made at the NAV next calculated after your exchange order is received in “good form.” |
■ | Once the Fund receives your exchange request, you cannot cancel it after the market closes. |
■ | The rules for buying shares of a Fund generally apply to exchanges into that Fund, including, if your exchange creates a new Fund account, it must satisfy the minimum investment amount, unless a waiver applies. |
■ | Shares of the purchased Fund may not be used on the same day for another exchange or sale. |
■ | If you exchange shares from Class A shares of Columbia Money Market Fund to a non-money market Fund, any further exchanges must be between shares of the same class. For example, if you exchange from Class A shares of Columbia Money Market Fund into Class C shares of a non-money market Fund, you may not exchange from Class C shares of that non-money market Fund back to Class A shares of Columbia Money Market Fund. |
■ | A sales charge may apply when you exchange shares of a Fund that were not assessed a sales charge at the time of your initial purchase. For example, if your initial investment was in Columbia Money Market Fund and you exchange into a non-money market Fund, your transaction is subject to a front-end sales charge if you exchange into Class A shares and to a CDSC if you exchange into Class C shares of the Funds. |
■ | If your initial investment was in Class A shares of a non-money market Fund and you exchange shares into Columbia Money Market Fund, you may exchange that amount to another Fund, including dividends earned on that amount, without paying a sales charge. |
■ | If your shares are subject to a CDSC, you will not be charged a CDSC upon the exchange of those shares. Any CDSC will be deducted when you sell the shares you received from the exchange. The CDSC imposed at that time will be based on the period that begins when you bought shares of the original Fund and ends when you sell the shares of the Fund you received from the exchange. The applicable CDSC will be the CDSC of the original Fund. |
■ | You may make exchanges only into a Fund that is legally offered and sold in your state of residence. Contact the Transfer Agent or your selling agent for more information. |
■ | You generally may make an exchange only into a Fund that is accepting investments. |
■ | The Fund may change or cancel your right to make an exchange by giving the amount of notice required by regulatory authorities (generally 60 days for a material change or cancellation). |
■ | Unless your account is part of a tax-advantaged arrangement, an exchange for shares of another Fund is a taxable event, and you may recognize a gain or loss for tax purposes. |
■ | Changing your investment to a different Fund will be treated as a sale and purchase, and you will be subject to applicable taxes on the sale and sales charges on the purchase of the new Fund. |
■ | Class Z shares of a Fund may be exchanged for Class A or Class Z shares of another Fund. In certain circumstances, the front-end sales charge applicable to Class A shares may be waived on exchanges of Class Z shares for Class A shares. See Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors — Class Z Shares for details. |
50 | Prospectus 2014 |
■ | You may generally exchange Class T shares of a Fund for Class A shares of another Fund if the other Fund does not offer Class T shares. Class T shares exchanged into Class A shares cannot be exchanged back into Class T shares. |
■ | Class W shares originally purchased, but no longer held, in a discretionary managed account, may not be exchanged for Class W shares of another Fund. |
■ | Former CFIT Shareholders may not exchange Class Y shares of a Fund into Class Y shares of another Fund. |
■ | No sales charges or other charges will apply to any such exchange, except that when Class B shares are exchanged, any CDSC applicable to Class B shares will be applied. |
■ | Ordinarily, shareholders will not recognize a gain or loss for U.S. federal income tax purposes upon such an exchange. You should consult your tax advisor about your particular exchanges. |
Prospectus 2014 | 51 |
■ | It can earn income on its investments. Examples of fund income are interest paid on money market instruments and bonds, and dividends paid on common stocks. |
■ | A mutual fund can also have capital gains if the value of its investments increases. While a fund continues to hold an investment, any gain is generally unrealized. If the fund sells an investment, it generally will realize a capital gain if it sells that investment for a higher price than its adjusted cost basis, and will generally realize a capital loss if it sells that investment for a lower price than its adjusted cost basis. Capital gains and losses are either short-term or long-term, depending on whether the fund holds the securities for one year or less (short-term) or more than one year (long-term). |
Declaration and Distribution Schedule | |
Declarations | Annually |
Distributions | Annually |
52 | Prospectus 2014 |
■ | The Fund intends to qualify each year as a regulated investment company. A regulated investment company generally is not subject to tax at the fund level on income and gains from investments that are distributed to shareholders. However, the Fund's failure to qualify as a regulated investment company would result in Fund level taxation, and consequently, a reduction in income available for distribution to you and in the net asset value of your shares. Even if a fund qualifies as a regulated investment company, the Fund may be subject to federal excise tax on certain undistributed income or gains. For tax-exempt Funds: If a tax-exempt Fund were to fail to qualify as a regulated investment company, any dividends of net tax-exempt income would no longer be exempt from U.S. federal income tax and, instead, in general, would be taxable to you as ordinary income. |
■ | Distributions generally are taxable to you when paid, whether they are paid in cash or automatically reinvested in additional Fund shares. Dividends paid in January are deemed paid on December 31 of the prior year if the dividend was declared and payable to shareholders of record in October, November, or December of such prior year. In certain circumstances a Fund may retain its net capital gain and deem such gains to have been distributed to shareholders. In such case, the Fund will be required to pay a fund-level tax on any such retained net capital gain, and shareholders will be required to include in income their share of such retained capital gain and will be entitled to credit their share of tax paid by the Fund against their federal income tax liabilities. |
■ | Distributions of the Fund's ordinary income and net short-term capital gain, if any, generally are taxable to you as ordinary income. Distributions of the Fund's net long-term capital gain, if any, generally are taxable to you as long-term capital gain. Whether capital gains are long-term or short-term is determined by how long the Fund has owned the investments that generated them, rather than how long you have owned your shares. For taxable fixed income Funds: The Fund expects that distributions will consist primarily of ordinary income. |
■ | From time to time, a distribution from the Fund could constitute a return of capital, which is not taxable to you so long as the amount of the distribution does not exceed your tax basis in your Fund shares. A return of capital reduces your tax basis in your Fund shares, with any amounts exceeding such basis generally taxable as capital gain. |
■ | If you are an individual and you meet certain holding period and other requirements for your Fund shares, a portion of your distributions may be treated as “qualified dividend income” taxable at the lower net long-term capital gain rates instead of the higher ordinary income rates. Qualified dividend income is income attributable to the Fund's dividends received from certain U.S. and foreign corporations, as long as the Fund meets certain holding period and other requirements for the stock producing such dividends. For taxable fixed income and tax-exempt Funds: The Fund does not expect a significant portion of Fund distributions to be qualified dividend income. |
■ | Certain high-income individuals (as well as estates and trusts) are subject to a 3.8% tax on net investment income. For individuals, the 3.8% tax applies to the lesser of (1) the amount (if any) by which the taxpayer's modified adjusted gross income exceeds certain threshold amounts or (2) the taxpayer's “net investment income.” Net investment income generally includes for this purpose dividends, including any capital gain dividends, paid by the Fund, and net gains recognized on the sale, redemption or exchange of shares of the Fund. For tax-exempt Funds: Exempt interest dividends are not included in net investment income for this purpose, and are therefore not subject to the tax on net investment income. |
■ | Certain derivative instruments when held in a Fund's portfolio subject the Fund to special tax rules, the effect of which may be to, among other things, accelerate income to the Fund, defer Fund losses, cause adjustments in the holding periods of Fund portfolio securities, or convert capital gains into ordinary income, short-term capital losses into long-term capital losses or long-term capital gains into short-term capital gains. These rules could therefore affect the amount, timing and/or character of distributions to shareholders. For tax-exempt Funds: Derivative instruments held by a Fund may also generate taxable income to the Fund. |
Prospectus 2014 | 53 |
■ | Certain Funds may purchase or write options, as described further in the SAI. Generally, a Fund realizes a capital gain or loss on an option when the option expires, or when it is exercised, sold or otherwise terminated. However, if an option is a “section 1256 contract,” which includes most traded options on a broad-based index, and the Fund holds such option at the end of its taxable year, the Fund is deemed to sell such option at fair market value at such time and recognize any gain or loss thereon, which is generally deemed to be 60% long-term and 40% short-term gain or loss, as described further in the SAI. |
■ | If at the end of the taxable year more than 50% of the value of the Fund's assets consists of securities of foreign corporations, and the Fund makes a special election, you will generally be required to include in your income for U.S. federal income tax purposes your share of the qualifying foreign income taxes paid by the Fund in respect of its foreign portfolio securities. You may be able to claim a foreign tax credit or deduction in respect of this amount, subject to certain limitations. There is no assurance that the Fund will make this election for a taxable year, even if it is eligible to do so. |
■ | For tax-exempt Funds: The Fund expects that distributions will consist primarily of exempt interest dividends. Distributions of the Fund's net interest income from tax-exempt securities generally are not subject to U.S. federal income tax, but may be subject to state and local income and other taxes, as well as federal and state alternative minimum tax. Similarly, distributions of interest income that is exempt from state and local income taxes of a particular state may be subject to other taxes, including income taxes of other states, and federal and state alternative minimum tax. Certain income generated by tax-exempt securities, including capital gains on sales and market discount, is taxable. The Fund may invest a portion of its assets in securities that generate income that is not exempt from federal or state income tax. Distributions by the Fund of this income generally are taxable to you as ordinary income or long-term capital gain. Distributions of capital gains realized by the Fund, including those generated from the sale or exchange of tax-exempt securities, generally also are taxable to you. Distributions of the Fund's net short-term capital gain, if any, generally are taxable to you as ordinary income. |
■ | For a Fund organized as a fund-of-funds: Because most of the Fund's investments are shares of underlying Funds, the tax treatment of the Fund's gains, losses, and distributions may differ from the tax treatment that would apply if either the Fund invested directly in the types of securities held by the underlying Funds or the Fund shareholders invested directly in the underlying Funds. As a result, you may receive taxable distributions earlier and recognize higher amounts of capital gain or ordinary income than you otherwise would. |
■ | A sale, redemption or exchange of Fund shares is a taxable event. This includes redemptions where you are paid in securities. Your sales, redemptions and exchanges of Fund shares (including those paid in securities) usually will result in a taxable capital gain or loss to you, equal to the difference between the amount you receive for your shares (or are deemed to have received in the case of exchanges) and the amount you paid (or are deemed to have paid in the case of exchanges) for them. Any such capital gain or loss generally will be long-term capital gain or loss if you have held your Fund shares for more than one year at the time of sale or exchange. In certain circumstances, capital losses may be converted from short-term to long-term; in other circumstances, capital losses may be disallowed under the “wash sale” rules. |
■ | The Fund generally is required to report to shareholders and the Internal Revenue Service (the IRS) upon the sale, exchange or redemption of Fund shares cost basis information with respect to those shares. The Fund uses average cost basis as its default method of calculating cost basis. Please see columbiamanagement.com or contact the Fund at 800.345.6611 for more information regarding average cost basis reporting, other available cost basis methods and how to select or change a particular method or to choose specific shares to sell, redeem or exchange. If you hold Fund shares through a selling agent, you should contact your selling agent to learn about its cost basis reporting default method and the reporting elections available to your account. |
■ | The Fund is required by federal law to withhold tax on any taxable or tax-exempt distributions and redemption proceeds paid to you (including amounts paid to you in securities and amounts deemed to be paid to you upon an exchange of shares) if: you haven't provided a correct TIN or haven't certified to the Fund that withholding doesn't apply; the IRS has notified us that the TIN listed on your account is incorrect according to its records; or the IRS informs the Fund that you are otherwise subject to backup withholding. |
54 | Prospectus 2014 |
Prospectus 2014 | 55 |
Year ended April 30, | Year ended June 30, | ||||||
Class A | 2014 | 2013 | 2012 (a) | 2011 | 2010 | 2009 | |
Per share data | |||||||
Net asset value, beginning of period | $45.66 | $41.67 | $46.21 | $35.84 | $29.29 | $39.50 | |
Income from investment operations: | |||||||
Net investment income | 0.14 | 0.29 | 0.14 | 0.16 | 0.15 | 0.23 (b) | |
Net realized and unrealized gain (loss) | 9.96 | 5.58 | (1.81) | 10.80 | 6.58 | (8.50) | |
Total from investment operations | 10.10 | 5.87 | (1.67) | 10.96 | 6.73 | (8.27) | |
Less distributions to shareholders: | |||||||
Net investment income | (0.30) | (0.24) | (0.16) | (0.44) | (0.18) | (0.01) | |
Net realized gains | (7.23) | (1.64) | (2.72) | (0.15) | — | (1.93) | |
Total distributions to shareholders | (7.53) | (1.88) | (2.88) | (0.59) | (0.18) | (1.94) | |
Proceeds from regulatory settlements | — | — | 0.01 | — | 0.00 (c) | 0.00 (c) | |
Net asset value, end of period | $48.23 | $45.66 | $41.67 | $46.21 | $35.84 | $29.29 | |
Total return | 22.95% | 14.68% | (3.21%) (d) | 30.67% | 22.99% | (20.73%) | |
Ratios to average net assets (e) | |||||||
Total gross expenses | 1.31% (f) | 1.32% | 1.31% (g) | 1.25% (f) | 1.27% (f) | 1.38% (f) | |
Total net expenses (h) | 1.31% (f)(i) | 1.32% (i) | 1.31% (g)(i) | 1.25% (f)(i) | 1.27% (f)(i) | 1.38% (f)(i) | |
Net investment income | 0.28% | 0.70% | 0.41% (g) | 0.37% | 0.43% | 0.74% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $411,968 | $518,968 | $587,332 | $704,167 | $593,209 | $443,154 | |
Portfolio turnover | 38% | 42% | 23% | 31% | 30% | 50% |
(a) | For the period from July 1, 2011 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from June 30 to April 30. |
(b) | Net investment income per share reflects special dividends. The effect of these dividends amounted to $0.03 per share. |
(c) | Rounds to zero. |
(d) | The Fund received proceeds from regulatory settlements. Had the Fund not received these proceeds, the total return would have been lower by 0.02%. |
(e) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Annualized. |
(h) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(i) | The benefits derived from expense reductions had an impact of less than 0.01%. |
56 | Prospectus 2014 |
Year ended April 30, | Year ended June 30, | ||||||
Class B | 2014 | 2013 | 2012 (a) | 2011 | 2010 | 2009 | |
Per share data | |||||||
Net asset value, beginning of period | $35.96 | $33.22 | $37.54 | $29.17 | $23.96 | $33.00 | |
Income from investment operations: | |||||||
Net investment income (loss) | (0.18) | 0.04 | (0.10) | (0.13) | (0.10) | (0.01) (b) | |
Net realized and unrealized gain (loss) | 7.76 | 4.34 | (1.50) | 8.80 | 5.38 | (7.10) | |
Total from investment operations | 7.58 | 4.38 | (1.60) | 8.67 | 5.28 | (7.11) | |
Less distributions to shareholders: | |||||||
Net investment income | — | — | — | (0.15) | (0.07) | — | |
Net realized gains | (7.23) | (1.64) | (2.72) | (0.15) | — | (1.93) | |
Total distributions to shareholders | (7.23) | (1.64) | (2.72) | (0.30) | (0.07) | (1.93) | |
Proceeds from regulatory settlements | — | — | 0.00 (c) | — | 0.00 (c) | 0.00 (c) | |
Net asset value, end of period | $36.31 | $35.96 | $33.22 | $37.54 | $29.17 | $23.96 | |
Total return | 22.02% | 13.84% | (3.85%) (d) | 29.76% | 22.02% | (21.31%) | |
Ratios to average net assets (e) | |||||||
Total gross expenses | 2.06% (f) | 2.06% | 2.07% (g) | 2.00% (f) | 2.02% (f) | 2.13% (f) | |
Total net expenses (h) | 2.06% (f)(i) | 2.06% (i) | 2.07% (g)(i) | 2.00% (f)(i) | 2.02% (f)(i) | 2.13% (f)(i) | |
Net investment income (loss) | (0.46%) | 0.11% | (0.37%) (g) | (0.38%) | (0.33%) | (0.02%) | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $3,982 | $5,466 | $10,427 | $17,908 | $22,775 | $28,977 | |
Portfolio turnover | 38% | 42% | 23% | 31% | 30% | 50% |
(a) | For the period from July 1, 2011 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from June 30 to April 30. |
(b) | Net investment income per share reflects special dividends. The effect of these dividends amounted to $0.03 per share. |
(c) | Rounds to zero. |
(d) | The Fund received proceeds from regulatory settlements. Had the Fund not received these proceeds, the total return would have been lower by 0.02%. |
(e) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Annualized. |
(h) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(i) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 57 |
Year ended April 30, | Year ended June 30, | ||||||
Class C | 2014 | 2013 | 2012 (a) | 2011 | 2010 | 2009 | |
Per share data | |||||||
Net asset value, beginning of period | $38.36 | $35.33 | $39.73 | $30.87 | $25.35 | $34.76 | |
Income from investment operations: | |||||||
Net investment loss | (0.19) | (0.01) | (0.10) | (0.14) | (0.10) | (0.00) (b)(c) | |
Net realized and unrealized gain (loss) | 8.30 | 4.68 | (1.58) | 9.30 | 5.69 | (7.48) | |
Total from investment operations | 8.11 | 4.67 | (1.68) | 9.16 | 5.59 | (7.48) | |
Less distributions to shareholders: | |||||||
Net investment income | — | — | — | (0.15) | (0.07) | — | |
Net realized gains | (7.23) | (1.64) | (2.72) | (0.15) | — | (1.93) | |
Total distributions to shareholders | (7.23) | (1.64) | (2.72) | (0.30) | (0.07) | (1.93) | |
Proceeds from regulatory settlements | — | — | 0.00 (b) | — | 0.00 (b) | 0.00 (b) | |
Net asset value, end of period | $39.24 | $38.36 | $35.33 | $39.73 | $30.87 | $25.35 | |
Total return | 22.03% | 13.83% | (3.84%) (d) | 29.71% | 22.04% | (21.30%) | |
Ratios to average net assets (e) | |||||||
Total gross expenses | 2.06% (f) | 2.07% | 2.06% (g) | 2.00% (f) | 2.02% (f) | 2.13% (f) | |
Total net expenses (h) | 2.06% (f)(i) | 2.07% (i) | 2.06% (g)(i) | 2.00% (f)(i) | 2.02% (f)(i) | 2.13% (f)(i) | |
Net investment loss | (0.48%) | (0.04%) | (0.34%) (g) | (0.38%) | (0.33%) | (0.01%) | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $37,568 | $36,007 | $42,092 | $52,248 | $49,888 | $44,377 | |
Portfolio turnover | 38% | 42% | 23% | 31% | 30% | 50% |
(a) | For the period from July 1, 2011 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from June 30 to April 30. |
(b) | Rounds to zero. |
(c) | Net investment income per share reflects special dividends. The effect of these dividends amounted to $0.03 per share. |
(d) | The Fund received proceeds from regulatory settlements. Had the Fund not received these proceeds, the total return would have been lower by 0.02%. |
(e) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Annualized. |
(h) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(i) | The benefits derived from expense reductions had an impact of less than 0.01%. |
58 | Prospectus 2014 |
Year ended April 30, |
Year
ended
June 30, 2011 (b) |
|||
Class I | 2014 | 2013 | 2012 (a) | |
Per share data | ||||
Net asset value, beginning of period | $48.25 | $43.93 | $48.60 | $40.40 |
Income from investment operations: | ||||
Net investment income | 0.39 | 0.52 | 0.31 | 0.30 |
Net realized and unrealized gain (loss) | 10.55 | 5.87 | (1.90) | 8.66 |
Total from investment operations | 10.94 | 6.39 | (1.59) | 8.96 |
Less distributions to shareholders: | ||||
Net investment income | (0.53) | (0.43) | (0.37) | (0.61) |
Net realized gains | (7.23) | (1.64) | (2.72) | (0.15) |
Total distributions to shareholders | (7.76) | (2.07) | (3.09) | (0.76) |
Proceeds from regulatory settlements | — | — | 0.01 | — |
Net asset value, end of period | $51.43 | $48.25 | $43.93 | $48.60 |
Total return | 23.51% | 15.19% | (2.85%) (c) | 22.29% |
Ratios to average net assets (d) | ||||
Total gross expenses | 0.86% (e) | 0.87% | 0.86% (f) | 0.83% (f)(e) |
Total net expenses (g) | 0.86% (e) | 0.87% | 0.86% (f) | 0.83% (f)(e)(h) |
Net investment income | 0.74% | 1.17% | 0.85% (f) | 0.84% (f) |
Supplemental data | ||||
Net assets, end of period (in thousands) | $51,812 | $59,690 | $54,312 | $75,716 |
Portfolio turnover | 38% | 42% | 23% | 31% |
(a) | For the period from July 1, 2011 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from June 30 to April 30. |
(b) | For the period from September 27, 2010 (commencement of operations) to June 30, 2011. |
(c) | The Fund received proceeds from regulatory settlements. Had the Fund not received these proceeds, the total return would have been lower by 0.02%. |
(d) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Annualized. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 59 |
Year ended April 30, |
Year
ended
June 30, 2011 (b) |
|||
Class R | 2014 | 2013 | 2012 (a) | |
Per share data | ||||
Net asset value, beginning of period | $45.70 | $41.70 | $46.23 | $38.43 |
Income from investment operations: | ||||
Net investment income | 0.01 | 0.14 | 0.12 | 0.09 |
Net realized and unrealized gain (loss) | 9.98 | 5.63 | (1.86) | 8.22 |
Total from investment operations | 9.99 | 5.77 | (1.74) | 8.31 |
Less distributions to shareholders: | ||||
Net investment income | (0.18) | (0.13) | (0.08) | (0.36) |
Net realized gains | (7.23) | (1.64) | (2.72) | (0.15) |
Total distributions to shareholders | (7.41) | (1.77) | (2.80) | (0.51) |
Proceeds from regulatory settlements | — | — | 0.01 | — |
Net asset value, end of period | $48.28 | $45.70 | $41.70 | $46.23 |
Total return | 22.65% | 14.40% | (3.37%) (c) | 21.68% |
Ratios to average net assets (d) | ||||
Total gross expenses | 1.56% (e) | 1.57% | 1.53% (f) | 1.50% (e)(f) |
Total net expenses (g) | 1.56% (e)(h) | 1.57% (h) | 1.53% (f)(h) | 1.50% (e)(f)(h) |
Net investment income | 0.01% | 0.33% | 0.34% (f) | 0.27% (f) |
Supplemental data | ||||
Net assets, end of period (in thousands) | $3,360 | $2,240 | $1,869 | $21 |
Portfolio turnover | 38% | 42% | 23% | 31% |
(a) | For the period from July 1, 2011 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from June 30 to April 30. |
(b) | For the period from September 27, 2010 (commencement of operations) to June 30, 2011. |
(c) | The Fund received proceeds from regulatory settlements. Had the Fund not received these proceeds, the total return would have been lower by 0.02%. |
(d) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Annualized. |
(g) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(h) | The benefits derived from expense reductions had an impact of less than 0.01%. |
60 | Prospectus 2014 |
Year
ended April 30,
|
||
Class R4 | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $48.96 | $43.31 |
Income from investment operations: | ||
Net investment income | 0.27 | 0.22 |
Net realized and unrealized gain | 10.73 | 7.42 |
Total from investment operations | 11.00 | 7.64 |
Less distributions to shareholders: | ||
Net investment income | (0.42) | (0.35) |
Net realized gains | (7.23) | (1.64) |
Total distributions to shareholders | (7.65) | (1.99) |
Net asset value, end of period | $52.31 | $48.96 |
Total return | 23.26% | 18.27% |
Ratios to average net assets (b) | ||
Total gross expenses | 1.06% (c) | 0.99% (d) |
Total net expenses (e) | 1.06% (c)(f) | 0.99% (d) |
Net investment income | 0.51% | 1.00% (d) |
Supplemental data | ||
Net assets, end of period (in thousands) | $9,620 | $3 |
Portfolio turnover | 38% | 42% |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(c) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(d) | Annualized. |
(e) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(f) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 61 |
Year
ended April 30,
|
||
Class R5 | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $48.93 | $43.31 |
Income from investment operations: | ||
Net investment income | 0.32 | 0.24 |
Net realized and unrealized gain | 10.75 | 7.41 |
Total from investment operations | 11.07 | 7.65 |
Less distributions to shareholders: | ||
Net investment income | (0.50) | (0.39) |
Net realized gains | (7.23) | (1.64) |
Total distributions to shareholders | (7.73) | (2.03) |
Net asset value, end of period | $52.27 | $48.93 |
Total return | 23.44% | 18.31% |
Ratios to average net assets (b) | ||
Total gross expenses | 0.91% (c) | 0.89% (d) |
Total net expenses (e) | 0.91% (c) | 0.89% (d) |
Net investment income | 0.61% | 1.10% (d) |
Supplemental data | ||
Net assets, end of period (in thousands) | $2,494 | $3 |
Portfolio turnover | 38% | 42% |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(c) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(d) | Annualized. |
(e) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
62 | Prospectus 2014 |
Year ended April 30, | Year ended June 30, | |||||
Class Y | 2014 | 2013 | 2012 (a) | 2011 | 2010 (b) | |
Per share data | ||||||
Net asset value, beginning of period | $48.26 | $43.93 | $48.60 | $37.63 | $31.68 | |
Income from investment operations: | ||||||
Net investment income | 0.31 | 0.50 | 0.31 | 0.37 | 0.31 | |
Net realized and unrealized gain (loss) | 10.63 | 5.90 | (1.90) | 11.36 | 5.88 | |
Total from investment operations | 10.94 | 6.40 | (1.59) | 11.73 | 6.19 | |
Less distributions to shareholders: | ||||||
Net investment income | (0.51) | (0.43) | (0.37) | (0.61) | (0.24) | |
Net realized gains | (7.23) | (1.64) | (2.72) | (0.15) | — | |
Total distributions to shareholders | (7.74) | (2.07) | (3.09) | (0.76) | (0.24) | |
Proceeds from regulatory settlements | — | — | 0.01 | — | 0.00 (c) | |
Net asset value, end of period | $51.46 | $48.26 | $43.93 | $48.60 | $37.63 | |
Total return | 23.50% | 15.20% | (2.86%) (d) | 31.27% | 19.57% | |
Ratios to average net assets (e) | ||||||
Total gross expenses | 0.87% (f) | 0.87% | 0.86% (g) | 0.81% (f) | 0.85% (f)(g) | |
Total net expenses (h) | 0.87% (f) | 0.87% | 0.86% (g) | 0.81% (f)(i) | 0.85% (f)(g)(i) | |
Net investment income | 0.61% | 1.14% | 0.85% (g) | 0.82% | 0.85% (g) | |
Supplemental data | ||||||
Net assets, end of period (in thousands) | $10,234 | $1,229 | $1,056 | $1,323 | $1,111 | |
Portfolio turnover | 38% | 42% | 23% | 31% | 30% |
(a) | For the period from July 1, 2011 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from June 30 to April 30. |
(b) | For the period from July 15, 2009 (commencement of operations) to June 30, 2010. |
(c) | Rounds to zero. |
(d) | The Fund received proceeds from regulatory settlements. Had the Fund not received these proceeds, the total return would have been lower by 0.02%. |
(e) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Annualized. |
(h) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(i) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 63 |
Year ended April 30, | Year ended June 30, | ||||||
Class Z | 2014 | 2013 | 2012 (a) | 2011 | 2010 | 2009 | |
Per share data | |||||||
Net asset value, beginning of period | $48.21 | $43.89 | $48.53 | $37.60 | $30.68 | $41.22 | |
Income from investment operations: | |||||||
Net investment income | 0.27 | 0.41 | 0.24 | 0.28 | 0.26 | 0.32 (b) | |
Net realized and unrealized gain (loss) | 10.55 | 5.89 | (1.89) | 11.34 | 6.88 | (8.87) | |
Total from investment operations | 10.82 | 6.30 | (1.65) | 11.62 | 7.14 | (8.55) | |
Less distributions to shareholders: | |||||||
Net investment income | (0.43) | (0.34) | (0.28) | (0.54) | (0.22) | (0.06) | |
Net realized gains | (7.23) | (1.64) | (2.72) | (0.15) | — | (1.93) | |
Total distributions to shareholders | (7.66) | (1.98) | (3.00) | (0.69) | (0.22) | (1.99) | |
Proceeds from regulatory settlements | — | — | 0.01 | — | 0.00 (c) | 0.00 (c) | |
Net asset value, end of period | $51.37 | $48.21 | $43.89 | $48.53 | $37.60 | $30.68 | |
Total return | 23.24% | 14.97% | (3.00%) (d) | 31.00% | 23.28% | (20.53%) | |
Ratios to average net assets (e) | |||||||
Total gross expenses | 1.06% (f) | 1.07% | 1.06% (g) | 1.00% (f) | 1.02% (f) | 1.13% (f) | |
Total net expenses (h) | 1.06% (f)(i) | 1.07% (i) | 1.06% (g)(i) | 1.00% (f)(i) | 1.02% (f)(i) | 1.13% (f)(i) | |
Net investment income | 0.53% | 0.93% | 0.67% (g) | 0.62% | 0.69% | 1.00% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $819,275 | $928,340 | $1,051,352 | $1,109,078 | $774,590 | $364,071 | |
Portfolio turnover | 38% | 42% | 23% | 31% | 30% | 50% |
(a) | For the period from July 1, 2011 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from June 30 to April 30. |
(b) | Net investment income per share reflects special dividends. The effect of these dividends amounted to $0.03 per share. |
(c) | Rounds to zero. |
(d) | The Fund received proceeds from regulatory settlements. Had the Fund not received these proceeds, the total return would have been lower by 0.02%. |
(e) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(f) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(g) | Annualized. |
(h) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(i) | The benefits derived from expense reductions had an impact of less than 0.01%. |
64 | Prospectus 2014 |
Class | Ticker Symbol | |
Class A Shares | LUTAX | |
Class B Shares | LUTBX | |
Class C Shares | LUTCX | |
Class I Shares | CUTIX | |
Class R5 Shares | CUTRX | |
Class W Shares | CTIWX | |
Class Z Shares | IUTIX |
|
3 |
|
3 |
|
3 |
|
4 |
|
4 |
|
5 |
|
7 |
|
7 |
|
8 |
|
8 |
|
9 |
|
9 |
|
9 |
|
9 |
|
10 |
|
14 |
|
16 |
|
16 |
|
17 |
|
17 |
|
17 |
|
22 |
|
29 |
|
31 |
|
34 |
|
35 |
|
35 |
|
36 |
|
40 |
|
42 |
|
47 |
|
48 |
|
51 |
|
51 |
|
52 |
|
55 |
2 | Prospectus 2014 |
Shareholder Fees (fees paid directly from your investment) | ||||
Class A | Class B | Class C |
Classes
I,
R5, W and Z |
|
Maximum sales charge (load) imposed on purchases (as a % of offering price) | 4.75% | None | None | None |
Maximum deferred sales charge (load) imposed on redemptions (as a % of the lower of the original purchase price or current net asset value) | None | 5.00% (a) | 1.00% (b) | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | |||||||
Class A | Class B | Class C | Class I | Class R5 | Class W | Class Z | |
Management fees | 0.10% | 0.10% | 0.10% | 0.10% | 0.10% | 0.10% | 0.10% |
Distribution and/or service (12b-1) fees | 0.25% | 1.00% | 1.00% | 0.00% | 0.00% | 0.25% | 0.00% |
Other expenses | 0.31% | 0.31% | 0.31% | 0.31% | 0.31% | 0.31% | 0.31% |
Total annual Fund operating expenses | 0.66% | 1.41% | 1.41% | 0.41% | 0.41% | 0.66% | 0.41% |
Less: Fee waivers and/or expense reimbursements (c) | (0.21%) | (0.21%) | (0.21%) | (0.21%) | (0.21%) | (0.21%) | (0.21%) |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 0.45% | 1.20% | 1.20% | 0.20% | 0.20% | 0.45% | 0.20% |
(a) | This charge decreases over time. |
(b) | This charge applies to redemptions within one year of purchase, with certain limited exceptions. |
(c) | Columbia Management Investment Advisers, LLC and certain of its affiliates have contractually agreed to waive fees and/or to reimburse expenses (excluding transaction costs and certain other investment related expenses, interest, taxes, acquired fund fees and expenses, and extraordinary expenses) until August 31, 2015, unless sooner terminated at the sole discretion of the Fund’s Board of Trustees. Under this agreement, the Fund’s net operating expenses, subject to applicable exclusions, will not exceed the annual rates of 0.45% for Class A, 1.20% for Class B, 1.20% for Class C, 0.20% for Class I, 0.20% for Class R5, 0.45% for Class W and 0.20% for Class Z. |
■ | you invest $10,000 in the applicable class of Fund shares for the periods indicated, |
■ | your investment has a 5% return each year, and |
■ | the Fund’s total annual operating expenses remain the same as shown in the Annual Fund Operating Expenses table above. |
Prospectus 2014 | 3 |
1 year | 3 years | 5 years | 10 years | |
Class A (whether or not shares are redeemed) | $519 | $656 | $805 | $1,239 |
Class B (assuming redemption of all shares at the end of the period) | $622 | $726 | $951 | $1,468 |
Class B (assuming no redemption of shares) | $122 | $426 | $751 | $1,468 |
Class C (assuming redemption of all shares at the end of the period) | $222 | $426 | $751 | $1,673 |
Class C (assuming no redemption of shares) | $122 | $426 | $751 | $1,673 |
Class I (whether or not shares are redeemed) | $ 20 | $110 | $209 | $ 497 |
Class R5 (whether or not shares are redeemed) | $ 20 | $110 | $209 | $ 497 |
Class W (whether or not shares are redeemed) | $ 46 | $190 | $347 | $ 803 |
Class Z (whether or not shares are redeemed) | $ 20 | $110 | $209 | $ 497 |
4 | Prospectus 2014 |
Prospectus 2014 | 5 |
Year
by Year Total Return (%)
as of December 31 Each Year* |
Best
and Worst Quarterly Returns
During the Period Shown in the Bar Chart |
||
|
Best | 4th Quarter 2008 | 8.75% |
Worst
|
2nd Quarter 2004 | -3.27% |
* | Year to Date return as of June 30, 2014: 2.37% |
Share
Class
Inception Date |
1 Year | 5 Years | 10 Years | |
Class A | 11/25/2002 | |||
returns before taxes | -7.61% | 0.71% | 3.24% | |
returns after taxes on distributions | -8.38% | -0.36% | 1.97% | |
returns after taxes on distributions and sale of Fund shares | -4.12% | 0.28% | 2.09% | |
Class B returns before taxes | 11/25/2002 | -8.57% | 0.56% | 2.97% |
Class C returns before taxes | 11/25/2002 | -4.64% | 1.07% | 3.12% |
Class I returns before taxes | 09/27/2010 | -2.78% | 1.94% | 4.00% |
Class R5 returns before taxes | 11/08/2012 | -2.80% | 1.94% | 4.00% |
Class W returns before taxes | 06/18/2012 | -3.11% | 1.52% | 3.55% |
Class Z returns before taxes | 06/04/1991 | -2.78% | 1.94% | 4.01% |
Citigroup Bond U.S. Treasury Index (reflects no deductions for fees, expenses or taxes) | -2.65% | 2.09% | 4.21% |
6 | Prospectus 2014 |
Portfolio Manager | Title | Role with Fund | Managed Fund Since | |||
William Finan | Portfolio Manager and Managing Trader | Co-manager | 2010 | |||
Orhan Imer, Ph.D., CFA | Senior Portfolio Manager, Head of LDI and Inflation Solutions | Co-manager | 2010 |
Online | Regular Mail | Express Mail | By Telephone | |||
columbiamanagement.com |
Columbia
Funds,
c/o Columbia Management Investment Services Corp. P.O. Box 8081 Boston, MA 02266-8081 |
Columbia
Funds,
c/o Columbia Management Investment Services Corp. 30 Dan Road, Suite 8081 Canton, MA 02021-2809 |
800.422.3737 |
Class | Category of eligible account |
For
accounts other than
systematic investment plan accounts |
For
systematic investment
plan accounts |
Classes A, B* & C | All accounts other than IRAs | $2,000 | $100 |
IRAs | $1,000 | $100 | |
Class I | All eligible accounts | None | N/A |
Class R5 | Combined underlying accounts of eligible registered investment advisers | $100,000 | N/A |
Omnibus retirement plans | None | N/A | |
Class W | All eligible accounts | $500 | N/A |
Class Z | All eligible accounts |
$0,
$1,000 or $2,000
depending upon the category of eligible investor |
$100 |
* | Class B shares are generally closed to new and existing shareholders. |
Prospectus 2014 | 7 |
8 | Prospectus 2014 |
Prospectus 2014 | 9 |
10 | Prospectus 2014 |
Prospectus 2014 | 11 |
12 | Prospectus 2014 |
Prospectus 2014 | 13 |
Columbia U.S. Treasury Index Fund | |
Class R5 | 0.20% |
Class W | 0.45% |
Class Z | 0.20% |
14 | Prospectus 2014 |
Portfolio Manager | Title | Role with Fund | Managed Fund Since | |||
William Finan | Portfolio Manager and Managing Trader | Co-manager | 2010 | |||
Orhan Imer, Ph.D., CFA | Senior Portfolio Manager, Head of LDI and Inflation Solutions | Co-manager | 2010 |
Prospectus 2014 | 15 |
■ | compensation and other benefits received by the Investment Manager and other Ameriprise Financial affiliates related to the management/administration of a Columbia Fund and the sale of its shares; |
■ | the allocation of, and competition for, investment opportunities among the Fund, other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates, or Ameriprise Financial itself and its affiliates; |
■ | separate and potentially divergent management of a Columbia Fund and other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates; |
■ | regulatory and other investment restrictions on investment activities of the Investment Manager and other Ameriprise Financial affiliates and accounts advised/managed by them; |
■ | insurance and other relationships of Ameriprise Financial affiliates with companies and other entities in which a Columbia Fund invests; and |
■ | regulatory and other restrictions relating to the sharing of information between Ameriprise Financial and its affiliates, including the Investment Manager, and a Columbia Fund. |
16 | Prospectus 2014 |
* | The website references in this prospectus are inactive links and information contained in or otherwise accessible through the referenced websites does not form a part of this prospectus. |
■ | The amount you plan to invest. |
■ | How long you intend to remain invested in the Fund. |
■ | The expenses for each share class. |
■ | Whether you may be eligible for a reduction or waiver of sales charges when you buy or sell shares. |
Prospectus 2014 | 17 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class A |
Eligibility:
Available to the general public for investment
|
5.75%
maximum, declining to 0.00% on investments of $1 million or more
|
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months of purchase charged as follows:
|
Distribution
and Service
Fees: up to 0.25% |
Class B |
Eligibility:
Closed to new investors
(f)
|
None | 5.00% maximum, gradually declining to 0.00% after six years (g) |
Distribution
Fee:
0.75%
|
Class C |
Eligibility:
Available to the general public for investment
|
None | 1.00% on certain investments redeemed within one year of purchase |
Distribution
Fee:
0.75%
|
Class I |
Eligibility:
Available only to other Funds (i.e., fund-of-fund investments)
|
None | None | None |
18 | Prospectus 2014 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class K |
Eligibility:
Closed to new investors; available only to qualified employee benefit plans, trust companies or similar institutions, 501(c)(3) charitable organizations, non-qualified deferred compensation plans whose participants
are included in a qualified employee benefit plan described above, 529 plans, and health savings accounts
(f)
|
None | None | Plan Administration Services Fee: 0.25% |
Class R |
Eligibility:
Available only to eligible retirement plans, health savings accounts and, in the sole discretion of the Distributor, other types of retirement accounts held through platforms maintained by selling agents approved by
the Distributor
|
None | None |
Series
of CFST & CFST I:
distribution fee of 0.50%
|
Class R4 |
Eligibility:
Available only to (i) omnibus retirement plans, (ii) trust companies or similar institutions, (iii) broker-dealers, banks, trust companies and similar institutions that clear Fund share transactions for their client
or customer investment advisory or similar accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the Transfer Agent with respect to Class R4 eligibility apart
from selling, servicing or similar agreements, (iv) 501(c)(3) charitable organizations, (v) 529 plans and (vi) health savings accounts
|
None | None | None |
Prospectus 2014 | 19 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class R5 |
Eligibility:
Available only to (i) certain registered investment advisers that clear Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that
have been granted specific written authorization from the Transfer Agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements and (ii) omnibus retirement
plans
(f)
|
None | None | None |
Class T |
Eligibility:
Generally closed to new investors
(f)
|
5.75% maximum, declining to 0.00% on investments of $1 million or more |
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months of purchase, charged as follows:
|
Service Fee: up to 0.50% |
Class W |
Eligibility:
Available only to investors purchasing through certain authorized investment programs managed by investment professionals, including discretionary managed account programs
|
None | None | Distribution and Service Fees: 0.25% |
Class Y |
Eligibility:
Available only to retirement plans that
maintain plan-level or omnibus
accounts with the Fund
(f)
|
None | None | None |
20 | Prospectus 2014 |
Share Class |
Eligible
Investors
(a)
;
Minimum Initial Investments (b) ; Investment Limits; and Conversion Features |
Front-End
Sales Charges (c) |
Contingent
Deferred
Sales Charges (CDSCs) (c) |
Maximum
Distribution
and/or Service Fees (d) |
Class Z |
Eligibility:
Available only to certain eligible investors, which are subject to different minimum investment requirements, ranging from $0 to $2,000; effective March 29, 2013, closed to (i) accounts of selling agents that clear
Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been given specific written notice from the Transfer Agent of the termination of their eligibility for
new purchases of Class Z shares and (ii) omnibus retirement plans, subject to certain exceptions
(f)
|
None | None | None |
(a) | For Columbia Money Market Fund, new investments must be made in Class A, Class I, Class W or Class Z shares, subject to eligibility. Class C and Class R shares of Columbia Money Market Fund are available as a new investment only to investors in the Distributor's proprietary 401(k) products, provided that such investor is eligible to invest in the class and transact directly with the Fund or the Transfer Agent through a third party administrator or third party recordkeeper. Columbia Money Market Fund offers other classes of shares only to facilitate exchanges with other Funds offering such share classes. |
(b) | The minimum initial investment requirement is $5,000 for Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund, and $10,000 for Columbia Absolute Return Currency and Income Fund and Columbia Absolute Return Emerging Markets Macro Fund. See Buying, Selling and Exchanging Shares — Buying Shares for more details on the eligible investors and minimum initial investment requirements. Certain share classes are subject to minimum account balance requirements, as described in Buying, Selling and Exchanging Shares — Transaction Rules and Policies. |
(c) | Actual front-end sales charges and CDSCs vary among the Funds. For more information on applicable sales charges, see Choosing a Share Class — Sales Charges and Commissions and for information about certain exceptions to these sales charges, see Choosing a Share Class — Reductions/Waivers of Sales Charges. |
(d) | These are the maximum applicable distribution and/or service fees. Fee rates and fee components (i.e., the portion of a combined fee that is a distribution or service fee) may vary among Funds. Because these fees are paid out of Fund assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of distribution and/or shareholder service fees. Although Class A shares of certain series of CFST I are subject to a combined distribution and service fee of up to 0.35%, these Funds currently limit the combined fee to 0.25%. Columbia Money Market Fund pays a distribution and service fee of up to 0.10% on Class A shares, up to 0.75% distribution fee and up to 0.10% service fee on Class B shares, up to 0.75% distribution fee on Class C shares, and 0.10% distribution and service fees on Class W shares. Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia Tax-Exempt Fund pay a service fee of up to 0.20% on Class A, Class B and Class C shares. Columbia AMT-Free Intermediate Muni Bond Fund pays a distribution fee of up to 0.65% on Class B and Class C shares. For more information on distribution and service fees, see Choosing a Share Class — Distribution and Service Fees. |
(e) | The following Funds are not subject to a front-end sales charge or a CDSC on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund and Columbia Small Cap Index Fund. Columbia U.S. Treasury Index Fund is not subject to a CDSC. |
(f) | These share classes are closed to new accounts, or closed to previously eligible investors, subject to certain conditions, as summarized below and described in more detail under Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors: |
Prospectus 2014 | 21 |
(g) | Timing of conversion and CDSC schedules will vary depending on the Fund and the date of your original purchase of Class B shares. For more information on the conversion of Class B shares to Class A shares, see Choosing a Share Class — Sales Charges and Commissions. Class B shares of Columbia Short Term Municipal Bond Fund do not charge a CDSC and do not convert to Class A shares. |
22 | Prospectus 2014 |
■ | The net asset value (or NAV) per share is the price of a share calculated by the Fund every business day. |
■ | The offering price per share is the NAV per share plus any front-end sales charge that applies. |
■ | depends on the amount you're investing (generally, the larger the investment, the smaller the percentage sales charge), and |
■ | is based on the total amount of your purchase and the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund). |
Prospectus 2014 | 23 |
Class A Shares — Front-End Sales Charge — Breakpoint Schedule* | ||||
Breakpoint Schedule For: |
Dollar
amount of
shares bought (a) |
Sales
charge as a % of the offering price (b) |
Sales
charge as a % of the net amount invested (b) |
Amount
retained by or paid to selling agents as a % of the offering price |
Columbia
Absolute Return Currency and Income Fund,
Columbia Absolute Return Multi-Strategy Fund, Columbia Floating Rate Fund, Columbia Inflation Protected Securities Fund and Columbia Limited Duration Credit Fund |
$ 0-$99,999 | 3.00% | 3.09% | 2.50% |
$100,000–$249,999 | 2.50% | 2.56% | 2.15% | |
$250,000–$499,999 | 2.00% | 2.04% | 1.75% | |
$500,000–$999,999 | 1.50% | 1.52% | 1.25% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Columbia
Short Term Bond Fund and
Columbia Short Term Municipal Bond Fund |
$ 0-$99,999 | 1.00% | 1.01% | 0.75% |
$100,000–$249,999 | 0.75% | 0.76% | 0.50% | |
$250,000–$999,999 | 0.50% | 0.50% | 0.40% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
* | The following Funds are not subject to a front-end sales charge on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund and Columbia Small Cap Index Fund. The following Funds are not subject to a CDSC on Class A shares: Columbia Money Market Fund, Columbia Large Cap Index Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Index Fund, Columbia Small Cap Index Fund and Columbia U.S. Treasury Index Fund. "Funds-of-Funds (equity)" includes Columbia Capital Allocation Aggressive Portfolio, Columbia Capital Allocation Moderate Aggressive Portfolio, Columbia Capital Allocation Moderate Conservative Portfolio, Columbia Capital Allocation Moderate Portfolio and Columbia LifeGoal® Growth Portfolio . "Funds-of-Funds (fixed income)" includes Columbia Capital Allocation Conservative Portfolio and Columbia Income Builder Fund. Columbia Balanced Fund and Columbia Global Opportunities Fund are treated as equity Funds for purposes of the table. |
(a) | Purchase amounts and account values may be aggregated among all eligible Fund accounts for the purposes of this table. See Choosing a Share Class — Reductions/Waivers of Sales Charges for a discussion of account value aggregation. |
(b) | Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process. Purchase price includes the sales charge. |
(c) | For information regarding cumulative commissions paid to your selling agent when you buy $1 million or more of Class A shares of a Fund, see Class A Shares — Commissions below. |
■ | If you purchased Class A shares without an initial sales charge because your accounts aggregated between $1 million and $50 million at the time of purchase, you will incur a CDSC if you redeem those shares within 18 months of purchase, which is charged as follows: 1.00% CDSC if shares are redeemed within 12 months of purchase; and 0.50% CDSC if shares are redeemed more than 12, but less than 18, months after purchase. |
■ | Subsequent Class A share purchases that bring your aggregate account value to $1 million or more (but less than $50 million) will also be subject to a CDSC if you redeem them within the time periods noted above. |
24 | Prospectus 2014 |
* | Not applicable to Funds that do not assess a front-end sales charge. In addition, the Distributor does not make such payments on purchases of $1 million or more of Columbia U.S. Treasury Index Fund. |
Prospectus 2014 | 25 |
Class B Shares — CDSC Schedule for the Funds (except those listed below) | |
Number
of Years
Class B Shares Held |
Applicable
CDSC* |
One | 5.00% |
Two | 4.00% |
Three | 3.00% |
Four | 3.00% |
Five | 2.00% |
Six | 1.00% |
Seven | None |
Eight | None |
Nine | Conversion to Class A Shares |
* | Because of rounding in the calculation, the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. |
Class B Shares — CDSC Schedule for Columbia Intermediate Bond Fund, Columbia AMT-Free Intermediate Muni Bond Fund, Columbia Short Term Bond Fund and the AMT-Free State-specific Intermediate Muni Bond Funds | |
Number
of Years
Class B Shares Held |
Applicable
CDSC* |
One | 3.00% |
Two | 3.00% |
Three | 2.00% |
Four | 1.00% |
Five | None |
Six | None |
Seven | None |
Eight | None |
Nine | Conversion to Class A Shares |
* | Because of rounding in the calculation, the actual CDSC you pay may be more or less than the CDSC calculated using these percentages. |
26 | Prospectus 2014 |
■ | depends on the amount you're investing (generally, the larger the investment, the smaller the percentage sales charge), and |
■ | is based on the total amount of your purchase and the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund). |
Prospectus 2014 | 27 |
Class T Shares — Front-End Sales Charge — Breakpoint Schedule | ||||
Breakpoint Schedule For: |
Dollar
amount of
shares bought (a) |
Sales
charge as a % of the offering price (b) |
Sales
charge as a % of the net amount invested (b) |
Amount
retained by or paid to selling agents as a % of the offering price |
Equity Funds | $ 0–$49,999 | 5.75% | 6.10% | 5.00% |
$ 50,000–$99,999 | 4.50% | 4.71% | 3.75% | |
$100,000–$249,999 | 3.50% | 3.63% | 2.75% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.00% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
Fixed Income Funds | $ 0–$49,999 | 4.75% | 4.99% | 4.25% |
$ 50,000–$99,999 | 4.50% | 4.71% | 3.75% | |
$100,000–$249,999 | 3.50% | 3.63% | 2.75% | |
$250,000–$499,999 | 2.50% | 2.56% | 2.00% | |
$500,000–$999,999 | 2.00% | 2.04% | 1.75% | |
$ 1,000,000 or more | 0.00% | 0.00% | 0.00% (c) | |
(a) | Purchase amounts and account values are aggregated among all eligible Fund accounts for the purposes of this table. |
(b) | Because the offering price is calculated to two decimal places, the dollar amount of the sales charge as a percentage of the offering price and your net amount invested for any particular purchase of Fund shares may be higher or lower depending on whether downward or upward rounding was required during the calculation process. |
(c) | For more information regarding cumulative commissions paid to your selling agent when you buy $1 million or more of Class T shares, see Class T Shares — Commissions below. |
■ | If you purchased Class T shares without a front-end sales charge because your accounts aggregated between $1 million and $50 million at the time of purchase, you will incur a CDSC if you redeem those shares within 18 months of purchase, which is charged as follows: 1.00% CDSC if shares are redeemed within 12 months of purchase, and 0.50% CDSC if shares are redeemed more than 12, but less than 18, months after purchase. |
■ | Subsequent Class T share purchases that bring your aggregate account value to $1 million or more (but less than $50 million) will also be subject to a CDSC if you redeem them within the time periods noted above. |
Class T Shares — Commission Schedule (Paid by the Distributor to Selling Agents) | |
Purchase
Amount |
Commission
Level
(as a % of net asset value per share) |
$1 million – $2,999,999 | 1.00% |
28 | Prospectus 2014 |
Class T Shares — Commission Schedule (Paid by the Distributor to Selling Agents) | |
Purchase
Amount |
Commission
Level
(as a % of net asset value per share) |
$3 million – $49,999,999 | 0.50% |
$50 million or more | 0.25% |
Prospectus 2014 | 29 |
30 | Prospectus 2014 |
Distribution
Fee |
Service
Fee |
Combined
Total |
|
Class A | up to 0.25% | up to 0.25% | up to 0.35% (a)(b)(c) |
Class B | 0.75% (d) | 0.25% | 1.00% (b) |
Class C | 0.75% (c)(e) | 0.25% | 1.00% (b) |
Class I | None | None | None |
Class K | None | 0.25% (f) | 0.25% (f) |
Class R (series of CFST and CFST I) | 0.50% | — (g) | 0.50% |
Class R (series of CFST II) | up to 0.50% (c) | up to 0.25% | 0.50% (g) |
Class R4 | None | None | None |
Class R5 | None | None | None |
Class T | None | 0.50% (h) | 0.50% (h) |
Class W | up to 0.25% | up to 0.25% | 0.25% (c) |
Class Y | None | None | None |
Class Z | None | None | None |
Prospectus 2014 | 31 |
(a) | The maximum distribution and service fees of Class A shares varies among the Funds, as shown in the table below: |
Funds |
Maximum
Class A Distribution Fee |
Maximum
Class A Service Fee |
Maximum
Class A Combined Total |
Series of CFST | — | — |
0.25%;
these Funds pay a
combined distribution and service fee |
Series
of CFST II (other than Columbia
Money Market Fund) |
up to 0.25% | up to 0.25% | 0.25% |
Columbia Money Market Fund | — | — | 0.10% |
Columbia Balanced Fund, Columbia Contrarian Core Fund, Columbia Dividend Income Fund, Columbia Intermediate Bond Fund, Columbia Large Cap Growth Fund, Columbia Mid Cap Growth Fund, Columbia AMT-Free Oregon Intermediate Muni Bond Fund, Columbia Real Estate Equity Fund, Columbia Small Cap Core Fund, Columbia Small Cap Growth Fund I, Columbia Global Technology Growth Fund | up to 0.10% | up to 0.25% |
up
to 0.35%; these Funds may
pay distribution and service fees up to a maximum of 0.35% of their average daily net assets attributable to Class A shares (comprised of up to 0.10% for distribution services and up to 0.25% for shareholder liaison services) but currently limit such fees to an aggregate fee of not more than 0.25% for Class A shares |
Columbia Bond Fund, Columbia California Tax-Exempt Fund, Columbia AMT-Free Connecticut Intermediate Muni Bond Fund, Columbia Corporate Income Fund, Columbia Diversified Real Return Fund, Columbia Emerging Markets Fund, Columbia Global Dividend Opportunity Fund, Columbia Global Energy and Natural Resources Fund, Columbia Greater China Fund, Columbia International Bond Fund, Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund, Columbia AMT-Free New York Intermediate Muni Bond Fund, Columbia New York Tax-Exempt Fund, Columbia Risk Allocation Fund, Columbia Small Cap Value Fund I, Columbia Pacific/Asia Fund, Columbia Select Large Cap Growth Fund, Columbia Strategic Income Fund, Columbia U.S. Treasury Index Fund, Columbia Value and Restructuring Fund | — | 0.25% | 0.25% |
Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund, Columbia Tax Exempt Fund | — | 0.20% | 0.20% |
(b) | The service fees for Class A, Class B and Class C shares of certain Funds vary. Service Fee for Class A, Class B and Class C shares of Columbia High Yield Municipal Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia Tax-Exempt Fund — The annual service fee may equal up to 0.20% of the average daily net asset value of all shares of such Fund class. Distribution Fee for Class B and Class C shares for Columbia AMT-Free Intermediate Muni Bond Fund — The annual distribution fee shall be 0.65% of the average daily net assets of the Fund's Class B and Class C shares. Fee amounts noted apply to Class B shares of the Funds other than Class B shares of Columbia Money Market Fund, which pays distribution fees of up to 0.75% and service fees of up to 0.10% for a combined total of 0.85%. The Distributor has currently agreed not to be reimbursed by the Fund for 0.10% of the 0.85% fee for Class B shares of Columbia Money Market Fund. The Distributor has voluntarily agreed to waive the service fee for Class A, Class B and Class C shares of Columbia U.S. Treasury Index Fund so that the service fee does not exceed 0.15% annually. This arrangement may be modified or terminated by the Distributor at any time. |
(c) | Fee amounts noted apply to all Funds other than Columbia Money Market Fund, which, for each of Class A and Class W shares, pays distribution and service fees of 0.10%, and for Class C shares pays distribution fees of 0.75%. The Distributor has currently agreed not to be reimbursed by the Fund for 0.25% of the 0.50% fee for Class R shares of Columbia Money Market Fund. The Distributor has voluntarily agreed to waive the 12b-1 fees it receives from Class A, Class C, Class R and Class W shares of Columbia Money Market Fund. This arrangement may be modified or terminated by the Distributor at any time. Compensation paid to broker-dealers and other selling agents may be suspended to the extent of the Distributor's waiver of the 12b-1 fees on these specific share classes of these Funds. |
(d) | The Distributor has voluntarily agreed to waive the distribution fee it receives from Class B shares of Columbia Seligman Communications and Information Fund and Columbia Global Infrastructure Fund and a portion of the distribution fee for Class B shares of Columbia Short Term Bond Fund so that the distribution fee does not exceed 0.30% annually. These arrangements may be modified or terminated by the Distributor at any time. |
(e) | The Distributor has voluntarily agreed to waive a portion of the distribution fee for Class C shares of the following Funds so that the distribution fee does not exceed the specified percentage annually: 0.40% for Columbia AMT-Free Oregon Intermediate Muni Bond Fund; 0.45% for Columbia California Tax-Exempt Fund, Columbia AMT-Free Connecticut Intermediate Muni Bond Fund, Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund, Columbia AMT-Free New York Intermediate Muni Bond Fund, Columbia New York Tax-Exempt Fund and Columbia |
32 | Prospectus 2014 |
Tax-Exempt Fund; 0.60% for Columbia Corporate Income Fund, Columbia High Yield Bond Fund, Columbia High Yield Municipal Fund, Columbia Intermediate Bond Fund and Columbia Short Term Bond Fund; and 0.70% for Columbia U.S. Treasury Index Fund. These arrangements may be modified or terminated by the Distributor at any time. | |
(f) | The shareholder service fees for Class K shares are not paid pursuant to a 12b-1 plan. Under a plan administration services agreement, the Funds' Class K shares pay for plan administration services. See Class K Plan Administration Services Fee below for more information. |
(g) | Class R shares of series of CFST and CFST I pay a distribution fee pursuant to a distribution (Rule 12b-1) plan for Class R shares. The Funds do not have a shareholder service plan for Class R shares. Series of CFST II have a distribution and shareholder service plan for Class R shares, which, prior to the close of business on September 3, 2010, were known as Class R2 shares. For Class R shares of series of CFST II, the maximum fee under the plan reimbursed for distribution expenses is equal on an annual basis to 0.50% of the average daily net assets of the Fund attributable to Class R shares. Of that amount, up to 0.25% may be reimbursed for shareholder service expenses. |
(h) | The shareholder servicing fees for Class T shares are up to 0.50% of average daily net assets attributable to Class T shares for equity Funds and 0.40% for fixed income Funds. In general, the Funds currently limit such fees to a maximum of 0.30% for equity Funds and 0.15% for fixed-income Funds. See Class T Shareholder Service Fees below for more information. |
Prospectus 2014 | 33 |
34 | Prospectus 2014 |
Prospectus 2014 | 35 |
36 | Prospectus 2014 |
Minimum Account Balance | |
Minimum
Account Balance |
|
For all Funds, classes and account types except those listed below |
$250
(None for accounts with
Systematic Investment Plans) |
Individual Retirement Accounts for all Funds and classes except those listed below | None |
Columbia
Absolute Return Currency and Income Fund and
Columbia Absolute Return Emerging Markets Macro Fund |
$5,000 |
Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund | $2,500 |
Class I, Class K, Class R, Class R4, Class R5, Class W and Class Y | None |
Prospectus 2014 | 37 |
38 | Prospectus 2014 |
■ | negative impact on the Fund's performance; |
■ | potential dilution of the value of the Fund's shares; |
■ | interference with the efficient management of the Fund's portfolio, such as the need to maintain undesirably large cash positions, the need to use its line of credit or the need to buy or sell securities it otherwise would not have bought or sold; |
■ | losses on the sale of investments resulting from the need to sell securities at less favorable prices; |
■ | increased taxable gains to the Fund's remaining shareholders resulting from the need to sell securities to meet sell orders; and |
■ | increased brokerage and administrative costs. |
Prospectus 2014 | 39 |
40 | Prospectus 2014 |
Prospectus 2014 | 41 |
■ | Dividend and/or capital gain distributions may continue to be reinvested in Class B shares of a Fund. |
■ | Shareholders invested in Class B shares of a Fund may exchange those shares for Class B shares of other Funds offering such shares. Certain exceptions apply, including that not all Funds may permit exchanges. |
42 | Prospectus 2014 |
Prospectus 2014 | 43 |
44 | Prospectus 2014 |
Minimum Initial Investments | ||
Minimum
Initial Investment (a) |
Minimum
Initial Investment for Accounts with Systematic Investment Plans |
|
For all Funds, classes and account types except those listed below | $2,000 | $100 (b) |
Individual Retirement Accounts for all Funds and classes except those listed below | $1,000 | $100 (c) |
Columbia Absolute Return Currency and Income Fund and Columbia Absolute Return Emerging Markets Macro Fund | $10,000 | $10,000 |
Columbia Floating Rate Fund and Columbia Inflation Protected Securities Fund | $5,000 | $5,000 |
Class I, Class K, Class R, Class R4 and Class Y | None | N/A |
Class R5 | variable (d) | N/A |
Class W | $500 | N/A |
Class Z | variable (e) | $100 |
(a) | If your Class A, Class B, Class C, Class T or Class Z shares account balance falls below the minimum initial investment amount for any reason, including a market decline, you may be asked to increase it to the minimum initial investment amount or establish a monthly Systematic Investment Plan. If you do not do so, your account will be subject to a $20 annual low balance fee and/or shares may be automatically redeemed and the proceeds mailed to you if the account falls below the minimum account balance. See Buying, Selling and Exchanging Shares — Transaction Rules and Policies above. |
(b) | Columbia Money Market Fund — $2,000 |
(c) | Columbia Money Market Fund — $1,000 |
(d) | There is no minimum initial investment in Class R5 shares for omnibus retirement plans. A minimum initial investment of $100,000 applies to aggregate purchases of Class R5 shares of a Fund for combined underlying accounts of any registered investment adviser that clears Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the Transfer Agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements. |
(e) | The minimum initial investment amount for Class Z shares is $0, $1,000 or $2,000 depending upon the category of eligible investor. See — Class Z Shares Minimum Initial Investments below. The minimum initial investment amount for systematic investment plan accounts is the same as the amount set forth in the first two rows of the table, as applicable. |
Prospectus 2014 | 45 |
■ | Any person investing all or part of the proceeds of a distribution, rollover or transfer of assets into a Columbia Management Individual Retirement Account, from any deferred compensation plan which was a shareholder of any of the Funds of Columbia Acorn Trust on September 29, 2000, in which the investor was a participant and through which the investor invested in one or more of the Funds of Columbia Acorn Trust immediately prior to the distribution, transfer or rollover. |
■ | Any health savings account sponsored by a third party platform. |
■ | Any investor participating in a wrap program sponsored by a selling agent or other entity that is paid an asset-based fee by the investor and that is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent. |
■ | Any individual retirement plan for which a selling agent or other entity provides services and is not compensated by the Fund for those services, other than in the form of payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent. |
■ | Any employee of Columbia Management Investment Advisers, LLC, the Distributor or the Transfer Agent and immediate family members of any of the foregoing who share the same address and any persons employed as of April 30, 2010 by Columbia Management Advisors, LLC, Columbia Management Distributors, Inc., or Columbia Management Services, Inc., the adviser, distributor and transfer agent of series of CFST and CFST I prior to May 1, 2010 (the Previous Service Providers) and immediate family members of any of the foregoing who share the same address are eligible to make new and subsequent purchases in Class Z shares through an individual retirement account. If you maintain your account with a selling agent, you must contact that selling agent each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
■ | Any shareholder (as well as any family member of a shareholder or person listed on an account registration for any account of the shareholder) of another fund distributed by the Distributor (i) who holds Class Z shares; (ii) who held Primary A shares prior to the share class redesignation of Primary A shares as Class Z shares that occurred on August 22, 2005; (iii) who holds Class A shares that were obtained by an exchange of Class Z shares; or (iv) who bought shares of certain mutual funds that were not subject to sales charges and that merged with a series of CFST or CFST I distributed by the Distributor. |
■ | Any investor participating in an account offered by a selling agent or other entity that provides services to such an account, is paid an asset-based fee by the investor and is not compensated by the Fund for those services, other than payments for shareholder servicing or sub-accounting performed in place of the Transfer Agent (each investor buying shares through a financial intermediary must independently satisfy the minimum investment requirement noted above). |
■ | Any institutional investor who is a corporation, partnership, trust, foundation, endowment, institution, government entity, or similar organization, which meets the respective qualifications for an accredited investor, as defined under the Securities Act of 1933. |
■ | Certain financial institutions and intermediaries, such as insurance companies, trust companies, banks, endowments, investment companies or foundations, buying shares for their own account, including Ameriprise Financial and its affiliates and/or subsidiaries. |
■ | Any employee of Columbia Management Investment Advisers, LLC, the Distributor or the Transfer Agent and immediate family members of any of the foregoing who share the same address and any persons employed as of April 30, 2010 by the Previous Service Providers and any of their immediate family members who share the same address are eligible to make new and subsequent purchases in Class Z shares through a non-retirement account. If you maintain your account with a selling agent, you must contact that selling agent each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
■ | Certain other investors as set forth in more detail in the SAI. |
46 | Prospectus 2014 |
■ | Once the Transfer Agent or your selling agent receives your buy order in “good form,” your purchase will be made at the next calculated public offering price per share, which is the net asset value per share plus any sales charge that applies. |
■ | You generally buy Class A and Class T shares at the public offering price per share because purchases of these share classes are generally subject to a front-end sales charge. |
■ | You buy Class B, Class C, Class I, Class K, Class R, Class R4, Class R5, Class W, Class Y and Class Z shares at net asset value per share because no front-end sales charge applies to purchases of these share classes. |
■ | The Distributor and the Transfer Agent reserve the right to cancel your order if the Fund doesn't receive payment within three business days of receiving your buy order. The Fund will return any payment received for orders that have been cancelled, but no interest will be paid on that money. |
■ | Selling agents are responsible for sending your buy orders to the Transfer Agent and ensuring that we receive your money on time. |
■ | Shares purchased are recorded on the books of the Fund. The Fund doesn't issue certificates. |
Prospectus 2014 | 47 |
■ | Once the Transfer Agent or your selling agent receives your redemption order in “good form,” your shares will be sold at the next calculated NAV per share. Any applicable CDSC will be deducted from the amount you're selling and the balance will be remitted to you. |
■ | If you sell your shares that are held directly with the Funds (through the Transfer Agent), we will normally send the redemption proceeds by mail or electronically transfer them to your bank account within three business days after the Transfer Agent or your selling agent receives your order in “good form.” |
■ | If you sell your shares through a selling agent, the Funds will normally send the redemption proceeds by Fedwire within three business days after the Transfer Agent or your selling agent receives your order in “good form.” |
■ | If you paid for your shares by check or from your bank account as an ACH transaction, the Funds will hold the redemption proceeds when you sell those shares for a period of time after the trade date of the purchase. |
■ | No interest will be paid on uncashed redemption checks. |
■ | The Funds can delay payment of the redemption proceeds for up to seven days and may suspend redemptions and/or further postpone payment of redemption proceeds when the NYSE is closed or trading thereon is restricted or during emergency or other circumstances, including as determined by the SEC. |
■ | Other restrictions may apply to retirement accounts. For information about these restrictions, contact your retirement plan administrator. |
■ | The Fund reserves the right to redeem your shares if your account falls below the Fund's minimum initial investment requirement. |
■ | Also keep in mind the Funds' Small Account Policy, which is described above in Buying, Selling and Exchanging Shares — Transaction Rules and Policies. |
48 | Prospectus 2014 |
■ | Exchanges are made at the NAV next calculated after your exchange order is received in “good form.” |
■ | Once the Fund receives your exchange request, you cannot cancel it after the market closes. |
■ | The rules for buying shares of a Fund generally apply to exchanges into that Fund, including, if your exchange creates a new Fund account, it must satisfy the minimum investment amount, unless a waiver applies. |
■ | Shares of the purchased Fund may not be used on the same day for another exchange or sale. |
■ | If you exchange shares from Class A shares of Columbia Money Market Fund to a non-money market Fund, any further exchanges must be between shares of the same class. For example, if you exchange from Class A shares of Columbia Money Market Fund into Class C shares of a non-money market Fund, you may not exchange from Class C shares of that non-money market Fund back to Class A shares of Columbia Money Market Fund. |
■ | A sales charge may apply when you exchange shares of a Fund that were not assessed a sales charge at the time of your initial purchase. For example, if your initial investment was in Columbia Money Market Fund and you exchange into a non-money market Fund, your transaction is subject to a front-end sales charge if you exchange into Class A shares and to a CDSC if you exchange into Class C shares of the Funds. |
■ | If your initial investment was in Class A shares of a non-money market Fund and you exchange shares into Columbia Money Market Fund, you may exchange that amount to another Fund, including dividends earned on that amount, without paying a sales charge. |
■ | If your shares are subject to a CDSC, you will not be charged a CDSC upon the exchange of those shares. Any CDSC will be deducted when you sell the shares you received from the exchange. The CDSC imposed at that time will be based on the period that begins when you bought shares of the original Fund and ends when you sell the shares of the Fund you received from the exchange. The applicable CDSC will be the CDSC of the original Fund. |
■ | You may make exchanges only into a Fund that is legally offered and sold in your state of residence. Contact the Transfer Agent or your selling agent for more information. |
■ | You generally may make an exchange only into a Fund that is accepting investments. |
■ | The Fund may change or cancel your right to make an exchange by giving the amount of notice required by regulatory authorities (generally 60 days for a material change or cancellation). |
■ | Unless your account is part of a tax-advantaged arrangement, an exchange for shares of another Fund is a taxable event, and you may recognize a gain or loss for tax purposes. |
■ | Changing your investment to a different Fund will be treated as a sale and purchase, and you will be subject to applicable taxes on the sale and sales charges on the purchase of the new Fund. |
■ | Class Z shares of a Fund may be exchanged for Class A or Class Z shares of another Fund. In certain circumstances, the front-end sales charge applicable to Class A shares may be waived on exchanges of Class Z shares for Class A shares. See Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors — Class Z Shares for details. |
Prospectus 2014 | 49 |
■ | You may generally exchange Class T shares of a Fund for Class A shares of another Fund if the other Fund does not offer Class T shares. Class T shares exchanged into Class A shares cannot be exchanged back into Class T shares. |
■ | Class W shares originally purchased, but no longer held, in a discretionary managed account, may not be exchanged for Class W shares of another Fund. |
■ | Former CFIT Shareholders may not exchange Class Y shares of a Fund into Class Y shares of another Fund. |
■ | No sales charges or other charges will apply to any such exchange, except that when Class B shares are exchanged, any CDSC applicable to Class B shares will be applied. |
■ | Ordinarily, shareholders will not recognize a gain or loss for U.S. federal income tax purposes upon such an exchange. You should consult your tax advisor about your particular exchanges. |
50 | Prospectus 2014 |
■ | It can earn income on its investments. Examples of fund income are interest paid on money market instruments and bonds, and dividends paid on common stocks. |
■ | A mutual fund can also have capital gains if the value of its investments increases. While a fund continues to hold an investment, any gain is generally unrealized. If the fund sells an investment, it generally will realize a capital gain if it sells that investment for a higher price than its adjusted cost basis, and will generally realize a capital loss if it sells that investment for a lower price than its adjusted cost basis. Capital gains and losses are either short-term or long-term, depending on whether the fund holds the securities for one year or less (short-term) or more than one year (long-term). |
Declaration and Distribution Schedule | |
Declarations | Daily |
Distributions | Monthly |
Prospectus 2014 | 51 |
■ | The Fund intends to qualify each year as a regulated investment company. A regulated investment company generally is not subject to tax at the fund level on income and gains from investments that are distributed to shareholders. However, the Fund's failure to qualify as a regulated investment company would result in Fund level taxation, and consequently, a reduction in income available for distribution to you and in the net asset value of your shares. Even if a fund qualifies as a regulated investment company, the Fund may be subject to federal excise tax on certain undistributed income or gains. For tax-exempt Funds: If a tax-exempt Fund were to fail to qualify as a regulated investment company, any dividends of net tax-exempt income would no longer be exempt from U.S. federal income tax and, instead, in general, would be taxable to you as ordinary income. |
■ | Distributions generally are taxable to you when paid, whether they are paid in cash or automatically reinvested in additional Fund shares. Dividends paid in January are deemed paid on December 31 of the prior year if the dividend was declared and payable to shareholders of record in October, November, or December of such prior year. In certain circumstances a Fund may retain its net capital gain and deem such gains to have been distributed to shareholders. In such case, the Fund will be required to pay a fund-level tax on any such retained net capital gain, and shareholders will be required to include in income their share of such retained capital gain and will be entitled to credit their share of tax paid by the Fund against their federal income tax liabilities. |
■ | Distributions of the Fund's ordinary income and net short-term capital gain, if any, generally are taxable to you as ordinary income. Distributions of the Fund's net long-term capital gain, if any, generally are taxable to you as long-term capital gain. Whether capital gains are long-term or short-term is determined by how long the Fund has owned the investments that generated them, rather than how long you have owned your shares. For taxable fixed income Funds: The Fund expects that distributions will consist primarily of ordinary income. |
■ | From time to time, a distribution from the Fund could constitute a return of capital, which is not taxable to you so long as the amount of the distribution does not exceed your tax basis in your Fund shares. A return of capital reduces your tax basis in your Fund shares, with any amounts exceeding such basis generally taxable as capital gain. |
■ | If you are an individual and you meet certain holding period and other requirements for your Fund shares, a portion of your distributions may be treated as “qualified dividend income” taxable at the lower net long-term capital gain rates instead of the higher ordinary income rates. Qualified dividend income is income attributable to the Fund's dividends received from certain U.S. and foreign corporations, as long as the Fund meets certain holding period and other requirements for the stock producing such dividends. For taxable fixed income and tax-exempt Funds: The Fund does not expect a significant portion of Fund distributions to be qualified dividend income. |
■ | Certain high-income individuals (as well as estates and trusts) are subject to a 3.8% tax on net investment income. For individuals, the 3.8% tax applies to the lesser of (1) the amount (if any) by which the taxpayer's modified adjusted gross income exceeds certain threshold amounts or (2) the taxpayer's “net investment income.” Net investment income generally includes for this purpose dividends, including any capital gain dividends, paid by the Fund, and net gains recognized on the sale, redemption or exchange of shares of the Fund. For tax-exempt Funds: Exempt interest dividends are not included in net investment income for this purpose, and are therefore not subject to the tax on net investment income. |
■ | Certain derivative instruments when held in a Fund's portfolio subject the Fund to special tax rules, the effect of which may be to, among other things, accelerate income to the Fund, defer Fund losses, cause adjustments in the holding periods of Fund portfolio securities, or convert capital gains into ordinary income, short-term capital losses into long-term capital losses or long-term capital gains into short-term capital gains. These rules could therefore affect the amount, timing and/or character of distributions to shareholders. For tax-exempt Funds: Derivative instruments held by a Fund may also generate taxable income to the Fund. |
52 | Prospectus 2014 |
■ | Certain Funds may purchase or write options, as described further in the SAI. Generally, a Fund realizes a capital gain or loss on an option when the option expires, or when it is exercised, sold or otherwise terminated. However, if an option is a “section 1256 contract,” which includes most traded options on a broad-based index, and the Fund holds such option at the end of its taxable year, the Fund is deemed to sell such option at fair market value at such time and recognize any gain or loss thereon, which is generally deemed to be 60% long-term and 40% short-term gain or loss, as described further in the SAI. |
■ | If at the end of the taxable year more than 50% of the value of the Fund's assets consists of securities of foreign corporations, and the Fund makes a special election, you will generally be required to include in your income for U.S. federal income tax purposes your share of the qualifying foreign income taxes paid by the Fund in respect of its foreign portfolio securities. You may be able to claim a foreign tax credit or deduction in respect of this amount, subject to certain limitations. There is no assurance that the Fund will make this election for a taxable year, even if it is eligible to do so. |
■ | For tax-exempt Funds: The Fund expects that distributions will consist primarily of exempt interest dividends. Distributions of the Fund's net interest income from tax-exempt securities generally are not subject to U.S. federal income tax, but may be subject to state and local income and other taxes, as well as federal and state alternative minimum tax. Similarly, distributions of interest income that is exempt from state and local income taxes of a particular state may be subject to other taxes, including income taxes of other states, and federal and state alternative minimum tax. Certain income generated by tax-exempt securities, including capital gains on sales and market discount, is taxable. The Fund may invest a portion of its assets in securities that generate income that is not exempt from federal or state income tax. Distributions by the Fund of this income generally are taxable to you as ordinary income or long-term capital gain. Distributions of capital gains realized by the Fund, including those generated from the sale or exchange of tax-exempt securities, generally also are taxable to you. Distributions of the Fund's net short-term capital gain, if any, generally are taxable to you as ordinary income. |
■ | For a Fund organized as a fund-of-funds: Because most of the Fund's investments are shares of underlying Funds, the tax treatment of the Fund's gains, losses, and distributions may differ from the tax treatment that would apply if either the Fund invested directly in the types of securities held by the underlying Funds or the Fund shareholders invested directly in the underlying Funds. As a result, you may receive taxable distributions earlier and recognize higher amounts of capital gain or ordinary income than you otherwise would. |
■ | A sale, redemption or exchange of Fund shares is a taxable event. This includes redemptions where you are paid in securities. Your sales, redemptions and exchanges of Fund shares (including those paid in securities) usually will result in a taxable capital gain or loss to you, equal to the difference between the amount you receive for your shares (or are deemed to have received in the case of exchanges) and the amount you paid (or are deemed to have paid in the case of exchanges) for them. Any such capital gain or loss generally will be long-term capital gain or loss if you have held your Fund shares for more than one year at the time of sale or exchange. In certain circumstances, capital losses may be converted from short-term to long-term; in other circumstances, capital losses may be disallowed under the “wash sale” rules. |
■ | The Fund generally is required to report to shareholders and the Internal Revenue Service (the IRS) upon the sale, exchange or redemption of Fund shares cost basis information with respect to those shares. The Fund uses average cost basis as its default method of calculating cost basis. Please see columbiamanagement.com or contact the Fund at 800.345.6611 for more information regarding average cost basis reporting, other available cost basis methods and how to select or change a particular method or to choose specific shares to sell, redeem or exchange. If you hold Fund shares through a selling agent, you should contact your selling agent to learn about its cost basis reporting default method and the reporting elections available to your account. |
■ | The Fund is required by federal law to withhold tax on any taxable or tax-exempt distributions and redemption proceeds paid to you (including amounts paid to you in securities and amounts deemed to be paid to you upon an exchange of shares) if: you haven't provided a correct TIN or haven't certified to the Fund that withholding doesn't apply; the IRS has notified us that the TIN listed on your account is incorrect according to its records; or the IRS informs the Fund that you are otherwise subject to backup withholding. |
Prospectus 2014 | 53 |
54 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class A | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $11.52 | $11.74 | $11.59 | $11.03 | $11.12 | $11.64 | |
Income from investment operations: | |||||||
Net investment income | 0.14 | 0.13 | 0.01 | 0.18 | 0.23 | 0.27 | |
Net realized and unrealized gain (loss) | (0.36) | 0.11 | 0.15 | 0.70 | 0.22 | (0.45) | |
Total from investment operations | (0.22) | 0.24 | 0.16 | 0.88 | 0.45 | (0.18) | |
Less distributions to shareholders: | |||||||
Net investment income | (0.15) | (0.13) | (0.01) | (0.19) | (0.27) | (0.34) | |
Net realized gains | (0.12) | (0.33) | — | (0.13) | (0.27) | (0.00) (b) | |
Total distributions to shareholders | (0.27) | (0.46) | (0.01) | (0.32) | (0.54) | (0.34) | |
Net asset value, end of period | $11.03 | $11.52 | $11.74 | $11.59 | $11.03 | $11.12 | |
Total return | (1.92%) | 2.06% | 1.40% | 8.01% | 4.04% | (1.53%) | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 0.66% | 0.66% | 0.66% (d) | 0.66% (e) | 0.66% (e) | 0.66% (e) | |
Total net expenses (f) | 0.45% (g) | 0.45% (g) | 0.45% (d) | 0.45% (e)(g) | 0.45% (e) | 0.48% (e) | |
Net investment income | 1.24% | 1.15% | 1.30% (d) | 1.55% | 2.04% | 2.44% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $22,163 | $28,129 | $42,700 | $43,818 | $41,739 | $47,105 | |
Portfolio turnover | 76% | 99% | 7% | 106% | 142% | 118% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 55 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class B | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $11.52 | $11.74 | $11.59 | $11.03 | $11.12 | $11.64 | |
Income from investment operations: | |||||||
Net investment income | 0.05 | 0.05 | 0.01 | 0.10 | 0.15 | 0.19 | |
Net realized and unrealized gain (loss) | (0.37) | 0.10 | 0.14 | 0.69 | 0.22 | (0.45) | |
Total from investment operations | (0.32) | 0.15 | 0.15 | 0.79 | 0.37 | (0.26) | |
Less distributions to shareholders: | |||||||
Net investment income | (0.06) | (0.04) | (0.00) (b) | (0.10) | (0.19) | (0.26) | |
Net realized gains | (0.12) | (0.33) | — | (0.13) | (0.27) | (0.00) (b) | |
Total distributions to shareholders | (0.18) | (0.37) | (0.00) (b) | (0.23) | (0.46) | (0.26) | |
Net asset value, end of period | $11.02 | $11.52 | $11.74 | $11.59 | $11.03 | $11.12 | |
Total return | (2.74%) | 1.30% | 1.34% | 7.21% | 3.27% | (2.26%) | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 1.41% | 1.40% | 1.41% (d) | 1.41% (e) | 1.41% (e) | 1.41% (e) | |
Total net expenses (f) | 1.20% (g) | 1.20% (g) | 1.20% (d) | 1.20% (e)(g) | 1.20% (e) | 1.23% (e) | |
Net investment income | 0.49% | 0.40% | 0.55% (d) | 0.83% | 1.29% | 1.69% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $1,489 | $2,162 | $3,102 | $3,143 | $4,053 | $5,810 | |
Portfolio turnover | 76% | 99% | 7% | 106% | 142% | 118% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
56 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class C | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $11.52 | $11.74 | $11.59 | $11.03 | $11.12 | $11.64 | |
Income from investment operations: | |||||||
Net investment income | 0.07 | 0.06 | 0.01 | 0.11 | 0.16 | 0.21 | |
Net realized and unrealized gain (loss) | (0.37) | 0.11 | 0.15 | 0.70 | 0.23 | (0.46) | |
Total from investment operations | (0.30) | 0.17 | 0.16 | 0.81 | 0.39 | (0.25) | |
Less distributions to shareholders: | |||||||
Net investment income | (0.08) | (0.06) | (0.01) | (0.12) | (0.21) | (0.27) | |
Net realized gains | (0.12) | (0.33) | — | (0.13) | (0.27) | (0.00) (b) | |
Total distributions to shareholders | (0.20) | (0.39) | (0.01) | (0.25) | (0.48) | (0.27) | |
Net asset value, end of period | $11.02 | $11.52 | $11.74 | $11.59 | $11.03 | $11.12 | |
Total return | (2.59%) | 1.45% | 1.35% | 7.37% | 3.42% | (2.12%) | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 1.41% | 1.41% | 1.41% (d) | 1.41% (e) | 1.41% (e) | 1.41% (e) | |
Total net expenses (f) | 1.05% (g) | 1.05% (g) | 1.05% (d) | 1.05% (e)(g) | 1.05% (e) | 1.08% (e) | |
Net investment income | 0.64% | 0.55% | 0.70% (d) | 0.98% | 1.44% | 1.83% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $6,417 | $10,111 | $11,628 | $12,172 | $13,142 | $19,568 | |
Portfolio turnover | 76% | 99% | 7% | 106% | 142% | 118% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 57 |
Year Ended April 30, | Year Ended March 31, | |||||
Class I | 2014 | 2013 | 2012 (a) | 2012 | 2011 (b) | |
Per share data | ||||||
Net asset value, beginning of period | $11.52 | $11.74 | $11.59 | $11.03 | $11.76 | |
Income from investment operations: | ||||||
Net investment income | 0.17 | 0.16 | 0.02 | 0.21 | 0.11 | |
Net realized and unrealized gain (loss) | (0.38) | 0.11 | 0.14 | 0.70 | (0.43) | |
Total from investment operations | (0.21) | 0.27 | 0.16 | 0.91 | (0.32) | |
Less distributions to shareholders: | ||||||
Net investment income | (0.17) | (0.16) | (0.01) | (0.22) | (0.15) | |
Net realized gains | (0.12) | (0.33) | — | (0.13) | (0.26) | |
Total distributions to shareholders | (0.29) | (0.49) | (0.01) | (0.35) | (0.41) | |
Net asset value, end of period | $11.02 | $11.52 | $11.74 | $11.59 | $11.03 | |
Total return | (1.76%) | 2.31% | 1.42% | 8.29% | (2.78%) | |
Ratios to average net assets (c) | ||||||
Total gross expenses | 0.41% | 0.41% | 0.41% (d) | 0.41% (e) | 0.41% (d)(e) | |
Total net expenses (f) | 0.20% | 0.20% | 0.20% (d) | 0.20% (e) | 0.20% (d)(e) | |
Net investment income | 1.49% | 1.39% | 1.55% (d) | 1.81% | 1.96% (d) | |
Supplemental data | ||||||
Net assets, end of period (in thousands) | $68,254 | $54,959 | $91,092 | $84,899 | $123,074 | |
Portfolio turnover | 76% | 99% | 7% | 106% | 142% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | For the period from September 27, 2010 (commencement of operations) to March 31, 2011. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
58 | Prospectus 2014 |
Year
Ended April 30,
|
||
Class R5 | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $11.51 | $11.68 |
Income from investment operations: | ||
Net investment income | 0.17 | 0.08 |
Net realized and unrealized loss | (0.38) | (0.04) (b) |
Total from investment operations | (0.21) | 0.04 |
Less distributions to shareholders: | ||
Net investment income | (0.17) | (0.08) |
Net realized gains | (0.12) | (0.13) |
Total distributions to shareholders | (0.29) | (0.21) |
Net asset value, end of period | $11.01 | $11.51 |
Total return | (1.76%) | 0.31% |
Ratios to average net assets (c) | ||
Total gross expenses | 0.41% | 0.45% (d) |
Total net expenses (e) | 0.20% | 0.20% (d) |
Net investment income | 1.52% | 1.41% (d) |
Supplemental data | ||
Net assets, end of period (in thousands) | $1,431 | $2 |
Portfolio turnover | 76% | 99% |
(a) | For the period from November 8, 2012 (commencement of operations) to April 30, 2013. |
(b) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of sales and repurchases of Fund shares in relation to fluctuations in the market value of the portfolio. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
Prospectus 2014 | 59 |
Year
Ended April 30,
|
||
Class W | 2014 | 2013 (a) |
Per share data | ||
Net asset value, beginning of period | $11.52 | $11.90 |
Income from investment operations: | ||
Net investment income | 0.14 | 0.11 |
Net realized and unrealized loss | (0.37) | (0.05) (b) |
Total from investment operations | (0.23) | 0.06 |
Less distributions to shareholders: | ||
Net investment income | (0.15) | (0.11) |
Net realized gains | (0.12) | (0.33) |
Total distributions to shareholders | (0.27) | (0.44) |
Net asset value, end of period | $11.02 | $11.52 |
Total return | (2.00%) | 0.52% |
Ratios to average net assets (c) | ||
Total gross expenses | 0.66% | 0.65% (d) |
Total net expenses (e) | 0.45% (f) | 0.45% (d) |
Net investment income | 1.24% | 1.10% (d) |
Supplemental data | ||
Net assets, end of period (in thousands) | $12,167 | $29,171 |
Portfolio turnover | 76% | 99% |
(a) | For the period from June 18, 2012 (commencement of operations) to April 30, 2013. |
(b) | Calculation of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of sales and repurchases of Fund shares in relation to fluctuations in the market value of the portfolio. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(f) | The benefits derived from expense reductions had an impact of less than 0.01%. |
60 | Prospectus 2014 |
Year Ended April 30, | Year Ended March 31, | ||||||
Class Z | 2014 | 2013 | 2012 (a) | 2012 | 2011 | 2010 | |
Per share data | |||||||
Net asset value, beginning of period | $11.52 | $11.74 | $11.59 | $11.03 | $11.11 | $11.64 | |
Income from investment operations: | |||||||
Net investment income | 0.17 | 0.16 | 0.02 | 0.21 | 0.26 | 0.30 | |
Net realized and unrealized gain (loss) | (0.38) | 0.11 | 0.14 | 0.70 | 0.23 | (0.46) | |
Total from investment operations | (0.21) | 0.27 | 0.16 | 0.91 | 0.49 | (0.16) | |
Less distributions to shareholders: | |||||||
Net investment income | (0.17) | (0.16) | (0.01) | (0.22) | (0.30) | (0.37) | |
Net realized gains | (0.12) | (0.33) | — | (0.13) | (0.27) | (0.00) (b) | |
Total distributions to shareholders | (0.29) | (0.49) | (0.01) | (0.35) | (0.57) | (0.37) | |
Net asset value, end of period | $11.02 | $11.52 | $11.74 | $11.59 | $11.03 | $11.11 | |
Total return | (1.76%) | 2.31% | 1.42% | 8.28% | 4.40% | (1.38%) | |
Ratios to average net assets (c) | |||||||
Total gross expenses | 0.41% | 0.41% | 0.41% (d) | 0.41% (e) | 0.41% (e) | 0.41% (e) | |
Total net expenses (f) | 0.20% (g) | 0.20% (g) | 0.20% (d) | 0.20% (e)(g) | 0.20% (e) | 0.23% (e) | |
Net investment income | 1.49% | 1.40% | 1.55% (d) | 1.82% | 2.29% | 2.64% | |
Supplemental data | |||||||
Net assets, end of period (in thousands) | $194,297 | $227,687 | $271,853 | $267,044 | $241,078 | $301,978 | |
Portfolio turnover | 76% | 99% | 7% | 106% | 142% | 118% |
(a) | For the period from April 1, 2012 to April 30, 2012. During the period, the Fund’s fiscal year end was changed from March 31 to April 30. |
(b) | Rounds to zero. |
(c) | In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the acquired funds in which it invests. Such indirect expenses are not included in the reported expense ratios. |
(d) | Annualized. |
(e) | Ratios include line of credit interest expense which rounds to less than 0.01%. |
(f) | Total net expenses include the impact of certain waivers/reimbursements made by the Investment Manager and certain of its affiliates, if applicable. |
(g) | The benefits derived from expense reductions had an impact of less than 0.01%. |
Prospectus 2014 | 61 |
STATEMENT OF ADDITIONAL INFORMATION
September 1, 2014
This Statement of Additional Information (SAI) is not a prospectus, is not a substitute for reading any prospectus and is intended to be read in conjunction with a Funds current prospectus (as amended or supplemented), the date of which may be found in the section of this SAI entitled About the Trust . The most recent annual report for each Fund, which includes the Funds audited financial statements for its most recent fiscal period, are incorporated by reference into this SAI.
Copies of the Funds current prospectuses and annual and semiannual reports may be obtained without charge by writing Columbia Management Investment Services Corp., P.O. Box 8081, Boston, MA 02266-8081, by calling Columbia Funds at 800.345.6611 or by visiting the Columbia Funds website at www.columbiamanagement.com.
Statement of Additional Information September 1, 2014 |
p. 1 | ||||
p. 5 |
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p. 13 | ||||
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p. 48 | ||||
p. 63 | ||||
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p. 90 |
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p. 110 | ||||
p. 110 | ||||
p. 111 | ||||
p. 113 | ||||
p. 113 | ||||
p. 118 | ||||
p. 122 | ||||
p. 127 | ||||
General Brokerage Policy, Brokerage Transactions and Broker Selection |
p. 127 | |||
p. 129 | ||||
p. 131 | ||||
p. 132 | ||||
p. 137 | ||||
p. 137 | ||||
p. 138 | ||||
p. 138 | ||||
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p. 145 | ||||
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p. 147 | ||||
p. 148 | ||||
p. 150 | ||||
p. 166 | ||||
p. 211 |
A-1 | ||||
Appendix B: Description of State Risk Factors State Tax-Exempt Funds |
B-1 | |||
C-1 | ||||
Appendix D: Series of CFST, CFST I and CFST II |
D-1 | |||
S-1 |
No person has been authorized to give any information or to make any representations other than those contained in this SAI and the Prospectus and, if given or made, such information or representations may not be relied upon as having been authorized by the Trust. The SAI does not constitute an offer to sell securities.
Statement of Additional Information September 1, 2014 |
The SAI is a part of the Funds registration statement that is filed with the SEC. The registration statement includes the Funds prospectuses, the SAI and certain exhibits. The SAI, and any supplements to it, can be found online at www.columbiamanagement.com, or by accessing the SECs website at www.sec.gov.
For purposes of any electronic version of this SAI, all references to websites, or universal resource locators (URLs), are not meant to incorporate the contents of any such website or URL into this SAI.
The SAI generally provides additional information about the Funds that is not required to be in the Funds prospectuses. The SAI expands discussions of certain matters described in the Funds prospectuses and provides certain additional information about the Funds that may be of interest to some investors. Among other things, the SAI provides information about:
|
the organization of the Trust; |
|
the Funds investments; |
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the Funds investment adviser, investment subadviser(s) (if any) and other service providers, including roles and relationships of Ameriprise Financial and its affiliates, and conflicts of interest; |
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the governance of the Funds; |
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the Funds brokerage practices; |
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the share classes offered by the Funds; |
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the purchase, redemption and pricing of Fund shares; and |
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the application of U.S. federal income tax laws. |
Investors may find this information important and helpful. If you have any questions about the Funds, please call Columbia Funds at 800.345.6611 or contact your financial advisor.
Before reading the SAI, you should consult the Glossary below, which defines certain of the terms used in the SAI.
Glossary
1933 Act |
Securities Act of 1933, as amended | |
1934 Act |
Securities Exchange Act of 1934, as amended | |
1940 Act |
Investment Company Act of 1940, as amended | |
Active Portfolio Funds |
AP Alternative Strategies Fund, AP Core Plus Bond Fund, AP Growth Fund and AP Small Cap Equity Fund | |
Administrative Services Agreement | The administrative services agreement, as amended, between the Trust, on behalf of the Funds, and the Administrator | |
Administrator |
Columbia Management Investment Advisers, LLC | |
Ameriprise Financial |
Ameriprise Financial, Inc. | |
AQR |
AQR Capital Management, LLC | |
BANA |
Bank of America, National Association | |
Bank of America |
Bank of America Corporation | |
BFDS/DST |
Boston Financial Data Services, Inc./DST Systems, Inc. | |
Board |
The Trusts Board of Trustees | |
Business Day |
Any day on which the New York Stock Exchange (NYSE) is open for business | |
CEA |
Commodity Exchange Act | |
CFST |
Columbia Funds Series Trust | |
CFST I |
Columbia Funds Series Trust I | |
CFST II |
Columbia Funds Series Trust II | |
CFTC |
The Commodity Futures Trading Commission, a U.S. Government agency |
Statement of Additional Information September 1, 2014 | Page 1 |
CMOs |
Collateralized mortgage obligations | |
Code |
Internal Revenue Code of 1986, as amended | |
Codes of Ethics |
The codes of ethics adopted by the Board pursuant to Rule 17j-1 under the 1940 Act | |
Columbia Funds Complex | The complex that is comprised of the registered investment companies advised by the Investment Manager or its affiliates | |
Columbia Funds or Columbia Fund Family | The open-end investment management companies, including the Funds, advised by the Investment Manager or its affiliates | |
Columbia Management |
Columbia Management Investment Advisers, LLC. | |
Conestoga |
Conestoga Capital Advisors, LLC | |
Custodian |
JPMorgan Chase Bank, N.A. | |
DGHM |
Dalton, Greiner, Hartman, Maher & Co., LLC | |
Distribution Agreement |
The distribution agreement between the Trust, on behalf of the Funds, and the Distributor | |
Distribution Plan(s) |
One or more of the plans adopted by the Board pursuant to Rule 12b-1 under the 1940 Act for the distribution of the Funds shares | |
Distributor |
Columbia Management Investment Distributors, Inc. | |
EAM |
EAM Investors, LLC | |
FDIC |
Federal Deposit Insurance Corporation | |
Federated |
Federated Investment Management Company | |
FHLMC |
The Federal Home Loan Mortgage Corporation | |
Fitch |
Fitch, Inc. | |
FNMA |
Federal National Mortgage Association | |
The Fund(s) or a Fund |
One or more of the open-end management investment companies listed on the front cover of this SAI | |
GNMA |
Government National Mortgage Association | |
Independent Trustees |
The Trustees of the Board who are not interested persons (as defined in the 1940 Act) of the Funds | |
Interested Trustees |
The Trustees of the Board who are currently treated as interested persons (as defined in the 1940 Act) of the Funds | |
Investment Management Services Agreement | The investment management services agreement, as amended, between the Trust, on behalf of the Funds, and the Investment Manager | |
Investment Manager or Adviser |
Columbia Management Investment Advisers, LLC | |
Investment Sub-Advisory Agreement | The investment subadvisory agreement among the Trust on behalf of the Fund(s), the Investment Manager and a Funds investment subadviser(s), as the context may require | |
IRS |
United States Internal Revenue Service | |
JPMorgan |
JPMorgan Chase Bank, N.A., the Funds custodian | |
LIBOR |
London Interbank Offered Rate | |
Loomis Sayles |
Loomis, Sayles & Company, L.P. | |
Moodys |
Moodys Investors Service, Inc. | |
NASDAQ |
National Association of Securities Dealers Automated Quotations system | |
NAV |
Net Asset Value of a Fund | |
NRSRO |
Nationally recognized statistical ratings organization (such as Moodys, Fitch or S&P) |
Statement of Additional Information September 1, 2014 | Page 2 |
NSCC |
National Securities Clearing Corporation | |
NYSE |
New York Stock Exchange | |
The Portfolio(s) or a Portfolio |
One or more of the open-end management investment companies listed on the front cover of this SAI that are series of the Trust | |
Previous Administrator |
Columbia Management Advisors, LLC, the administrator of the series of the Trust prior to May 1, 2010 when Ameriprise Financial acquired the long-term asset management business of the Previous Adviser, which is an indirect wholly-owned subsidiary of Bank of America. | |
Previous Adviser |
Columbia Management Advisors, LLC, the investment adviser of the series of the Trust prior to May 1, 2010 when Ameriprise Financial acquired the long-term asset management business of the Previous Adviser, which is an indirect wholly-owned subsidiary of Bank of America | |
Previous Distributor |
Columbia Management Distributors, Inc., the distributor of the series of the Trust prior to May 1, 2010 when Ameriprise Financial acquired the long-term asset management business of the Previous Adviser, which is an indirect wholly-owned subsidiary of Bank of America | |
Previous Transfer Agent | Columbia Management Services, Inc., the transfer agent of the series of the Trust prior to May 1, 2010 when Ameriprise Financial acquired the long-term asset management business of the Previous Adviser, which is an indirect wholly-owned subsidiary of Bank of America | |
REIT |
Real estate investment trust | |
REMIC |
Real estate mortgage investment conduit | |
RIC |
A regulated investment company, as such term is used in the Internal Revenue Code of 1986, as amended | |
RiverSource Funds |
The funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia Funds Series Trust II. | |
S&P |
Standard & Poors, a division of The McGraw-Hill Companies, Inc. (Standard & Poors and S&P are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by the Investment Manager. The Columbia Funds are not sponsored, endorsed, sold or promoted by Standard & Poors and Standard & Poors makes no representation regarding the advisability of investing in the Columbia Funds) | |
SAI |
This Statement of Additional Information | |
SEC |
United States Securities and Exchange Commission, a U.S. Government agency | |
Selling Agent(s) |
One or more of the financial intermediaries that are authorized to sell shares of the Funds, which include broker-dealers and financial advisors as well as firms that employ such broker-dealers and financial advisors, including, for example, brokerage firms, banks, investment advisors, third party administrators and other financial intermediaries, including Ameriprise Financial and its affiliates. | |
Shares |
Shares of a Fund | |
State Street |
State Street Bank and Trust Company, the Funds former custodian | |
Subsidiary |
A wholly-owned subsidiary of a Fund | |
TCW |
TCW Investment Management Company | |
Threadneedle |
Threadneedle International Limited | |
Transfer Agency Agreement | The transfer agency agreement between the Trust, on behalf of the Funds, and Columbia Management Investment Services Corp. | |
Transfer Agent |
Columbia Management Investment Services Corp. | |
Trust |
Columbia Funds Series Trust I | |
Trustee(s) |
One or more of the Boards Trustees | |
Wasatch |
Wasatch Advisors, Inc. | |
Water Island |
Water Island Capital, LLC |
Statement of Additional Information September 1, 2014 | Page 3 |
Throughout this SAI, the Funds are referred to as follows:
Fund Name: | Referred to as: | |
Active Portfolios ® Multi-Manager Alternative Strategies Fund |
AP Alternative Strategies Fund | |
Active Portfolios ® Multi-Manager Core Plus Bond Fund |
AP Core Plus Bond Fund | |
Active Portfolios ® Multi-Manager Growth Fund |
AP Growth Fund | |
Active Portfolios ® Multi-Manager Small Cap Equity Fund |
AP Small Cap Equity Fund | |
CMG Ultra Short Term Bond Fund |
Ultra Short Term Bond Fund | |
Columbia AMT-Free Connecticut Intermediate Muni Bond Fund |
AMT-Free CT Intermediate Muni Bond Fund | |
Columbia AMT-Free Intermediate Muni Bond Fund |
AMT-Free Intermediate Muni Bond Fund | |
Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund |
AMT-Free MA Intermediate Muni Bond Fund | |
Columbia AMT-Free New York Intermediate Muni Bond Fund |
AMT-Free NY Intermediate Muni Bond Fund | |
Columbia AMT-Free Oregon Intermediate Muni Bond Fund |
AMT-Free OR Intermediate Muni Bond Fund | |
Columbia Balanced Fund |
Balanced Fund | |
Columbia Bond Fund |
Bond Fund | |
Columbia California Tax-Exempt Fund |
CA Tax-Exempt Fund | |
Columbia Contrarian Core Fund |
Contrarian Core Fund | |
Columbia Corporate Income Fund |
Corporate Income Fund | |
Columbia Diversified Real Return Fund |
Diversified Real Return Fund | |
Columbia Dividend Income Fund |
Dividend Income Fund | |
Columbia Emerging Markets Fund |
Emerging Markets Fund | |
Columbia Global Dividend Opportunity Fund |
Global Dividend Opportunity Fund | |
Columbia Global Energy and Natural Resources Fund |
Global Energy and Natural Resources Fund | |
Columbia Global Inflation-Linked Bond Plus Fund |
Global ILB Plus Fund | |
Columbia Global Technology Growth Fund |
Global Technology Growth Fund | |
Columbia Greater China Fund |
Greater China Fund | |
Columbia High Yield Municipal Fund |
HY Municipal Fund | |
Columbia Intermediate Bond Fund |
Intermediate Bond Fund | |
Columbia International Bond Fund |
International Bond Fund | |
Columbia Large Cap Growth Fund |
Large Cap Growth Fund | |
Columbia Mid Cap Growth Fund |
Mid Cap Growth Fund | |
Columbia New York Tax-Exempt Fund |
NY Tax-Exempt Fund | |
Columbia Pacific/Asia Fund |
Pacific/Asia Fund | |
Columbia Real Estate Equity Fund |
Real Estate Equity Fund | |
Columbia Risk Allocation Fund |
Risk Allocation Fund | |
Columbia Select Large Cap Growth Fund |
Select Large Cap Growth Fund | |
Columbia Small Cap Core Fund |
Small Cap Core Fund | |
Columbia Small Cap Growth Fund I |
Small Cap Growth Fund I | |
Columbia Small Cap Value Fund I |
Small Cap Value Fund I | |
Columbia Strategic Income Fund |
Strategic Income Fund | |
Columbia Tax-Exempt Fund |
Tax-Exempt Fund | |
Columbia U.S. Treasury Index Fund |
U.S. Treasury Index Fund | |
Columbia Value and Restructuring Fund |
Value and Restructuring Fund |
Statement of Additional Information September 1, 2014 | Page 4 |
The Trust is a registered investment company under the 1940 Act located at 225 Franklin Street, Boston, Massachusetts 02110. The Trust was organized as a Massachusetts business trust in 1987. On September 19, 2005, the Trust changed its name from Columbia Funds Trust IX to its current name. On October 13, 2003, the Trust changed its name from Liberty-Stein Roe Funds Municipal Trust to Columbia Funds Trust IX. The table below identifies the fiscal year end, the date of the Funds prospectus(es), the date the Fund (or its predecessor) began operations, whether the Fund is diversified or non-diversified and investment category of the Funds, which are series of the Trust.
Fund |
Fiscal Year
|
Prospectus
|
Date Began
|
Diversified** |
Fund
|
|||||
AMT-Free CT Intermediate Muni Bond Fund |
October 31 | 3/1/2014 | 8/1/1994 | No | Tax-exempt fixed-income | |||||
AMT-Free Intermediate Muni Bond Fund |
October 31 | 3/1/2014 | 6/14/1993 | Yes | Tax-exempt fixed-income | |||||
AMT-Free MA Intermediate Muni Bond Fund |
October 31 | 3/1/2014 | 6/14/1993 | No | Tax-exempt fixed-income | |||||
AMT-Free NY Intermediate Muni Bond Fund |
October 31 | 3/1/2014 | 12/31/1991 | No | Tax-exempt fixed-income | |||||
AMT-Free OR Intermediate Muni Bond Fund |
July 31 (h) | 12/1/2013 | 7/2/1984 | Yes | Tax-exempt fixed-income | |||||
AP Alternative Strategies Fund |
August 31 | 1/1/2014 | 4/23/2012 | No | Alternative | |||||
AP Core Plus Bond Fund |
August 31 | 1/1/2014 | 4/20/2012 | Yes | Taxable fixed-income | |||||
AP Growth Fund |
March 31 | 8/1/2014 | 4/20/2012 | Yes | Equity | |||||
AP Small Cap Equity Fund |
August 31 | 1/1/2014 | 4/20/2012 | Yes | Equity | |||||
Balanced Fund |
August 31 | 1/1/2014 | 10/1/1991 | Yes | Equity/Taxable fixed-income | |||||
Bond Fund |
April 30 (a) | 9/1/2014 | 1/9/1986 | Yes | Taxable fixed-income | |||||
CA Tax-Exempt Fund |
October 31 | 3/1/2014 | 6/16/1986 | No | Tax-exempt fixed-income | |||||
Contrarian Core Fund |
August 31 (b) | 1/1/2014 | 12/14/1992 | Yes | Equity | |||||
Corporate Income Fund |
April 30 (a) | 9/1/2014 | 3/5/1986 | Yes | Taxable fixed-income | |||||
Diversified Real Return Fund |
January 31 | 6/1/2014 | 3/11/2014 | Yes | Fund-of-funds fixed-income | |||||
Dividend Income Fund |
May 31 (c) | 10/1/2013 | 3/4/1998 | Yes | Equity | |||||
Emerging Markets Fund |
August 31 (d) | 1/1/2014 | 1/2/1998 | Yes | Equity | |||||
Global Dividend Opportunity Fund |
August 31 | 1/1/2014 | 11/9/2000 | Yes | Equity | |||||
Global Energy and Natural Resources Fund |
August 31 (d) | 1/1/2014 | 12/31/1992 | No | Equity | |||||
Global ILB Plus Fund |
July 31 | 3/10/2014 | 3/12/2014 | No | Taxable fixed-income | |||||
Global Technology Growth Fund |
August 31 | 1/1/2014 | 11/9/2000 | No | Equity | |||||
Greater China Fund |
August 31 | 1/1/2014 | 5/16/1997 | No | Equity | |||||
HY Municipal Fund |
May 31 (e) | 10/1/2013 | 3/5/1984 | Yes | Tax-exempt fixed-income | |||||
Intermediate Bond Fund |
April 30 (a) | 9/1/2014 | 12/5/1978 | Yes | Taxable fixed-income | |||||
International Bond Fund |
October 31 (f) | 3/1/2014 | 12/1/2008 | No | Taxable fixed-income | |||||
Large Cap Growth Fund |
July 31 (g) | 12/1/2013 | 12/14/1990 | Yes | Equity | |||||
Mid Cap Growth Fund |
August 31 | 1/1/2014 | 11/20/1985 | Yes | Equity | |||||
NY Tax-Exempt Fund |
October 31 | 3/1/2014 | 9/26/1986 | No | Tax-exempt fixed-income | |||||
Pacific/Asia Fund |
March 31 | 8/1/2014 | 12/31/1992 | Yes | Equity | |||||
Real Estate Equity Fund |
December 31 (i) | 5/1/2014 | 4/1/1994 | No | Equity | |||||
Risk Allocation Fund |
May 31 | 10/1/2013 | 6/19/2012 | No | Alternative | |||||
Select Large Cap Growth Fund |
March 31 | 8/1/2014 | 10/1/1997 | Yes | Equity | |||||
Small Cap Core Fund |
August 31 (b) | 1/1/2014 | 12/14/1992 | Yes | Equity | |||||
Small Cap Growth Fund I |
August 31 | 1/1/2014 | 10/1/1996 | Yes | Equity | |||||
Small Cap Value Fund I |
April 30 (j) | 9/1/2014 | 7/25/1986 | Yes | Equity | |||||
Strategic Income Fund |
October 31 (f) | 3/1/2014 | 4/21/1977 | Yes | Taxable fixed-income |
Statement of Additional Information September 1, 2014 | Page 5 |
Fund |
Fiscal Year
|
Prospectus
|
Date Began
|
Diversified** |
Fund
|
|||||
Tax-Exempt Fund |
July 31 (k) | 12/1/2013 | 11/21/1978 | Yes | Tax-exempt fixed-income | |||||
Ultra Short Term Bond Fund |
July 31 | 12/1/2013 | 3/8/2004 | Yes | Taxable fixed-income | |||||
U.S. Treasury Index Fund |
April 30 (a) | 9/1/2014 | 6/4/1991 | Yes | Taxable fixed-income | |||||
Value and Restructuring Fund |
August 31 (d) | 1/1/2014 | 12/31/1992 | Yes | Equity |
* | Certain Funds reorganized into series of the Trust. The date of operations for these Funds represents the date on which the predecessor funds began operation. |
** | A diversified Fund may not, with respect to 75% of its total assets, invest more than 5% of its total assets in securities of any one issuer or purchase more than 10% of the outstanding voting securities of any one issuer, except obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities and except securities of other investment companies. A non-diversified Fund may invest a greater percentage of its total assets in the securities of fewer issuers than a diversified fund, which increases the risk that a change in the value of any one investment held by the Fund could affect the overall value of the Fund more than it would affect that of a diversified fund holding a greater number of investments. Accordingly, a non-diversified Funds value will likely be more volatile than the value of a more diversified fund. If a non-diversified fund is managed as if it were a diversified fund for a period of three years, its status under the 1940 Act will convert automatically from non-diversified to diversified. A diversified fund may convert to non-diversified status only with shareholder approval. |
*** | The Fund Investment Category is used as a convenient way to describe Funds in this SAI and should not be deemed a description of the Funds principal investment strategies, which are described in the Funds prospectus. |
(a) | Bond Fund, Corporate Income Fund, Intermediate Bond Fund and U.S. Treasury Index Fund changed their fiscal year ends in 2012 from March 31 to April 30. |
(b) | Contrarian Core Fund and Small Cap Core Fund changed their fiscal year ends in 2012 from September 30 to August 31. |
(c) | Dividend Income Fund changed its fiscal year end in 2012 from September 30 to May 31. |
(d) | Emerging Markets Fund, Global Energy and Natural Resources Fund and Value and Restructuring Fund changed their fiscal year ends in 2012 from March 31 to August 31. |
(e) | HY Municipal Fund changed its fiscal year end in 2012 from June 30 to May 31. |
(f) | International Bond Fund and Strategic Income Fund changed their fiscal year ends in 2012 from May 31 to October 31. |
(g) | Large Cap Growth Fund changed its fiscal year end in 2012 from September 30 to July 31. |
(h) | OR Intermediate Municipal Bond Fund changed its fiscal year end in 2012 from August 31 to July 31. |
(i) | Real Estate Equity Fund changed its fiscal year end in 2009 from August 31 to December 31. |
(j) | Small Cap Value Fund I changed its fiscal year end in 2012 from June 30 to April 30. |
(k) | Tax-Exempt Fund changed its fiscal year end in 2012 from November 30 to July 31. |
Name Changes. The table below identifies any Fund whose name has changed in the past five years, the effective date of the name change and the former name.
Fund | Effective Date of Name Change | Previous Fund Name | ||
AMT-Free CT Intermediate Muni Bond Fund |
July 7, 2014 | Columbia Connecticut Intermediate Municipal Bond Fund | ||
AMT-Free Intermediate Muni Bond Fund |
July 7, 2014 | Columbia Intermediate Municipal Bond Fund | ||
AMT-Free MA Intermediate Muni Bond Fund |
July 7, 2014 | Columbia Massachusetts Intermediate Municipal Bond Fund | ||
AMT-Free NY Intermediate Muni Bond Fund |
July 7, 2014 | Columbia New York Intermediate Municipal Bond Fund | ||
AMT-Free OR Intermediate Muni Bond Fund |
July 7, 2014 | Columbia Oregon Intermediate Municipal Bond Fund | ||
AP Growth Fund |
December 11, 2013 | Columbia Active Portfolios ® Select Large Cap Growth Fund | ||
Contrarian Core Fund |
November 14, 2008 | Columbia Common Stock Fund | ||
Corporate Income Fund |
September 27, 2010 | Columbia Income Fund | ||
Global Dividend Opportunity Fund |
August 17, 2012 | Columbia Strategic Investor Fund | ||
Global Energy and Natural Resources Fund |
August 5, 2013 | Columbia Energy and Natural Resources Fund | ||
Global Technology Growth Fund |
July 7, 2014 | Columbia Technology Fund |
Statement of Additional Information September 1, 2014 | Page 6 |
FUNDAMENTAL AND NON-FUNDAMENTAL INVESTMENT POLICIES
The following discussion of fundamental and non-fundamental investment policies and limitations for each Fund supplements the discussion of investment policies in the Funds prospectuses. A fundamental policy may be changed only with Board and shareholder approval. A non-fundamental policy may be changed by the Board and does not require shareholder approval, but may require notice to shareholders in certain instances.
Unless otherwise noted, whenever an investment policy or limitation states a maximum percentage of a Funds assets that may be invested in any security or other asset, or sets forth a policy regarding an investment standard, compliance with such percentage limitation or standard will be determined solely at the time of the Funds acquisition of such security or asset.
Notwithstanding any of a Funds other investment policies, each Fund, subject to certain limitations, may invest its assets in another investment company. These underlying funds have adopted their own investment policies that may be more or less restrictive than those of the Fund. Unless a fund has a policy to consider the policies of underlying funds, the Fund may engage in investment strategies indirectly that would otherwise be prohibited under the Funds investment policies.
Fundamental Policies
The 1940 Act provides that a vote of a majority of the outstanding voting securities means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of a Fund, or (2) 67% or more of the shares present at a meeting if more than 50% of the outstanding shares are represented at the meeting in person or by proxy. The following fundamental investment policies cannot be changed without such a vote.
Fund |
A
Buy or
|
B
Buy or sell
|
C
Buy more
|
D
Invest
|
E
Concentrate
|
F
Invest at
|
G
Act as an
|
H
Lending |
I
Borrow
|
J
Issue
|
||||||||||
AMT-Free CT Intermediate Muni Bond Fund |
A1 | B1 | | | E1 | F2 | G1 | H1 | I1 | J1 | ||||||||||
AMT-Free Intermediate Municipal Bond Fund |
A1 | B1 | C1 | D1 | E1 | F3 | G1 | H1 | I1 | J1 | ||||||||||
AMT-Free MA Intermediate Municipal Bond Fund |
A1 | B1 | | | E1 | F4 | G1 | H1 | I1 | J1 | ||||||||||
AMT-Free NY Intermediate Municipal Bond Fund |
A1 | B1 | | | E1 | F5 | G1 | H1 | I1 | J1 | ||||||||||
AMT-Free OR Intermediate Municipal Bond Fund |
A1 | B1 | C3 | D3 | E1 | F6 | G1 | H1 | I1 | J1 | ||||||||||
AP Alternative Strategies Fund |
A1 | B2 | | | E1 | | G1 | H1 | I1 | J1 | ||||||||||
AP Core Plus Bond Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
AP Growth Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
AP Small Cap Equity Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Balanced Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Bond Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
CA Tax-Exempt Fund |
A1 | B1 | | | E1 | F1 | G1 | H1 | I1 | J1 | ||||||||||
Contrarian Core Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Corporate Income Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Diversified Real Return Fund |
A1 | B3 | C1 | D1 | E5 | | G1 | H1 | I1 | J1 | ||||||||||
Dividend Income Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Emerging Markets Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Global Dividend Opportunity Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Global Energy and Natural Resources Fund |
A1 | B1 | | | E2 | | G1 | H1 | I1 | J1 | ||||||||||
Global ILB Plus Fund |
A1 | B3 | | | E5 | | G1 | H1 | I1 | J1 | ||||||||||
Global Technology Growth Fund |
A1 | B1 | | | E4 | F9 | G1 | H1 | I1 | J1 | ||||||||||
Greater China Fund |
A1 | B1 | C2 | D2 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
HY Municipal Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 |
Statement of Additional Information September 1, 2014 | Page 7 |
Fund |
A
Buy or
|
B
Buy or sell
|
C
Buy more
|
D
Invest
|
E
Concentrate
|
F
Invest at
|
G
Act as an
|
H
Lending |
I
Borrow
|
J
Issue
|
||||||||||
Intermediate Bond Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
International Bond Fund |
A1 | B1 | | | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Large Cap Growth Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Mid Cap Growth Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
NY Tax-Exempt Fund |
A1 | B1 | | | E1 | F1 | G1 | H1 | I1 | J1 | ||||||||||
Pacific/Asia Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Real Estate Equity Fund |
A1 | B1 | | | E3 | F7 | G1 | H1 | I1 | J1 | ||||||||||
Risk Allocation Fund |
A1 | B1 | | | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Select Large Cap Growth Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Small Cap Core Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Small Cap Growth Fund I |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Small Cap Value Fund I |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Strategic Income Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Tax-Exempt Fund |
A1 | B1 | C1 | D1 | E1 | F8 | G1 | H1 | I1 | J1 | ||||||||||
Ultra Short Term Bond Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
U.S. Treasury Index Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 | ||||||||||
Value and Restructuring Fund |
A1 | B1 | C1 | D1 | E1 | | G1 | H1 | I1 | J1 |
A. | Buy or sell real estate | |||
A1 | The Fund may not purchase or sell real estate, except each Fund may: (i) purchase securities of issuers which deal or invest in real estate, (ii) purchase securities which are secured by real estate or interests in real estate and (iii) hold and dispose of real estate or interests in real estate acquired through the exercise of its rights as a holder of securities which are secured by real estate or interests therein. | |||
B. | Buy or sell physical commodities | |||
B1 | The Fund may not purchase or sell commodities, except that each Fund may to the extent consistent with its investment objective: (i) invest in securities of companies that purchase or sell commodities or which invest in such programs, (ii) purchase and sell options, forward contracts, futures contracts, and options on futures contracts and (iii) enter into swap contracts and other financial transactions relating to commodities. (a) This limitation does not apply to foreign currency transactions including without limitation forward currency contracts. | |||
B2 | The Fund may invest up to 25% of its total assets in one or more wholly-owned subsidiaries that may invest in commodities, thereby indirectly gaining exposure to commodities, and may, to the extent consistent with its investment objective, (i) invest in securities of companies that purchase or sell commodities or which invest in such programs, (ii) purchase and sell options, forward contracts, futures contracts, and options on futures contracts and (iii) enter into swap contracts and other financial transactions relating to commodities. (a) This policy does not limit foreign currency transactions including without limitation forward currency contracts. | |||
B3 | The Fund will not purchase or sell commodities, except to the extent permitted by applicable law from time to time. | |||
C. | Buy more than 10% of an issuer | |||
C1 | The Fund may not purchase securities (except securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities) of any one issuer if, as a result, it would own more than 10% of the voting securities of such issuer, except that: (i) up to 25% of its total assets may be invested without regard to these limitations and (ii) a Funds assets may be invested in the securities of one or more management investment companies to the extent permitted by the 1940 Act, the rules and regulations thereunder, or any applicable exemptive relief. | |||
C2 | The Fund may not, as a matter of fundamental policy, purchase securities (except securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities) of any one issuer if, as a result, it would own more than 10% of the voting securities of such issuer, except that: (i) up to 50% of its total assets may be invested without regard to these limitations and (ii) the Funds assets may be invested in the securities of one or more management investment companies to the extent permitted by the 1940 Act, the rules and regulations thereunder, or any applicable exemptive relief. | |||
C3 | The Fund will not make any investment inconsistent with its classification as a diversified company under the 1940 Act. |
Statement of Additional Information September 1, 2014 | Page 8 |
D. | Invest more than 5% in an issuer | |||
D1 | The Fund may not purchase securities (except securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities) of any one issuer if, as a result, more than 5% of its total assets will be invested in the securities of such issuer, except that: (i) up to 25% of its total assets may be invested without regard to these limitations and (ii) a Funds assets may be invested in the securities of one or more management investment companies to the extent permitted by the 1940 Act, the rules and regulations thereunder, or any applicable exemptive relief. | |||
D2 | The Fund may not, as a matter of fundamental policy, purchase securities (except securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities) of any one issuer if, as a result, more than 5% of its total assets will be invested in the securities of such issuer, except that: (i) up to 50% of its total assets may be invested without regard to these limitations and (ii) the Funds assets may be invested in the securities of one or more management investment companies to the extent permitted by the 1940 Act, the rules and regulations thereunder, or any applicable exemptive relief. | |||
D3 | The Fund will not make any investment inconsistent with its classification as a diversified company under the 1940 Act. | |||
E. | Concentrate (b) | |||
E1 | The Fund may not purchase any securities which would cause 25% or more of the value of its total assets at the time of purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that: (i) there is no limitation with respect to obligations issued or guaranteed by the U.S. Government, any state or territory of the United States or any of their agencies, instrumentalities or political subdivisions (c) ; and (ii) notwithstanding this limitation or any other fundamental investment limitation, assets may be invested in the securities of one or more management investment companies or subsidiaries to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. | |||
E2 | The Fund may not purchase any securities which would cause 25% or more of the value of its total assets at the time of purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that: (i) there is no limitation with respect to obligations issued or guaranteed by the U.S. Government, any state or territory of the United States or any of their agencies, instrumentalities or political subdivisions; (ii) notwithstanding this limitation or any other fundamental investment limitation, assets may be invested in the securities of one or more management investment companies or subsidiaries to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief; and (iii) under normal market conditions, the Fund will invest at least 25% of the value of its total assets at the time of purchase in the securities of issuers conducting their principal business activities in the energy and other natural resources groups of industries. (d) | |||
E3 | The Fund will invest at least 65% of the value of its total assets in securities of companies principally engaged in the real estate industry. | |||
E4 | The Fund will invest at least 25% of the value of its total assets in securities of issuers conducting their principal business activities in the technology and related group of industries. | |||
E5 | The Fund may not purchase any securities which would cause 25% or more of the value of its total assets at the time of purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that: (i) there is no limitation with respect to obligations issued or guaranteed by the U.S. Government, any state, municipality or territory of the United States, or any of their agencies, instrumentalities or political subdivisions; and (ii) notwithstanding this limitation or any other fundamental investment limitation, assets may be invested in the securities of one or more management investment companies or subsidiaries to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. The Fund will consider the concentration policies of any underlying funds in which it invests when evaluating compliance with its concentration policy. | |||
F. | Invest at least 80% | |||
F1 | The Fund will, under normal circumstances, invest at least 80% of its total assets in state bonds, subject to applicable state requirements. | |||
F2 | Under normal circumstances, the Fund invests at least 80% of net assets in municipal securities that pay interest exempt from federal income tax (including the federal alternative minimum tax) and Connecticut individual income tax. These securities are issued by the State of Connecticut and its political subdivisions, agencies, |
Statement of Additional Information September 1, 2014 | Page 9 |
authorities and instrumentalities, by other qualified issuers (such as Guam, Puerto Rico and the U.S. Virgin Islands) and by mutual funds that invest in such securities. Dividends derived from interest on municipal securities other than such securities will generally be exempt from regular federal income tax (including the federal alternative minimum tax) but subject to Connecticut personal income tax. The Fund may comply with this 80% policy by investing in a partnership, trust or regulated investment company which invests in such securities, in which case the Funds investment in such entity shall be deemed to be an investment in the underlying securities in the same proportion as such entitys investment in such securities bears to its net assets. | ||||
F3 | As a matter of fundamental policy, under normal circumstances, the Fund invests at least 80% of net assets in municipal securities that pay interest exempt from federal income tax (including the federal alternative minimum tax). These securities are issued by states and their political subdivisions, agencies, authorities and instrumentalities, by other qualified issuers (such as Guam, Puerto Rico and the U.S. Virgin Islands) and by mutual funds that invest in such securities. The Fund may comply with this 80% policy by investing in a partnership, trust, or regulated investment company which invests in such securities, in which case the Funds investment in such entity shall be deemed to be an investment in the underlying securities in the same proportion as such entitys investment in such securities bears to its net assets. | |||
F4 | Under normal circumstances, the Fund invests at least 80% of net assets in municipal securities that pay interest exempt from federal income tax (including the federal alternative minimum tax) and Massachusetts individual income tax. These securities are issued by the Commonwealth of Massachusetts and its political subdivisions, agencies, authorities and instrumentalities, by other qualified issuers (such as Guam, Puerto Rico and the U.S. Virgin Islands) and by mutual funds that invest in such securities. Dividends derived from interest on municipal securities other than such securities will generally be exempt from regular federal income tax (including the federal alternative minimum tax) but may be subject to Massachusetts personal income tax. The Fund may comply with this 80% policy by investing in a partnership, trust, or regulated investment company which invests in such securities, in which case the Funds investment in such entity shall be deemed to be an investment in the underlying securities in the same proportion as such entitys investment in such securities bears to its net assets. | |||
F5 | As a matter of fundamental policy, under normal circumstances, the Fund invests at least 80% of net assets in municipal securities that pay interest exempt from federal income tax (including the federal alternative minimum tax) and New York state individual income tax. These securities are issued by the State of New York and its political subdivisions, agencies, authorities and instrumentalities and by other qualified issuers (such as Guam, Puerto Rico and the U.S. Virgin Islands). Dividends derived from interest on municipal securities other than such securities will generally be exempt from regular federal income tax (including the federal alternative minimum tax) but may be subject to New York State and New York City personal income tax. The Fund may comply with this 80% policy by investing in a partnership, trust or regulated investment company which invests in such securities, in which case the Funds investment in such entity shall be deemed to be an investment in the underlying securities in the same proportion as such entitys investment in such securities bears to its net assets. | |||
F6 | Under normal circumstances, the Fund invests at least 80% of its net assets in municipal securities issued by the State of Oregon and its political subdivisions, agencies, authorities and instrumentalities. | |||
F7 | Under normal circumstances, the Fund invests at least 80% of its net assets in equity securities of companies principally engaged in the real estate industry, including REITs. | |||
F8 | Under normal circumstances, the Fund invests at least 80% of its total assets in tax-exempt bonds. | |||
F9 |
Under normal circumstances, the Fund invests at least 80% of net assets in equity securities (including, but not limited to, common stocks, preferred stocks and securities convertible into common or preferred stocks) of technology companies that may benefit from technological improvements, advancements or developments. |
|||
G. | Act as an underwriter | |||
G1 | The Fund may not underwrite any issue of securities issued by other persons within the meaning of the 1933 Act except when it might be deemed to be an underwriter either: (i) in connection with the disposition of a portfolio security; or (ii) in connection with the purchase of securities directly from the issuer thereof in accordance with the Funds investment objective. This restriction shall not limit the Funds ability to invest in securities issued by other registered investment companies. | |||
H. | Lending | |||
H1 | The Fund may not make loans, except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. | |||
I. | Borrowing | |||
I1 | The Fund may not borrow money except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. |
Statement of Additional Information September 1, 2014 | Page 10 |
J. | Issue senior securities | |||
J1 | The Fund may not issue senior securities except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. |
(a) | For purposes of fundamental investment policy on buying or selling physical commodities above, at the time of the establishment of the restriction for certain Funds, swap contracts on financial instruments or rates were not within the understanding of the term commodities. Notwithstanding any federal legislation or regulatory action by the CFTC that subjects such swaps to regulation by the CFTC, these Funds will not consider such instruments to be commodities for purposes of this restriction. |
(b) | For purposes of applying the limitation set forth in the concentration policies above, the Funds will generally use the industry classifications provided by the Global Industry Classification System (GICS). |
(c) | For purposes of determining whether International Bond Fund has invested 25% or more of the value of its total assets at the time of purchase in the securities of one or more issuers conducting their principal business activities in the same industry pursuant to the fundamental investment policy on concentration, the Fund will consider each foreign government to be conducting its business activities in a separate industry, and will consider a security to have been issued by a foreign government if (i) the security is issued directly by such government, (ii) the security is issued by an agency, instrumentality or authority that is backed by the full faith and credit of such foreign government or (iii) the security is issued by an entity the assets and revenues of which the Investment Manager determines are not separate from such foreign government. The Fund generally will treat supranational entities as issuers separate and distinct from any foreign government, so long as such entities do not fall within the characteristics described in item (iii) above. If any other security is guaranteed as to payment of principal and/or interest by a foreign government, then the Fund will generally treat the guarantee as a separate security issued by such foreign government. |
(d) | In determining whether Global Energy and Natural Resources Fund has invested at least 25% of the value of its total assets in the securities of one or more issuers conducting their principal business activities in the energy and other natural resources groups of industries, the Investment Manager currently uses the GICS produced by S&P and MSCI Inc. The Investment Manager currently considers companies in each of the indicated GICS industry groups to be within the energy and other natural resources groups of industries: (i) Energy, (ii) Utilities, and (iii) Materials, but limited to companies in the following GICS industries and sub-industries: the Chemicals industry (companies that primarily produce or distribute industrial and basic chemicals, including the Commodity Chemicals, Diversified Chemicals, Fertilizers & Agriculture Chemicals, Industrial Gases, and Specialty Chemicals sub-industries), the Metals & Mining industry (companies that primarily produce, process, extract, or distribute precious or basic metals or minerals, including the Aluminum, Diversified Metals & Mining, Gold, Precious Metals & Minerals, and Steel sub-industries), and the Paper & Forest Products industry (companies that primarily cultivate or manufacture timber or wood-related products or paper products, including the Forest Products and Paper Products sub-industries). |
Non-fundamental Policies
The following non-fundamental policies may be changed by the Board at any time and are in addition to those described in a prospectus.
Investment in Illiquid Securities
No more than 15% of the net assets of any Fund will be held in securities and other instruments that are illiquid. Illiquid Securities are defined in accordance with the SEC staffs current guidance and interpretations which provide that an illiquid security is a security which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which the Fund has valued the security.
Investment in Other Investment Companies
The Funds may not purchase securities of other investment companies except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. If shares of a Fund are purchased by another Fund in reliance on Section 12(d)(1)(G) of the 1940 Act, for so long as shares of the Fund are held by such other fund, the Fund will not purchase securities of a registered open-end investment company or registered unit investment trust in reliance on Section 12(d)(1)(F) or Section 12(d)(1)(G) of the 1940 Act.
A mutual funds investment in other registered investment companies is limited. The 1940 Act, in summary, provides that a mutual fund generally may not: (i) purchase more than 3% of the outstanding voting stock of another investment company; (ii) purchase securities issued by another registered investment company representing more than 5% of the investing mutual funds total assets; and (iii) purchase securities issued by investment companies that in the aggregate represent more than 10% of the acquiring funds total assets (the 3, 5 and 10 Rule). Affiliated fund-of-funds (i.e., those funds that invest in other funds within the same fund family), with respect to investments in affiliated funds, are not subject to the 3, 5 and 10 Rule and, therefore, may invest in affiliated funds without restriction. A fund-of-funds may also invest its assets in unaffiliated funds, but the fund-of-funds generally may not purchase more than 3% of the outstanding voting stock of any one unaffiliated fund.
Investment in Foreign Securities
|
Bond Fund may invest up to 25% of its assets in dollar-denominated debt securities issued by foreign governments, companies or other entities. |
|
Large Cap Growth Fund, Mid Cap Growth Fund, Small Cap Core Fund, Small Cap Growth Fund I and Small Cap Value Fund I each may invest up to 20% of its total assets in foreign securities. |
|
Balanced Fund, Contrarian Core Fund and Dividend Income Fund each may invest up to 20% of its net assets in foreign securities. |
Statement of Additional Information September 1, 2014 | Page 11 |
|
Up to 25% of the net assets of AP Core Plus Bond Fund may be invested in foreign investments, which may include investments in non-U.S. dollar denominated securities, as well as investments in emerging markets securities. |
|
AP Small Cap Equity Fund may invest up to 25% of its net assets in foreign investments. |
|
Ultra Short Term Bond Fund may invest up to 20% of its total assets in dollar-denominated foreign debt securities. |
Selling Securities Short
|
Each Fund (other than those Funds listed below) may not sell securities short, except as permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. |
|
The following Funds may not sell securities short: AMT-Free OR Intermediate Muni Bond Fund, AP Core Plus Bond Fund, AP Growth Fund, Balanced Fund, Bond Fund, Emerging Markets Fund, Global Dividend Opportunity Fund, Global Energy and Natural Resources Fund, Global Technology Growth Fund, Mid Cap Growth Fund, Pacific/Asia Fund, Real Estate Equity Fund, Select Large Cap Growth Fund, Small Cap Growth Fund I and Value and Restructuring Fund. |
|
Tax-Exempt Fund may not have a short position, unless the Fund owns, or owns rights (exercisable without payment) to acquire, an equal amount of such securities. |
Purchasing on Margin
|
Tax-Exempt Fund may not purchase securities on margin, but may receive short-term credit to clear securities transactions and may make initial or maintenance margin deposits in connection with futures transactions. |
Names Rule Policy
To the extent a Fund is subject to Rule 35d-1 under the 1940 Act (the Names Rule), and does not otherwise have a fundamental policy in place to comply with the Names Rule, such Fund has adopted the following non-fundamental policy: Shareholders will receive at least 60 days notice of any change to the Funds investment objective or principal investment strategies made in order to comply with the Names Rule. The notice will be provided in plain English in a separate written document, and will contain the following prominent statement or similar statement in bold-face type: Important Notice Regarding Change in Investment Policy. This statement will appear on both the notice and the envelope in which it is delivered, unless it is delivered separately from other communications to investors, in which case the statement will appear either on the notice or the envelope in which the notice is delivered.
Summary of 1940 Act Restrictions on Certain Activities
Certain of the Funds fundamental and non-fundamental policies set forth above prohibit certain activities except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief. The following discussion summarizes some of the flexibility that the Fund currently gains from these exceptions. To the extent the 1940 Act or the rules and regulations thereunder may, in the future, be amended to provide greater flexibility, or to the extent the SEC may in the future grant exemptive relief or issue interpretative or pronouncements providing greater flexibility, the Fund will be able to use that flexibility without seeking shareholder approval of its fundamental policies.
Making loans (Lending) Under the 1940 Act, a mutual fund may loan money or property to persons who do not control and are not under common control with the fund, except that a fund may make loans to a wholly-owned subsidiary. In addition, the SEC staff takes the position that a fund may not lend portfolio securities representing more than one-third of the funds total value. In addition, a fund must receive from the borrower collateral at least equal in value to the loaned securities, marked to market daily. Thus, the Funds may make loans to third parties, including loans of their portfolio securities, subject to these conditions.
Borrowing money The 1940 Act permits a fund to borrow up to 33 1/3% of its total assets (including the amounts borrowed) from banks, plus an additional 5% of its total assets for temporary purposes, which may be borrowed from banks or other sources. The exception in the fundamental policy allows the Funds to borrow money subject to these conditions.
Issuing senior securities A senior security is an obligation with respect to the earnings or assets of a company that takes precedence over the claims of that companys common stock with respect to the same earnings or assets. The 1940 Act generally prohibits a mutual fund from issuing senior securities other than certain borrowings from a bank, but SEC staff interpretations allow a fund to engage in certain types of transactions that otherwise might raise senior security concerns (such as short sales, buying and selling financial futures contracts and selling put and call options and entering into certain other derivative transactions, and reverse repurchase agreements and other transactions creating a future obligation on the Fund), provided that the fund segregates liquid assets, or otherwise covers the transaction with offsetting portfolio securities, in amounts sufficient to offset any liability associated with the transaction. The Funds operate in reliance upon SEC and its staff interpretations.
Selling securities short A Fund may sell a security short by borrowing the security, then selling it to a third party. The Fund will eventually need to close out the short sale by buying the security and returning it, together with interest, to the party from whom the Fund borrowed the security. The SEC staff takes the position that, as described under Issuing senior securities above, a mutual fund must segregate liquid assets with a value equal to, or otherwise cover the obligation to return, the security. The exception in the Funds policy (as applicable) allows a Fund to sell securities short provided it segregates liquid assets with a value equal to, or otherwise covers the obligation to return, the security.
Statement of Additional Information September 1, 2014 | Page 12 |
Each Funds investment objectives, principal investment strategies and related principal risks are discussed in each Funds prospectuses. Each Funds prospectus identifies the types of securities in which the Fund invests principally and summarizes the principal risks to the Funds portfolio as a whole associated with such investments. Unless otherwise indicated in the prospectus or this SAI, the investment objective and policies of a Fund may be changed without shareholder approval.
To the extent that a type of security identified in the table below for a Fund is not described in the Funds prospectus (or as a sub-category of such security type in this SAI), the Fund generally invests in such security type, if at all, as part of its non-principal investment strategies.
Information about individual types of securities (including certain of their associated risks) in which some or all of the Funds may invest is set forth below. Each Fund may invest in these types of securities, subject to its investment objective and fundamental and non-fundamental investment policies. A Fund is not required to invest in any or all of the types of securities listed below.
Funds-of-funds invest in a combination of underlying funds, although they may invest directly in stocks, bonds and other securities. These underlying funds have their own investment strategies and types of investments they are allowed to engage in and purchase. Funds-of-funds may invest, directly or indirectly through investments in underlying funds, in the securities and engage in investment strategies indicated in the table below.
Certain Investment Activity Limits. The overall investment and other activities of the Investment Manager and its affiliates may limit the investment opportunities for each Fund in certain markets, industries or transactions or in individual issuers where limitations are imposed upon the aggregate amount of investment by the Funds and other accounts managed by the Investment Manager and accounts of its affiliates (collectively, affiliated investors). From time to time, each Funds activities also may be restricted because of regulatory restrictions applicable to the Investment Manager and its affiliates and/or because of their internal policies. See Investment Management and Other Services Other Roles and Relationships of Ameriprise Financial and its Affiliates Certain Conflicts of Interest.
Temporary Defensive Positions. Each Fund may from time to time take temporary defensive investment positions that may be inconsistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, social or other conditions, including, without limitation investing some or all of its assets in money market instruments or shares of affiliated or unaffiliated money market funds or holding some or all of its assets in cash or cash equivalents. The Fund may take such defensive investment positions for as long a period as deemed necessary.
Other Strategic and Investment Measures. Unless prohibited by its investment policies, a Fund may also from time to time take temporary portfolio positions that may or may not be consistent with the Funds principal investment strategies in attempting to respond to adverse market, economic, political, social or other conditions, including, without limitation, investing in derivatives, such as futures (e.g., index futures) or options on futures, for various purposes, including among others, investing in particular derivatives to achieve indirect investment exposure to a sector, country or region where the Investment Manager (or Fund subadviser, if applicable) believes such defensive positioning is appropriate. Each Fund may do so without limit and for as long a period as deemed necessary, when the Investment Manager or the Funds subadviser, if applicable: (i) believes that market conditions are not favorable for profitable investing or to avoid losses, including under adverse market, economic, political or other conditions; (ii) is unable to locate favorable investment opportunities; or (iii) determines that a temporary defensive position is advisable or necessary in order to meet anticipated redemption requests, or for other reasons. While the Fund is so positioned, derivatives could comprise a substantial portion of the Funds investments and the Fund may not achieve its investment objective. Investing in this manner may adversely affect Fund performance. During these times, the portfolio managers may make frequent portfolio holding changes, which could result in increased trading expenses and taxes, and decreased Fund performance.
A black circle indicates that the investment strategy or type of investment generally is authorized for a category of funds. Exceptions are noted following the table. See About the Trust for fund investment categories.
Type of Investment | Alternative |
Equity
and Flexible |
Funds-of-Funds
Equity and Fixed Income |
Taxable
Fixed Income (a) |
Tax-Exempt
Fixed Income |
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Asset-Backed Securities |
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Bank Obligations (Domestic and Foreign) |
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Type of Investment | Alternative |
Equity
and Flexible |
Funds-of-Funds
Equity and Fixed Income |
Taxable
Fixed Income (a) |
Tax-Exempt
Fixed Income |
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Collateralized Bond Obligations |
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Commercial Paper |
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Common Stock |
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Convertible Securities |
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Corporate Debt Securities |
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Custody Receipts and Trust Certificates |
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Debt Obligations |
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Depositary Receipts |
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Derivatives |
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Dollar Rolls |
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Foreign Currency Transactions |
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Foreign Securities |
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Guaranteed Investment Contracts (Funding Agreements) |
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High Yield Securities |
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Illiquid Securities |
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Inflation Protected Securities |
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Initial Public Offerings |
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Inverse Floaters |
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Investments in Other Investment Companies (Including ETFs) |
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Money Market Instruments |
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Mortgage-Backed Securities |
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Municipal Securities |
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Participation Interests |
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Partnership Securities |
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Preferred Stock |
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Private Placement and Other Restricted Securities |
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Real Estate Investment Trusts |
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Repurchase Agreements |
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Reverse Repurchase Agreements |
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Short Sales (b) |
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Sovereign Debt |
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Standby Commitments |
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U.S. Government and Related Obligations |
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Variable and Floating Rate Obligations |
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(a) | Intermediate Bond Fund is not authorized to purchase common stock or bank obligations. U.S. Treasury Index Fund is not authorized to purchase asset-backed securities; bank obligations, convertible securities, corporate debt obligations (other than money market instruments), depositary receipts, dollar rolls, foreign currency transactions, foreign securities, guaranteed investment contracts, inverse floaters, low and below investment grade securities, mortgage-backed securities, municipal securities, participation interests, partnership securities, REITs, reverse repurchase agreements, short sales, sovereign debt and standby commitments. Ultra Short Term Bond is not authorized to purchase common stock, foreign currency transactions and short sales. |
(b) | See Fundamental and Non-Fundamental Investment Policies for Funds that are not permitted to sell securities short. |
Asset-Backed Securities
Asset-backed securities represent interests in, or debt instruments that are backed by, pools of various types of assets that generate cash payments generally over fixed periods of time, such as, among others, motor vehicle installment sales, contracts, installment loan contracts, leases of various types of real and personal property, and receivables from revolving (credit card) agreements. Such securities entitle the security holders to receive distributions (i.e., principal and interest) that are tied to the payments made by the borrower on the underlying assets (less fees paid to the originator, servicer, or other parties, and fees paid for credit enhancement), so that the payments made on the underlying assets effectively pass through to such security holders. Asset-backed securities typically are created by an originator of loans or owner of accounts receivable that sells such underlying assets to a special purpose entity in a process called a securitization. The special purpose entity issues securities that are backed by the payments on the underlying assets, and have a minimum denomination and specific
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term. Asset-backed securities may be structured as fixed-, variable- or floating-rate obligations or as zero-coupon, pay-in-kind and step-coupon securities and may be privately placed or publicly offered. See Types of Investments Variable- and Floating-Rate Obligations, Types of Investments Zero-Coupon, Pay-in-Kind and Step-Coupon Securities and Types of Investments Private Placement and Other Restricted Securities for more information.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with asset-backed securities include: Credit Risk, Interest Rate Risk, Liquidity Risk and Prepayment and Extension Risk.
Bank Obligations (Domestic and Foreign)
Bank obligations include certificates of deposit, bankers acceptances, time deposits and promissory notes that earn a specified rate of return and may be issued by (i) a domestic branch of a domestic bank, (ii) a foreign branch of a domestic bank, (iii) a domestic branch of a foreign bank or (iv) a foreign branch of a foreign bank. Bank obligations may be structured as fixed-, variable- or floating-rate obligations. See Types of Investments Variable- and Floating-Rate Obligations for more information.
Certificates of deposit, or so-called CDs, typically are interest-bearing debt instruments issued by banks and have maturities ranging from a few weeks to several years. Yankee dollar certificates of deposit are negotiable CDs issued in the United States by branches and agencies of foreign banks. Eurodollar certificates of deposit are CDs issued by foreign banks with interest and principal paid in U.S. dollars. Eurodollar and Yankee Dollar CDs typically have maturities of less than two years and have interest rates that typically are pegged to the London Interbank Offered Rate or LIBOR. See Types of Investments Eurodollar and Yankee Dollar Instruments . Bankers acceptances are time drafts drawn on and accepted by banks, are a customary means of effecting payment for merchandise sold in import-export transactions and are a general source of financing. A time deposit can be either a savings account or CD that is an obligation of a financial institution for a fixed term. Typically, there are penalties for early withdrawals of time deposits. Promissory notes are written commitments of the maker to pay the payee a specified sum of money either on demand or at a fixed or determinable future date, with or without interest.
Bank investment contracts are issued by banks. Pursuant to such contracts, a Fund may make cash contributions to a deposit fund of a bank. The bank then credits to the Fund payments at floating or fixed interest rates. A Fund also may hold funds on deposit with its custodian for temporary purposes.
Certain bank obligations, such as some CDs, are insured by the FDIC up to certain specified limits. Many other bank obligations, however, are neither guaranteed nor insured by the FDIC or the U.S. Government. These bank obligations are backed only by the creditworthiness of the issuing bank or parent financial institution. Domestic and foreign banks are subject to different governmental regulation. Accordingly, certain obligations of foreign banks, including Eurodollar and Yankee dollar obligations, involve different and/or heightened investment risks than those affecting obligations of domestic banks, including, among others, the possibilities that: (i) their liquidity could be impaired because of political or economic developments; (ii) the obligations may be less marketable than comparable obligations of domestic banks; (iii) a foreign jurisdiction might impose withholding and other taxes at high levels on interest income; (iv) foreign deposits may be seized or nationalized; (v) foreign governmental restrictions such as exchange controls may be imposed, which could adversely affect the payment of principal and/or interest on those obligations; (vi) there may be less publicly available information concerning foreign banks issuing the obligations; and (vii) the reserve requirements and accounting, auditing and financial reporting standards, practices and requirements applicable to foreign banks may differ (including, less stringent) from those applicable to domestic banks. Foreign banks generally are not subject to examination by any U.S. Government agency or instrumentality. See Types of Investments Foreign Securities .
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with bank obligations include: Credit Risk, Interest Rate Risk, Issuer Risk, and Prepayment and Extension Risk.
Collateralized Bond Obligations
Collateralized bond obligations (CBOs) are investment grade bonds backed by a pool of bonds, which may include junk bonds (which are considered speculative investments). CBOs are similar in concept to collateralized mortgage obligations (CMOs), but differ in that CBOs represent different degrees of credit quality rather than different maturities. (See Types of Investments Mortgage-Backed Securities and Asset-Backed Securities .) CBOs are often privately offered and sold, and thus not registered under securities laws.
Underwriters of CBOs package a large and diversified pool of high-risk, high-yield junk bonds, which is then structured into tranches. Typically, the first tranche represents a senior claim on collateral and pays the lowest interest rate; the second tranche is junior to the first tranche and therefore subject to greater risk and pays a higher rate; the third tranche is junior to both the first and second tranche, represents the lowest credit quality and instead of receiving a fixed interest rate receives the residual interest payments money that is left over after the higher tranches have been paid. CBOs, like CMOs, are substantially overcollateralized and this, plus the diversification of the pool backing them, may earn certain of the tranches investment-grade bond ratings. Holders of third-tranche CBOs stand to earn higher or lower yields depending on the rate of defaults in the collateral pool. See Types of Investments Low and Below Investment Grade (High Yield) Securities .
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Although one or more of the other risks described in this SAI may also apply, the risks typically associated with CBOs include: Credit Risk, Illiquid Securities Risk, Interest Rate Risk, Liquidity Risk, Low and Below Investment Grade (High-Yield) Securities Risk and Prepayment and Extension Risk.
Commercial Paper
Commercial paper is a short-term debt obligation, usually sold on a discount basis, with a maturity ranging from 2 to 270 days issued by banks, corporations and other borrowers. It is sold to investors with temporary idle cash as a way to increase returns on a short-term basis. These instruments are generally unsecured, which increases the credit risk associated with this type of investment. See Types of Investments Debt Obligations and Illiquid Securities . See Appendix A for a discussion of securities ratings.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with commercial paper include: Credit Risk and Liquidity Risk.
Common Stock
Common stock represents a unit of equity ownership of a corporation. Owners typically are entitled to vote on the selection of directors and other important corporate governance matters, and to receive dividend payments, if any, on their holdings. However, ownership of common stock does not entitle owners to participate in the day-to-day operations of the corporation. Common stocks of domestic and foreign public corporations can be listed, and their shares traded, on domestic stock exchanges, such as the NYSE or the NASDAQ Stock Market. Domestic and foreign corporations also may have their shares traded on foreign exchanges, such as the London Stock Exchange or Tokyo Stock Exchange. See Types of Investments Foreign Securities . Common stock may be privately placed or publicly offered. The price of common stock is generally determined by corporate earnings, type of products or services offered, projected growth rates, experience of management, liquidity, and market conditions generally. In the event that a corporation declares bankruptcy or is liquidated, the claims of secured and unsecured creditors and owners of bonds and preferred stock take precedence over the claims of those who own common stock. See Types of Investments Private Placement and Other Restricted Securities Preferred Stock and Convertible Securities for more information.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with common stock include: Issuer Risk and Market Risk.
Convertible Securities
Convertible securities include bonds, debentures, notes, preferred stocks or other securities that may be converted or exchanged (by the holder or by the issuer) into shares of the underlying common stock (or cash or securities of equivalent value) at a stated exchange ratio or predetermined price (the conversion price). As such, convertible securities combine the investment characteristics of debt securities and equity securities. A holder of convertible securities is entitled to receive the income of a bond, debenture or note or the dividend of a preferred stock until the conversion privilege is exercised. The market value of convertible securities generally is a function of, among other factors, interest rates, the rates of return of similar nonconvertible securities and the financial strength of the issuer. The market value of convertible securities tends to decline as interest rates rise and, conversely, to rise as interest rates decline. However, a convertible securitys market value tends to reflect the market price of the common stock of the issuing company when that stock price approaches or is greater than its conversion price. As the market price of the underlying common stock declines, the price of the convertible security tends to be influenced more by the rate of return of the convertible security. Because both interest rate and common stocks market movements can influence their value, convertible securities generally are not as sensitive to changes in interest rates as similar non-convertible debt securities nor generally as sensitive to changes in share price as the underlying common stock. Convertible securities may be structured as fixed-, variable- or floating-rate obligations or as zero-coupon, pay-in-kind and step-coupon securities and may be privately placed or publicly offered. See Types of Investments Variable- and Floating-Rate Obligations, Types of Investments Zero-Coupon, Pay-in-Kind and Step-Coupon Securities, Types of Investments Common Stock, Types of Investments Corporate Debt Securities and Types of Investments Private Placement and Other Restricted Securities for more information.
Certain convertible securities may have a mandatory conversion feature, pursuant to which the securities convert automatically into common stock or other equity securities (of the same or a different issuer) at a specified date and at a specified exchange ratio. Certain convertible securities may be convertible at the option of the issuer, which may require a holder to convert the security into the underlying common stock, even at times when the value of the underlying common stock or other equity security has declined substantially. In addition, some convertible securities may be rated below investment grade or may not be rated and, therefore, may be considered speculative investments. Companies that issue convertible securities frequently are small- and mid-capitalization companies and, accordingly, carry the risks associated with such companies. In addition, the credit rating of a companys convertible securities generally is lower than that of its conventional debt securities. Convertible securities are senior to equity securities and have a claim to the assets of an issuer prior to the holders of the issuers common stock in the event of liquidation but generally are subordinate to similar non-
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convertible debt securities of the same issuer. Some convertible securities are particularly sensitive to changes in interest rates when their predetermined conversion price is much higher than the price for the issuing companys common stock.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with convertible securities include: Convertible Securities Risk, Interest Rate Risk, Issuer Risk, Market Risk, Prepayment and Extension Risk, and Reinvestment Risk.
Corporate Debt Securities
Corporate debt securities are long and short term fixed income securities typically issued by businesses to finance their operations. Corporate debt securities are issued by public or private companies, as distinct from debt securities issued by a government or its agencies. The issuer of a corporate debt security often has a contractual obligation to pay interest at a stated rate on specific dates and to repay principal periodically or on a specified maturity date. Corporate debt securities typically have four distinguishing features: (1) they are taxable; (2) they have a par value of $1,000; (3) they have a term maturity, which means they come due at a specified time period; and (4) many are traded on major securities exchanges. Notes, bonds, debentures and commercial paper are the most common types of corporate debt securities, with the primary difference being their interest rates, maturity dates and secured or unsecured status. Commercial paper has the shortest term and usually is unsecured, as are debentures. The broad category of corporate debt securities includes debt issued by domestic or foreign companies of all kinds, including those with small-, mid- and large-capitalizations. The category also includes bank loans, as well as assignments, participations and other interests in bank loans. Corporate debt securities may be rated investment grade or below investment grade and may be structured as fixed-, variable or floating-rate obligations or as zero-coupon, pay-in-kind and step-coupon securities and may be privately placed or publicly offered. They may also be senior or subordinated obligations. See Appendix A for a discussion of securities ratings. See Types of Investments Variable- and Floating-Rate Obligations, Types of Investments Zero-Coupon, Pay-in-Kind and Step-Coupon Securities Types of Investments Private Placement and Other Restricted Securities Debt Obligations, Types of Investments Commercial Paper and Low and Below Investment Grade Securities for more information.
Extendible commercial notes (ECNs) are very similar to commercial paper except that, with ECNs, the issuer has the option to extend the notes maturity. ECNs are issued at a discount rate, with an initial redemption of not more than 90 days from the date of issue. If ECNs are not redeemed by the issuer on the initial redemption date, the issuer will pay a premium (step-up) rate based on the ECNs credit rating at the time.
Because of the wide range of types and maturities of corporate debt securities, as well as the range of creditworthiness of issuers, corporate debt securities can have widely varying risk/return profiles. For example, commercial paper issued by a large established domestic corporation that is rated by an NRSRO as investment grade may have a relatively modest return on principal but present relatively limited risk. On the other hand, a long-term corporate note issued, for example, by a small foreign corporation from an emerging market country that has not been rated by an NRSRO may have the potential for relatively large returns on principal but carries a relatively high degree of risk.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with corporate debt securities include: Credit Risk, Interest Rate Risk, Issuer Risk, High Yield Securities Risk, Prepayment and Extension Risk and Reinvestment Risk.
Custody Receipts and Trust Certificates
Custody receipts and trust certificates are derivative products that evidence direct ownership in a pool of securities. Typically, a sponsor will deposit a pool of securities with a custodian in exchange for custody receipts evidencing interests in those securities. The sponsor generally then will sell the custody receipts or trust certificates in negotiated transactions at varying prices. Each custody receipt or trust certificate evidences the individual securities in the pool and the holder of a custody receipt or trust certificate generally will have all the rights and privileges of owners of those securities.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with custody receipts and trust certificates include: Liquidity Risk and Counterparty Risk. In addition, custody receipts and trust certificates generally are subject to the same risks as the securities evidenced by the receipts or certificates.
Debt Obligations
Many different types of debt obligations exist (for example, bills, bonds, and notes). Issuers of debt obligations have a contractual obligation to pay interest at a fixed, variable or floating rate on specified dates and to repay principal by a specified maturity date. Certain debt obligations (usually intermediate and long-term bonds) have provisions that allow the issuer to redeem or call a bond before its maturity. Issuers are most likely to call these securities during periods of falling interest rates. When this happens, an investor may have to replace these securities with lower yielding securities, which could result in a lower return.
The market value of debt obligations is affected primarily by changes in prevailing interest rates and the issuers perceived ability to repay the debt. The market value of a debt obligation generally reacts inversely to interest rate changes. When prevailing interest rates decline, the market value of the bond usually rises, and when prevailing interest rates rise, the market value of the bond usually declines.
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In general, the longer the maturity of a debt obligation, the higher its yield and the greater the sensitivity to changes in interest rates. Conversely, the shorter the maturity, the lower the yield and the lower the sensitivity to changes in interest rates.
As noted, the values of debt obligations also may be affected by changes in the credit rating or financial condition of their issuers. Generally, the lower the quality rating of a security, the higher the degree of risk as to the payment of interest and return of principal. To compensate investors for taking on such increased risk, those issuers deemed to be less creditworthy generally must offer their investors higher interest rates than do issuers with better credit ratings. See Types of Investments Corporate Debt Securities and Low and Below Investment Grade (High Yield) Securities .
See Types of Investments Trust-Preferred Securities for information with respect to the trust-preferred or trust-issued securities.
Determining Investment Grade for Purposes of Investment Policies. When determining whether a security is investment grade or below investment grade for purposes of investment policies of investing in such securities, a Fund will apply one of the following methodologies, as identified within its shareholder reports, when available. In general, bond ratings apply to the underlying holdings of the Fund and not the Fund itself.
Median method Bond ratings are divided into categories ranging from highest to lowest credit quality, determined by using the median rating of Moodys, S&P, and Fitch, as available. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a security is not rated by one of these agencies, the Investment Manager or, as applicable, a subadviser, determines whether such security is of investment grade or below investment grade (e.g., junk bond) quality.
Average method Bond ratings are divided into categories ranging from highest to lowest credit quality, determined by using the average rating of Moodys, S&P, and Fitch. When ratings are available from only two rating agencies, the average of the two rating is used. When a rating is available from only one rating agency, that rating is used. When a security is not rated by one of these agencies, the Investment Manager or, as applicable, a subadviser, determines whether such security is of investment grade or below investment grade (e.g., junk bond) quality.
Waterfall method Bond ratings are divided into categories ranging from highest to lowest credit quality, determined by using the rating assigned by Moodys, as available. If Moodys doesnt rate a bond, then the S&P rating is used. When a security is not rated by one of these agencies, the Investment Manager or, as applicable, a subadviser, determines whether such security is of investment grade or below investment grade (e.g., junk bond) quality.
Lower of S&P and Moodys method Bond ratings are divided into categories ranging from highest to lowest credit quality, determined by using the lower of the ratings of Moodys and S&P. When a rating is available from only one rating agency, that rating is used. When a security is not rated by one of these agencies, the Investment Manager or, as applicable, a subadviser, determines whether such security is of investment grade or below investment grade (e.g., junk bond) quality.
Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. See Appendix A for a discussion of securities ratings.
All ratings limitations are applied at the time of purchase. Subsequent to purchase, a debt security may cease to be rated or its rating may be reduced below the minimum required for purchase by a Fund. Neither event will require the sale of such a security, but it will be a factor in considering whether to continue to hold the security.
Depositary Receipts
See Types of Investments Foreign Securities below.
Derivatives
General
Derivatives are financial instruments whose values are based on (or derived from) traditional securities (such as a stock or a bond), assets (such as a commodity, like gold), reference rates (such as LIBOR), market indices (such as the S&P 500 ® Index) or customized baskets of securities or instruments. Some forms of derivatives, such as exchange-traded futures and options on securities, commodities, or indices, are traded on regulated exchanges. These types of derivatives are standardized contracts that can easily be bought and sold, and whose market values are determined and published daily. Non-standardized derivatives, on the other hand, tend to be more specialized or complex, and may be harder to value. Many derivative instruments often require little or no initial payment and therefore often create inherent economic leverage. Derivatives, when used properly, can enhance returns and be useful in hedging portfolios and managing risk. Some common types of derivatives include futures; options; options on futures; forward foreign currency exchange contracts; forward contracts on securities and securities indices; linked securities and structured products; CMOs; stripped securities; warrants and rights; swap agreements and swaptions.
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A Fund may use derivatives for a variety of reasons, including, for example: (i) to enhance its return; (ii) to attempt to protect against possible unfavorable changes in the market value of securities held in or to be purchased for its portfolio resulting from securities markets or currency exchange rate fluctuations (i.e., to hedge); (iii) to protect its unrealized gains reflected in the value of its portfolio securities; (iv) to facilitate the sale of such securities for investment purposes; (v) to reduce transaction costs; (vi) to manage the effective maturity or duration of its portfolio; and/or (vii) to maintain cash reserves while remaining fully invested.
A Fund may use any or all of the above investment techniques and may purchase different types of derivative instruments at any time and in any combination. The use of derivatives is a function of numerous variables, including market conditions. See also Types of Investments Warrants and Rights and When Issued, Delayed Delivery and Forward Commitment Transactions .
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with transactions in derivatives (including the derivatives instruments discussed below) include: Counterparty Risk, Credit Risk, Interest Rate Risk, Leverage Risk, Liquidity Risk, Market Risk, Derivatives Risk, Derivatives Risk/Credit Default Swaps Risk, Derivatives Risk/Forward Foreign Currency Contracts Risk, Derivatives Risk/Commodity-Linked Futures Contracts Risk, Derivatives Risk/Commodity-Linked Structured Notes Risk, Derivatives Risk/Commodity-Linked Swaps, Derivatives Risk/Forward Interest Rate Agreements Risk, Derivatives Risk/Futures Contracts Risk, Derivatives Risk/Interest Rate Swaps Risk, Derivatives Risk/Inverse Floaters Risk, Derivatives Risk/Options Risk, Derivatives Risk/Portfolio Swaps and Total Return Swaps Risk, Derivatives Risk/Total Return Swaps Risk, and Derivatives Risk/Warrants Risk.
Index or Linked Securities (Structured Products)
General. Indexed or linked securities, also often referred to as structured products, are instruments that may have varying combinations of equity and debt characteristics. These instruments are structured to recast the investment characteristics of the underlying security or reference asset. If the issuer is a unit investment trust or other special purpose vehicle, the structuring will typically involve the deposit with or purchase by such issuer of specified instruments (such as commercial bank loans or securities) and/or the execution of various derivative transactions, and the issuance by that entity of one or more classes of securities (structured securities) backed by, or representing interests in, the underlying instruments. The cash flow on the underlying instruments may be apportioned among the newly issued structured securities to create securities with different investment characteristics, such as varying maturities, payment priorities and interest rate provisions, and the extent of such payments made with respect to structured securities is dependent on the extent of the cash flow on the underlying instruments.
Indexed and Inverse Floating Rate Securities. A Fund may invest in securities that provide a potential return based on a particular index or interest rates. For example, a Fund may invest in debt securities that pay interest based on an index of interest rates. The principal amount payable upon maturity of certain securities also may be based on the value of the index. To the extent a Fund invests in these types of securities, a Funds return on such securities will rise and fall with the value of the particular index: that is, if the value of the index falls, the value of the indexed securities owned by a Fund will fall. Interest and principal payable on certain securities may also be based on relative changes among particular indices.
A Fund may also invest in so-called inverse floaters or residual interest bonds on which the interest rates vary inversely with a floating rate (which may be reset periodically by a dutch auction, a remarketing agent, or by reference to a short-term tax-exempt interest rate index). A Fund may purchase synthetically-created inverse floating rate bonds evidenced by custodial or trust receipts. A trust funds the purchase of a bond by issuing two classes of certificates: short-term floating rate notes (typically sold to third parties) and the inverse floaters (also known as residual certificates). No additional income beyond that provided by the trusts underlying bond is created; rather, that income is merely divided-up between the two classes of certificates. Generally, income on inverse floating rate bonds will decrease when interest rates increase, and will increase when interest rates decrease. Such securities can have the effect of providing a degree of investment leverage, since they may increase or decrease in value in response to changes in market interest rates at a rate that is a multiple of the actual rate at which fixed-rate securities increase or decrease in response to such changes. As a result, the market values of such securities will generally be more volatile than the market values of fixed-rate securities. To seek to limit the volatility of these securities, a Fund may purchase inverse floating obligations that have shorter-term maturities or that contain limitations on the extent to which the interest rate may vary. Certain investments in such obligations may be illiquid. Furthermore, where such a security includes a contingent liability, in the event of an adverse movement in the underlying index or interest rate, a Fund may be required to pay substantial additional margin to maintain the position.
Credit-Linked Securities. Among the income-producing securities in which a Fund may invest are credit linked securities. The issuers of these securities frequently are limited purpose trusts or other special purpose vehicles that, in turn, invest in a derivative instrument or basket of derivative instruments, such as credit default swaps, interest rate swaps and other securities, in order to provide exposure to certain fixed income markets. For instance, a Fund may invest in credit linked securities as a cash management tool in order to gain exposure to a certain market and/or to remain fully invested when more traditional income-producing securities are not available. Like an investment in a bond, investments in these credit linked securities represent the right to receive periodic income payments (in the form of distributions) and payment of principal at
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the end of the term of the security. However, these payments are conditioned on or linked to the issuers receipt of payments from, and the issuers potential obligations to, the counterparties to the derivative instruments and other securities in which the issuer invests. For instance, the issuer may sell one or more credit default swaps, under which the issuer would receive a stream of payments over the term of the swap agreements provided that no event of default has occurred with respect to the referenced debt obligation upon which the swap is based. If a default occurs, the stream of payments may stop and the issuer would be obligated to pay the counterparty the par (or other agreed upon value) of the referenced debt obligation. This, in turn, would reduce the amount of income and/or principal that a Fund would receive. A Funds investments in these securities are indirectly subject to the risks associated with derivative instruments. These securities generally are exempt from registration under the 1933 Act. Accordingly, there may be no established trading market for the securities and they may constitute illiquid investments.
Index-, Commodity- and Currency-Linked Securities. Index-linked or commodity-linked notes are debt securities of companies that call for interest payments and/or payment at maturity in different terms than the typical note where the borrower agrees to make fixed interest payments and to pay a fixed sum at maturity. Principal and/or interest payments on an index-linked or commodity-linked note depend on the performance of one or more market indices, such as the S&P 500 ® Index, a weighted index of commodity futures such as crude oil, gasoline and natural gas or the market prices of a particular commodity or basket of commodities or securities. Currency-linked debt securities are short-term or intermediate-term instruments having a value at maturity, and/or an interest rate, determined by reference to one or more foreign currencies. Payment of principal or periodic interest may be calculated as a multiple of the movement of one currency against another currency, or against an index.
Index-, commodity- and currency-linked securities may entail substantial risks. Such instruments may be subject to significant price volatility. The company issuing the instrument may fail to pay the amount due on maturity. The underlying investment may not perform as expected by a Funds portfolio manager. Markets and underlying investments and indexes may move in a direction that was not anticipated by a Funds portfolio manager. Performance of the derivatives may be influenced by interest rate and other market changes in the United States and abroad, and certain derivative instruments may be illiquid.
Linked securities are often issued by unit investment trusts. Examples of this include such index-linked securities as S&P Depositary Receipts (SPDRs), which is an interest in a unit investment trust holding a portfolio of securities linked to the S&P 500 ® Index, and a type of exchange-traded fund (ETF). Because a unit investment trust is an investment company under the 1940 Act, a Funds investments in SPDRs are subject to the limitations set forth in Section 12(d)(1)(A) of the 1940 Act, although the SEC has issued exemptive relief permitting investment companies such as the Funds to invest beyond the limits of Section 12(d)(1)(A) subject to certain conditions. SPDRs generally closely track the underlying portfolio of securities, trade like a share of common stock and pay periodic dividends proportionate to those paid by the portfolio of stocks that comprise the S&P 500 ® Index. As a holder of interests in a unit investment trust, a Fund would indirectly bear its ratable share of that unit investment trusts expenses. At the same time, a Fund would continue to pay its own management and advisory fees and other expenses, as a result of which a Fund and its shareholders in effect would be absorbing levels of fees with respect to investments in such unit investment trusts.
Because linked securities typically involve no credit enhancement, their credit risk generally will be equivalent to that of the underlying instruments. Investments in structured products may be structured as a class that is either subordinated or unsubordinated to the right of payment of another class. Subordinated linked securities typically have higher rates of return and present greater risks than unsubordinated structured products. Structured products sometimes are sold in private placement transactions and often have a limited trading market.
Investments in linked securities have the potential to lead to significant losses because of unexpected movements in the underlying financial asset, index, currency or other investment. The ability of a Fund to utilize linked securities successfully will depend on its ability correctly to predict pertinent market movements, which cannot be assured. Because currency-linked securities usually relate to foreign currencies, some of which may be currencies from emerging market countries, there are certain additional risks associated with such investments.
Futures Contracts and Options on Futures Contracts
Futures Contracts. A futures contract sale creates an obligation by the seller to deliver the type of security or other asset called for in the contract at a specified delivery time for a stated price. A futures contract purchase creates an obligation by the purchaser to take delivery of the type of security or other asset called for in the contract at a specified delivery time for a stated price. The specific security or other asset delivered or taken at the settlement date is not determined until on or near that date. The determination is made in accordance with the rules of the exchange on which the futures contract was made. A Fund may enter into futures contracts which are traded on national or foreign futures exchanges and are standardized as to maturity date and underlying security or other asset. Futures exchanges and trading in the United States are regulated under the Commodity Exchange Act (CEA) by the Commodity Futures Trading Commission (CFTC), a U.S. Government agency. See Types of Investments Derivatives CFTC Regulation below for information on CFTC regulation.
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Traders in futures contracts may be broadly classified as either hedgers or speculators. Hedgers use the futures markets primarily to offset unfavorable changes (anticipated or potential) in the value of securities or other assets currently owned or expected to be acquired by them. Speculators less often own the securities or other assets underlying the futures contracts which they trade, and generally use futures contracts with the expectation of realizing profits from fluctuations in the value of the underlying securities or other assets.
Upon entering into futures contracts, in compliance with regulatory requirements, cash or liquid securities, equal in value to the amount of a Funds obligation under the contract (less any applicable margin deposits and any assets that constitute cover for such obligation), will be segregated with a Funds custodian.
Unlike when a Fund purchases or sells a security, no price is paid or received by a Fund upon the purchase or sale of a futures contract, although a Fund is required to deposit with its custodian in a segregated account in the name of the futures broker an amount of cash and/or U.S. Government securities in order to initiate and maintain open positions in futures contracts. This amount is known as initial margin. The nature of initial margin in futures transactions is different from that of margin in security transactions, in that futures contract margin does not involve the borrowing of funds by a Fund to finance the transactions. Rather, initial margin is in the nature of a performance bond or good faith deposit intended to assure completion of the contract (delivery or acceptance of the underlying security or other asset) that is returned to a Fund upon termination of the futures contract, assuming all contractual obligations have been satisfied. Minimum initial margin requirements are established by the relevant futures exchange and may be changed. Brokers may establish deposit requirements which are higher than the exchange minimums. Futures contracts are customarily purchased and sold on margin which may range upward from less than 5% of the value of the contract being traded. Subsequent payments, called variation margin, to and from the broker (or the custodian) are made on a daily basis as the price of the underlying security or other asset fluctuates, a process known as marking to market. If the futures contract price changes to the extent that the margin on deposit does not satisfy margin requirements, payment of additional variation margin will be required. Conversely, a change in the contract value may reduce the required margin, resulting in a repayment of excess margin to the contract holder. Variation margin payments are made for as long as the contract remains open. A Fund expects to earn interest income on its margin deposits.
Although futures contracts by their terms call for actual delivery or acceptance of securities or other assets (stock index futures contracts or futures contracts that reference other intangible assets do not permit delivery of the referenced assets), the contracts usually are closed out before the settlement date without the making or taking of delivery. A Fund may elect to close some or all of its futures positions at any time prior to their expiration. The purpose of taking such action would be to reduce or eliminate the position then currently held by a Fund. Closing out an open futures position is done by taking an opposite position (buying a contract which has previously been sold, selling a contract previously purchased) in an identical contract (i.e., the same aggregate amount of the specific type of security or other asset with the same delivery date) to terminate the position. Final determinations are made as to whether the price of the initial sale of the futures contract exceeds or is below the price of the offsetting purchase, or whether the purchase price exceeds or is below the offsetting sale price. Final determinations of variation margin are then made, additional cash is required to be paid by or released to a Fund, and a Fund realizes a loss or a gain. Brokerage commissions are incurred when a futures contract is bought or sold.
Successful use of futures contracts by a Fund is subject to its portfolio managers ability to predict correctly movements in the direction of interest rates and other factors affecting securities and commodities markets. This requires different skills and techniques than those required to predict changes in the prices of individual securities. A Fund, therefore, bears the risk that future market trends will be incorrectly predicted.
The risk of loss in trading futures contracts in some strategies can be substantial, due both to the relatively low margin deposits required and the potential for an extremely high degree of leverage involved in futures contracts. As a result, a relatively small price movement in a futures contract may result in an immediate and substantial loss to the investor. For example, if at the time of purchase, 10% of the value of the futures contract is deposited as margin, a subsequent 10% decrease in the value of the futures contract would result in a total loss of the margin deposit, before any deduction for the transaction costs, if the account were then closed out. A 15% decrease would result in a loss equal to 150% of the original margin deposit if the contract were closed out. Thus, a purchase or sale of a futures contract may result in losses in excess of the amount posted as initial margin for the contract.
In the event of adverse price movements, a Fund would continue to be required to make daily cash payments in order to maintain its required margin. In such a situation, if a Fund has insufficient cash, it may have to sell portfolio securities in order to meet daily margin requirements at a time when it may be disadvantageous to do so. The inability to close the futures position also could have an adverse impact on the ability to hedge effectively.
To reduce or eliminate a hedge position held by a Fund, a Fund may seek to close out a position. The ability to establish and close out positions will be subject to the development and maintenance of a liquid secondary market. It is not certain that this market will develop or continue to exist for a particular futures contract, which may limit a Funds ability to realize its profits or limit its losses. Reasons for the absence of a liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain contracts; (ii) restrictions may be imposed by an exchange on opening transactions,
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closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of contracts, or underlying securities; (iv) unusual or unforeseen circumstances, such as volume in excess of trading or clearing capability, may interrupt normal operations on an exchange; (v) the facilities of an exchange or a clearing corporation may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of contracts (or a particular class or series of contracts), in which event the secondary market on that exchange (or in the class or series of contracts) would cease to exist, although outstanding contracts on the exchange that had been issued by a clearing corporation as a result of trades on that exchange would continue to be exercisable in accordance with their terms.
Interest Rate Futures Contracts. Bond prices are established in both the cash market and the futures market. In the cash market, bonds are purchased and sold with payment for the full purchase price of the bond being made in cash, generally within five business days after the trade. In the futures market, a contract is made to purchase or sell a bond in the future for a set price on a certain date. Historically, the prices for bonds established in the futures markets have tended to move generally in the aggregate in concert with the cash market prices and have maintained fairly predictable relationships. Accordingly, a Fund may use interest rate futures contracts as a defense, or hedge, against anticipated interest rate changes. A Fund presently could accomplish a similar result to that which it hopes to achieve through the use of interest rate futures contracts by selling bonds with long maturities and investing in bonds with short maturities when interest rates are expected to increase, or conversely, selling bonds with short maturities and investing in bonds with long maturities when interest rates are expected to decline. However, because of the liquidity that is often available in the futures market, the protection is more likely to be achieved, perhaps at a lower cost and without changing the rate of interest being earned by a Fund, through using futures contracts.
Interest rate futures contracts are traded in an auction environment on the floors of several exchanges principally, the Chicago Board of Trade, the Chicago Mercantile Exchange and the New York Futures Exchange. Each exchange guarantees performance under contract provisions through a clearing corporation, a nonprofit organization managed by the exchange membership. A public market exists in futures contracts covering various financial instruments including long-term U.S. Treasury Bonds and Notes; GNMA modified pass-through mortgage backed securities; three-month U.S. Treasury Bills; and ninety-day commercial paper. A Fund may also invest in exchange-traded Eurodollar contracts, which are interest rate futures on the forward level of LIBOR. These contracts are generally considered liquid securities and trade on the Chicago Mercantile Exchange. Such Eurodollar contracts are generally used to lock-in or hedge the future level of short-term rates. A Fund may trade in any interest rate futures contracts for which there exists a public market, including, without limitation, the foregoing instruments.
Index Futures Contracts. An index futures contract is a contract to buy or sell units of an index at a specified future date at a price agreed upon when the contract is made. Entering into a contract to buy units of an index is commonly referred to as buying or purchasing a contract or holding a long position in the index. Entering into a contract to sell units of an index is commonly referred to as selling a contract or holding a short position in the index. A unit is the current value of the index. A Fund may enter into stock index futures contracts, debt index futures contracts, or other index futures contracts appropriate to its objective(s).
Municipal Bond Index Futures Contracts. Municipal bond index futures contracts may act as a hedge against changes in market conditions. A municipal bond index assigns values daily to the municipal bonds included in the index based on the independent assessment of dealer-to-dealer municipal bond brokers. A municipal bond index futures contract represents a firm commitment by which two parties agree to take or make delivery of an amount equal to a specified dollar amount multiplied by the difference between the municipal bond index value on the last trading date of the contract and the price at which the futures contract is originally struck. No physical delivery of the underlying securities in the index is made.
Commodity-Linked Futures Contracts. Commodity-linked futures contracts are traded on futures exchanges. These futures exchanges offer a central marketplace in which to transact in futures contracts, a clearing corporation to process trades, and standardization of expiration dates and contract sizes. Futures markets also specify the terms and conditions of delivery as well as the maximum permissible price movement during a trading session. Additionally, the commodity futures exchanges may have position limit rules that limit the amount of futures contracts that any one party may hold in a particular commodity at any point in time. These position limit rules are designed to prevent any one participant from controlling a significant portion of the market.
Commodity-linked futures contracts are generally based upon commodities within six main commodity groups: (1) energy, which includes, among others, crude oil, brent crude oil, gas oil, natural gas, gasoline and heating oil; (2) livestock, which includes, among others, feeder cattle, live cattle and hogs; (3) agriculture, which includes, among others, wheat (Kansas wheat and Chicago wheat), corn and soybeans; (4) industrial metals, which includes, among others, aluminum, copper, lead, nickel and zinc; and (5) precious metals, which includes, among others, gold and silver; and (6) softs, which includes cotton, coffee, sugar and cocoa. A Fund may purchase commodity futures contracts, swaps on commodity futures contracts, options on futures contracts and options and futures on commodity indices with respect to these six main commodity groups and the individual commodities within each group, as well as other types of commodities.
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The price of a commodity futures contract will reflect the storage costs of purchasing the physical commodity. These storage costs include the time value of money invested in the physical commodity plus the actual costs of storing the commodity less any benefits from ownership of the physical commodity that are not obtained by the holder of a futures contract (this is sometimes referred to as the convenience yield). To the extent that these storage costs change for an underlying commodity while a Fund is long futures contracts on that commodity, the value of the futures contract may change proportionately.
In the commodity futures markets, if producers of the underlying commodity wish to hedge the price risk of selling the commodity, they will sell futures contracts today to lock in the price of the commodity at delivery tomorrow. In order to induce speculators to take the corresponding long side of the same futures contract, the commodity producer must be willing to sell the futures contract at a price that is below the expected future spot price. Conversely, if the predominant hedgers in the futures market are the purchasers of the underlying commodity who purchase futures contracts to hedge against a rise in prices, then speculators will only take the short side of the futures contract if the futures price is greater than the expected future spot price of the commodity.
The changing nature of the hedgers and speculators in the commodity markets will influence whether futures contract prices are above or below the expected future spot price. This can have significant implications for a Fund when it is time to replace an existing contract with a new contract. If the nature of hedgers and speculators in futures markets has shifted such that commodity purchasers are the predominant hedgers in the market, a Fund might open the new futures position at a higher price or choose other related commodity-linked investments.
The values of commodities which underlie commodity futures contracts are subject to additional variables which may be less significant to the values of traditional securities such as stocks and bonds. Variables such as drought, floods, weather, livestock disease, embargoes and tariffs may have a larger impact on commodity prices and commodity-linked investments, including futures contracts, commodity-linked structured notes, commodity-linked options and commodity-linked swaps, than on traditional securities. These additional variables may create additional investment risks which subject a Funds commodity-linked investments to greater volatility than investments in traditional securities.
Options on Futures Contracts. A Fund may purchase and write call and put options on those futures contracts that it is permitted to buy or sell. A Fund may use such options on futures contracts in lieu of writing options directly on the underlying securities or other assets or purchasing and selling the underlying futures contracts. Such options generally operate in the same manner as options purchased or written directly on the underlying investments. A futures option gives the holder, in return for the premium paid, the right, but not the obligation, to buy from (call) or sell to (put) the writer of the option a futures contract at a specified price at any time during the period of the option. Upon exercise, the writer of the option is obligated to pay the difference between the cash value of the futures contract and the exercise price. Like the buyer or seller of a futures contract, the holder or writer of an option has the right to terminate its position prior to the scheduled expiration of the option by selling or purchasing an option of the same series, at which time the person entering into the closing purchase transaction will realize a gain or loss. There is no guarantee that such closing purchase transactions can be effected.
A Fund will enter into written options on futures contracts only when, in compliance with regulatory requirements, it has segregated cash or liquid securities equal in value to the underlying securitys or other assets value (less any applicable margin deposits). A Fund will be required to deposit initial margin and maintenance margin with respect to put and call options on futures contracts written by it pursuant to brokers requirements similar to those described above.
Options on Index Futures Contracts. A Fund may also purchase and sell options on index futures contracts. Options on index futures give the purchaser the right, in return for the premium paid, to assume a position in an index futures contract (a long position if the option is a call and a short position if the option is a put), at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writers futures margin account, which represents the amount by which the market price of the index futures contract, at exercise, exceeds (in the case of a call) or is less than (in the case of a put) the exercise price of the option on the index future. If an option is exercised on the last trading day prior to the expiration date of the option, the settlement will be made entirely in cash equal to the difference between the exercise price of the option and the closing level of the index on which the future is based on the expiration date. Purchasers of options who fail to exercise their options prior to the exercise date suffer a loss of the premium paid.
Use by Tax-Exempt Funds of Interest Rate and U.S. Treasury Security Futures Contracts and Options. If a Fund invests in tax-exempt securities, it may purchase and sell futures contracts and related options on interest rate and U.S. Treasury securities when, in the opinion of a Funds portfolio manager, price movements in these security futures and related options will correlate closely with price movements in the tax-exempt securities which are the subject of the hedge. Interest rate and U.S. Treasury securities futures contracts require the seller to deliver, or the purchaser to take delivery of, the type of security called for in the contract at a specified date and price. Options on interest rate and U.S. Treasury security futures contracts give the purchaser the right in return for the premium paid to assume a position in a futures contract at the specified option exercise price at any time during the period of the option.
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Options on Stocks and Stock and Other Indices. A Fund may purchase and write (i.e., sell) put and call options. Such options may relate to particular stocks or stock indices, and may or may not be listed on a domestic or foreign securities exchange and may or may not be issued by the Options Clearing Corporation (OCC). Stock index options are put options and call options on various stock indices. In most respects, they are identical to listed options on common stocks.
There is a key difference between stock options and index options in connection with their exercise. In the case of stock options, the underlying security, common stock, is delivered. However, upon the exercise of an index option, settlement does not occur by delivery of the securities comprising the index. The option holder who exercises the index option receives an amount of cash if the closing level of the stock index upon which the option is based is greater than (in the case of a call) or less than (in the case of a put) the exercise price of the option. This amount of cash is equal to the difference between the closing price of the stock index and the exercise price of the option expressed in dollars times a specified multiple. A stock index fluctuates with changes in the market value of the securities included in the index. For example, some stock index options are based on a broad market index, such as the S&P 500 ® Index or a narrower market index, such as the S&P 100 ® Index. Indices may also be based on an industry or market segment.
A Fund may, for the purpose of hedging its portfolio, subject to applicable securities regulations, purchase and write put and call options on foreign stock indices listed on foreign and domestic stock exchanges.
As an alternative to purchasing call and put options on index futures, a Fund may purchase call and put options on the underlying indices themselves. Such options could be used in a manner identical to the use of options on index futures. Options involving securities indices provide the holder with the right to make or receive a cash settlement upon exercise of the option based on movements in the relevant index. Such options must be listed on a national securities exchange and issued by the OCC. Such options may relate to particular securities or to various stock indices, except that a Fund may not write covered options on an index.
Writing Covered Options. A Fund may write covered call options and covered put options on securities held in its portfolio. Call options written by a Fund give the purchaser the right to buy the underlying securities from a Fund at the stated exercise price at any time prior to the expiration date of the option, regardless of the securitys market price; put options give the purchaser the right to sell the underlying securities to a Fund at the stated exercise price at any time prior to the expiration date of the option, regardless of the securitys market price.
A Fund may write covered options, which means that, so long as a Fund is obligated as the writer of a call option, it will own the underlying securities subject to the option (or comparable securities satisfying the cover requirements of securities exchanges). In the case of put options, a Fund will hold liquid securities equal to the price to be paid if the option is exercised. In addition, a Fund will be considered to have covered a put or call option if and to the extent that it holds an option that offsets some or all of the risk of the option it has written. A Fund may write combinations of covered puts and calls (straddles) on the same underlying security.
A Fund will receive a premium from writing a put or call option, which increases a Funds return on the underlying security if the option expires unexercised or is closed out at a profit. The amount of the premium reflects, among other things, the relationship between the exercise price and the current market value of the underlying security, the volatility of the underlying security, the amount of time remaining until expiration, current interest rates, and the effect of supply and demand in the options market and in the market for the underlying security. By writing a call option, a Fund limits its opportunity to profit from any increase in the market value of the underlying security above the exercise price of the option but continues to bear the risk of a decline in the value of the underlying security. By writing a put option, a Fund assumes the risk that it may be required to purchase the underlying security for an exercise price higher than the securitys then-current market value, resulting in a potential capital loss unless the security subsequently appreciates in value.
A Funds obligation to sell an instrument subject to a call option written by it, or to purchase an instrument subject to a put option written by it, may be terminated prior to the expiration date of the option by a Funds execution of a closing purchase transaction, which is effected by purchasing on an exchange an offsetting option of the same series (i.e., same underlying instrument, exercise price and expiration date) as the option previously written. A closing purchase transaction will ordinarily be effected in order to realize a profit on an outstanding option, to prevent an underlying instrument from being called, to permit the sale of the underlying instrument or to permit the writing of a new option containing different terms on such underlying instrument. A Fund realizes a profit or loss from a closing purchase transaction if the cost of the transaction (option premium plus transaction costs) is less or more than the premium received from writing the option. Because increases in the market price of a call option generally reflect increases in the market price of the security underlying the option, any loss resulting from a closing purchase transaction may be offset in whole or in part by unrealized appreciation of the underlying security.
If a Fund writes a call option but does not own the underlying security, and when it writes a put option, a Fund may be required to deposit cash or securities with its broker as margin or collateral for its obligation to buy or sell the underlying security. As the value of the underlying security varies, a Fund may also have to deposit additional margin with the broker.
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Margin requirements are complex and are fixed by individual brokers, subject to minimum requirements currently imposed by the Federal Reserve Board and by stock exchanges and other self-regulatory organizations.
Purchasing Put Options. A Fund may purchase put options to protect its portfolio holdings in an underlying security against a decline in market value. Such hedge protection is provided during the life of the put option since a Fund, as holder of the put option, is able to sell the underlying security at the put exercise price regardless of any decline in the underlying securitys market price. For a put option to be profitable, the market price of the underlying security must decline sufficiently below the exercise price to cover the premium and transaction costs. By using put options in this manner, a Fund will reduce any profit it might otherwise have realized from appreciation of the underlying security by the premium paid for the put option and by transaction costs.
Purchasing Call Options. A Fund may purchase call options, including call options to hedge against an increase in the price of securities that a Fund wants ultimately to buy. Such hedge protection is provided during the life of the call option since a Fund, as holder of the call option, is able to buy the underlying security at the exercise price regardless of any increase in the underlying securitys market price. In order for a call option to be profitable, the market price of the underlying security must rise sufficiently above the exercise price to cover the premium and transaction costs. These costs will reduce any profit a Fund might have realized had it bought the underlying security at the time it purchased the call option.
Over-the-Counter (OTC) Options. OTC options (options not traded on exchanges) are generally established through negotiation with the other party to the options contract. A Fund will enter into OTC options transactions only with primary dealers in U.S. Government securities and, in the case of OTC options written by a Fund, only pursuant to agreements that will assure that a Fund will at all times have the right to repurchase the option written by it from the dealer at a specified formula price. A Fund will treat the amount by which such formula price exceeds the amount, if any, by which the option may be in-the-money as an illiquid investment. It is the present policy of a Fund not to enter into any OTC option transaction if, as a result, more than 15% (10% in some cases, refer to your Funds prospectuses) of a Funds net assets would be invested in (i) illiquid investments (determined under the foregoing formula) relating to OTC options written by a Fund, (ii) OTC options purchased by a Fund, (iii) securities which are not readily marketable, and (iv) repurchase agreements maturing in more than seven days.
Swap Agreements
Swap agreements are derivative instruments that can be individually negotiated and structured to include exposure to a variety of different types of investments or market factors. Depending on their structure, swap agreements may increase or decrease a Funds exposure to long- or short-term interest rates, foreign currency values, mortgage securities, corporate borrowing rates, or other factors such as security prices or inflation rates. A Fund may enter into a variety of swap agreements, including interest rate, index, commodity, commodity futures, equity, equity index, credit default, bond futures, total return, portfolio and currency exchange rate swap agreements, and other types of swap agreements such as caps, collars and floors. A Fund also may enter into swaptions, which are options to enter into a swap agreement.
Swap agreements are usually entered into without an upfront payment because the value of each partys position is the same. The market values of the underlying commitments will change over time, resulting in one of the commitments being worth more than the other and the net market value creating a risk exposure for one party or the other.
In a typical interest rate swap, one party agrees to make regular payments equal to a floating interest rate times a notional principal amount, in return for payments equal to a fixed rate times the same amount, for a specified period of time. If a swap agreement provides for payments in different currencies, the parties might agree to exchange notional principal amounts as well. In a total return swap agreement, the non-floating rate side of the swap is based on the total return of an individual security, a basket of securities, an index or another reference asset. Swaps may also depend on other prices or rates, such as the value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only under specified circumstances, usually in return for payment of a fee by the other party. For example, the buyer of an interest rate cap obtains the right to receive payments to the extent that a specified interest rate exceeds an agreed-upon level, while the seller of an interest rate floor is obligated to make payments to the extent that a specified interest rate falls below an agreed-upon level. Caps and floors have an effect similar to buying or writing options. A collar combines elements of buying a cap and selling a floor. In interest rate collar transactions, one party sells a cap and purchases a floor, or vice versa, in an attempt to protect itself against interest rate movements exceeding given minimum or maximum levels or collar amounts.
Swap agreements will tend to shift a Funds investment exposure from one type of investment to another. For example, if a Fund agreed to pay fixed rates in exchange for floating rates while holding fixed-rate bonds, the swap would tend to decrease a Funds exposure to long-term interest rates. Another example is if a Fund agreed to exchange payments in dollars for payments in foreign currency. In that case, the swap agreement would tend to decrease a Funds exposure to U.S. interest rates and increase its exposure to foreign currency and interest rates.
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Because swaps are two-party contracts that may be subject to contractual restrictions on transferability and termination and because they may have terms of greater than seven days, swap agreements may be considered to be illiquid. If a swap is not liquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses.
Moreover, a Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. When a counterpartys obligations are not fully secured by collateral, then the Fund is essentially an unsecured creditor of the counterparty. If the counterparty defaults, the Fund will have contractual remedies, but there is no assurance that a counterparty will be able to meet its obligations pursuant to such contracts or that, in the event of default, the Fund will succeed in enforcing contractual remedies. Counterparty risk still exists even if a counterpartys obligations are secured by collateral because the Funds interest in collateral may not be perfected or additional collateral may not be promptly posted as required. Counterparty risk also may be more pronounced if a counterpartys obligations exceed the amount of collateral held by the Fund (if any), the Fund is unable to exercise its interest in collateral upon default by the counterparty, or the termination value of the instrument varies significantly from the marked-to-market value of the instrument.
Counterparty risk with respect to derivatives will be affected by new rules and regulations affecting the derivatives market. Some derivatives transactions are required to be centrally cleared, and a party to a cleared derivatives transaction is subject to the credit risk of the clearing house and the clearing member through which it holds its cleared position, rather than the credit risk of its original counterparty to the derivative transaction. Credit risk of market participants with respect to derivatives that are centrally cleared is concentrated in a few clearing houses, and it is not clear how an insolvency proceeding of a clearing house would be conducted and what impact an insolvency of a clearing house would have on the financial system. A clearing member is obligated by contract and by applicable regulation to segregate all funds received from customers with respect to cleared derivatives transactions from the clearing members proprietary assets. However, all funds and other property received by a clearing broker from its customers are generally held by the clearing broker on a commingled basis in an omnibus account, and the clearing member may invest those funds in certain instruments permitted under the applicable regulations. The assets of a Fund might not be fully protected in the event of the bankruptcy of a Funds clearing member, because the Fund would be limited to recovering only a pro rata share of all available funds segregated on behalf of the clearing brokers customers for a relevant account class. Also, the clearing member is required to transfer to the clearing organization the amount of margin required by the clearing organization for cleared derivatives, which amounts are generally held in an omnibus account at the clearing organization for all customers of the clearing member. Regulations promulgated by the CFTC require that the clearing member notify the clearing house of the amount of initial margin provided by the clearing member to the clearing organization that is attributable to each customer. However, if the clearing member does not provide accurate reporting, the Funds are subject to the risk that a clearing organization will use a Funds assets held in an omnibus account at the clearing organization to satisfy payment obligations of a defaulting customer of the clearing member to the clearing organization. In addition, clearing members generally provide to the clearing organization the net amount of variation margin required for cleared swaps for all of its customers in the aggregate, rather than the gross amount of each customer. The Funds are therefore subject to the risk that a clearing organization will not make variation margin payments owed to a Fund if another customer of the clearing member has suffered a loss and is in default, and the risk that a Fund will be required to provide additional variation margin to the clearing house before the clearing house will move the Funds cleared derivatives transactions to another clearing member. In addition, if a clearing member does not comply with the applicable regulations or its agreement with the Funds, or in the event of fraud or misappropriation of customer assets by a clearing member, a Fund could have only an unsecured creditor claim in an insolvency of the clearing member with respect to the margin held by the clearing member.
Interest Rate Swaps. Interest rate swap agreements are often used to obtain or preserve a desired return or spread at a lower cost than through a direct investment in an instrument that yields the desired return or spread. They are financial instruments that involve the exchange of one type of interest rate cash flow for another type of interest rate cash flow on specified dates in the future. In a standard interest rate swap transaction, two parties agree to exchange their respective commitments to pay fixed or floating interest rates on a predetermined specified (notional) amount. The swap agreements notional amount is the predetermined basis for calculating the obligations that the swap counterparties have agreed to exchange. Under most swap agreements, the obligations of the parties are exchanged on a net basis. The two payment streams are netted out, with each party receiving or paying, as the case may be, only the net amount of the two payments. Interest rate swaps can be based on various measures of interest rates, including LIBOR, swap rates, Treasury rates and foreign interest rates.
Credit Default Swap Agreements. A Fund may enter into credit default swap agreements, which may have as reference obligations one or more securities or a basket of securities that are or are not currently held by a Fund. The protection buyer in a credit default contract is generally obligated to pay the protection seller an upfront or a periodic stream of payments over the term of the contract provided that no credit event, such as a default, on a reference obligation has occurred. If a
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credit event occurs, the seller generally must pay the buyer the par value (full notional value) of the swap in exchange for an equal face amount of deliverable obligations of the reference entity described in the swap, or the seller may be required to deliver the related net cash amount, if the swap is cash settled. A Fund may be either the buyer or seller in a credit default swap. If a Fund is a buyer and no credit event occurs, a Fund may recover nothing if the swap is held through its termination date. However, if a credit event occurs, the buyer generally may elect to receive the full notional value of the swap in exchange for an equal face amount of deliverable obligations of the reference entity whose value may have significantly decreased. As a seller, a Fund generally receives an upfront payment or a fixed rate of income throughout the term of the swap provided that there is no credit event. As the seller, a Fund would effectively add leverage to its portfolio because, in addition to its total net assets, a Fund would be subject to investment exposure on the notional amount of the swap.
Credit default swap agreements may involve greater risks than if a Fund had invested in the reference obligation directly since, in addition to risks relating to the reference obligation, credit default swaps are subject to illiquidity risk, counterparty risk and credit risk. A Fund will enter into credit default swap agreements generally with counterparties that meet certain standards of creditworthiness. A buyer generally will lose its investment and recover nothing if no credit event occurs and the swap is held to its termination date. If a credit event were to occur, the value of any deliverable obligation received by the seller, coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller.
A Funds obligations under a credit default swap agreement will be accrued daily (offset against any amounts owing to the Fund). In connection with credit default swaps in which a Fund is the buyer, the Fund will segregate or earmark cash or other liquid assets, or enter into certain offsetting positions, with a value at least equal to the Funds exposure (any accrued but unpaid net amounts owed by the Fund to any counterparty), on a mark-to-market basis. In connection with credit default swaps in which a Fund is the seller, the Fund will segregate or earmark cash or other liquid assets, or enter into offsetting positions, with a value at least equal to the full notional amount of the swap (minus any amounts owed to the Fund). Such segregation or earmarking will ensure that a Fund has assets available to satisfy its obligations with respect to the transaction. Such segregation or earmarking will not limit a Funds exposure to loss.
Equity Swaps. A Fund may engage in equity swaps. Equity swaps allow the parties to the swap agreement to exchange components of return on one equity investment (e.g., a basket of equity securities or an index) for a component of return on another non-equity or equity investment, including an exchange of differential rates of return. Equity swaps may be used to invest in a market without owning or taking physical custody of securities in circumstances where direct investment may be restricted for legal reasons or is otherwise impractical. Equity swaps also may be used for other purposes, such as hedging or seeking to increase total return.
Total Return Swap Agreements. Total return swap agreements are contracts in which one party agrees to make periodic payments to another party based on the change in market value of the assets underlying the contract, which may include a specified security, basket of securities or securities indices during the specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets. Total return swap agreements may be used to obtain exposure to a security or market without owning or taking physical custody of such security or investing directly in such market. Total return swap agreements may effectively add leverage to a Funds portfolio because, in addition to its total net assets, a Fund would be subject to investment exposure on the notional amount of the swap.
Total return swap agreements are subject to the risk that a counterparty will default on its payment obligations to a Fund thereunder, and conversely, that a Fund will not be able to meet its obligation to the counterparty. Generally, a Fund will enter into total return swaps on a net basis (i.e., the two payment streams are netted against one another with a Fund receiving or paying, as the case may be, only the net amount of the two payments). The net amount of the excess, if any, of a Funds obligations over its entitlements with respect to each total return swap will be accrued on a daily basis, and an amount of liquid assets having an aggregate net asset value at least equal to the accrued excess will be segregated by a Fund. If the total return swap transaction is entered into on other than a net basis, the full amount of a Funds obligations will be accrued on a daily basis, and the full amount of a Funds obligations will be segregated by a Fund in an amount equal to or greater than the market value of the liabilities under the total return swap agreement or the amount it would have cost a Fund initially to make an equivalent direct investment, plus or minus any amount a Fund is obligated to pay or is to receive under the total return swap agreement.
Variance, Volatility and Correlation Swap Agreements. Variance and volatility swaps are contracts that provide exposure to increases or decreases in the volatility of certain referenced assets. Correlation swaps are contracts that provide exposure to increases or decreases in the correlation between the prices of different assets or different market rates.
Commodity-Linked Swaps. Commodity-linked swaps are two-party contracts in which the parties agree to exchange the return or interest rate on one instrument for the return of a particular commodity, commodity index or commodities futures or options contract. The payment streams are calculated by reference to an agreed upon notional amount. A one-period swap
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contract operates in a manner similar to a forward or futures contract because there is an agreement to swap a commodity for cash at only one forward date. A Fund may engage in swap transactions that have more than one period and therefore more than one exchange of commodities.
A Fund may invest in total return commodity swaps to gain exposure to the overall commodity markets. In a total return commodity swap, a Fund will receive the price appreciation of a commodity index, a portion of the index, or a single commodity in exchange for paying an agreed-upon fee. If the commodity swap is for one period, the Fund will pay a fixed fee, established at the outset of the swap. However, if the term of the commodity swap is more than one period, with interim swap payments, the Fund will pay an adjustable or floating fee. With a floating rate, the fee is pegged to a base rate such as LIBOR, and is adjusted each period. Therefore, if interest rates increase over the term of the swap contract, a Fund may be required to pay a higher fee at each swap reset date.
Cross Currency Swaps. Cross currency swaps are similar to interest rate swaps, except that they involve multiple currencies. A Fund may enter into a cross currency swap when it has exposure to one currency and desires exposure to a different currency. Typically, the interest rates that determine the currency swap payments are fixed, although occasionally one or both parties may pay a floating rate of interest. Unlike an interest rate swap, however, the principal amounts are exchanged at the beginning of the contract and returned at the end of the contract. In addition to paying and receiving amounts at the beginning and termination of the agreements, both sides will have to pay in full periodically based upon the currency they have borrowed. Changes in foreign exchange currency rates and changes in interest rates, as described above, may negatively affect currency swaps.
Contracts for Differences. Contracts for differences are swap arrangements in which the parties agree that their return (or loss) will be based on the relative performance of two different groups or baskets of securities. Often, one or both baskets will be an established securities index. A Funds return will be based on changes in value of theoretical long futures positions in the securities comprising one basket (with an aggregate face value equal to the notional amount of the contract for differences) and theoretical short futures positions in the securities comprising the other basket. A Fund also may use actual long and short futures positions and achieve similar market exposure by netting the payment obligations of the two contracts. A Fund typically enters into contracts for differences (and analogous futures positions) when its portfolio manager believes that the basket of securities constituting the long position will outperform the basket constituting the short position. If the short basket outperforms the long basket, a Fund will realize a loss even in circumstances when the securities in both the long and short baskets appreciate in value.
Swaptions. A swaption is an options contract on a swap agreement. These transactions that give a counterparty the right (but not the obligation) to enter into new swap agreements or to shorten, extend, cancel or otherwise modify an existing swap agreement (which are described herein) at some designated future time on specified terms, in return for payment of the purchase price (the premium) of the option. A Fund may write (sell) and purchase put and call swaptions to the same extent it may make use of standard options on securities or other instruments. The writer of the contract receives the premium and bears the risk of unfavorable changes in the market value on the underlying swap agreement. Swaptions can be bundled and sold as a package. These are commonly called interest rate caps, floors and collars (which are described herein).
Many swaps are complex and often valued subjectively. Many over-the-counter derivatives are complex and their valuation often requires modeling and judgment, which increases the risk of mispricing or incorrect valuation. The pricing models used may not produce valuations that are consistent with the values the Fund realizes when it closes or sells an over-the-counter derivative. Valuation risk is more pronounced when the Fund enters into over-the-counter derivatives with specialized terms because the market value of those derivatives in some cases is determined in part by reference to similar derivatives with more standardized terms. Incorrect valuations may result in increased cash payment requirements to counterparties, undercollateralization and/or errors in calculation of the Funds net asset value.
Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) established a framework for the regulation of OTC swap markets; the framework outlined the joint responsibility of the CFTC and the SEC in regulating swaps. The CFTC is responsible for the regulation of swaps, the SEC is responsible for the regulation of security-based swaps and they are both jointly responsible for the regulation of mixed swaps.
Risk of Potential Governmental Regulation of Derivatives
It is possible that government regulation of various types of derivative instruments, including futures and swap agreements, may limit or prevent the Funds from using such instruments as a part of their investment strategy, and could ultimately prevent the Funds from being able to achieve their investment objectives. It is impossible to predict fully the effects of legislation and regulation in this area, but the effects could be substantial and adverse. The futures markets are subject to comprehensive statutes, regulations, and margin requirements. The SEC, the CFTC and the exchanges are authorized to take extraordinary actions in the event of a market emergency, including, for example, the implementation or reduction of speculative position limits, the implementation of higher margin requirements, the establishment of daily price limits and the suspension of trading.
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The regulation of swaps and futures transactions in the U.S. is a rapidly changing area of law and is subject to modification by government and judicial action. There is a possibility of future regulatory changes altering, perhaps to a material extent, the nature of an investment in a Fund or the ability of a Fund to continue to implement its investment strategies. In particular, the Dodd-Frank Act which was signed into law in July 2010, sets forth a new legislative framework for OTC derivatives, such as swaps, in which the Funds may invest. Title VII of the Dodd-Frank Act makes broad changes to the OTC derivatives market, grants significant new authority to the SEC and the CFTC to regulate OTC derivatives and market participants, and will require clearing of many OTC derivatives transactions.
Additional Risk Factors in Cleared Derivatives Transactions
Under recently adopted rules and regulations, transactions in some types of swaps (including interest rate swaps and credit default swaps on North American and European indices) are required to be centrally cleared. In a transaction involving those swaps (cleared derivatives), a Funds counterparty is a clearing house, rather than a bank or broker. Since the Funds are not members of clearing houses and only members of a clearing house (clearing members) can participate directly in the clearing house, the Funds will hold cleared derivatives through accounts at clearing members. In cleared derivatives positions, the Funds will make payments (including margin payments) to and receive payments from a clearing house through their accounts at clearing members. Clearing members guarantee performance of their clients obligations to the clearing house.
In many ways, cleared derivative arrangements are less favorable to mutual funds than bilateral arrangements. For example, the Funds may be required to provide more margin for cleared derivatives positions than for bilateral derivatives positions. Also, in contrast to a bilateral derivatives position, following a period of notice to a Fund, a clearing member generally can require termination of an existing cleared derivatives position at any time or an increase in margin requirements above the margin that the clearing member required at the beginning of a transaction. Clearing houses also have broad rights to increase margin requirements for existing positions or to terminate those positions at any time. Any increase in margin requirements or termination of existing cleared derivatives positions by the clearing member or the clearing house could interfere with the ability of a Fund to pursue its investment strategy. Further, any increase in margin requirements by a clearing member could expose a Fund to greater credit risk to its clearing member because margin for cleared derivatives positions in excess of a clearing houses margin requirements typically is held by the clearing member. Also, a Fund is subject to risk if it enters into a derivatives transaction that is required to be cleared (or that the Adviser expects to be cleared), and no clearing member is willing or able to clear the transaction on the Funds behalf. While the documentation in place between the Funds and their clearing members generally provides that the clearing members will accept for clearing all cleared derivatives transactions that are within credit limits (specified in advance) for each Fund, the Funds are still subject to the risk that no clearing member will be willing or able to clear a transaction. In those cases, the position might have to be terminated, and the Fund could lose some or all of the benefit of the position, including loss of an increase in the value of the position and/or loss of hedging protection. In addition, the documentation governing the relationship between the Funds and clearing members is drafted by the clearing members and generally is less favorable to the Funds than typical bilateral derivatives documentation. For example, documentation relating to cleared derivatives generally includes a one-way indemnity by the Funds in favor of the clearing member for losses the clearing member incurs as the Funds clearing member and typically does not provide the Funds any remedies if the clearing member defaults or becomes insolvent. While futures contracts entail similar risks, the risks likely are more pronounced for cleared swaps due to their more limited liquidity and market history.
Some types of cleared derivatives are required to be executed on an exchange or on a swap execution facility. A swap execution facility is a trading platform where multiple market participants can execute derivatives by accepting bids and offers made by multiple other participants in the platform. While this execution requirement is designed to increase transparency and liquidity in the cleared derivatives market, trading on a swap execution facility can create additional costs and risks for the Funds. For example, swap execution facilities typically charge fees, and if a Fund executes derivatives on a swap execution facility through a broker intermediary, the intermediary may impose fees as well. Also, a Fund may indemnify a swap execution facility, or a broker intermediary who executes cleared derivatives on a swap execution facility on the Funds behalf, against any losses or costs that may be incurred as a result of the Funds transactions on the swap execution facility.
These and other new rules and regulations could, among other things, further restrict a Funds ability to engage in, or increase the cost to the Fund of, derivatives transactions, for example, by making some types of derivatives no longer available to the Fund, increasing margin or capital requirements, or otherwise limiting liquidity or increasing transaction costs. These regulations are new and evolving, so their potential impact on the Funds and the financial system are not yet known. While the new regulations and central clearing of some derivatives transactions are designed to reduce systemic risk (i.e., the risk that the interdependence of large derivatives dealers could cause them to suffer liquidity, solvency or other challenges simultaneously), there is no assurance that the new clearing mechanisms will achieve that result, and in the meantime, as noted above, central clearing and related requirements expose the Funds to new kinds of risks and costs.
CFTC Regulation
Each of AP Alternative Strategies Fund and Risk Allocation Fund no longer qualifies for an exclusion from the definition of a commodity pool pursuant to Rule 4.5 under the Commodity Exchange Act (CEA). Accordingly, each of these Funds is a
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commodity pool under CEA and the Investment Manager is registered as a commodity pool operator under the CEA with respect to these Funds, effective January 1, 2013. As a result, additional CFTC-mandated disclosure, reporting and record keeping obligations apply with respect to these Funds. Compliance with the CFTCs new regulatory requirements could increase Fund expenses, adversely affecting a Funds total return.
Each of the other Funds listed on the cover of this SAI qualifies for an exclusion from the definition of a commodity pool under the CEA and has filed a notice of exclusion under CFTC Rule 4.5. Accordingly, the Investment Manager is not subject to registration or regulation as a commodity pool operator under the CEA with respect to these Funds. To remain eligible for the exclusion, each of these Funds is limited in its ability to use certain financial instruments regulated under the CEA (commodity interests), including futures and options on futures and certain swaps transactions. In the event that a Funds investments in commodity interests are not within the thresholds set forth in the exclusion, the Investment Manager may be required to register as a commodity pool operator with the CFTC with respect to that Fund. The Investment Managers eligibility to claim the exclusion with respect to a Fund will be based upon, among other things, the level and scope of a Funds investments in commodity interests, the purposes of such investments and the manner in which the Fund holds out its use of commodity interests. Each such Funds ability to invest in commodity interests (including, but not limited to, futures and swaps on broad-based securities indexes and interest rates) is limited by the Investment Managers intention to operate the Fund in a manner that would permit the Investment Manager to continue to claim the exclusion under CFTC Rule 4.5, which may adversely affect the Funds total return. In the event the Investment Manager becomes unable to rely on the exclusion in Rule 4.5 and is required to register with the CFTC as a commodity pool operator with respect to a Fund, the Funds expenses may increase, adversely affecting that Funds total return.
Dollar Rolls
Dollar rolls involve selling securities (e.g., mortgage-backed securities or U.S. Treasury securities) and simultaneously entering into a commitment to purchase those or similar securities on a specified future date and price from the same party. Mortgage dollar rolls and U.S. Treasury rolls are types of dollar rolls. A Fund foregoes principal and interest paid on the securities during the roll period. A Fund is compensated by the difference between the current sales price and the lower forward price for the future purchase of the securities, as well as the interest earned on the cash proceeds of the initial sale. The investor also could be compensated through the receipt of fee income equivalent to a lower forward price.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with mortgage dollar rolls include: Counterparty Risk, Credit Risk and Interest Rate Risk.
Equity-Linked Notes
An equity-linked note (ELN) is a debt instrument whose value is based on the value of a single equity security, basket of equity securities or an index of equity securities (each, an Underlying Equity). An ELN typically provides interest income, thereby offering a yield advantage over investing directly in an Underlying Equity. The Fund may purchase ELNs that trade on a securities exchange or those that trade on the over-the-counter markets, including Rule 144A securities. The Fund may also purchase ELNs in a privately negotiated transaction with the issuer of the ELNs (or its broker-dealer affiliate). The Fund may or may not hold an ELN until its maturity.
Equity-linked securities also include issues such as Structured Yield Product Exchangeable for Stock (STRYPES), Trust Automatic Common Exchange Securities (TRACES), Trust Issued Mandatory Exchange Securities (TIMES) and Trust Enhanced Dividend Securities (TRENDS). The issuers of these equity-linked securities generally purchase and hold a portfolio of stripped U.S. Treasury securities maturing on a quarterly basis through the conversion date, and a forward purchase contract with an existing shareholder of the company relating to the common stock. Quarterly distributions on such equity-linked securities generally consist of the cash received from the U.S. Treasury securities and such equity-linked securities generally are not entitled to any dividends that may be declared on the common stock.
Eurodollar and Yankee Dollar and Related Derivatives Instruments
Eurodollar instruments are bonds that pay interest and principal in U.S. dollars held in banks outside the United States, primarily in Europe. Eurodollar instruments are usually issued on behalf of multinational companies and foreign governments by large underwriting groups composed of banks and issuing houses from many countries. Yankee Dollar instruments are U.S. dollar-denominated bonds issued in the United States by foreign banks and corporations. These investments involve risks that are different from investments in securities issued by U.S. issuers.
Eurodollar futures contracts enable purchasers to obtain a fixed rate for the lending of funds and sellers to obtain a fixed rate for borrowings. A Fund may use Eurodollar futures contracts and options thereon to hedge against changes in the LIBOR, to which many interest rate swaps and fixed income instruments are linked.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with Eurodollar and Yankee Dollar instruments include: Credit Risk, Foreign Securities Risk, Interest Rate Risk and Issuer Risk.
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Foreign Currency Transactions
Because investments in foreign securities usually involve currencies of foreign countries and because a Fund may hold cash and cash equivalent investments in foreign currencies, the value of a Funds assets as measured in U.S. dollars may be affected favorably or unfavorably by changes in currency exchange rates and exchange control regulations. Also, a Fund may incur costs in connection with conversions between various currencies. Currency exchange rates may fluctuate significantly over short periods of time, causing a Funds NAV to fluctuate. Currency exchange rates are generally determined by the forces of supply and demand in the foreign exchange markets, actual or anticipated changes in interest rates, and other complex factors. Currency exchange rates also can be affected by the intervention of U.S. or foreign governments or central banks, or the failure to intervene, or by currency controls or political developments.
Spot Rates and Derivative Instruments. A Fund may conduct its foreign currency exchange transactions either at the spot (cash) rate prevailing in the foreign currency exchange market or by entering into forward foreign currency exchange contracts (forward contracts). (See Types of Investments Derivatives .) These contracts are traded in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. Because foreign currency transactions occurring in the interbank market might involve substantially larger amounts than those involved in the use of such derivative instruments, a Fund could be disadvantaged by having to deal in the odd lot market for the underlying foreign currencies at prices that are less favorable than for round lots.
A Fund may enter into forward contracts for a variety of reasons, including for risk management (hedging) or for investment purposes.
When a Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency or has been notified of a dividend or interest payment, it may desire to lock in the price of the security or the amount of the payment, usually in U.S. dollars, although it could desire to lock in the price of the security in another currency. By entering into a forward contract, a Fund would be able to protect itself against a possible loss resulting from an adverse change in the relationship between different currencies from the date the security is purchased or sold to the date on which payment is made or received or when the dividend or interest is actually received.
A Fund may enter into forward contracts when management of the Fund believes the currency of a particular foreign country may decline in value relative to another currency. When selling currencies forward in this fashion, a Fund may seek to hedge the value of foreign securities it holds against an adverse move in exchange rates. The precise matching of forward contract amounts and the value of securities involved generally will not be possible since the future value of securities in foreign currencies more than likely will change between the date the forward contract is entered into and the date it matures. The projection of short-term currency market movements is extremely difficult and successful execution of a short-term hedging strategy is highly uncertain.
This method of protecting the value of a Funds securities against a decline in the value of a currency does not eliminate fluctuations in the underlying prices of the securities. It simply establishes a rate of exchange that can be achieved at some point in time. Although forward contracts can be used to minimize the risk of loss due to a decline in value of hedged currency, they will also limit any potential gain that might result should the value of such currency increase.
A Fund may also enter into forward contracts when the Funds portfolio manager believes the currency of a particular country will increase in value relative to another currency. A Fund may buy currencies forward to gain exposure to a currency without incurring the additional costs of purchasing securities denominated in that currency.
For example, the combination of U.S. dollar-denominated instruments with long forward currency exchange contracts creates a position economically equivalent to a position in the foreign currency, in anticipation of an increase in the value of the foreign currency against the U.S. dollar. Conversely, the combination of U.S. dollar-denominated instruments with short forward currency exchange contracts is economically equivalent to borrowing the foreign currency for delivery at a specified date in the future, in anticipation of a decrease in the value of the foreign currency against the U.S. dollar.
Unanticipated changes in the currency exchange results could result in poorer performance for Funds that enter into these types of transactions.
A Fund may designate cash or securities in an amount equal to the value of the Funds total assets committed to consummating forward contracts entered into under the circumstance set forth above. If the value of the securities declines, additional cash or securities will be designated on a daily basis so that the value of the cash or securities will equal the amount of the Funds commitments on such contracts.
At maturity of a forward contract, a Fund may either deliver (if a contract to sell) or take delivery of (if a contract to buy) the foreign currency or terminate its contractual obligation by entering into an offsetting contract with the same currency trader, having the same maturity date, and covering the same amount of foreign currency.
If a Fund engages in an offsetting transaction, it will incur a gain or loss to the extent there has been movement in forward contract prices. If a Fund engages in an offsetting transaction, it may subsequently enter into a new forward contract to buy or sell the foreign currency.
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Although a Fund values its assets each business day in terms of U.S. dollars, it may not intend to convert its foreign currencies into U.S. dollars on a daily basis. However, it will do so from time to time, and such conversions involve certain currency conversion costs. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference (spread) between the prices at which they buy and sell various currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one rate, while offering a lesser rate of exchange should a Fund desire to resell that currency to the dealer.
It is possible, under certain circumstances, including entering into forward currency contracts for investment purposes, that a Fund will be required to limit or restructure its forward contract currency transactions to qualify as a regulated investment company under the Internal Revenue Code.
Options on Foreign Currencies. A Fund may buy put and call options and write covered call and cash-secured put options on foreign currencies for hedging purposes and to gain exposure to foreign currencies. For example, a decline in the dollar value of a foreign currency in which securities are denominated will reduce the dollar value of such securities, even if their value in the foreign currency remains constant. In order to protect against the diminutions in the value of securities, a Fund may buy put options on the foreign currency. If the value of the currency does decline, a Fund would have the right to sell the currency for a fixed amount in dollars and would thereby offset, in whole or in part, the adverse effect on its portfolio that otherwise would have resulted.
Conversely, where a change in the dollar value of a currency would increase the cost of securities a Fund plans to buy, or where a Fund would benefit from increased exposure to the currency, a Fund may buy call options on the foreign currency, giving it the right to purchase the currency for a fixed amount in dollars. The purchase of the options could offset, at least partially, the changes in exchange rates.
As in the case of other types of options, however, the benefit to a Fund derived from purchases of foreign currency options would be reduced by the amount of the premium and related transaction costs. In addition, where currency exchange rates do not move in the direction or to the extent anticipated, a Fund could sustain losses on transactions in foreign currency options that would require it to forego a portion or all of the benefits of advantageous changes in rates.
A Fund may write options on foreign currencies for similar purposes. For example, when a Fund anticipates a decline in the dollar value of foreign-denominated securities due to adverse fluctuations in exchange rates, it could, instead of purchasing a put option, write a call option on the relevant currency, giving the option holder the right to purchase that currency from the Fund for a fixed amount in dollars. If the expected decline occurs, the option would most likely not be exercised and the diminution in value of securities would be offset, at least partially, by the amount of the premium received.
Similarly, instead of purchasing a call option when a foreign currency is expected to appreciate, a Fund could write a put option on the relevant currency, giving the option holder the right to that currency from the Fund for a fixed amount in dollars. If rates move in the manner projected, the put option would expire unexercised and allow the Fund to hedge increased cost up to the amount of the premium.
As in the case of other types of options, however, the writing of a foreign currency option will constitute only a partial hedge up to the amount of the premium, and only if rates move in the expected direction. If this does not occur, the option may be exercised and the Fund would be required to buy or sell the underlying currency at a loss that may not be offset by the amount of the premium. Through the writing of options on foreign currencies, the Fund also may be required to forego all or a portion of the benefits that might otherwise have been obtained from favorable movements on exchange rates.
An option written on foreign currencies is covered if a Fund holds currency sufficient to cover the option or has an absolute and immediate right to acquire that currency without additional cash consideration upon conversion of assets denominated in that currency or exchange of other currency held in its portfolio. An option writer could lose amounts substantially in excess of its initial investments, due to the margin and collateral requirements associated with such positions.
Options on foreign currencies are traded through financial institutions acting as market-makers, although foreign currency options also are traded on certain national securities exchanges, such as the Philadelphia Stock Exchange and the Chicago Board Options Exchange, subject to SEC regulation. In an over-the-counter trading environment, many of the protections afforded to exchange participants will not be available. For example, there are no daily price fluctuation limits, and adverse market movements could therefore continue to an unlimited extent over a period of time. Although the purchaser of an option cannot lose more than the amount of the premium plus related transaction costs, this entire amount could be lost.
Foreign currency option positions entered into on a national securities exchange are cleared and guaranteed by the OCC, thereby reducing the risk of counterparty default. Further, a liquid secondary market in options traded on a national securities exchange may be more readily available than in the over-the-counter market, potentially permitting a Fund to liquidate open positions at a profit prior to exercise or expiration, or to limit losses in the event of adverse market movements.
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Foreign Currency Futures and Related Options. A Fund may enter into currency futures contracts to buy or sell currencies. It also may buy put and call options and write covered call and cash-secured put options on currency futures. Currency futures contracts are similar to currency forward contracts, except that they are traded on exchanges (and have margin requirements) and are standardized as to contract size and delivery date. Most currency futures call for payment of delivery in U.S. dollars. A Fund may use currency futures for the same purposes as currency forward contracts, subject to CFTC limitations.
Currency futures and options on futures values can be expected to correlate with exchange rates, but will not reflect other factors that may affect the value of the Funds investments. A currency hedge, for example, should protect a Yen-denominated bond against a decline in the Yen, but will not protect a Fund against price decline if the issuers creditworthiness deteriorates. Because the value of a Funds investments denominated in foreign currency will change in response to many factors other than exchange rates, it may not be possible to match the amount of a forward contract to the value of a Funds investments denominated in that currency over time.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with foreign currency transactions include: Foreign Currency Risk, Derivatives Risk, Interest Rate Risk, and Liquidity Risk.
Foreign Securities
Unless otherwise stated in a Funds prospectus, stocks, bonds and other securities or investments are deemed to be foreign based primarily on the issuers place of organization/incorporation, but the Fund may also consider, under circumstances the Funds portfolio manager deems relevant, the issuers domicile, its principal place of business, its primary stock exchange listing, the source of its revenue or other factors. A Funds investments in foreign markets, may include issuers in emerging markets, as well as frontier markets, each of which carry heightened risks as compared with investments in other typical foreign markets. Frontier market countries generally have smaller economies and even less developed capital markets than typical emerging market countries (which themselves have increased investment risk relative to investing in more developed markets) and, as a result, the risks of investing in emerging market countries are magnified in frontier market countries. Foreign securities may be structured as fixed-, variable- or floating-rate obligations or as zero-coupon, pay-in-kind and step-coupon securities and may be privately placed or publicly offered. See Types of Investments Variable- and Floating-Rate Obligations, Types of Investments Zero-Coupon, Pay-in-Kind and Step-Coupon Securities and Types of Investments Private Placement and Other Restricted Securities for more information.
Due to the potential for foreign withholding taxes, MSCI publishes two versions of its indices reflecting the reinvestment of dividends using two different methodologies: gross dividends and net dividends. While both versions reflect reinvested dividends, they differ with respect to the manner in which taxes associated with dividend payments are treated. In calculating the net dividends version, MSCI incorporates reinvested dividends applying the withholding tax rate applicable to foreign non-resident institutional investors that do not benefit from double taxation treaties. The Investment Manager believes that the net dividends version of MSCI indices better reflects the returns U.S. investors might expect were they to invest directly in the component securities of an MSCI index.
There is a practice in certain foreign markets under which an issuers securities are blocked from trading at the custodian or sub-custodian level for a specified number of days before and, in certain instances, after a shareholder meeting where such shares are voted. This is referred to as share blocking. The blocking period can last up to several weeks. Share blocking may prevent a Fund from buying or selling securities during this period, because during the time shares are blocked, trades in such securities will not settle. It may be difficult or impossible to lift blocking restrictions, with the particular requirements varying widely by country. As a consequence of these restrictions, the Investment Manager, on behalf of a Fund, may abstain from voting proxies in markets that require share blocking.
Foreign securities may include depositary receipts, such as American Depositary Receipts (ADRs), European Depositary Receipts (EDRs) and Global Depositary Receipts (GDRs). ADRs are U.S. dollar-denominated receipts issued in registered form by a domestic bank or trust company that evidence ownership of underlying securities issued by a foreign issuer. EDRs are foreign currency-denominated receipts issued in Europe, typically by foreign banks or trust companies and foreign branches of domestic banks, that evidence ownership of foreign or domestic securities. GDRs are receipts structured similarly to ADRs and EDRs and are marketed globally. Depositary receipts will not necessarily be denominated in the same currency as their underlying securities. In general, ADRs, in registered form, are designed for use in the U.S. securities markets, and EDRs, in bearer form, are designed for use in European securities markets. GDRs are tradable both in the United States and in Europe and are designed for use throughout the world. A Fund may invest in depositary receipts through sponsored or unsponsored facilities. A sponsored facility is established jointly by the issuer of the underlying security and a depositary, whereas a depositary may establish an unsponsored facility without participation by the issuer of the deposited security. Holders of unsponsored depositary receipts generally bear all the costs of such facilities and the depositary of an unsponsored facility frequently is under no obligation to distribute interest holder communications received from the issuer of the deposited security or to pass through voting rights to the holders of such receipts in respect of the deposited securities. The
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issuers of unsponsored depositary receipts are not obligated to disclose material information in the United States, and, therefore, there may be limited information available regarding such issuers and/or limited correlation between available information and the market value of the depositary receipts.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with foreign securities include: Emerging Markets Securities Risk, EuroZone-Related Risk, Foreign Currency Risk, Foreign Securities Risk, Frontier Market Risk, Geographic Concentration Risk, Issuer Risk and Market Risk.
Guaranteed Investment Contracts (Funding Agreements)
Guaranteed investment contracts, or funding agreements, are short-term, privately placed debt instruments issued by insurance companies. Pursuant to such contracts, a Fund may make cash contributions to a deposit fund of the insurance companys general account. The insurance company then credits to a Fund payments at negotiated, floating or fixed interest rates. A Fund will purchase guaranteed investment contracts only from issuers that, at the time of purchase, meet certain credit and quality standards. In general, guaranteed investment contracts are not assignable or transferable without the permission of the issuing insurance companies, and an active secondary market does not exist for these investments. In addition, the issuer may not be able to pay the principal amount to a Fund on seven days notice or less, at which time the investment may be considered illiquid under applicable SEC regulatory guidance and subject to certain restrictions. See Types of Investments Illiquid Securities.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with guaranteed investment contracts (funding agreements) include: Credit Risk and Liquidity Risk.
High Yield Securities
High yield or low and below investment grade securities (below investment grade securities are also known as junk bonds) are debt securities with the lowest investment grade rating (e.g., BBB by S&P and Fitch or Baa by Moodys), that are below investment grade (e.g., lower than BBB by S&P and Fitch or Baa by Moodys) or that are unrated but determined by a Funds portfolio manager to be of comparable quality. These types of securities may be issued to fund corporate transactions or restructurings, such as leveraged buyouts, mergers, acquisitions, debt reclassifications or similar events, are more speculative in nature than securities with higher ratings and tend to be more sensitive to credit risk, particularly during a downturn in the economy. These types of securities generally are issued by unseasoned companies without long track records of sales and earnings, or by companies or municipalities that have questionable credit strength. Low and below investment grade securities and comparable unrated securities: (i) likely will have some quality and protective characteristics that, in the judgment of one or more NRSROs, are outweighed by large uncertainties or major risk exposures to adverse conditions; (ii) are speculative with respect to the issuers capacity to pay interest and repay principal in accordance with the terms of the obligation; and (iii) may have a less liquid secondary market, potentially making it difficult to value or sell such securities. Credit ratings issued by credit rating agencies are designed to evaluate the safety of principal and interest payments of rated securities. They do not, however, evaluate the market value risk of lower-quality securities and, therefore, may not fully reflect the true risks of an investment. In addition, credit rating agencies may or may not make timely changes in a rating to reflect changes in the economy or in the condition of the issuer that affect the market value of the securities. Consequently, credit ratings are used only as a preliminary indicator of investment quality. Low and below investment grade securities may be structured as fixed-, variable- or floating-rate obligations or as zero-coupon, pay-in-kind and step-coupon securities and may be privately placed or publicly offered. See Types of Investments Variable- and Floating-Rate Obligations, Types of Investments Zero-Coupon, Pay-in-Kind and Step-Coupon Securities and Types of Investments Private Placement and Other Restricted Securities for more information.
The rates of return on these types of securities generally are higher than the rates of return available on more highly rated securities, but generally involve greater volatility of price and risk of loss of principal and income, including the possibility of default by or insolvency of the issuers of such securities. Accordingly, a Fund may be more dependent on the Investment Managers or a subadvisers credit analysis with respect to these types of securities than is the case for more highly rated securities.
The market values of certain low and below investment grade securities and comparable unrated securities tend to be more sensitive to individual corporate developments and changes in economic conditions than are the market values of more highly rated securities. In addition, issuers of low and below investment grade and comparable unrated securities often are highly leveraged and may not have more traditional methods of financing available to them, so that their ability to service their debt obligations during an economic downturn or during sustained periods of rising interest rates may be impaired.
The risk of loss due to default is greater for low and below investment grade and comparable unrated securities than it is for higher rated securities because low and below investment grade securities and comparable unrated securities generally are unsecured and frequently are subordinated to more senior indebtedness. A Fund may incur additional expenses to the extent
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that it is required to seek recovery upon a default in the payment of principal or interest on its holdings of such securities. The existence of limited markets for lower-rated debt securities may diminish a Funds ability to: (i) obtain accurate market quotations for purposes of valuing such securities and calculating portfolio net asset value; and (ii) sell the securities at fair market value either to meet redemption requests or to respond to changes in the economy or in financial markets.
Many lower-rated securities are not registered for offer and sale to the public under the 1933 Act. Investments in these restricted securities may be determined to be liquid (able to be sold within seven days at approximately the price at which they are valued by a Fund) pursuant to policies approved by the Funds Trustees. Investments in illiquid securities, including restricted securities that have not been determined to be liquid, may not exceed 15% of a Funds net assets. A Fund is not otherwise subject to any limitation on its ability to invest in restricted securities. Restricted securities may be less liquid than other lower-rated securities, potentially making it difficult to value or sell such securities.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with low and below investment grade securities include: Credit Risk, Interest Rate Risk, Low and Below Investment Grade (High Yield) Securities Risk and Prepayment and Extension Risk.
Illiquid Securities
Illiquid securities are defined by a Fund consistent with the SEC staffs current guidance and interpretations which provide that an illiquid security is an asset which may not be sold or disposed of in the ordinary course of business within seven days at approximately the value at which a Fund has valued the investment on its books. Some securities, such as those not registered under U.S. securities laws, cannot be sold in public transactions. Some securities are deemed to be illiquid because they are subject to contractual or legal restrictions on resale. Subject to its investment policies, a Fund may invest in illiquid investments and may invest in certain restricted securities that are deemed to be illiquid securities at the time of purchase.
Although one or more of the other risks described in this SAI may also apply, the risk typically associated with illiquid securities include: Liquidity Risk.
Inflation-Protected Securities
Inflation is a general rise in prices of goods and services. Inflation erodes the purchasing power of an investors assets. For example, if an investment provides a total return of 7% in a given year and inflation is 3% during that period, the inflation-adjusted, or real, return is 4%. Inflation-protected securities are debt securities whose principal and/or interest payments are adjusted for inflation, unlike debt securities that make fixed principal and interest payments. One type of inflation-protected debt security is issued by the U.S. Treasury. The principal of these securities is adjusted for inflation as indicated by the Consumer Price Index (CPI) for urban consumers and interest is paid on the adjusted amount. The CPI is a measurement of changes in the cost of living, made up of components such as housing, food, transportation and energy.
If the CPI falls, the principal value of inflation-protected securities will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Conversely, if the CPI rises, the principal value of inflation-protected securities will be adjusted upward, and consequently the interest payable on these securities will be increased. Repayment of the original bond principal upon maturity is guaranteed in the case of U.S. Treasury inflation-protected securities, even during a period of deflation. However, the current market value of the inflation-protected securities is not guaranteed and will fluctuate. Other inflation-indexed securities include inflation-related bonds, which may or may not provide a similar guarantee. If a guarantee of principal is not provided, the adjusted principal value of the bond repaid at maturity may be less than the original principal.
Other issuers of inflation-protected debt securities include other U.S. government agencies or instrumentalities, corporations and foreign governments. There can be no assurance that the CPI or any foreign inflation index will accurately measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country will be correlated to the rate of inflation in the United States. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the bonds inflation measure.
Any increase in principal for an inflation-protected security resulting from inflation adjustments is considered by IRS regulations to be taxable income in the year it occurs. For direct holders of an inflation-protected security, this means that taxes must be paid on principal adjustments even though these amounts are not received until the bond matures. Similarly, a Fund holding these securities distributes both interest income and the income attributable to principal adjustments in the form of cash or reinvested shares, which are taxable to shareholders.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with inflation-protected securities include: Inflation-Protected Securities Risk, Interest Rate Risk and Market Risk. In addition, inflation protected securities issued by non-U.S. government agencies or instrumentalities are subject to Credit Risk.
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Initial Public Offerings
A Fund may invest in initial public offerings (IPOs) of common stock or other primary or secondary syndicated offerings of equity or debt securities issued by a corporate issuer. Fixed income funds frequently invest in these types of offerings of debt securities. A purchase of IPO securities often involves higher transaction costs than those associated with the purchase of securities already traded on exchanges or markets. A Fund may hold IPO securities for a period of time, or may sell them soon after the purchase. Investments in IPOs could have a magnified impact either positive or negative on a Funds performance while the Funds assets are relatively small. The impact of an IPO on a Funds performance may tend to diminish as the Funds assets grow. In circumstances when investments in IPOs make a significant contribution to a Funds performance, there can be no assurance that similar contributions from IPOs will continue in the future.
Although one or more risks described in this SAI may also apply, the risks typically associated with IPOs include: Initial Public Offering (IPO) Risk, Issuer Risk, Liquidity Risk, Market Risk and Small Company Securities Risk.
Inverse Floater
See Types of Investments Derivatives Index or Linked Securities (Structured Products) above.
Investments in Other Investment Companies (Including ETFs)
Investing in other investment companies may be a means by which a Fund seeks to achieve its investment objective. A Fund may invest in securities issued by other investment companies within the limits prescribed by the 1940 Act, the rules and regulations thereunder and any exemptive orders currently or in the future obtained by a Fund, or the investment company in which a Fund invests, from the SEC. These securities include shares of other open-end investment companies (i.e., mutual funds), closed-end funds, exchange-traded funds (ETFs) and business development companies.
Except with respect to Funds structured as funds-of-funds or so-called master/feeder funds or other Funds whose strategies otherwise allow such investments, the 1940 Act generally requires that a fund limit its investments in another investment company or series thereof so that, as determined at the time a securities purchase is made: (i) no more than 5% of the value of its total assets will be invested in the securities of any one investment company; (ii) no more than 10% of the value of its total assets will be invested in the aggregate in securities of other investment companies; and (iii) no more than 3% of the outstanding voting stock of any one investment company or series thereof will be owned by a Fund or by companies controlled by a Fund. Such other investment companies may include ETFs, which are shares of publicly traded unit investment trusts, open-end funds or depositary receipts that may be passively managed (e.g., they seek to track the performance of specific indexes or companies in related industries) or they may be actively managed. The SEC has granted orders for exemptive relief to certain ETFs that permit investments in those ETFs by other investment companies in excess of these limits.
ETFs are listed on an exchange and trade in the secondary market on a per-share basis, which allows investors to purchase and sell ETF shares at their market price throughout the day. Certain ETFs, such as passively managed ETFs, hold portfolios of securities that are designed to replicate, as closely as possible before expenses, the price and yield of a specified market index. The performance results of these ETFs will not replicate exactly the performance of the pertinent index due to transaction and other expenses, including fees to service providers borne by ETFs. ETF shares are sold and redeemed at net asset value only in large blocks called creation units and redemption units, respectively. The Funds ability to redeem redemption units may be limited by the 1940 Act, which provides that ETFs will not be obligated to redeem shares held by the Funds in an amount exceeding one percent of their total outstanding securities during any period of less than 30 days.
Although a Fund may derive certain advantages from being able to invest in shares of other investment companies, such as to be fully invested, there may be potential disadvantages. Investing in other investment companies may result in higher fees and expenses for a Fund and its shareholders. A shareholder may be charged fees not only on Fund shares held directly but also on the investment company shares that a Fund purchases. Because these investment companies may invest in other securities, they are also subject to the risks associated with a variety of investment instruments as described in this SAI.
Under the 1940 Act and rules and regulations thereunder, a Fund may purchase shares of affiliated funds, subject to certain conditions. Investing in affiliated funds may present certain actual or potential conflicts of interest. For more information about such actual and potential conflicts of interest, see Investment Management and Other Services Other Roles and Relationships of Ameriprise Financial and its Affiliates Certain Conflicts of Interest.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with the securities of other investment companies include: Investing in Other Funds Risk, Exchange Traded Fund (ETF) Risk, Issuer Risk and Market Risk.
Money Market Instruments
Money market instruments include cash equivalents and short-term debt obligations which include: (i) bank obligations, including certificates of deposit (CDs), time deposits and bankers acceptances, and letters of credit of banks or savings and
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loan associations having capital surplus and undivided profits (as of the date of its most recently published annual financial statements) in excess of $100 million (or the equivalent in the instance of a foreign branch of a U.S. bank) at the date of investment; (ii) funding agreements; (iii) repurchase agreements; (iv) obligations of the United States, foreign countries and supranational entities, and each of their subdivisions, agencies and instrumentalities; (v) certain corporate debt securities, such as commercial paper, short-term corporate obligations and extendible commercial notes; (vi) participation interests; and (vii) municipal securities. Money market instruments may be structured as fixed-, variable- or floating-rate obligations and may be privately placed or publicly offered. A Fund may also invest in affiliated and unaffiliated money market mutual funds, which invest primarily in money market instruments. See Types of Investments Variable- and Floating-Rate Obligations and Types of Investments Private Placement and Other Restricted Securities for more information.
With respect to money market securities, certain U.S. Government obligations are backed or insured by the U.S. Government, its agencies or its instrumentalities. Other money market securities are backed only by the claims paying ability or creditworthiness of the issuer.
Bankers acceptances are marketable short-term credit instruments used to finance the import, export, transfer or storage of goods. They are termed accepted when a bank unconditionally guarantees their payment at maturity.
A Fund may invest its daily cash balance in Columbia Short-Term Cash Fund, a money market fund established for the exclusive use of the funds in the Columbia Fund Family and other institutional clients of the Investment Manager.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with money market instruments include: Credit Risk, Inflation Risk, Interest Rate Risk, Issuer Risk, Money Market Fund Risk and Regulatory Risk.
Mortgage-Backed Securities
Mortgage-backed securities are a type of asset-backed security that represent interests in, or debt instruments backed by, pools of underlying mortgages. In some cases, these underlying mortgages may be insured or guaranteed by the U.S. Government or its agencies. Mortgage-backed securities entitle the security holders to receive distributions that are tied to the payments made on the underlying mortgage collateral (less fees paid to the originator, servicer, or other parties, and fees paid for credit enhancement), so that the payments made on the underlying mortgage collateral effectively pass through to such security holders. Mortgage-backed securities are created when mortgage originators (or mortgage loan sellers who have purchased mortgage loans from mortgage loan originators) sell the underlying mortgages to a special purpose entity in a process called a securitization. The special purpose entity issues securities that are backed by the payments on the underlying mortgage loans, and have a minimum denomination and specific term. Mortgage-backed securities may be structured as fixed-, variable- or floating-rate obligations or as zero-coupon, pay-in-kind and step-coupon securities and may be privately placed or publicly offered. See Types of Investments Variable- and Floating-Rate Obligations, Types of Investments Zero-Coupon, Pay-in-Kind and Step-Coupon Securities and Types of Investments Private Placement and Other Restricted Securities for more information.
Mortgage-backed securities may be issued or guaranteed by GNMA (also known as Ginnie Mae), FNMA (also known as Fannie Mae), or FHLMC (also known as Freddie Mac), but also may be issued or guaranteed by other issuers, including private companies. GNMA is a government-owned corporation that is an agency of the U.S. Department of Housing and Urban Development. It guarantees, with the full faith and credit of the United States, full and timely payment of all monthly principal and interest on its mortgage-backed securities. Until recently, FNMA and FHLMC were government-sponsored corporations owned entirely by private stockholders. Both issue mortgage-related securities that contain guarantees as to timely payment of interest and principal but that are not backed by the full faith and credit of the U.S. Government. The value of the companies securities fell sharply in 2008 due to concerns that the firms did not have sufficient capital to offset losses. The U.S. Treasury has historically had the authority to purchase obligations of Fannie Mae and Freddie Mac. In addition, in 2008, due to capitalization concerns, Congress provided the U.S. Treasury with additional authority to lend Fannie Mae and Freddie Mac emergency funds and to purchase the companies stock, as described below. In September 2008, the U.S. Treasury and the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac had been placed in conservatorship.
In the past Fannie Mae and Freddie Mac have received significant capital support through U.S. Treasury preferred stock purchases and Federal Reserve purchases of their mortgage-backed securities. There can be no assurance that these or other agencies of the government will provide such support in the future. The future status of Fannie Mae or Freddie Mac could be impacted by, among other things, the actions taken and restrictions placed on Fannie Mae or Freddie Mac by the FHFA in its role as conservator, the restrictions placed on Fannie Maes or Freddie Macs operations and activities under the senior stock purchase agreements, market responses to developments at Fannie Mae or Freddie Mac, and future legislative and regulatory action that alters the operations, ownership structure and/or mission of Fannie Mae or Freddie Mac, each of which may, in turn, impact the value of, and cash flows on, any securities guaranteed by Fannie Mae and Freddie Mac.
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Stripped mortgage-backed securities are a type of mortgage-backed security that receives differing proportions of the interest and principal payments from the underlying assets. Generally, there are two classes of stripped mortgage-backed securities: Interest Only (IO) and Principal Only (PO). IOs entitle the holder to receive distributions consisting of all or a portion of the interest on the underlying pool of mortgage loans or mortgage-backed securities. POs entitle the holder to receive distributions consisting of all or a portion of the principal of the underlying pool of mortgage loans or mortgage-backed securities. See Types of Investments Stripped Securities for more information.
Collateralized Mortgage Obligations (CMOs) are hybrid mortgage-related instruments issued by special purpose entities secured by pools of mortgage loans or other mortgage-related securities, such as mortgage pass-through securities or stripped mortgage-backed securities. CMOs may be structured into multiple classes, often referred to as tranches, with each class bearing a different stated maturity and entitled to a different schedule for payments of principal and interest, including prepayments. Principal prepayments on collateral underlying a CMO may cause it to be retired substantially earlier than its stated maturity or final distribution dates, resulting in a loss of all or part of the premium if any has been paid. The yield characteristics of mortgage-backed securities differ from those of other debt securities. Among the differences are that interest and principal payments are made more frequently on mortgage-backed securities, usually monthly, and principal may be repaid at any time. These factors may reduce the expected yield. Interest is paid or accrues on all classes of the CMOs on a periodic basis. The principal and interest payments on the underlying mortgage assets may be allocated among the various classes of CMOs in several ways. Typically, payments of principal, including any prepayments, on the underlying mortgage assets are applied to the classes in the order of their respective stated maturities or final distribution dates, so that no payment of principal is made on CMOs of a class until all CMOs of other classes having earlier stated maturities or final distribution dates have been paid in full.
Commercial mortgage-backed securities (CMBS) are a specific type of mortgage-backed security collateralized by a pool of mortgages on commercial real estate.
CMO Residuals are mortgage securities issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans, including savings and loan associations, homebuilders, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing. The cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make required payments of principal and interest on the CMOs and second to pay the related administrative expenses and any management fee of the issuer. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of administrative expenses and the pre-payment experience on the mortgage assets. In particular, the yield to maturity on CMO residuals is extremely sensitive to pre-payments on the related underlying mortgage assets, in the same manner as an interest-only (IO) class of stripped mortgage-backed securities. In addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. As described below with respect to stripped mortgage-backed securities, in certain circumstances an ETF may fail to recoup fully its initial investment in a CMO residual. CMO residuals are generally purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers. Transactions in CMO residuals are generally completed only after careful review of the characteristics of the securities in question. In addition, CMO residuals may, or pursuant to an exemption therefrom, may not have been registered under the 1933 Act. CMO residuals, whether or not registered under the 1933 Act, may be subject to certain restrictions on transferability, and may be deemed illiquid and subject to a Funds limitations on investment in illiquid securities.
Mortgage Pass-Through Securities are interests in pools of mortgage-related securities that differ from other forms of debt securities, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates. Instead, these securities provide a monthly payment which consists of both interest and principal payments. In effect, these payments are a pass-through of the monthly payments made by the individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale of the underlying property, refinancing or foreclosure, net of fees or costs which may be incurred. Some mortgage-related securities (such as securities issued by the GNMA) are described as modified pass-through. These securities entitle the holder to receive all interest and principal payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or not the mortgagor actually makes the payment.
REMICs are entities that own mortgages and elect REMIC status under the Code and, like CMOs, issue debt obligations collateralized by underlying mortgage assets that have characteristics similar to those issued by CMOs.
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Although one or more of the other risks described in this SAI may also apply, the risks typically associated with mortgage and asset-backed securities include: Credit Risk, Interest Rate Risk, Issuer Risk, Liquidity Risk, Mortgage-Backed and Other Asset-Backed Securities Risk, Prepayment and Extension Risk and Reinvestment Risk.
Municipal Securities
Municipal securities include debt obligations issued by governmental entities to obtain funds for various public purposes, including the construction of a wide range of public facilities, the refunding of outstanding obligations, the payment of general operating expenses, and the extension of loans to public institutions and facilities.
Municipal securities may include municipal bonds, municipal notes and municipal leases, which are described below. Municipal bonds are debt obligations of a governmental entity that obligate the municipality to pay the holder a specified sum of money at specified intervals and to repay the principal amount of the loan at maturity. Municipal securities can be classified into two principal categories, including general obligation bonds and other securities and revenue bonds and other securities. General obligation bonds are secured by the issuers full faith, credit and taxing power for the payment of principal and interest. Revenue securities are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source, such as the user of the facility being financed. Municipal securities also may include moral obligation securities, which normally are issued by special purpose public authorities. If the issuer of moral obligation securities is unable to meet its debt service obligations from current revenues, it may draw on a reserve fund, the restoration of which is a moral commitment but not a legal obligation of the governmental entity that created the special purpose public authority. Municipal securities may be structured as fixed-, variable- or floating-rate obligations or as zero-coupon, pay-in-kind and step-coupon securities and may be privately placed or publicly offered. See Types of Investments Variable- and Floating-Rate Obligations, Types of Investments Zero-Coupon, Pay-in-Kind and Step-Coupon Securities and Types of Investments Private Placement and Other Restricted Securities for more information.
Municipal notes may be issued by governmental entities and other tax-exempt issuers in order to finance short-term cash needs or, occasionally, to finance construction. Most municipal notes are general obligations of the issuing entity payable from taxes or designated revenues expected to be received within the relevant fiscal period. Municipal notes generally have maturities of one year or less. Municipal notes can be subdivided into two sub-categories: (i) municipal commercial paper and (ii) municipal demand obligations.
Municipal commercial paper typically consists of very short-term unsecured negotiable promissory notes that are sold, for example, to meet seasonal working capital or interim construction financing needs of a governmental entity or agency. While these obligations are intended to be paid from general revenues or refinanced with long-term debt, they frequently are backed by letters of credit, lending agreements, note repurchase agreements or other credit facility agreements offered by banks or institutions. See Types of Investments Commercial Paper for more information.
Municipal demand obligations can be subdivided into two general types: variable rate demand notes and master demand obligations. Variable rate demand notes are tax-exempt municipal obligations or participation interests that provide for a periodic adjustment in the interest rate paid on the notes. They permit the holder to demand payment of the notes, or to demand purchase of the notes at a purchase price equal to the unpaid principal balance, plus accrued interest either directly by the issuer or by drawing on a bank letter of credit or guaranty issued with respect to such note. The issuer of the municipal obligation may have a corresponding right to prepay at its discretion the outstanding principal of the note plus accrued interest upon notice comparable to that required for the holder to demand payment. The variable rate demand notes in which a Fund may invest are payable, or are subject to purchase, on demand, usually on notice of seven calendar days or less. The terms of the notes generally provide that interest rates are adjustable at intervals ranging from daily to six months.
Master demand obligations are tax-exempt municipal obligations that provide for a periodic adjustment in the interest rate paid and permit daily changes in the amount borrowed. The interest on such obligations is, in the opinion of counsel for the borrower, excluded from gross income for federal income tax purposes (but not necessarily for alternative minimum tax purposes). Although there is no secondary market for master demand obligations, such obligations are considered by a Fund to be liquid because they are payable upon demand.
Municipal lease obligations are participations in privately arranged loans to state or local government borrowers and may take the form of a lease, an installment purchase, or a conditional sales contract. They are issued by state and local governments and authorities to acquire land, equipment, and facilities. An investor may purchase these obligations directly, or it may purchase participation interests in such obligations. In general, municipal lease obligations are unrated, in which case they will be determined by a Funds portfolio manager to be of comparable quality at the time of purchase to rated instruments that may be acquired by a Fund. Frequently, privately arranged loans have variable interest rates and may be backed by a bank letter of credit. In other cases, they may be unsecured or may be secured by assets not easily liquidated.
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Moreover, such loans in most cases are not backed by the taxing authority of the issuers and may have limited marketability or may be marketable only by virtue of a provision requiring repayment following demand by the lender.
Municipal leases may be subject to greater risks than general obligation or revenue bonds. State constitutions and statutes set forth requirements that states or municipalities must meet in order to issue municipal obligations. Municipal leases may contain a covenant by the state or municipality to budget for and make payments due under the obligation. Certain municipal leases may, however, provide that the issuer is not obligated to make payments on the obligation in future years unless funds have been appropriated for this purpose each year.
Although lease obligations do not constitute general obligations of the municipal issuer to which the governments taxing power is pledged, a lease obligation ordinarily is backed by the governments covenant to budget for, appropriate, and make the payments due under the lease obligation. However, certain lease obligations contain non-appropriation clauses that provide that the government has no obligation to make lease or installment purchase payments in future years unless money is appropriated for such purpose on a periodic basis. In the case of a non-appropriation lease, a Funds ability to recover under the lease in the event of non-appropriation or default likely will be limited to the repossession of the leased property in the event that foreclosure proves difficult.
Tender option bonds are municipal securities having relatively long maturities and bearing interest at a fixed interest rate substantially higher than prevailing short-term tax-exempt rates that is coupled with the agreement of a third party, such as a bank, broker-dealer or other financial institution, to grant the security holders the option, at periodic intervals, to tender their securities to the institution and receive the face value thereof. The financial institution receives periodic fees equal to the difference between the municipal securitys coupon rate and the rate that would cause the security to trade at face value on the date of determination.
There are variations in the quality of municipal securities, both within a particular classification and between classifications, and the rates of return on municipal securities can depend on a variety of factors, including general money market conditions, the financial condition of the issuer, general conditions of the municipal bond market, the size of a particular offering, the maturity of the obligation, and the rating of the issue. The ratings of NRSROs represent their opinions as to the quality of municipal securities. It should be emphasized, however, that these ratings are general and are not absolute standards of quality, and municipal securities with the same maturity, interest rate, and rating may have different rates of return while municipal securities of the same maturity and interest rate with different ratings may have the same rate of return. The municipal bond market is characterized by a large number of different issuers, many having smaller sized bond issues, and a wide choice of different maturities within each issue. For these reasons, most municipal bonds do not trade on a daily basis and many trade only rarely. Because many of these bonds trade infrequently, the spread between the bid and offer may be wider and the time needed to develop a bid or an offer may be longer than for other security markets. See Appendix A for a discussion of securities ratings. (See Types of Investments Debt Obligations .)
Standby Commitments. Standby commitments are securities under which a purchaser, usually a bank or broker-dealer, agrees to purchase, for a fee, an amount of a Funds municipal obligations. The amount payable by a bank or broker-dealer to purchase securities subject to a standby commitment typically will be substantially the same as the value of the underlying municipal securities. A Fund may pay for standby commitments either separately in cash or by paying a higher price for portfolio securities that are acquired subject to such a commitment.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with standby commitments include: Counterparty Risk, Market Risk and Municipal Securities Risk.
Taxable Municipal Obligations. Interest or other investment return is subject to federal income tax for certain types of municipal obligations for a variety of reasons. These municipal obligations do not qualify for the federal income tax exemption because (a) they did not receive necessary authorization for tax-exempt treatment from state or local government authorities, (b) they exceed certain regulatory limitations on the cost of issuance for tax-exempt financing or (c) they finance public or private activities that do not qualify for the federal income tax exemption. These non-qualifying activities might include, for example, certain types of multi-family housing, certain professional and local sports facilities, refinancing of certain municipal debt, and borrowing to replenish a municipalitys underfunded pension plan.
For more information about the key risks associated with investments in municipal securities of particular states, see Appendix B. See Appendix A for a discussion of securities ratings. (See Types of Investments Debt Obligations .)
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with municipal securities include: Credit Risk, Inflation Risk, Interest Rate Risk, Market Risk, Municipal Securities Risk and Municipal Securities Risk/Health Care Sector Risk.
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Participation Interests
Participation interests (also called pass-through certificates or securities) represent an interest in a pool of debt obligations, such as municipal bonds or notes that have been packaged by an intermediary, such as a bank or broker-dealer. Participation interests typically are issued by partnerships or trusts through which a Fund receives principal and interest payments that are passed through to the holder of the participation interest from the payments made on the underlying debt obligations. The purchaser of a participation interest receives an undivided interest in the underlying debt obligations. The issuers of the underlying debt obligations make interest and principal payments to the intermediary, as an initial purchaser, which are passed through to purchasers in the secondary market, such as a Fund. Mortgage-backed securities are a common type of participation interest. Participation interests may be structured as fixed-, variable- or floating-rate obligations or as zero-coupon, pay-in- kind and step-coupon securities and may be privately placed or publicly offered. See Types of Investments Variable- and Floating-Rate Obligations, Types of Investments Zero-Coupon, Pay-in-Kind and Step-Coupon Securities and Types of Investments Private Placement and Other Restricted Securities for more information.
Loan participations also are a type of participation interest. Loans, loan participations, and interests in securitized loan pools are interests in amounts owed by a corporate, governmental, or other borrower to a lender or consortium of lenders (typically banks, insurance companies, investment banks, government agencies, or international agencies).
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with loan participations include: Confidential Information Access Risk, Credit Risk and Interest Rate Risk.
Partnership Securities
The Fund may invest in securities issued by publicly traded partnerships or master limited partnerships or limited liability companies (together referred to as PTPs/MLPs). These entities are limited partnerships or limited liability companies that may be publicly traded on stock exchanges or markets such as the NYSE, the NYSE Alternext US LLC (NYSE Alternext) (formerly the American Stock Exchange) and NASDAQ. PTPs/MLPs often own businesses or properties relating to energy, natural resources or real estate, or may be involved in the film industry or research and development activities. Generally PTPs/MLPs are operated under the supervision of one or more managing partners or members. Limited partners, unit holders, or members (such as a Fund that invests in a partnership) are not involved in the day-to-day management of the company. Limited partners, unit holders, or members are allocated income and capital gains associated with the partnership project in accordance with the terms of the partnership or limited liability company agreement.
At times PTPs/MLPs may potentially offer relatively high yields compared to common stocks. Because PTPs/MLPs are generally treated as partnerships or similar limited liability pass-through entities for tax purposes, they do not ordinarily pay income taxes, but pass their earnings on to unit holders (except in the case of some publicly traded firms that may be taxed as corporations). For tax purposes, unit holders may initially be deemed to receive only a portion of the distributions attributed to them because certain other portions may be attributed to the repayment of initial investments and may thereby lower the cost basis of the units or shares owned by unit holders. As a result, unit holders may effectively defer taxation on the receipt of some distributions until they sell their units. These tax consequences may differ for different types of entities.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with partnership securities include: Interest Rate Risk, Issuer Risk, Liquidity Risk and Market Risk.
Preferred Stock
Preferred stock represents units of ownership of a corporation that frequently have dividends that are set at a specified rate. Preferred stock has preference over common stock in the payment of dividends and the liquidation of assets. Preferred stock shares some of the characteristics of both debt and equity. Preferred stock ordinarily does not carry voting rights. Most preferred stock is cumulative; if dividends are passed (i.e., not paid for any reason), they accumulate and must be paid before common stock dividends. Participating preferred stock entitles its holders to share in profits above and beyond the declared dividend, along with common shareholders, as distinguished from nonparticipating preferred stock, which is limited to the stipulated dividend. Convertible preferred stock is exchangeable for a given number of shares of common stock and thus tends to be more volatile than nonconvertible preferred stock, which generally behaves more like a fixed income bond. Preferred stock may be privately placed or publicly offered. The price of a preferred stock is generally determined by earnings, type of products or services, projected growth rates, experience of management, liquidity, and general market conditions of the markets on which the stock trades. See Types of Investments Private Placement and Other Restricted Securities for more information.
Auction preferred stock (APS) is a type of adjustable-rate preferred stock with a dividend determined periodically in a Dutch auction process by corporate bidders. An APS is distinguished from standard preferred stock because its dividends change from time to time. Holders of APS may not be able to sell their shares if an auction fails, such as when there are more shares of APS for sale at an auction than there are purchase bids. Shares typically are bought and sold at face values generally ranging from $100,000 to $500,000 per share.
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Although one or more of the other risks described in this SAI may also apply, the risks typically associated with preferred stock include: Convertible Securities Risk, Issuer Risk, Liquidity Risk and Market Risk.
Private Placement and Other Restricted Securities
Private placement securities are securities that have been privately placed and are not registered under the 1933 Act. They are generally eligible for sale only to certain eligible investors. Private placements often may offer attractive opportunities for investment not otherwise available on the open market. Private placement and other restricted securities often cannot be sold to the public without registration under the 1933 Act or the availability of an exemption from registration (such as Rules 144 or 144A), or they are not readily marketable because they are subject to other legal or contractual delays in or restrictions on resale. Asset-backed securities, common stock, convertible securities, corporate debt securities, foreign securities, low and below investment grade securities, money market instruments, mortgage-backed securities, municipal securities, participation interests, preferred stock and other types of equity and debt instruments may be privately placed or restricted securities.
Private placements typically may be sold only to qualified institutional buyers (or, in the case of the initial sale of certain securities, such as those issued in collateralized debt obligations or collateralized loan obligations, to accredited investors (as defined in Rule 501(a) under the 1933 Act), or in a privately negotiated transaction or to a limited number of purchasers, or in limited quantities after they have been held for a specified period of time and other conditions are met pursuant to an exemption from registration.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with private placement and other restricted securities include: Issuer Risk, Liquidity Risk, Market Risk and Confidential Information Access Risk.
Real Estate Investment Trusts
Real estate investment trusts (REITs) are pooled investment vehicles that manage a portfolio of real estate or real estate related loans to earn profits for their shareholders. REITs are generally classified as equity REITs, mortgage REITs or a combination of equity and mortgage REITs. Equity REITs invest the majority of their assets directly in real property, such as shopping centers, nursing homes, office buildings, apartment complexes, and hotels, and derive income primarily from the collection of rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive income from the collection of interest payments. REITs can be subject to extreme volatility due to fluctuations in the demand for real estate, changes in interest rates, and adverse economic conditions.
Partnership units of real estate and other types of companies sometimes are organized as master limited partnerships in which ownership interests are publicly traded.
Similar to investment companies, REITs are not taxed on income distributed to shareholders provided they comply with certain requirements under the Code. The failure of a REIT to continue to qualify as a REIT for tax purposes can materially affect its value. A Fund will indirectly bear its proportionate share of any expenses paid by a REIT in which it invests. REITs often do not provide complete tax information until after the calendar year-end. Consequently, because of the delay, it may be necessary for a Fund investing in REITs to request permission to extend the deadline for issuance of Forms 1099-DIV beyond January 31. In the alternative, amended Forms 1099-DIV may be sent.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with REITs include: Interest Rate Risk, Issuer Risk, Market Risk and Real Estate-Related Investment Risk.
Repurchase Agreements
Repurchase agreements are agreements under which a Fund acquires a security for a relatively short period of time (usually within seven days) subject to the obligation of a seller to repurchase and a Fund to resell such security at a fixed time and price (representing the Funds cost plus interest). The repurchase agreement specifies the yield during the purchasers holding period. Repurchase agreements also may be viewed as loans made by a Fund that are collateralized by the securities subject to repurchase, which may consist of a variety of security types. A Fund typically will enter into repurchase agreements only with commercial banks, registered broker-dealers and the Fixed Income Clearing Corporation. Such transactions are monitored to ensure that the value of the underlying securities will be at least equal at all times to the total amount of the repurchase obligation, including any accrued interest.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with repurchase agreements include: Counterparty Risk, Credit Risk, Issuer Risk, Market Risk and Repurchase Agreements Risk.
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Reverse Repurchase Agreements
Reverse repurchase agreements are agreements under which a Fund temporarily transfers possession of a portfolio instrument to another party, such as a bank or broker-dealer, in return for cash. At the same time, the Fund agrees to repurchase the instrument at an agreed-upon time (normally within 7 days) and price which reflects an interest payment. A Fund generally retains the right to interest and principal payments on the security. Reverse repurchase agreements also may be viewed as borrowings made by a Fund.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with reverse repurchase agreements include: Credit Risk, Interest Rate Risk, Issuer Risk, Market Risk and Reverse Repurchase Agreements Risk.
Short Sales
A Fund may sometimes sell securities short when it owns an equal amount of the securities sold short. This is a technique known as selling short against the box. If a Fund makes a short sale against the box, it would not immediately deliver the securities sold and would not receive the proceeds from the sale. The seller is said to have a short position in the securities sold until it delivers the securities sold, at which time it receives the proceeds of the sale. To secure its obligation to deliver securities sold short, a Fund will deposit in escrow in a separate account with the custodian an equal amount of the securities sold short or securities convertible into or exchangeable for such securities. A Fund can close out its short position by purchasing and delivering an equal amount of the securities sold short, rather than by delivering securities already held by a Fund, because a Fund might want to continue to receive interest and dividend payments on securities in its portfolio that are convertible into the securities sold short.
Short sales against the box entail many of the same risks and considerations described below regarding short sales not against the box. However, when a Fund sells short against the box it typically limits the amount of its effective leverage. A Funds decision to make a short sale against the box may be a technique to hedge against market risks when a Funds portfolio manager believes that the price of a security may decline, causing a decline in the value of a security owned by a Fund or a security convertible into or exchangeable for such security. In such case, any future losses in a Funds long position would be reduced by a gain in the short position. The extent to which such gains or losses in the long position are reduced will depend upon the amount of securities sold short relative to the amount of the securities a Fund owns, either directly or indirectly, and, in the case where a Fund owns convertible securities, changes in the investment values or conversion premiums of such securities. Short sales may have adverse tax consequences to a Fund and its shareholders.
Subject to its fundamental and non-fundamental investment policies, a Fund may engage in short sales that are not against the box, which are sales by a Fund of securities, contracts or instruments that it does not own in hopes of purchasing the same security, contract or instrument at a later date at a lower price. The technique is also used to protect a profit in a long-term position in a security, commodity futures contract or other instrument. To make delivery to the buyer, a Fund must borrow or purchase the security. If borrowed, a Fund is then obligated to replace the security borrowed from the third party, so a Fund must purchase the security at the market price at a later time. If the price of the security has increased during this time, then a Fund will incur a loss equal to the increase in price of the security from the time of the short sale plus any premiums and interest paid to the third party. (Until the security is replaced, a Fund is required to pay to the lender amounts equal to any dividends or interest which accrue during the period of the loan. To borrow the security, a Fund also may be required to pay a premium, which would increase the cost of the security sold. The proceeds of the short sale will be retained by the broker, to the extent necessary to meet the margin requirements, until the short position is closed out.) Short sales of forward commitments and derivatives do not involve borrowing a security. These types of short sales may include futures, options, contracts for differences, forward contracts on financial instruments and options such as contracts, credit-linked instruments, and swap contracts.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with short sales include: Leverage Risk, Market Risk and Short Selling Risk.
Sovereign Debt
Sovereign debt obligations are issued or guaranteed by foreign governments or their agencies. It may be in the form of conventional securities or other types of debt instruments such as loans or loan participations. A sovereign debtors willingness or ability to repay principal and pay interest in a timely manner may be affected by a variety of factors, including its cash flow situation, the extent of its reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtors policy toward international lenders, and the political constraints to which a sovereign debtor may be subject. (See also Types of Investments Foreign Securities .) In addition, there may be no legal recourse against a sovereign debtor in the event of a default.
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Sovereign debt includes Brady Bonds, which are securities issued under the framework of the Brady Plan, an initiative announced by former U.S. Treasury Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to restructure their outstanding external commercial bank indebtedness.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with sovereign debt include: Credit Risk, Emerging Markets Securities Risk, Foreign Securities Risk, Issuer Risk and Market Risk.
Standby Commitments
See Types of Investments Municipal Securities above.
Stripped Securities
Stripped securities are the separate income or principal payments of a debt security and evidence ownership in either the future interest or principal payments on an instrument. There are many different types and variations of stripped securities. For example, Separate Trading of Registered Interest and Principal Securities (STRIPS) can be component parts of a U.S. Treasury security where the principal and interest components are traded independently through DTC, a clearing agency registered pursuant to Section 17A of the 1934 Act and created to hold securities for its participants, and to facilitate the clearance and settlement of securities transactions between participants through electronic computerized book-entries, thereby eliminating the need for physical movement of certificates. Treasury Investor Growth Receipts (TIGERs) are U.S. Treasury securities stripped by brokers. Stripped mortgage-backed securities, (SMBS) also can be issued by the U.S. Government or its agencies. Stripped securities may be structured as fixed-, variable- or floating-rate obligations. See Types of Investments Variable- and Floating-Rate Obligations for more information.
SMBS usually are structured with two or more classes that receive different proportions of the interest and principal distributions from a pool of mortgage-backed assets. Common types of SMBS will be structured so that one class receives some of the interest and most of the principal from the mortgage-backed assets, while another class receives most of the interest and the remainder of the principal.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with stripped securities include: Credit Risk, Interest Rate Risk, Liquidity Risk, Prepayment and Extension Risk and Stripped Securities Risk
Trust-Preferred Securities
Trust-preferred securities, also known as trust-issued securities, are securities that have characteristics of both debt and equity instruments and are typically treated by the Funds as debt investments.
Generally, trust-preferred securities are cumulative preferred stocks issued by a trust that is created by a financial institution, such as a bank holding company. The financial institution typically creates the trust with the objective of increasing its capital by issuing subordinated debt to the trust in return for cash proceeds that are reflected on the financial institutions balance sheet.
The primary asset owned by the trust is the subordinated debt issued to the trust by the financial institution. The financial institution makes periodic interest payments on the debt as discussed further below. The financial institution will subsequently own the trusts common securities, which may typically represent a small percentage of the trusts capital structure. The remainder of the trusts capital structure typically consists of trust-preferred securities which are sold to investors. The trust uses the sales proceeds to purchase the subordinated debt issued by the financial institution. The financial institution uses the proceeds from the subordinated debt sale to increase its capital while the trust receives periodic interest payments from the financial institution for holding the subordinated debt.
The trust uses the interest received to make dividend payments to the holders of the trust-preferred securities. The dividends are generally paid on a quarterly basis and are often higher than other dividends potentially available on the financial institutions common stocks. The interests of the holders of the trust-preferred securities are senior to those of common stockholders in the event that the financial institution is liquidated, although their interests are typically subordinated to those of other holders of other debt issued by the institution.
The primary benefit for the financial institution in using this particular structure is that the trust-preferred securities issued by the trust are treated by the financial institution as debt securities for tax purposes (as a consequence of which the expense of paying interest on the securities is tax deductible), but are treated as more desirable equity securities for purposes of the calculation of capital requirements.
In certain instances, the structure involves more than one financial institution and thus, more than one trust. In such a pooled offering, an additional separate trust may be created. This trust will issue securities to investors and use the proceeds to purchase the trust-preferred securities issued by other trust subsidiaries of the participating financial institutions. In such a structure, the trust-preferred securities held by the investors are backed by other trust-preferred securities issued by the trust subsidiaries.
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If a financial institution is financially unsound and defaults on interest payments to the trust, the trust will not be able to make dividend payments to holders of the trust-preferred securities such as the Fund, as the trust typically has no business operations other than holding the subordinated debt issued by the financial institution(s) and issuing the trust-preferred securities and common stock backed by the subordinated debt.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with trust- preferred securities include: Credit Risk, Interest Rate Risk, Liquidity Risk and Prepayment and Extension Risk.
U.S. Government and Related Obligations
U.S. Government obligations include U.S. Treasury obligations and securities issued or guaranteed by various agencies of the U.S. Government or by various agencies or instrumentalities established or sponsored by the U.S. Government. U.S. Treasury obligations and securities issued or guaranteed by various agencies or instrumentalities of the U.S. Government differ in their interest rates, maturities and time of issuance, as well as with respect to whether they are guaranteed by the U.S. Government. U.S. Government and related obligations may be structured as fixed-, variable- or floating-rate obligations. See Types of Investments Variable- and Floating-Rate Obligations for more information.
Investing in U.S. Government and related obligations is subject to certain risks. While U.S. Treasury obligations are backed by the full faith and credit of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies and U.S. Government-sponsored instrumentalities may or may not be backed by the full faith and credit of the U.S. Government. These securities may be supported by the ability to borrow from the U.S. Treasury or only by the credit of the issuing agency or instrumentality and, as a result, may be subject to greater credit risk than securities issued or guaranteed by the U.S. Treasury. Obligations of U.S. Government agencies, authorities, instrumentalities and sponsored enterprises historically have involved limited risk of loss of principal if held to maturity. However, no assurance can be given that the U.S. Government would provide financial support to any of these entities if it is not obligated to do so by law.
Government-sponsored entities issuing securities include privately owned, publicly chartered entities created to reduce borrowing costs for certain sectors of the economy, such as farmers, homeowners, and students. They include the Federal Farm Credit Bank System, Farm Credit Financial Assistance Corporation, Fannie Mae, Freddie Mac, Federal National Mortgage Association (FNMA), Student Loan Marketing Association (SLMA), and Resolution Trust Corporation (RTC). Government-sponsored entities may issue discount notes (with maturities ranging from overnight to 360 days) and bonds. On Sept. 7, 2008, the Federal Housing Finance Agency (FHFA), an agency of the U.S. Government, placed the Freddie Mac and Fannie Mae into conservatorship, a statutory process with the objective of returning the entities to normal business operations. FHFA will act as the conservator to operate the enterprises until they are stabilized.
On August 5, 2011, S&P lowered its long-term sovereign credit rating for the United States of America to AA+ from AAA. Because a Fund may invest in U.S. Government obligations, the value of a Funds shares may be adversely affected by S&Ps downgrade or any future downgrades of the U.S. Governments credit rating. While the long-term impact of the downgrade is uncertain. See Appendix A for a description of securities ratings.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with U.S. Government and related obligations include: Credit Risk, Inflation Risk, Interest Rate Risk, Prepayment and Extension Risk, Reinvestment Risk and U.S. Government Obligations Risk.
Variable- and Floating-Rate Obligations
Variable- and floating-rate obligations are debt instruments that provide for periodic adjustments in the interest rate and, under certain circumstances, varying principal amounts. Unlike a fixed interest rate, a variable, or floating, rate is one that rises and declines based on the movement of an underlying index of interest rates and may pay interest at rates that are adjusted periodically according to a specified formula. Variable- or floating-rate securities frequently include a demand feature enabling the holder to sell the securities to the issuer at par. In many cases, the demand feature can be exercised at any time. Some securities that do not have variable or floating interest rates may be accompanied by puts producing similar results and price characteristics. Variable-rate demand notes include master demand notes that are obligations that permit the investor to invest fluctuating amounts, which may change daily without penalty, pursuant to direct arrangements between the investor (as lender), and the borrower. The interest rates on these notes fluctuate. The issuer of such obligations normally has a corresponding right, after a given period, to prepay in its discretion the outstanding principal amount of the obligations plus accrued interest upon a specified number of days notice to the holders of such obligations. Because these obligations are direct lending arrangements between the lender and borrower, it is not contemplated that such instruments generally will be traded. There generally is not an established secondary market for these obligations. Accordingly, where these obligations are not secured by letters of credit or other credit support arrangements, the lenders right to redeem is dependent on the ability of
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the borrower to pay principal and interest on demand. Such obligations frequently are not rated by credit rating agencies and may involve heightened risk of default by the issuer. Asset-backed securities, bank obligations, convertible securities, corporate debt securities, foreign securities, low and below investment grade securities, money market instruments, mortgage-backed securities, municipal securities, participation interests, stripped securities, U.S. Government and related obligations and other types of debt instruments may be structured as variable- and floating-rate obligations.
Most floating rate loans are acquired directly from the agent bank or from another holder of the loan by assignment. Most such loans are secured, and most impose restrictive covenants on the borrower. These loans are typically made by a syndicate of banks and institutional investors, represented by an agent bank which has negotiated and structured the loan and which is responsible generally for collecting interest, principal, and other amounts from the borrower on its own behalf and on behalf of the other lending institutions in the syndicate, and for enforcing its rights and the rights of the syndicate against the borrower. Each of the lending institutions, including the agent bank, lends to the borrower a portion of the total amount of the loan, and retains the corresponding interest in the loan. Floating rate loans may include delayed draw term loans and prefunded or synthetic letters of credit.
A Funds ability to receive payments of principal and interest and other amounts in connection with loans held by it will depend primarily on the financial condition of the borrower. The failure by the Fund to receive scheduled interest or principal payments on a loan would adversely affect the income of the Fund and would likely reduce the value of its assets, which would be reflected in a reduction in the Funds net asset value. Banks and other lending institutions generally perform a credit analysis of the borrower before originating a loan or purchasing an assignment in a loan. In selecting the loans in which the Fund will invest, however, the Investment Manager will not rely on that credit analysis of the agent bank, but will perform its own investment analysis of the borrowers. The Investment Managers analysis may include consideration of the borrowers financial strength and managerial experience, debt coverage, additional borrowing requirements or debt maturity schedules, changing financial conditions, and responsiveness to changes in business conditions and interest rates. Investments in loans may be of any quality, including distressed loans, and will be subject to the Funds credit quality policy.
Loans may be structured in different forms, including assignments and participations. In an assignment, a Fund purchases an assignment of a portion of a lenders interest in a loan. In this case, the Fund may be required generally to rely upon the assigning bank to demand payment and enforce its rights against the borrower, but would otherwise be entitled to all of such banks rights in the loan.
The borrower of a loan may, either at its own election or pursuant to terms of the loan documentation, prepay amounts of the loan from time to time. There is no assurance that a Fund will be able to reinvest the proceeds of any loan prepayment at the same interest rate or on the same terms as those of the original loan.
Corporate loans in which a Fund may purchase a loan assignment are made generally to finance internal growth, mergers, acquisitions, recapitalizations, stock repurchases, leveraged buy-outs, dividend payments to sponsors and other corporate activities. The highly leveraged capital structure of certain borrowers may make such loans especially vulnerable to adverse changes in economic or market conditions. The Fund may hold investments in loans for a very short period of time when opportunities to resell the investments that a Funds Portfolio Manager believes are attractive arise.
Certain of the loans acquired by a Fund may involve revolving credit facilities under which a borrower may from time to time borrow and repay amounts up to the maximum amount of the facility. In such cases, the Fund would have an obligation to advance its portion of such additional borrowings upon the terms specified in the loan assignment. To the extent that the Fund is committed to make additional loans under such an assignment, it will at all times designate cash or securities in an amount sufficient to meet such commitments.
Notwithstanding its intention in certain situations to not receive material, non-public information with respect to its management of investments in floating rate loans, the Investment Manager may from time to time come into possession of material, non-public information about the issuers of loans that may be held in a Funds portfolio. Possession of such information may in some instances occur despite the Investment Managers efforts to avoid such possession, but in other instances the Investment Manager may choose to receive such information (for example, in connection with participation in a creditors committee with respect to a financially distressed issuer). As, and to the extent, required by applicable law, the Investment Managers ability to trade in these loans for the account of the Fund could potentially be limited by its possession of such information. Such limitations on the Investment Managers ability to trade could have an adverse effect on the Fund by, for example, preventing the Fund from selling a loan that is experiencing a material decline in value. In some instances, these trading restrictions could continue in effect for a substantial period of time.
In some instances, other accounts managed by the Investment Manager may hold other securities issued by borrowers whose floating rate loans may be held in a Funds portfolio. These other securities may include, for example, debt securities that are subordinate to the floating rate loans held in the Funds portfolio, convertible debt or common or preferred equity securities.
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In certain circumstances, such as if the credit quality of the issuer deteriorates, the interests of holders of these other securities may conflict with the interests of the holders of the issuers floating rate loans. In such cases, the Investment Manager may owe conflicting fiduciary duties to the Fund and other client accounts. The Investment Manager will endeavor to carry out its obligations to all of its clients to the fullest extent possible, recognizing that in some cases certain clients may achieve a lower economic return, as a result of these conflicting client interests, than if the Investment Managers client accounts collectively held only a single category of the issuers securities.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with variable- or floating-rate obligations include: Counterparty Risk, Credit Risk, Interest Rate Risk, Liquidity Risk and Prepayment and Extension Risk.
Warrants and Rights
Warrants and rights are types of securities that give a holder a right to purchase shares of common stock. Warrants usually are issued together with a bond or preferred stock and entitle a holder to purchase a specified amount of common stock at a specified price typically for a period of years. Rights usually have a specified purchase price that is lower than the current market price and entitle a holder to purchase a specified amount of common stock typically for a period of only weeks. Warrants may be used to enhance the marketability of a bond or preferred stock. Warrants do not carry with them the right to dividends or voting rights and they do not represent any rights in the assets of the issuer. Warrants may be considered to have more speculative characteristics than certain other types of investments. In addition, the value of a warrant does not necessarily change with the value of the underlying securities, and a warrant ceases to have value if it is not exercised prior to its expiration date, if any.
The potential exercise price of warrants or rights may exceed their market price, such as when there is no movement in the market price or the market price of the common stock declines.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with warrants and rights include: Convertible Securities Risk, Credit Risk, Issuer Risk and Market Risk.
When-Issued, Delayed Delivery and Forward Commitment Transactions
When-issued, delayed delivery and forward commitment transactions involve the purchase or sale of securities by a Fund, with payment and delivery taking place in the future after the customary settlement period for that type of security. Normally, the settlement date occurs within 45 days of the purchase although in some cases settlement may take longer. The investor does not pay for the securities or receive dividends or interest on them until the contractual settlement date. When engaging in when-issued, delayed delivery and forward commitment transactions, a Fund typically will designate liquid assets in an amount equal to or greater than the purchase price. The payment obligation and, if applicable, the interest rate that will be received on the securities, are fixed at the time that a Fund agrees to purchase the securities. A Fund generally will enter into when-issued, delayed delivery and forward commitment transactions only with the intention of completing such transactions. However, a Funds portfolio manager may determine not to complete a transaction if he or she deems it appropriate to close out the transaction prior to its completion. In such cases, a Fund may realize short-term gains or losses.
To Be Announced Securities (TBAs) . As with other delayed delivery transactions, a seller agrees to issue a TBA security at a future date. However, the seller does not specify the particular securities to be delivered. Instead, the Fund agrees to accept any security that meets specified terms. For example, in a TBA mortgage-backed security transaction, the Fund and the seller would agree upon the issuer, interest rate and terms of the underlying mortgages. The seller would not identify the specific underlying mortgages until it issues the security. TBA mortgage-backed securities increase market risks because the underlying mortgages may be less favorable than anticipated by the Fund. See Types of Investments Mortgage-Backed Securities and Asset-Backed Securities.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with when-issued, delayed delivery and forward commitment transactions include: Counterparty Risk, Credit Risk and Market Risk.
Zero-Coupon, Pay-in-Kind and Step-Coupon Securities
Zero-coupon, pay-in-kind and step-coupon securities are types of debt instruments that do not necessarily make payments of interest in fixed amounts or at fixed intervals. Asset-backed securities, convertible securities, corporate debt securities, foreign securities, low and below investment grade securities, mortgage-backed securities, municipal securities, participation interests, stripped securities, U.S. Government and related obligations and other types of debt instruments may be structured as zero-coupon, pay-in-kind and step-coupon securities.
Zero-coupon securities do not pay interest on a current basis but instead accrue interest over the life of the security. These securities include, among others, zero-coupon bonds, which either may be issued at a discount by a corporation or
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government entity or may be created by a brokerage firm when it strips the coupons from a bond or note and then sells the bond or note and the coupon separately. This technique is used frequently with U.S. Treasury bonds, and zero-coupon securities are marketed under such names as CATS (Certificate of Accrual on Treasury Securities), TIGERs or STRIPS. Zero-coupon bonds also are issued by municipalities. Buying a municipal zero-coupon bond frees its purchaser of the obligation to pay regular federal income tax on imputed interest, since the interest is exempt for regular federal income tax purposes. Zero-coupon certificates of deposit and zero-coupon mortgages are generally structured in the same fashion as zero-coupon bonds; the certificate of deposit holder or mortgage holder receives face value at maturity and no payments until then.
Pay-in-kind securities normally give the issuer an option to pay cash at a coupon payment date or to give the holder of the security a similar security with the same coupon rate and a face value equal to the amount of the coupon payment that would have been made.
Step-coupon securities trade at a discount from their face value and pay coupon interest that gradually increases over time. The coupon rate is paid according to a schedule for a series of periods, typically lower for an initial period and then increasing to a higher coupon rate thereafter. The discount from the face amount or par value depends on the time remaining until cash payments begin, prevailing interest rates, liquidity of the security and the perceived credit quality of the issue.
Zero-coupon, step-coupon and pay-in-kind securities holders generally have substantially all the rights and privileges of holders of the underlying coupon obligations or principal obligations. Holders of these securities typically have the right upon default on the underlying coupon obligations or principal obligations to proceed directly and individually against the issuer and are not required to act in concert with other holders of such securities.
See Appendix A for a discussion of securities ratings.
Although one or more of the other risks described in this SAI may also apply, the risks typically associated with zero-coupon, step-coupon, and pay-in-kind securities include: Credit Risk, Interest Rate Risk and Zero-Coupon Bonds Risk.
The following is a summary of risks of investing in the Funds and the risk characteristics associated with the various investment instruments available to the Funds for investment. A Funds risk profile is largely defined by the Funds primary portfolio holdings and principal investment strategies. However, most Funds are allowed to use certain other strategies and investments that may have different risk characteristics. Accordingly, one or more of the following types of risk may be associated with a Fund at any time (for a description of principal risks and investment strategies for an individual Fund, please see that Funds prospectus):
Active Management Risk. Performance of actively managed Funds will reflect, in part, the ability of the portfolio managers to select investments and to make investment decisions that are suited to achieving the Funds investment objective. Due to a Funds active management, the Fund could underperform its benchmark index and/or other funds with a similar investment objective and/or strategies. A Fund may fail to achieve its investment objective and you may lose money.
Allocation Risk. There is a risk that a Funds allocation among asset classes, investments, managers, strategies and/or investment styles will cause the Funds shares to lose value or cause the Fund to underperform other funds with a similar investment objective and/or strategies, or that the investments themselves will not produce the returns expected.
Asset-Backed Securities Risk. The value of the Funds asset-backed securities may be affected by, among other things, changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the receivables, the creditworthiness of the entities that provide any supporting letters of credit, surety bonds or other credit enhancements, or the markets assessment of the quality of underlying assets. Asset-backed securities represent interests in, or are backed by, pools of receivables such as credit card, auto, student and home equity loans. They may also be backed by securities backed by these types of loans and others, such as mortgage loans. Asset-backed securities can have a fixed or an adjustable rate. Most asset-backed securities are subject to prepayment risk, which is the possibility that the underlying debt may be refinanced or prepaid prior to maturity during periods of declining or low interest rates, causing the Fund to have to reinvest the money received in securities that have lower yields. In addition, the impact of prepayments on the value of asset-backed securities may be difficult to predict and may result in greater volatility. Rising or high interest rates tend to extend the duration of asset-backed securities, resulting in valuations that are volatile and sensitive to changes in interest rates.
Changing Distribution Level Risk. The amount of the distributions paid by the Fund will vary and generally depends on the amount of interest income and/or dividends received by the Fund on the securities it holds. The Fund may not be able to pay distributions or may have to reduce its distribution level if the interest income and/or dividends the Fund receives from its investments decline.
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Commodity-Related Investment Risk. The value of commodities investments will generally be affected by overall market movements and factors specific to a particular industry or commodity, which may include demand for the commodity, weather, embargoes, tariffs, and economic health, political, international, regulatory and other developments. Economic and other events (whether real or perceived) can reduce the demand for commodities, which may, in turn, reduce market prices and cause the value of Fund shares to fall. The frequency and magnitude of such changes cannot be predicted. Exposure to commodities and commodities markets may subject the value of the Funds investments to greater volatility than other types of investments. No, or limited, active trading market may exist for certain commodities investments, which may impair the ability to sell or to realize the full value of such investments in the event of the need to liquidate such investments. In addition, adverse market conditions may impair the liquidity of actively traded commodities investments. Certain types of commodities instruments (such as commodity-linked swaps and commodity-linked structured notes) are subject to the risk that the counterparty to the instrument may not perform or be unable to perform in accordance with the terms of the instrument.
Concentration Risk. To the extent that the Fund concentrates its investment in particular issuers, countries, geographic regions, industries or sectors, the Fund may be subject to greater risks of adverse developments in such areas of focus than a fund that invests in a wider variety of issuers, countries, geographic regions, industries, sectors or investments.
Confidential Information Access Risk. In managing the Fund, the Investment Manager normally will seek to avoid the receipt of material, non-public information (Confidential Information) about the issuers of floating rate loans being considered for acquisition by the Fund, or held in the Fund. In many instances, issuers of floating rate loans offer to furnish Confidential Information to prospective purchasers or holders of the issuers floating rate loans to help potential investors assess the value of the loan. The Investment Managers decision not to receive Confidential Information from these issuers may disadvantage the Fund as compared to other floating rate loan investors, and may adversely affect the price the Fund pays for the loans it purchases, or the price at which the Fund sells the loans. Further, in situations when holders of floating rate loans are asked, for example, to grant consents, waivers or amendments, the Investment Managers ability to assess the desirability of such consents, waivers or amendments may be compromised. For these and other reasons, it is possible that the Investment Managers decision under normal circumstances not to receive Confidential Information could adversely affect the Funds performance.
Convertible Securities Risk. Convertible securities are subject to the usual risks associated with debt securities, such as interest rate risk (i.e., the risk of losses attributable to changes in interest rates) and credit risk (i.e., the risk that the issuer of a fixed-income security may or will default or otherwise become unable, or be perceived to be unable or unwilling, to honor a financial obligation, such as making payments to the Fund when due). Convertible securities also react to changes in the value of the common stock into which they convert, and are thus subject to market risk (i.e., the risk that the market values of securities or other investments that the Fund holds will fall, sometimes rapidly or unpredictably, or fail to rise). Because the value of a convertible security can be influenced by both interest rates and the common stocks market movements, a convertible security generally is not as sensitive to interest rates as a similar debt security, and generally will not vary in value in response to other factors to the same extent as the underlying common stock. In the event of a liquidation of the issuing company, holders of convertible securities would typically be paid before the companys common stockholders but after holders of any senior debt obligations of the company. The Fund may be forced to convert a convertible security before it otherwise would choose to do so, which may decrease the Funds return.
Counterparty Risk. The risk exists that a counterparty to a financial instrument held by the Fund or by a special purpose or structured vehicle in which the Fund invests may become insolvent or otherwise fail to perform its obligations due to financial difficulties, including making payments to the Fund. The Fund may obtain no or limited recovery in a bankruptcy or other organizational proceedings, and any recovery may be significantly delayed. Transactions that the Fund enters into may involve counterparties in the financial services sector and, as a result, events affecting the financial services sector may cause the Funds share value to fluctuate.
Credit Risk. Credit risk is the risk that the borrower of a loan or the issuer of another debt security may or will default or otherwise become unable or unwilling, or is perceived to be unable or unwilling, to honor a financial obligation, such as making payments to the Fund. Rating agencies assign credit ratings to certain loans and other fixed-income securities to indicate their credit risk. The price of a loan or other debt security generally will fall if the borrower or the issuer defaults on its obligation to pay principal or interest, the rating agencies downgrade the credit rating of the borrower or the issuer or other news affects the markets perception of the credit risk of the borrower or the issuer. If the issuer of a loan declares bankruptcy or is declared bankrupt, there may be a delay before the Fund can act on the collateral securing the loan, which may adversely affect the Fund. Further, there is a risk that a court could take action with respect to a loan adverse to the holders of the loan, such as invalidating the loan, the lien on the collateral, the priority status of the loan, or ordering the refund of interest previously paid by the borrower. Any such actions by a court could adversely affect the Funds performance. If the Fund purchases unrated loans or other debt securities, the Fund will depend on analysis of credit risk more heavily than usual.
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Non-investment grade loans or securities (commonly called high-yield or junk) have greater price fluctuations and are more likely to experience a default than investment grade loans or securities. A default or expected default of a loan could also make it difficult for the Fund to sell the loan at a price approximating the value previously placed on it. In order to enforce its rights in the event of a default, bankruptcy or similar situation, the Fund may be required to retain legal or similar counsel. This may increase the Funds operating expenses and adversely affect net asset value. Loans that have a lower priority for repayment in an issuers capital structure may involve a higher degree of overall risk than more senior loans of the same borrower.
Cyber Security Risk. With the increased use of technologies such as the Internet and the dependence on computer systems to perform necessary business functions, investment companies such as the Funds and their service providers may be prone to operational and information security risks resulting from cyber-attacks. In general, cyber-attacks result from deliberate attacks; however, other acts or events may have effects similar to those caused by cyber-attacks. Cyber-attacks include, among other actions, stealing or corrupting data maintained online or digitally, denial of service attacks on websites, the unauthorized release of confidential information and causing operational disruption. Successful cyber-attacks against, or security breakdowns of, a Fund or its adviser, subadviser(s), distributor, custodians, transfer agent, Selling Agents or other third party service providers may adversely impact the Fund and its shareholders. For instance, cyber-attacks may interfere with the processing of shareholder transactions, impact a Funds ability to calculate its NAV; cause the release of private shareholder information or confidential Fund information; impede trading; cause reputational damage; and subject the Fund to regulatory fines, penalties or financial losses, reimbursement or other compensation costs, and/or additional compliance costs. The Fund may also incur substantial costs for cyber security risk management or mitigation in order to prevent any cyber incidents in the future with the Funds and their shareholders potentially being negatively impacted as a result. While the Funds have policies and procedures to address cyber-attacks, including various controls, systems and protocols designed to prevent such cyber-attacks, there are inherent limitations in such controls, systems and protocols including the possibility that certain risks have not been identified, as well as the rapid development of new cyber technology threats. Similar types of cyber security risks are also present for issuers of securities in which the Funds invest, which could result in material adverse consequences for such issuers, and may cause the Funds investment in such securities to lose value.
Depositary Receipts Risks. Depositary receipts are receipts issued by a bank or trust company and evidence of ownership of underlying securities issued by foreign companies. Some foreign securities are traded in the form of American Depositary Receipts (ADRs). Depositary receipts involve the risks of other investments in foreign securities, including risks associated with investing in the particular country, including the political, regulatory, economic, social and other conditions or events occurring in the country, as well as fluctuations in its currency. In addition, ADR holders may not have all the legal rights of shareholders and may experience difficulty in receiving shareholder communications.
Derivatives Risk. Losses involving derivative instruments may be substantial, because a relatively small price movement in the underlying security(ies), instrument, commodity, currency or index may result in a substantial loss for the Fund. In addition to the potential for increased losses, the use of derivative instruments may lead to increased volatility within the Fund. Derivatives will typically increase the Funds exposure to principal risks to which it is otherwise exposed, and may expose the Fund to additional risks, including correlation risk (related to hedging risk and is the risk that there may be an incomplete correlation between the hedge and the opposite position, which may result in increased or unanticipated losses), counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), leverage risk (the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument), hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset), and liquidity risk (it may not be possible for the Fund to liquidate the instrument at an advantageous time or price, each of which may result in significant and unanticipated losses to the Fund. Below is more detailed information on certain derivatives expected to be utilized by the Fund.
Derivatives Risk/Commodity-Linked Futures Contracts. The loss that may be incurred by the Fund in entering into futures contracts is potentially unlimited and may exceed the amount of the premium. Futures markets are highly volatile and the use of futures by the Fund may increase the volatility of the Funds net asset value. Additionally, as a result of the low collateral deposits normally required in futures trading, a relatively small price movement in a futures contract may result in substantial losses to the Fund. Futures contracts may be illiquid. The liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced. Furthermore, exchanges may limit fluctuations in futures contract prices during a trading session by imposing a maximum permissible price movement on each futures contract. The Fund may be disadvantaged if it is prohibited from executing a trade outside the daily permissible price movement. Moreover, to the extent the Fund engages in futures contracts on foreign exchanges, such exchanges may not provide the same protection as U.S. exchanges.
Derivatives Risk/Commodity-Linked Structured Notes Risk. The use of commodity-linked structured notes is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio
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securities transactions. The Funds investments in commodity-linked structured notes involve substantial risks, including risk of loss of interest and principal, lack of a secondary (i.e. liquid) market, and risk of greater volatility than investments in traditional equity and debt markets.
If payment of interest on a commodity-linked structured note is linked to the value of a particular commodity, commodity index or other economic variable, the Fund might receive lower interest payments (or not receive any of the interest due) on its investments if there is a loss of value of the underlying investment. Further, to the extent that the amount of principal to be repaid upon maturity is linked to the value of a particular commodity, commodity index or other economic variable, the Fund might not receive a portion (or any) of the principal at maturity of the investment or upon earlier exchange. At any time, the risk of loss associated with a particular structured note in the Funds portfolio may be significantly higher than the value of the note.
A liquid secondary market may not exist for the commodity-linked structured notes held in the Funds portfolio, which may make it difficult for the notes to be sold at a price acceptable to the portfolio managers or to accurately value them. Investment in commodity-linked structured notes also subjects the Fund to counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument) and hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset), each of which may result in significant and unanticipated losses to the Fund.
The value of the commodity-linked structured notes may fluctuate significantly because the values of the underlying investments to which they are linked are themselves volatile. Additionally, the particular terms of a commodity-linked structured note may create economic leverage by requiring payment by the issuer of an amount that is a multiple of the price increase or decrease of the underlying commodity, commodity index, or other economic variable. Economic leverage will increase the volatility of the value of these commodity-linked notes as they may increase or decrease in value more quickly than the underlying commodity, commodity index or other economic variable.
Derivatives Risk/Commodity-Linked Swaps Risk. The use of commodity-linked swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. Commodity-linked swaps could result in losses if the underlying asset or reference does not perform as anticipated. The value of swaps, like many other derivatives, may move in unexpected ways and may result in losses for the Fund. Such transactions can have the potential for unlimited losses. Such risk is heightened in the case of short swap transactions. Swaps can involve greater risks than direct investment in the underlying asset, because swaps may be leveraged (creating leverage risk) and are subject to counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset), pricing risk (the risk that swaps may be difficult to value) and liquidity risk (the risk that it may not be possible to liquidate a swap position at an advantageous time or price), each of which may result in significant and unanticipated losses to the Fund.
Derivatives Risk/Credit Default Swap Indexes Risk. A credit default swap (CDS) is an agreement between two parties in which one party agrees to make one or more payments to the second party, while the second party assumes the risk of certain defaults, generally a failure to pay on a referenced debt obligation or the bankruptcy of the obligations issuer. As such, a CDS generally enables an investor to buy or sell protection against a credit event. A credit default index (CDX) is an index of CDS. Credit default swap indexes (CDSX) are swap agreements that are intended to track the performance of a CDX. CDSX allow an investor, such as the Fund, to manage credit risk or to take a position on a basket of debt obligations more efficiently than transacting in single name CDS. If a credit event occurs in one of the reference issuers, the protection is paid out through the delivery of the defaulted bond by the buyer of protection in return for payment of the notional value of the defaulted bond by the seller of protection or through a cash settlement between the two parties. The reference issuer is then removed from the index. CDSX are subject to the risk that the Funds counterparty will default on its obligations. If such a default were to occur, any contractual remedies that the Fund may have may be subject to bankruptcy and insolvency laws, which could delay or limit the Funds recovery. Thus, if the counterparty under a CDSX defaults on its obligation to make payments thereunder, as a result of its bankruptcy or otherwise, the Fund may lose such payments altogether, or collect only a portion thereof, which collection could involve costs or delays. The Funds return from investment in CDSX may not match the return of the referenced index. Further, investment in CDSX could result in losses if the referenced index does not perform as expected. Unexpected changes in the composition of the index may also affect performance of CDSX. If a referenced index has a dramatic intraday move that causes a material decline in the Funds net assets, the terms of the Funds CDSX may permit the counterparty to immediately close out the transaction. In that event, the Fund may be unable to enter into another CDSX or otherwise achieve desired exposure, even if the referenced index reverses all or a portion of its intraday move.
Derivatives Risk/Credit Default Swaps Risk. The use of credit default swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. A credit default swap enables an investor to buy or sell protection against a credit event, such as an issuers failure to make timely payments of interest or principal, bankruptcy or restructuring. A credit default swap may be embedded within a structured
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note or other derivative instrument. The value of swaps, like many other derivatives, may move in unexpected ways and may result in losses for the Fund. Swaps can involve greater risks than direct investment in the underlying securities, because swaps, among other factors, may be leveraged (creating leverage risk, the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instrument) and subject the Fund to counterparty risk (the risk that the counterparty to the instrument will not perform or be unable to perform in accordance with the terms of the instrument), hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset), pricing risk (the risk that swaps may be difficult to value) and liquidity risk (the risk that it may not be possible for the Fund to liquidate a swap position at an advantageous time or price), each of which may result in significant and unanticipated losses to the Fund. If the Fund is selling credit protection, there is a risk that a credit event will occur and that the Fund will have to pay the counterparty. If the Fund is buying credit protection, there is a risk that no credit event will occur.
Derivatives Risk/Forward Foreign Currency Contracts Risk. The use of forward foreign currency contracts is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. These instruments are a type of derivative contract, whereby the Fund may agree to buy or sell a countrys or regions currency at a specific price on a specific date in the future. These instruments may fall in value due to foreign market downswings or foreign currency value fluctuations. The effectiveness of any currency hedging strategy by a Fund may be reduced by the Funds inability to precisely match forward contract amounts and the value of securities involved. Forward foreign currency contracts used for hedging may also limit any potential gain that might result from an increase or decrease in the value of the currency. When entering into forward foreign currency contracts, unanticipated changes in the currency markets could result in reduced performance for the Fund. At or prior to maturity of a forward contract, the Fund may enter into an offsetting contract and may incur a loss to the extent there has been movement in forward contract prices. When the Fund converts its foreign currencies into U.S. dollars, it may incur currency conversion costs due to the spread between the prices at which it may buy and sell various currencies in the market. Investment in these instruments also subjects the Fund, among other factors, to counterparty risk (the risk that the counterparty to the instrument will not perform or be unable to perform in accordance with the terms of the instrument).
Derivatives Risk/Forward Interest Rate Agreements Risk. Under forward interest rate agreements, the buyer locks in an interest rate at a future settlement date. If the interest rate on the settlement date exceeds the lock rate, the buyer pays the seller the difference between the two rates (based on the notional value of the agreement). If the lock rate exceeds the interest rate on the settlement date, the seller pays the buyer the difference between the two rates (based on the notional value of the agreement). The Fund may act as a buyer or a seller. Investment in these instruments subjects the Fund to risks, including counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset) and interest rate risk (the risk of losses attributable to changes in interest rates), each of which may result in significant and unanticipated losses to the Fund.
Derivatives Risk/Futures Contracts Risk. The use of futures contracts is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. A futures contract is a sales contract between a buyer (holding the long position) and a seller (holding the short position) for an asset with delivery deferred until a future date. The buyer agrees to pay a fixed price at the agreed future date and the seller agrees to deliver the asset. The seller hopes that the market price on the delivery date is less than the agreed upon price, while the buyer hopes for the contrary. The liquidity of the futures markets depends on participants entering into off-setting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced. In addition, futures exchanges often impose a maximum permissible price movement on each futures contract for each trading session. The Fund may be disadvantaged if it is prohibited from executing a trade outside the daily permissible price movement. Moreover, to the extent the Fund engages in futures contracts on foreign exchanges, such exchanges may not provide the same protection as U.S. exchanges. The loss that may be incurred in entering into futures contracts may exceed the amount of the premium paid and may be potentially unlimited. Futures markets are highly volatile and the use of futures may increase the volatility of the Funds net asset value (NAV). Additionally, as a result of the low collateral deposits normally involved in futures trading, a relatively small price movement in a futures contract may result in substantial losses to the Fund. Investment in these instruments involves risks, including counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset) and pricing risk (the risk that the instrument may be difficult to value), each of which may result in significant and unanticipated losses to the Fund.
Derivatives Risk/Inflation Rate Swaps Risk. An inflation rate swap is a derivative instrument used to transfer inflation risk from one party to another through an exchange of cash flows. In an inflation rate swap, one party pays a fixed rate on a notional principal amount, while the other party pays a floating rate linked to an inflation index, such as the Consumer Price Index (CPI). Investments in inflation rate swaps subject the Fund (and, therefore, shareholders) to risks, including hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset), counterparty risk (the risk that the
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counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), and inflation risk (the risk that inflation rates may change drastically as a result of unexpected shifts in the global economy), each of which may result in significant and unanticipated losses to the Fund.
Derivatives Risk/Interest Rate Swaps Risk. Interest rate swaps can be based on various measures of interest rates, including LIBOR, swap rates, treasury rates and other foreign interest rates. A swap agreement can increase or decrease the volatility of the Funds investments and its net asset value. The value of swaps, like many other derivatives, may move in unexpected ways and may result in losses for the Fund. Swaps can involve greater risks than direct investment in securities, because swaps may be leveraged, and are, among other factors, subject to counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset), pricing risk (the risk that swaps may be difficult to value), liquidity risk (the risk that it may not be possible to liquidate a swap position at an advantageous time or price) and interest rate risk (the risk of losses attributable to changes in interest rates), each of which may result in significant and unanticipated losses to the Fund.
Derivatives Risk/Inverse Floaters Risk. Inverse floaters (or inverse variable or floating rate securities) are a type of derivative, long-term fixed income obligation with a variable or floating interest rate that moves in the opposite direction of short-term interest rates. As short-term interest rates go down, the holders of the inverse floaters receive more income and, as short-term interest rates go up, the holders of the inverse floaters receive less income. Variable rate securities provide for a specified periodic adjustment in the interest rate, while floating rate securities have interest rates that change whenever there is a change in a designated benchmark rate or the issuers credit quality. While inverse floaters tend to provide more income than similar term and credit quality fixed-rate bonds, they also exhibit greater volatility in price movement. There is a risk that the current interest rate on variable and floating rate securities may not accurately reflect current market interest rates or adequately compensate the holder for the current creditworthiness of the issuer. Some variable or floating rate securities are structured with liquidity features and some may include market-dependent liquidity features that may present greater liquidity risk. Other risks associated with transactions in inverse floaters include interest rate risk (the risk of losses attributable to changes in interest rates), counterparty risk (the risk that the issuer of a security may or will default or otherwise become unable, or be perceived to be unable or unwilling, to honor a financial obligation, such as making payments when due) and hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset), each of which may result in significant and unanticipated losses to the Fund.
Derivatives Risk/Options Risk. The use of options is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. The Fund may buy and sell call and put options, including options on currencies, interest rates and swap agreements (commonly referred to as swaptions), If the Fund sells a put option, there is a risk that the Fund may be required to buy the underlying asset at a disadvantageous price. If the Fund sells a call option, there is a risk that the Fund may be required to sell the underlying asset at a disadvantageous price, and if the call option sold is not covered (for example, by owning the underlying asset), the Funds losses are potentially unlimited. Options may be traded on a securities exchange or in the over-the-counter market. These transactions involve other risks, including counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument) and hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset), each of which may result in significant and unanticipated losses to the Fund.
Derivatives Risk/Swaps Risk. The use of swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. In a swap transaction, one party agrees to pay the other party an amount equal to the return, based upon an agreed-upon notional value, of a defined underlying asset or a non-asset reference (such as an index) during a specified period of time. In return, the other party would make periodic payments based on a fixed or variable interest rate or on the return from a different underlying asset or non-asset reference based upon an agreed-upon notional value. Swaps could result in losses if the underlying asset or reference does not perform as anticipated. The value of swaps, like many other derivatives, may move in unexpected ways and may result in losses for the Fund. Such transactions can have the potential for unlimited losses. Such risk is heightened in the case of swap transactions involving short exposures. Swaps can involve greater risks than direct investment in the underlying asset, because swaps may be leveraged (creating leverage risk in that the Funds exposure and potential losses are greater than the amount invested) and are subject to counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset), pricing risk (the risk that swaps may be difficult to value) and liquidity risk (the risk that it may not be possible to liquidate a swap position at an advantageous time or price), each of which may result in significant and unanticipated losses to the Fund.
Derivatives Risk/Total Return Swaps Risk. The use of total return swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. In a total
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return swap transaction, one party agrees to pay the other party an amount equal to the total return of a defined underlying asset (such as an equity security or basket of such securities) or a non-asset reference (such as an index) during a specified period of time. In return, the other party makes periodic payments based on a fixed or variable interest rate or on the total return from a different underlying asset or non-asset reference. Total return swaps could result in losses if the underlying asset or reference does not perform as anticipated. Such transactions can have the potential for unlimited losses. The value of swaps, like many other derivatives, may move in unexpected ways and may result in losses for the Fund. Swaps can involve greater risks than direct investment in securities, because swaps may be leveraged, are subject to counterparty risk (the risk that the counterparty to the instrument will not perform or be able to perform in accordance with the terms of the instrument), hedging risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset), pricing risk (the risk that it may be difficult to value) and liquidity risk (the risk that it may not be possible for the Fund to liquidate a swap position at an advantageous time or price), each of which may result in significant and unanticipated losses to the Fund.
Derivatives Risk/Warrants Risk. Warrants are securities giving the holder the right, but not the obligation, to buy the stock of an issuer at a given price (generally higher than the value of the stock at the time of issuance) during a specified period or perpetually. Warrants may be acquired separately or in connection with the acquisition of securities. Warrants do not carry with them the right to dividends or voting rights and they do not represent any rights in the assets of the issuer. In addition, the value of a warrant does not necessarily change with the value of the underlying securities, and a warrant ceases to have value if it is not exercised prior to its expiration date. Warrants may be subject to the risk that the securities could lose value. There also is the risk that the potential exercise price may exceed the market price of the warrants or rights. Investment in these instruments also subject the Fund to liquidity risk (the risk that it may not be possible for the Fund to liquidate the instrument at an advantageous time or price), which may result in significant and unanticipated losses to the Fund).
Dollar Rolls Risk. Dollar rolls are transactions in which the Fund sells securities to a counterparty and simultaneously agrees to purchase those or similar securities in the future at a predetermined price. Dollar rolls involve the risk that the market value of the securities the Fund is obligated to repurchase may decline below the repurchase price, or that the counterparty may default on its obligations. These transactions may also increase the Funds portfolio turnover rate. If the Fund reinvests the proceeds of the security sold, the Fund will also be subject to the risk that the investments purchased with such proceeds will decline in value (a form of leverage risk).
Emerging Market Securities Risk. Securities issued by foreign governments or companies in emerging market countries are more likely to have greater exposure to the risks of investing in foreign securities that are described in Foreign Securities Risk. In addition, emerging market countries are more likely to experience instability resulting, for example, from rapid changes or developments in social, political, economic or other conditions. Their economies are usually less mature and their securities markets are typically less developed with more limited trading activity (i.e., lower trading volumes and less liquidity) than more developed countries. Emerging market securities tend to be more volatile than securities in more developed markets. Many emerging market countries are heavily dependent on international trade and have fewer trading partners, which makes them more sensitive to world commodity prices and economic downturns in other countries. Some emerging market countries have a higher risk of currency devaluations, and some of these countries may experience periods of high inflation or rapid changes in inflation rates and may have hostile relations with other countries.
Operational and Settlement Risks of Securities in Emerging Markets. In addition to having less developed securities markets, banks in emerging markets that are eligible foreign sub-custodians may be recently organized, lack extensive operating experience or lack effective government oversight or regulation. In addition, there may be legal restrictions or limitations on the ability of the Fund to recover assets held in custody by a foreign sub-custodian in the event of the bankruptcy of the sub-custodian. Because settlement systems may be less organized than in developed markets and because delivery versus payment settlement may not be possible or reliable, there may be a greater risk that settlement may be delayed and that cash or securities of the Fund may be lost because of failures of or defects in the system, including fraud or corruption. Settlement systems in emerging markets also have a higher risk of failed trades. Ownership of Russian securities poses particular risks because ownership records are typically maintained in a decentralized fashion by registrars who may not be subject to effective governmental supervision leading to the possibility that the Fund may lose its ownership rights. In such a case, it may be difficult for the Fund to enforce any rights it may have against the registrar or issuer of the securities.
Risks Related to Currencies and Corporate Actions in Emerging Markets. Risks related to currencies and corporate actions are also greater in emerging market countries than in developed countries. For example, some emerging market countries may have fixed or managed currencies that are not free-floating against the U.S. dollar. Further, certain currencies may not be traded internationally, or countries may have varying exchange rates. Some emerging market countries have a higher risk of currency devaluations, and some of these countries may experience sustained periods of high inflation or rapid changes in inflation rates which can have negative effects on a countrys economy and securities markets. Corporate action procedures in emerging market countries may be less reliable and have limited or no involvement by the depositories and central banks. Lack of standard practices and payment systems can lead to significant delays in payment.
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Risks Related to Corporate and Securities Laws in Emerging Markets. Securities laws in emerging markets may be relatively new and unsettled and, consequently, there is a risk of rapid and unpredictable change in laws regarding foreign investment, securities regulation, title to securities and shareholder rights. Accordingly, foreign investors may be adversely affected by new or amended laws and regulations. In addition, the systems of corporate governance to which issuers in certain emerging markets are subject may be less advanced than the systems to which issuers located in more developed countries are subject, and therefore, shareholders of such issuers may not receive many of the protections available to shareholders of issuers located in more developed countries. These risks may be heightened in Russia.
Equity-Linked Notes Risk. An equity-linked note (ELN) is a debt instrument whose value is based on the value of a single equity security, basket of equity securities or an index of equity securities (each, an Underlying Equity). An ELN typically provides interest income, thereby offering a yield advantage over investing directly in an Underlying Equity. The Fund may purchase ELNs that trade on a securities exchange or those that trade on the over-the-counter markets, including securities offered and sold under Rule 144A of the Securities Act of 1933, as amended. The Fund may also purchase an ELN in a privately negotiated transaction with the issuer of the ELN (or its broker-dealer affiliate). The Funds investment in ELNs has the potential to lead to significant losses because ELNs are subject to the market and volatility risks associated with their Underlying Equity, and to additional risks not typically associated with investments in listed equity securities, such as liquidity risk, credit risk of the issuer and concentration risk. The liquidity of unlisted ELNs is normally determined by the willingness of the issuer to make a market in the ELN. While the Fund will seek to purchase ELNs only from issuers that it believes to be willing to, and capable of, repurchasing the ELN at a reasonable price, there can be no assurance that the Fund will be able to sell any ELN at such a price or at all. This may impair the Funds ability to enter into other transactions at a time when doing so might be advantageous. In addition, because ELNs often take the form of unsecured notes of the issuer, the Fund would be subject to the risk that the issuer may default on its obligations under the ELN, thereby subjecting the Fund to the further risk of being too concentrated in the securities (including ELNs) of that issuer. The Fund may or may not hold an ELN until its maturity.
E uroZone - Related Risk. A number of countries in the European Union (EU) have experienced, and may continue to experience, severe economic and financial difficulties. Additional EU member countries may also fall subject to such difficulties. These events could negatively affect the value and liquidity of the Funds investments in euro-denominated securities and derivatives contracts, securities of issuers located in the EU or with significant exposure to EU issuers or countries. If the euro is dissolved entirely, the legal and contractual consequences for holders of euro-denominated obligations and derivative contracts would be determined by laws in effect at such time. Such investments may continue to be held, or purchased, to the extent consistent with the Funds investment objective and permitted under applicable law. These potential developments, or market perceptions concerning these and related issues, could adversely affect the value of Fund shares.
Certain countries in the EU have had to accept assistance from supra-governmental agencies such as the International Monetary Fund, the European Stability Mechanism (the ESM) or other supra-governmental agencies. The European Central Bank has also been intervening to purchase Eurozone debt in an attempt to stabilize markets and reduce borrowing costs. There can be no assurance that these agencies will continue to intervene or provide further assistance and markets may react adversely to any expected reduction in the financial support provided by these agencies. Responses to the financial problems by European governments, central banks and others including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences.
In addition, one or more countries may abandon the euro and/or withdraw from the EU. The impact of these actions, especially if they occur in a disorderly fashion, could be significant and far-reaching.
Exchange-Traded Fund (ETF) Risk. An ETFs share price may not track its specified market index (if any) and may trade below its net asset value. Certain ETFs use a passive investment strategy and will not attempt to take defensive positions in volatile or declining markets. Other ETFs in which the Fund may invest are actively managed ETFs (i.e., they do not track a particular benchmark), which subjects the Fund to active management risk. An active secondary market in an ETFs shares may not develop or be maintained and may be halted or interrupted due to actions by its listing exchange, unusual market conditions or other reasons. There can be no assurance an ETFs shares will continue to be listed on an active exchange. In addition, shareholders bear both their proportionate share of the Funds expenses and similar expenses incurred through ownership of the ETF.
The Funds generally expect to purchase shares of ETFs through broker-dealers in transactions on a securities exchange, and in such cases the Funds will pay customary brokerage commissions for each purchase and sale. Shares of an ETF may also be acquired by depositing a specified portfolio of the ETFs underlying securities, as well as a cash payment generally equal to accumulated dividends of the securities (net of expenses) up to the time of deposit, with the ETFs custodian, in exchange for which the ETF will issue a quantity of new shares sometimes referred to as a creation unit. Similarly, shares of an ETF purchased on an exchange may be accumulated until they represent a creation unit, and the creation unit may be redeemed in kind for a portfolio of the underlying securities (based on the ETFs net asset value) together with a cash payment generally
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equal to accumulated dividends as of the date of redemption. The Funds may redeem creation units for the underlying securities (and any applicable cash), and may assemble a portfolio of the underlying securities (and any required cash) to purchase creation units. The Funds ability to redeem creation units may be limited by the 1940 Act, which provides that ETFs the shares of which are purchased in reliance on Section 12(d)(1)(F) of the 1940 Act will not be obligated to redeem such shares in an amount exceeding one percent of their total outstanding securities during any period of less than 30 days.
Foreign Currency Risk. The performance of the Fund may be materially affected positively or negatively by foreign currency strength or weakness relative to the U.S. dollar, particularly if the Fund invests a significant percentage of its assets in foreign securities or other assets denominated in currencies other than the U.S. dollar. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, imposition of currency controls and economic or political developments in the U.S. or abroad. The Fund may also incur currency conversion costs when converting foreign currencies into U.S. dollars and vice versa.
Foreign Currency-Related Tax Risk. As a regulated investment company (RIC), the Fund must derive at least 90% of its gross income for each taxable year from sources treated as qualifying income under the Internal Revenue Code of 1986, as amended. The Fund may gain exposure to local currency markets through forward currency contracts. Although foreign currency gains currently constitute qualifying income, the Treasury Department has the authority to issue regulations excluding from the definition of qualifying income a RICs foreign currency gains not directly related to its principal business of investing in stock or securities (or options and futures with respect thereto). Such regulations might treat gains from some of the Funds foreign currency-denominated positions as not qualifying income and there is a remote possibility that such regulations might be applied retroactively, in which case, the Fund might not qualify as a RIC for one or more years. In the event the Treasury Department issues such regulations, the Funds Board may authorize a significant change in investment strategy or the Funds liquidation.
Foreign Securities Risk. Investments in foreign securities involve certain risks not associated with investments in securities of U.S. companies. For example, foreign markets can be extremely volatile. Foreign securities are primarily denominated in foreign currencies. Fluctuations in currency exchange rates may impact the value of foreign securities, without a change in the intrinsic value of those securities. Foreign securities may also be less liquid than domestic securities so that the Fund may, at times, be unable to sell foreign securities at desirable times or prices. Brokerage commissions, custodial costs and other fees are also generally higher for foreign securities. The Fund may have limited or no legal recourse in the event of default with respect to certain foreign securities, including those issued by foreign governments. In addition, foreign governments may impose withholding or other taxes on the Funds income and capital gain on foreign securities, which could reduce the Funds yield on such securities. Other risks include possible delays in the settlement of transactions or in the payment of income; generally less publicly available information about companies; the impact of economic, political, social, diplomatic or other conditions or events; possible seizure, expropriation or nationalization of a company or its assets; possible imposition of currency exchange controls; accounting, auditing and financial reporting standards that may be less comprehensive and stringent than those applicable to domestic companies; and the relatively less stringent standard of care to which local agents may be held in the local markets. In addition, it may be difficult to obtain reliable information about the securities and business operations of certain foreign issuers. Governments or trade groups may compel local agents to hold securities in designated depositories that are not subject to independent evaluation. The less developed a countrys securities market is, the greater the level of risks. The risks posed by sanctions against a particular foreign country, its nationals or industries or businesses within the country may be heightened to the extent the Fund invests significantly in the affected country or region or in issuers from the affected country that depend on global markets.
Operational and Settlement Risks of Foreign Securities. The Funds foreign securities are generally held outside the United States in the primary market for the securities in the custody of certain eligible foreign banks and trust companies (foreign sub-custodians), as permitted under the Investment Company Act of 1940. Settlement practices for foreign securities may differ from those in the United States. Some countries have limited governmental oversight and regulation of industry practices, stock exchanges, depositories, registrars, brokers and listed companies, which increases the risk of corruption and fraud and the possibility of losses to the Fund. In particular, under certain circumstances, foreign securities may settle on a delayed delivery basis, meaning that the Fund may be required to make payment for securities before the Fund has actually received delivery of the securities or deliver securities prior to the receipt of payment. Typically, in these cases, the Fund will receive evidence of ownership in accordance with the generally accepted settlement practices in the local market entitling the Fund to delivery or payment at a future date, but there is a risk that the security will not be delivered to the Fund or that payment will not be received, although the Fund and its foreign sub-custodians take reasonable precautions to mitigate this risk. Losses can also result from lost, stolen or counterfeit securities; defaults by brokers and banks; failures or defects of the settlement system; or poor and improper record keeping by registrars and issuers.
Share Blocking. Share blocking refers to a practice in certain foreign markets under which an issuers securities are blocked from trading at the custodian or sub-custodian level for a specified number of days before and, in certain instances, after a
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shareholder meeting where a vote of shareholders takes place. The blocking period can last up to several weeks. Share blocking may prevent the Fund from buying or selling securities during this period, because during the time shares are blocked, trades in such securities will not settle. It may be difficult or impossible to lift blocking restrictions, with the particular requirements varying widely by country. As a consequence of these restrictions, the Investment Manager, on behalf of the Fund, may abstain from voting proxies in markets that require share blocking.
Forward Contracts on Mortgage-backed Securities Risk. A forward is a contract between two parties to buy or sell an asset at a specified future time at a price agreed today. Forwards are traded in the over-the-counter markets. Investments in forward contracts subject the Fund to leverage risk and counterparty risk. The Fund is subject to similar risks when purchasing mortgage-backed securities in the to be announced (TBA) market. In the TBA market, the seller agrees to deliver the mortgage backed securities for an agreed upon price on an agreed upon date, but makes no guarantee as to which or how many securities are to be delivered.
Fund-of-Funds Risk. There is risk that the Fund portfolio managers investment determinations regarding asset classes or underlying funds and the Funds allocations thereto may not be successful, in whole or in part. There is also a risk that the selected underlying funds performance may be lower than the performance of the asset class they were selected to represent or may be lower than the performance of alternative underlying funds that could have been selected to represent the asset class. The Fund also is exposed to the same risks as the underlying funds in direct proportion to the allocation of its assets among the underlying funds. The ability of the Fund to realize its investment objective(s) will depend, in large part, on the extent to which the underlying funds realize their investment objective. There is no guarantee that the underlying funds will achieve their respective investment objectives. The performance of underlying funds could be adversely affected if other entities that invest in the same underlying funds make relatively large investments or redemptions in such underlying funds. The Fund, and its shareholders, indirectly bear a portion of the expenses of any funds in which the Fund invests. Because the expenses and costs of a fund are shared by its investors, redemptions by other investors in the fund could result in decreased economies of scale and increased operating expenses for such fund. These transactions might also result in higher brokerage, tax or other costs for a fund. This risk may be particularly important when one investor owns a substantial portion of a fund. The Investment Manager may have potential conflicts of interest in selecting affiliated underlying funds for investment by the Fund because the fees paid to it by some underlying funds are higher than the fees paid by other underlying funds.
Geographic Concentration Risk. The Fund may be particularly susceptible to economic, political, regulatory or other events or conditions affecting issuers and countries within the specific geographic regions in which the Fund invests. Currency devaluations could occur in countries that have not yet experienced currency devaluation to date, or could continue to occur in countries that have already experienced such devaluations. As a result, the Funds net asset value may be more volatile than a more geographically diversified fund.
Growth Securities Risk. Growth securities typically trade at a higher multiple of earnings than other types of equity securities. Accordingly, the market values of growth securities may be more sensitive to adverse economic or other circumstances or changes in current or expected earnings than the market values of other types of securities. In addition, growth securities, at times, may not perform as well as value securities or the stock market in general, and may be out of favor with investors for varying periods of time.
Health Care Sector Risk. Companies in the health care sector are subject to extensive government regulation. Their profitability can be affected significantly and adversely by restrictions on government reimbursement for medical expenses, government approval of medical products and services, competitive pricing pressures, an increased emphasis on outpatient and other alternative services and other factors. In many cases, patent protection is integral to the success of companies in the health care sector, and profitability can be affected materially by, among other things, the cost of obtaining (or failing to obtain) patent approvals, the cost of litigating patent infringement and the loss of patent protection for medical products (which significantly increases pricing pressures and can materially reduce profitability with respect to such products). Companies in the health care sector also potentially are subject to extensive product liability and other similar litigation. Companies in the health care sector are affected by the rising cost of medical products and services, and the effects of such rising costs can be particularly pronounced for companies that are dependent on a relatively limited number of products or services. Medical products also frequently become obsolete due to industry innovation or other causes. Because the Fund invests a significant portion of its net assets in the equity securities of health care companies, the Funds price may be more volatile than a fund that is invested in a more diverse range of companies in different market sectors.
Highly Leveraged Transactions Risk. The loans or other securities in which the Fund invests may consist of transactions involving refinancings, recapitalizations, mergers and acquisitions and other financings for general corporate purposes. The Funds investments also may include senior obligations of a borrower issued in connection with a restructuring pursuant to Chapter 11 of the U.S. Bankruptcy Code (commonly known as debtor-in-possession financings), provided that such senior obligations are determined by the Funds portfolio managers to be a suitable investment for the Fund. In such highly leveraged transactions, the borrower assumes large amounts of debt in order to have the financial resources to attempt to
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achieve its business objectives. Such business objectives may include but are not limited to: managements taking over control of a company (leveraged buy-out); reorganizing the assets and liabilities of a company (leveraged recapitalization); or acquiring another company. Loans or securities that are part of highly leveraged transactions involve a greater risk (including default and bankruptcy) than other investments.
High-Yield Securities Risk. Securities with the lowest investment grade rating, securities rated below investment grade (commonly called high-yield or junk bonds) and unrated securities of comparable quality tend to be more sensitive to credit risk than higher-rated securities and may react more to perceived changes in the ability of the issuing entity or obligor to pay interest and principal when due than to changes in interest rates.
These investments have greater price fluctuations and are more likely to experience a default than higher-rated securities. High-yield securities are considered to be predominantly speculative with respect to the issuers capacity to pay interest and repay principal. These securities typically pay a premium a higher interest rate or yield because of the increased risk of loss, including default. These securities may require a greater degree of judgment to establish a price, may be difficult to sell at the time and price the Fund desires, may carry high transaction costs, and also are generally less liquid than higher-rated securities. The securities ratings provided by third party rating agencies are based on analyses by these ratings agencies of the credit quality of the securities and may not take into account every risk related to whether interest or principal will be timely repaid. In adverse economic and other circumstances, issuers of lower-rated securities are more likely to have difficulty making principal and interest payments than issuers of higher-rated securities.
Impairment of Collateral Risk. The value of collateral, if any, securing a loan can decline, and may be insufficient to meet the borrowers obligations or difficult or costly to liquidate. In addition, the Funds access to collateral may be limited by bankruptcy or other insolvency laws. Further, certain floating rate and other loans may not be fully collateralized and may decline in value.
Inflation-Protected Securities Risk. Inflation-protected debt securities tend to react to changes in real interest rates. Real interest rates can be described as nominal interest rates minus the expected impact of inflation. In general, the price of an inflation-protected debt security falls when real interest rates rise, and rises when real interest rates fall. Interest payments on inflation-protected debt securities will vary as the principal and/or interest is adjusted for inflation and may be more volatile than interest paid on ordinary bonds. In periods of deflation, the Fund may have no income at all from such investments. Income earned by a shareholder depends on the amount of principal invested, and that principal will not grow with inflation unless the shareholder reinvests the portion of Fund distributions that comes from inflation adjustments. The Funds investment in certain inflation-protected debt securities may generate taxable income in excess of the interest they pay to the Fund, which may cause the Fund to sell investments to obtain cash to make income distributions to shareholders, including at times when it may not be advantageous to do so.
Inflation Risk. Inflation risk is the uncertainty over the future real value (after inflation) of an investment. Inflation rates may change frequently and drastically as a result of various factors, including unexpected shifts in the domestic or global economy, and the Funds investments may not keep pace with inflation, which may result in losses to Fund investors.
Initial Public Offering (IPO) Risk. IPOs are subject to many of the same risks as investing in companies with smaller market capitalizations. To the extent the Fund determines to invest in IPOs, it may not be able to invest to the extent desired, because, for example, only a small portion (if any) of the securities being offered in an IPO are available to the Fund. The investment performance of the Fund during periods when it is unable to invest significantly or at all in IPOs may be lower than during periods when the Fund is able to do so. In addition, as the Fund increases in size, the impact of IPOs on the Funds performance will generally decrease. IPOs sold within 12 months of purchase may result in increased short-term capital gains, which will be taxable to the Funds shareholders as ordinary income.
Interest Rate Risk. Interest rate risk is the risk of losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt securities will tend to fall, and if interest rates fall, the values of debt securities will tend to rise. Changes in the value of a debt security usually will not affect the amount of income the Fund receives from it but may affect the value of the Funds shares. In general, the longer the maturity or duration of a debt security, the greater its sensitivity to changes in interest rates. Interest rate changes also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Securities with floating interest rates are typically less sensitive to interest rate changes, but may decline in value if their interest rates do not rise as much as interest rates in general. Because rates on certain floating rate loans and other debt securities reset only periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause fluctuations in the Funds net asset value.
Investing in Other Funds Risk. The Funds investment in other funds (affiliated and/or unaffiliated funds, including exchange-traded funds (ETFs)) subjects the Fund to the investment performance (positive or negative) and risks of these underlying funds in direct proportion to the Funds investment therein. The performance of underlying funds could be adversely affected if other entities that invest in the same underlying funds make relatively large investments or redemptions
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in such underlying funds. The Fund, and its shareholders, indirectly bear a portion of the expenses of any funds in which the Fund invests. Because the expenses and costs of a fund are shared by its investors, redemptions by other investors in the fund could result in decreased economies of scale and increased operating expenses for such fund. These transactions might also result in higher brokerage, tax or other costs for the Fund. This risk may be particularly important when one investor owns a substantial portion of another fund. The Investment Manager may have potential conflicts of interest in selecting affiliated underlying funds for investment by the Fund because the fees paid to it by some underlying funds are higher than the fees paid by other underlying funds, as well as a potential conflict in selecting affiliated funds over unaffiliated funds.
Issuer Risk. An issuer in which the Fund invests may perform poorly, and therefore, the value of its securities may decline, which would negatively affect the Funds performance. Poor performance may be caused by poor management decisions, competitive pressures, breakthroughs in technology, reliance on suppliers, labor problems or shortages, corporate restructurings, fraudulent disclosures, natural disasters or other events, conditions or factors.
Leverage Risk. Leverage occurs when the Fund increases its assets available for investment using borrowings, short sales, derivatives, or similar instruments or techniques. The use of leverage may make any change in the Funds net asset value (NAV) even greater and thus result in increased volatility of returns. Short sales involve borrowing securities and then selling them, the Funds short sales effectively leverage the Funds assets. The Funds assets that are used as collateral to secure the Funds obligations to return the securities sold short may decrease in value while the short positions are outstanding, which may force the Fund to use its other assets to increase the collateral. Leverage can create an interest expense that may lower the Funds overall returns. Leverage presents the opportunity for increased net income and capital gains, but also exaggerates the Funds risk of loss. There can be no guarantee that a leveraging strategy will be successful.
Liquidity Risk. Liquidity risk is the risk associated with a lack of marketability of investments which may make it difficult to sell the investment at a desirable time or price. The Fund may have to lower the selling price, sell other investments, or forego another, more appealing investment opportunity. Judgment plays a larger role in valuing these investments as compared to valuing more liquid investments.
Market Risk. Market risk refers to the possibility that the market values of securities or other investments that the Fund holds will fall, sometimes rapidly or unpredictably, or fail to rise. Security values may fall or fail to rise because of a variety of factors affecting an issuer (e.g., an unfavorable earnings report), the industry or sector it operates, or the market as a whole, reducing the value of an investment in the Fund. Accordingly, an investment in the Fund could lose money over short or even long periods. The market values of the securities the Fund holds can be affected by the markets perception of the issuer (or its industry or sector), changes or perceived changes in U.S. or foreign economies and financial markets, and the liquidity of these securities, among other factors. In general, equity securities tend to have greater price volatility than debt securities. In addition, common stock prices may be sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase.
Master Limited Partnership Risk. Investments in securities (units) of master limited partnerships involve risks that differ from an investment in common stock. Holders of these units have more limited rights to vote on matters affecting the partnership. These units may be subject to cash flow and dilution risks. There are also certain tax risks associated with such an investment. In particular, the Funds investment in master limited partnerships can be limited by the Funds intention to qualify as a regulated investment company for U.S. federal income tax purposes, and can limit the Funds ability to so qualify. In addition, conflicts of interest may exist between common unit holders, subordinated unit holders and the general partner of a master limited partnership, including a conflict arising as a result of incentive distribution payments. In addition, there are risks related to the general partners right to require unit holders to sell their common units at an undesirable time or price.
Mid-Cap Company Securities Risk. Securities of mid-capitalization companies (mid-cap companies) can, in certain circumstances, have more risk than securities of larger capitalization companies (larger companies). For example, mid-cap companies may be more vulnerable to market downturns and adverse business or economic events than larger companies because they may have more limited financial resources and business operations. Mid-cap companies are also more likely than larger companies to have more limited product lines and operating histories and to depend on smaller management teams. Securities of mid-cap companies may trade less frequently and in smaller volumes and may be less liquid and fluctuate more sharply in value than securities of larger companies. When the Fund takes significant positions in mid-cap companies with limited trading volumes, the liquidation of those positions, particularly in a distressed market, could be difficult and result in Fund investment losses. In addition, some mid-cap companies may not be widely followed by the investment community, which can lower the demand for their stocks.
Money Market Fund Investment Risk. An investment in a money market fund is not a bank deposit and is not insured or guaranteed by any bank, the FDIC or any other government agency. Although money market funds seek to preserve the value of investments at $1.00 per share, it is possible for the Fund to lose money by investing in money market funds. In addition to the fees and expenses that the Fund directly bears, the Fund indirectly bears the fees and expenses of any money market funds in which it invests, including affiliated money market funds. To the extent these fees and expenses are expected to equal or
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exceed 0.01% of the Funds average daily net assets, they will be reflected in the Annual Fund Operating Expenses set forth in the table under Fees and Expenses of the Fund. By investing in a money market fund, the Fund will be exposed to the investment risks of the money market fund in direct proportion to such investment. The money market fund may not achieve its investment objective. The Fund, through its investment in the money market fund, may not achieve its investment objective. To the extent the Fund invests in instruments such as derivatives, the Fund may hold investments, which may be significant, in money market fund shares to cover its obligations resulting from the Funds investments in derivatives.
Mortgage- and Other Asset-Backed Securities Risk. The value of any mortgage-backed and other asset-backed securities held by the Fund may be affected by, among other things, changes or perceived changes in: interest rates, factors concerning the interests in and structure of the issuer or the originator of the mortgages or other assets, the creditworthiness of the entities that provide any supporting letters of credit, surety bonds or other credit enhancements, or the markets assessment of the quality of underlying assets. Mortgage-backed securities represent interests in, or are backed by, pools of mortgages from which payments of interest and principal (net of fees paid to the issuer or guarantor of the securities) are distributed to the holders of the mortgage-backed securities. Mortgage-backed securities can have a fixed or an adjustable rate. Payment of principal and interest on some mortgage-backed securities (but not the market value of the securities themselves) may be guaranteed (i) by the full faith and credit of the U.S. Government (in the case of securities guaranteed by the Government National Mortgage Association) or (ii) by its agencies, authorities, enterprises or instrumentalities (in the case of securities guaranteed by the Federal National Mortgage Association (FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC)), which are not insured or guaranteed by the U.S. Government (although FNMA and FHLMC may be able to access capital from the U.S. Treasury to meet their obligations under such securities). Mortgage-backed securities issued by non-governmental issuers (such as commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers) may be supported by various credit enhancements, such as pool insurance, guarantees issued by governmental entities, letters of credit from a bank or senior/subordinated structures, and may entail greater risk than obligations guaranteed by the U.S. Government, whether or not such obligations are guaranteed by the private issuer. The Fund may participate in mortgage-backed securities acquired in the TBA market up to the Funds then current position in mortgage-backed securities that are considered good delivery. Mortgage-backed securities are subject to prepayment risk, which is the possibility that the underlying mortgage may be refinanced or prepaid prior to maturity during periods of declining or low interest rates, causing the Fund to have to reinvest the money received in securities that have lower yields. In addition, the impact of prepayments on the value of mortgage-backed securities may be difficult to predict and may result in greater volatility. Rising or high interest rates tend to extend the duration of mortgage-backed securities, making them more volatile and more sensitive to changes in interest rates.
Municipal Securities Risk. Municipal securities are debt obligations generally issued to obtain funds for various public purposes, including general financing for state and local governments, or financing for a specific project or public facility. Municipal securities can be significantly affected by political and legislative changes at the state or federal level. Municipal securities may be fully or partially backed by the taxing authority of the local government, by the credit of a private issuer, by the current or anticipated revenues from a specific project or specific assets or by domestic or foreign entities providing credit support, such as letters of credit, guarantees or insurance, and are generally classified into general obligation bonds and special revenue obligations. General obligation bonds are backed by an issuers taxing authority and may be vulnerable to limits on a governments power or ability to raise revenue or increase taxes. They may also depend for payment on legislative appropriation and/or funding or other support from other governmental bodies. Revenue obligations are payable from revenues generated by a particular project or other revenue source, and are typically subject to greater risk of default than general obligation bonds because investors can look only to the revenue generated by the project or other revenue source backing the project, rather than to the general taxing authority of the state or local government issuer of the obligations. Because many municipal securities are issued to finance projects in sectors such as education, health care, transportation and utilities, conditions in those sectors can affect the overall municipal market. Municipal securities generally pay interest that, in the opinion of bond counsel, is free from U.S. federal income tax (and, in some cases, the federal alternative minimum tax). There is no assurance that the Internal Revenue Service (IRS) will agree with this opinion or that U.S. federal income tax law will not change. In the event the IRS determines that the issuer does not comply with relevant tax requirements or U.S. federal income tax law changes, interest payments from a security could become federally taxable, possibly retroactively to the date the security was issued, and the value of the security would likely fall. As a shareholder of the Fund, you may be required to file an amended tax return and pay additional taxes as a result. The amount of publicly available information for municipal issuers is generally less than for corporate issuers.
Preferred Stock Risk. Preferred stock is a type of stock that generally pays dividends at a specified rate and that has preference over common stock in the payment of dividends and the liquidation of assets. Preferred stock does not ordinarily carry voting rights. The price of a preferred stock is generally determined by earnings, type of products or services, projected growth rates, experience of management, liquidity, and general market conditions of the markets on which the stock trades. The most significant risks associated with investments in preferred stock include Issuer Risk, Market Risk and Interest Rate Risk.
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Prepayment and Extension Risk. Prepayment and extension risk is the risk that a loan, bond or other security or investment might be called or otherwise converted, prepaid or redeemed before maturity. This risk is primarily associated with asset-backed securities, including mortgage-backed securities and floating rate loans. If the investment is converted, prepaid or redeemed before maturity, particularly during a time of declining interest rates or spreads, the portfolio managers may not be able to invest the proceeds in other investments providing as high a level of income, resulting in a reduced yield to the Fund. Conversely, as interest rates rise or spreads widen, the likelihood of prepayment decreases and the maturity of the investment may extend. The portfolio managers may be unable to capitalize on securities with higher interest rates or wider spreads because the Funds investments are locked in at a lower rate for a longer period of time.
Quantitative Model Risk. The Fund may use quantitative methods to select investments. Securities or other investments selected using quantitative methods may perform differently from the market as a whole or from their expected performance for many reasons, including factors used in building the quantitative analytical framework, the weights placed on each factor, and changing sources of market returns, among others. Any errors or imperfections in the Fund portfolio managers quantitative analyses or models, or in the data on which they are based, could adversely affect the portfolio managers effective use of such analyses or models, which in turn could adversely affect the Funds performance. There can be no assurance that these methodologies will enable the Fund to achieve its objective.
Real Estate-Related Investment Risk. Investment in real estate investment trusts (REITs) and in securities of other companies (wherever organized) principally engaged in the real estate industry subjects the Fund to, among other risks, risks similar to those of direct investments in real estate and the real estate industry in general, including risks related to general and local economic conditions, possible lack of availability of financing and changes in interest rates or property values. REITs are entities that either own properties or make construction or mortgage loans, and also may include operating or finance companies. The value of REIT shares is affected by, among other factors, changes in the value of the underlying properties owned by the REIT, by changes in the prospect for earnings and/or cash flow growth of the REIT itself, defaults by borrowers or tenants, market saturation, decreases in market rates for rents, and other economic, political, or regulatory matters affecting the real estate industry, including REITs. REITs and similar non-U.S. entities depend upon specialized management skills, may have limited financial resources, may have less trading volume in their securities, and may be subject to more abrupt or erratic price movements than the overall securities markets. REITs are also subject to the risk of failing to qualify for tax-free pass-through of income. Some REITs (especially mortgage REITs) are affected by risks similar to those associated with investments in debt securities including changes in interest rates and the quality of credit extended.
Redemption Risk. The Fund may need to sell portfolio securities to meet redemption requests. The Fund could experience a loss when selling portfolio securities to meet redemption requests if there is (i) significant redemption activity by shareholders, including, for example, when a single investor or few large investors make a significant redemption of Fund shares, (ii) a disruption in the normal operation of the markets in which the Fund buys and sells portfolio securities or (iii) the inability of the Fund to sell portfolio securities because such securities are illiquid. In such events, the Fund could be forced to sell portfolio securities at unfavorable prices in an effort to generate sufficient cash to pay redeeming shareholders. The Fund may suspend redemptions or the payment of redemption proceeds when permitted by applicable regulations.
Regulatory Risk. Changes in government regulations may adversely affect the value of a security held by the Fund. In addition, the SEC has proposed amendments to money market regulation. These changes may have a significant impact on the operation of money market funds, which may, among other things, reduce yield.
Reinvestment Risk. Reinvestment risk is the risk that the Fund will not be able to reinvest income or principal at the same return it is currently earning.
Repurchase Agreements Risk. Repurchase agreements are agreements in which the seller of a security to the Fund agrees to repurchase that security from the Fund at a mutually agreed upon price and time. Repurchase agreements carry the risk that the counterparty may not fulfill its obligations under the agreement. This could cause the Funds income and the value of your investment in the Fund to decline.
Reverse Repurchase Agreements Risk. Reverse repurchase agreements are agreements in which a Fund sells a security to a counterparty, such as a bank or broker-dealer, in return for cash and agrees to repurchase that security at a mutually agreed upon price and time. Reverse repurchase agreements carry the risk that the market value of the security sold by the Fund may decline below the price at which the Fund must repurchase the security. Reverse repurchase agreements also may be viewed as a form of borrowing.
Rule 144A Securities Risk. The Fund may invest significantly in Rule 144A securities that are determined to be liquid in accordance with procedures adopted by the Funds Board. However, an insufficient number of qualified institutional buyers interested in purchasing Rule 144A securities at a particular time could affect adversely the marketability of such securities and the Fund might be unable to dispose of such securities promptly or at reasonable prices. Accordingly, even if determined to be liquid, the Funds holdings of Rule 144A securities may increase the level of Fund illiquidity if eligible buyers become uninterested in buying them at a particular time. The Fund may also have to bear the expense of registering the securities for
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resale and the risk of substantial delays in effecting the registration. Additionally, the purchase price and subsequent valuation of restricted and illiquid securities normally reflect a discount, which may be significant, from the market price of comparable securities for which a more liquid market exists.
Sector Risk. At times, the Fund may have a significant portion of its assets invested in securities of companies conducting business in a related group of industries within an economic sector. Companies in the same economic sector may be similarly affected by economic, regulatory, political or market events or conditions, making the Fund more vulnerable to unfavorable developments in that economic sector than funds that invest more broadly. The more a fund diversifies its investments, the more it spreads risk and potentially reduces the risks of loss and volatility.
Short Positions Risk. The Fund may establish short positions which introduce more risk to the Fund than long positions (where the Fund owns the instrument) because the maximum sustainable loss on an instrument purchased (held long) is limited to the amount paid for the instrument plus the transaction costs, whereas there is no maximum price of the shorted instrument when purchased in the open market. Therefore, in theory, short positions have unlimited risk. The Funds use of short positions in effect leverages the Fund. Leverage potentially exposes the Fund to greater risks of loss due to unanticipated market movements, which may magnify losses and increase the volatility of returns. To the extent the Fund takes a short position in a derivative instrument, this involves the risk of a potentially unlimited increase in the value of the underlying instrument.
Small- and Mid-Cap Company Securities Risk. Securities of small- and mid-capitalization companies (small- and mid-cap companies) can, in certain circumstances, have a higher potential for gains than securities of larger, more established companies (larger companies) but may also have more risk. For example, small- and mid-cap companies may be more vulnerable to market downturns and adverse business or economic events than larger companies because they may have more limited financial resources and business operations. Small- and mid-cap companies are also more likely than larger companies to have more limited product lines and operating histories and to depend on smaller management teams. Securities of small- and mid-cap companies may trade less frequently and in smaller volumes and may be less liquid and fluctuate more sharply in value than securities of larger companies. When the Fund takes significant positions in small- and mid-cap companies with limited trading volumes, the liquidation of those positions, particularly in a distressed market, could be prolonged and result in Fund investment losses. In addition, some small- and mid-cap companies may not be widely followed by the investment community, which can lower the demand for their stocks.
Sovereign Debt Risk. A sovereign debtors willingness or ability to repay principal and pay interest in a timely manner may be affected by a variety of factors, including its cash flow situation, the extent of its reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtors policy toward international lenders, and the political constraints to which a sovereign debtor may be subject.
With respect to sovereign debt of emerging market issuers, investors should be aware that certain emerging market countries are among the largest debtors to commercial banks and foreign governments. At times, certain emerging market countries have declared moratoria on the payment of principal and interest on external debt. Certain emerging market countries have experienced difficulty in servicing their sovereign debt on a timely basis and that has led to defaults and the restructuring of certain indebtedness to the detriment of debt-holders. Sovereign debt risk is increased for emerging market issuers.
Special Situations Risk. Securities of companies that are involved in an initial public offering or a major corporate event, such as a business consolidation or restructuring, may present special risk because of the high degree of uncertainty that can be associated with such events. Securities issued in initial public offerings often are issued by companies that are in the early stages of development, have a history of little or no revenues and may operate at a loss following the offering. It is possible that there will be no active trading market for the securities after the offering, and that the market price of the securities may be subject to significant and unpredictable fluctuations. Investing in special situations may have a magnified effect on the performance of funds with small amounts of assets.
Stripped Securities Risk. Stripped securities are the separate income or principal components of debt securities. These securities are particularly sensitive to changes in interest rates, and therefore subject to greater fluctuations in price than typical interest bearing debt securities. For example, stripped mortgage-backed securities have greater interest rate risk than mortgage-backed securities with like maturities, and stripped treasury securities have greater interest rate risk than traditional government securities with identical credit ratings.
Systems and Technology Risk. The Investment Manager and, as the case may be, any Fund subadvisers, use various technology in managing the Fund, consistent with its investment objective and strategy described in the Funds prospectus. For example, proprietary and third-party data and systems may be utilized to support decision making for the Fund. Data imprecision, software or other technology malfunctions, programming inaccuracies and similar circumstances may impair the performance of these systems, which may negatively affect Fund performance.
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Technology and Technology-Related Investment Risk. Companies in the technology sector and technology-related sectors are subject to significant competitive pressures, such as aggressive pricing of their products or services, new market entrants, competition for market share, short product cycles due to an accelerated rate of technological developments and the potential for limited earnings and/or falling profit margins. These companies also face the risks that new services, equipment or technologies will not be accepted by consumers and businesses or will become rapidly obsolete. These factors can affect the profitability of these companies and, as a result, the value of their securities. Also, patent protection is integral to the success of many companies in these sectors, and profitability can be affected materially by, among other things, the cost of obtaining (or failing to obtain) patent approvals, the cost of litigating patent infringement and the loss of patent protection for products (which significantly increases pricing pressures and can materially reduce profitability with respect to such products). In addition, many technology companies have limited operating histories. Prices of these companies securities historically have been more volatile than other securities, especially over the short term. If a Fund concentrates its investments (or, invests a significant portion of its net assets in securities of technology and technology-related companies), the Funds price may be more volatile than a fund that is invested in a more diverse range of market sectors.
U.S. Government Obligations Risk. While U.S. Treasury obligations are backed by the full faith and credit of the U.S. Government, such securities are nonetheless subject to credit risk (i.e., the risk that the U.S. Government may be, or may be perceived to be, unable or unwilling to honor its financial obligations, such as making payments). Securities issued or guaranteed by federal agencies or authorities and U.S. Government-sponsored instrumentalities or enterprises may or may not be backed by the full faith and credit of the U.S. Government. For example, securities issued by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association and the Federal Home Loan Banks are neither insured nor guaranteed by the U.S. Government. These securities may be supported by the ability to borrow from the U.S. Treasury or only by the credit of the issuing agency, authority, instrumentality or enterprise and, as a result, are subject to greater credit risk than securities issued or guaranteed by the U.S. Treasury.
Zero-Coupon Bonds Risk. Zero-coupon bonds are bonds that do not pay interest in cash on a current basis, but instead accrue interest over the life of the bond. As a result, these securities are issued at a discount and their values may fluctuate more than the values of similar securities that pay interest periodically. Although these securities pay no interest to holders prior to maturity, interest accrued on these securities is reported as income to the Fund and affects the amounts distributed to its shareholders, which may cause the Fund to sell investments to obtain cash to make income distributions to shareholders, including at times when it may not be advantageous to do so.
In general, pursuant to the 1940 Act, a Fund may borrow money only from banks in an amount not exceeding 33 1 / 3 % of its total assets (including the amount borrowed) less liabilities (other than borrowings). Any borrowings that come to exceed this amount must be reduced within three days (not including Sundays and holidays) to the extent necessary to comply with the 33 1 / 3 % limitation.
The Funds participate in a committed line of credit (Line of Credit). Any advance under the Line of Credit is contemplated primarily for temporary or emergency purposes.
Lending of Portfolio Securities
To generate additional income, a Fund may lend up to 33%, or such lower percentage specified by the Fund or Adviser of the value of its total assets (including securities out on loan) to broker-dealers, banks or other institutional borrowers of securities. JPMorgan serves as lending agent (the Lending Agent) to the Funds pursuant to a securities lending agreement (the Securities Lending Agreement) approved by the Board. Under the Securities Lending Agreement, the Lending Agent loans securities to approved borrowers pursuant to borrower agreements in exchange for collateral. Collateral may consist of cash, securities issued by the U.S. Government or its agencies or instrumentalities (collectively, U.S. Government securities) or such other collateral as may be approved by the Board. For loans secured by cash, the Fund retains the interest earned on cash collateral investments, but is required to pay the borrower a rebate for the use of the cash collateral. For loans secured by U.S. Government securities, the borrower pays a borrower fee to the Lending Agent on behalf of the Fund. If the market value of the loaned securities goes up, the Lending Agent will require additional collateral from the borrower.
If the market value of the loaned securities goes down, the borrower may request that some collateral be returned. During the existence of the loan, the lender will receive from the borrower amounts equivalent to any dividends, interest or other distributions on the loaned securities, as well as interest on such amounts.
Loans are subject to termination by a Fund or a borrower at any time. A Fund may choose to terminate a loan in order to vote in a proxy solicitation if the Fund has knowledge of a material event to be voted on that would affect the Funds investment in the loaned security.
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Securities lending involves counterparty risk, including the risk that a borrower may not provide additional collateral when required or return the loaned securities in a timely manner. Counterparty risk also includes a potential loss of rights in the collateral if the borrower or the Lending Agent defaults or fails financially. This risk is increased if a Funds loans are concentrated with a single borrower or limited number of borrowers. There are no limits on the number of borrowers a Fund may use and a Fund may lend securities to only one or a small group of borrowers. Funds participating in securities lending also bear the risk of loss in connection with investments of cash collateral received from the borrowers. Cash collateral is invested in accordance with investment guidelines contained in the Securities Lending Agreement and approved by the Board. Some or all of the cash collateral received in connection with the securities lending program may be invested in one or more pooled investment vehicles, including, among other vehicles, money market funds managed by the Lending Agent (or its affiliates). The Lending Agent shares in any income resulting from the investment of such cash collateral, and an affiliate of the Lending Agent may receive asset-based fees for the management of such pooled investment vehicles, which may create a conflict of interest between the Lending Agent (or its affiliates) and the Fund with respect to the management of such cash collateral. To the extent that the value or return of a Funds investments of the cash collateral declines below the amount owed to a borrower, a Fund may incur losses that exceed the amount it earned on lending the security. The Lending Agent will indemnify a Fund from losses resulting from a borrowers failure to return a loaned security when due, but such indemnification does not extend to losses associated with declines in the value of cash collateral investments. The Investment Manager is not responsible for any loss incurred by the Funds in connection with the securities lending program.
The Funds currently do not participate in the securities lending program, but the Board may determine to renew participation in the future.
The Investment Manager and Subadvisers
Columbia Management Investment Advisers, LLC, located at 225 Franklin Street, Boston, MA 02110, is the investment adviser of the Funds and also serves as the investment adviser and/or administrator of other funds in the Columbia Fund Complex. The Investment Manager is a wholly-owned subsidiary of Ameriprise Financial, which is located at 1099 Ameriprise Financial Center, Minneapolis, MN 55474. Ameriprise Financial is a holding company, which primarily conducts business through its subsidiaries to provide financial planning, products and services that are designed to be utilized as solutions for clients cash and liquidity, asset accumulation, income, protection and estate and wealth transfer needs.
From time to time the Investment Manager may engage its investment advisory affiliates (Participating Affiliates) around the world to provide a variety of services such as, investment research, investment monitoring, trading and discretionary investment management (including portfolio management) to certain accounts managed by the Investment Manager, including the Fund. The Investment Manager expects to engage certain of its Threadneedle Investments affiliates to provide such services. These Participating Affiliates will provide services to the Investment Manager either pursuant to subadvisory agreements, personnel-sharing agreements or similar inter-company arrangements and the Investment Manager will bear any and all costs of such agreements. These Participating Affiliates, like the Investment Manager, are direct or indirect subsidiaries of Ameriprise and are registered with the appropriate respective regulators in their home jurisdictions and, where required, the SEC and the CFTC in the United States.
Pursuant to some of these arrangements, certain employees of these Participating Affiliates may serve as associated persons of the Investment Manager and, in this capacity, subject to the oversight and supervision of the Investment Manager and consistent with the investment objectives, policies and limitations set forth in the Funds prospectus and SAI may provide such services to the Fund on behalf of the Investment Manager.
Services Provided
Under the Investment Management Services Agreement, the Investment Manager has contracted to furnish each Fund with investment research and advice. For these services, unless otherwise noted, each Fund pays a monthly fee to the Investment Manager based on the average of the daily closing value of the total net assets of a Fund for such month. Under the Investment Management Services Agreement, any liability of the Investment Manager to the Trust, a Fund and/or its shareholders is limited to situations involving the Investment Managers own willful misfeasance, bad faith, negligence in the performance of its duties or reckless disregard of its obligations and duties. Neither the Investment Manager, nor any of its respective directors, officers, partners, principals, employees, or agents shall be liable for any acts or omissions or for any losses suffered by a Fund or its shareholders or creditors.
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The Investment Management Services Agreement may be terminated with respect to a Fund at any time on 60 days written notice by the Investment Manager or by the Board or by a vote of a majority of the outstanding voting securities of a Fund. The Investment Management Services Agreement will automatically terminate upon any assignment thereof, will continue in effect for two years from its initial effective date and thereafter will continue from year to year with respect to a Fund only so long as such continuance is approved at least annually (i) by the Trustees of the Trust or by a vote of a majority of the outstanding voting securities of a Fund and (ii) by vote of a majority of the Trustees who are not interested persons (as such term is defined in the 1940 Act) of the Investment Manager or the Trust, cast in person at a meeting called for the purpose of voting on such approval.
The Investment Manager pays all compensation of the Trustees and officers of the Trust who are employees of the Investment Manager or its affiliates, except for the Chief Compliance Officer, a portion of whose salary is paid by the Columbia Funds. Except to the extent expressly assumed by the Investment Manager and except to the extent required by law to be paid or reimbursed by the Investment Manager, the Investment Manager does not have a duty to pay any Fund operating expense incurred in the organization and operation of a Fund, including, but not limited to, auditing, legal, custodial, investor servicing and shareholder reporting expenses. The Trust pays the cost of printing and mailing Fund prospectuses to shareholders.
The Investment Manager, at its own expense, provides office space, facilities and supplies, equipment and personnel for the performance of its functions under each Funds Investment Management Services Agreement.
Advisory Fee Rates Paid by the Funds
Each Fund, unless otherwise noted, pays the Investment Manager an annual fee for its investment advisory services, as set forth in the Investment Management Services Agreement, and as shown in the section entitled Fees and Expenses of the Fund Annual Fund Operating Expenses in each Funds prospectus. The fee is calculated as a percentage of the average daily net assets of each Fund and is paid monthly. The Investment Manager and/or its affiliates may from time to time waive fees and/or reimburse a Funds expenses. See the Funds prospectus for more information.
Investment Management Fee Rates. The Investment Manager receives a monthly investment advisory fee based on each Funds average daily net assets at the following annual rates:
Investment Management Services Agreement Fee Schedule
Fund |
Assets (billions) |
Annual rate at
each asset level |
||||
AP Alternative Strategies Fund |
First $0.5 | 1.020 | % | |||
$0.5 to $1.0 | 0.975 | % | ||||
$1.0 to $3.0 | 0.950 | % | ||||
$3.0 to $6.0 | 0.930 | % | ||||
Over $6.0 | 0.900 | % | ||||
AP Core Plus Bond Fund |
First $1.0 | 0.430 | % | |||
Bond Fund |
$1.0 to $2.0 | 0.420 | % | |||
Intermediate Bond Fund |
$2.0 to $6.0 | 0.400 | % | |||
Corporate Income Fund |
$6.0 to $7.5 | 0.380 | % | |||
$7.5 to $9.0 | 0.365 | % | ||||
$9.0 to $12.0 | 0.360 | % | ||||
$12.0 to $20.0 | 0.350 | % | ||||
$20.0 to $24.0 | 0.340 | % | ||||
$24.0 to $50.0 | 0.320 | % | ||||
Over $50.0 | 0.300 | % | ||||
AP Growth Fund |
First $0.5 | 0.710 | % | |||
Contrarian Core Fund |
$0.5 to $1.0 | 0.665 | % | |||
Global Dividend Opportunity Fund |
$1.0 to $1.5 | 0.620 | % | |||
Large Cap Growth Fund |
$1.5 to $3.0 | 0.570 | % | |||
Select Large Cap Growth Fund |
$3.0 to $6.0 | 0.560 | % | |||
Over $6.0 | 0.540 | % | ||||
AP Small Cap Equity Fund |
First $0.25 | 0.900 | % | |||
$0.25 to $0.5 | 0.850 | % | ||||
Over $0.5 | 0.800 | % |
Statement of Additional Information September 1, 2014 | Page 65 |
Fund |
Assets (billions) |
Annual rate at
each asset level |
||||
Balanced Fund |
First $0.5 | 0.660 | % | |||
Dividend Income Fund |
$0.5 to $1.0 | 0.615 | % | |||
$1.0 to $1.5 | 0.570 | % | ||||
$1.5 to $3.0 | 0.520 | % | ||||
$3.0 to $6.0 | 0.510 | % | ||||
Over $6.0 | 0.490 | % | ||||
AMT-Free CT Intermediate Muni Bond Fund |
First $0.5 | 0.400 | % | |||
AMT-Free MA Intermediate Muni Bond Fund |
$0.5 to $1.0 | 0.350 | % | |||
AMT-Free NY Intermediate Muni Bond Fund |
$1.0 to $3.0 | 0.320 | % | |||
AMT-Free OR Intermediate Muni Bond Fund |
$3.0 to $6.0 | 0.290 | % | |||
CA Tax-Exempt Fund |
$6.0 to $7.5 | 0.280 | % | |||
NY Tax-Exempt Fund |
Over $7.5 | 0.270 | % | |||
Emerging Markets Fund |
First $0.25 | 1.100 | % | |||
$0.25 to $0.5 | 1.080 | % | ||||
$0.5 to $0.75 | 1.060 | % | ||||
$0.75 to $1.0 | 1.040 | % | ||||
$1.0 to $1.5 | 0.800 | % | ||||
$1.5 to $3.0 | 0.750 | % | ||||
$3.0 to $6.0 | 0.710 | % | ||||
Over $6.0 | 0.660 | % | ||||
Global Energy and Natural Resources Fund |
First $1.0 | 0.690 | % | |||
$1.0 to $1.5 | 0.620 | % | ||||
$1.5 to $3.0 | 0.570 | % | ||||
$3.0 to $6.0 | 0.560 | % | ||||
Over $6.0 | 0.540 | % | ||||
Global ILB Plus Fund |
All assets | 0.620 | % | |||
Global Technology Growth Fund |
First $0.5 | 0.870 | % | |||
$0.5 to $1.0 | 0.820 | % | ||||
Over $1.0 | 0.770 | % | ||||
Greater China Fund |
First $1.0 | 0.870 | % | |||
$1.0 to $1.5 | 0.800 | % | ||||
$1.5 to $3.0 | 0.760 | % | ||||
$3.0 to $6.0 | 0.720 | % | ||||
Over $6.0 | 0.680 | % | ||||
HY Municipal Fund |
First $1.0 | 0.470 | % | |||
$1.0 to $2.0 | 0.445 | % | ||||
$2.0 to $3.0 | 0.420 | % | ||||
$3.0 to $6.0 | 0.395 | % | ||||
$6.0 to $7.5 | 0.370 | % | ||||
$7.5 to $10.0 | 0.360 | % | ||||
$10.0 to $15.0 | 0.350 | % | ||||
$15.0 to $24.0 | 0.340 | % | ||||
$24.0 to $50.0 | 0.320 | % | ||||
Over $50.0 | 0.300 | % | ||||
AMT-Free Intermediate Muni Bond Fund |
First $1.0 | 0.410 | % | |||
Tax-Exempt Fund |
$1.0 to $2.0 | 0.385 | % | |||
$2.0 to $3.0 | 0.360 | % | ||||
$3.0 to $6.0 | 0.335 | % | ||||
$6.0 to $9.0 | 0.310 | % | ||||
$9.0 to $10.0 | 0.300 | % | ||||
$10.0 to $15.0 | 0.290 | % | ||||
$15.0 to $24.0 | 0.280 | % | ||||
$24.0 to $50.0 | 0.260 | % | ||||
Over $50.0 | 0.250 | % |
Statement of Additional Information September 1, 2014 | Page 66 |
Fund |
Assets (billions) |
Annual rate at
each asset level |
||||
International Bond Fund |
First $1.0 | 0.570 | % | |||
$1.0 to $2.0 | 0.525 | % | ||||
$2.0 to $3.0 | 0.520 | % | ||||
$3.0 to $6.0 | 0.515 | % | ||||
$6.0 to $7.5 | 0.510 | % | ||||
$7.5 to $12.0 | 0.500 | % | ||||
$12.0 to $20.0 | 0.490 | % | ||||
$20.0 to $50.0 | 0.480 | % | ||||
Over $50.0 | 0.470 | % | ||||
Mid Cap Growth Fund |
First $0.5 | 0.760 | % | |||
$0.5 to $1.0 | 0.715 | % | ||||
$1.0 to $1.5 | 0.670 | % | ||||
Over $1.5 | 0.620 | % | ||||
Pacific/Asia Fund |
First $1.0 | 0.870 | % | |||
$1.0 to $1.5 | 0.800 | % | ||||
$1.5 to $3.0 | 0.750 | % | ||||
$3.0 to $6.0 | 0.710 | % | ||||
Over $6.0 | 0.660 | % | ||||
Real Estate Equity Fund |
First $1.0 | 0.690 | % | |||
$1.0 to $1.5 | 0.670 | % | ||||
Over $1.5 | 0.620 | % | ||||
Small Cap Core Fund |
First $0.5 | 0.790 | % | |||
Small Cap Growth Fund I |
$0.5 to $1.0 | 0.745 | % | |||
Small Cap Value Fund I |
Over $1.0 | 0.700 | % | |||
Strategic Income Fund |
First $0.5 | 0.530 | % | |||
$0.5 to $1.0 | 0.525 | % | ||||
$1.0 to $2.0 | 0.515 | % | ||||
$2.0 to $3.0 | 0.495 | % | ||||
$3.0 to $6.0 | 0.480 | % | ||||
$6.0 to $7.5 | 0.455 | % | ||||
$7.5 to $9.0 | 0.440 | % | ||||
$9.0 to $10.0 | 0.431 | % | ||||
$10.0 to $15.0 | 0.419 | % | ||||
$15.0 to $20.0 | 0.409 | % | ||||
$20.0 to $24.0 | 0.393 | % | ||||
$24.0 to $50.0 | 0.374 | % | ||||
Over $50.0 | 0.353 | % | ||||
Ultra Short Term Bond Fund |
All assets | 0.250 | % (1) | |||
U.S. Treasury Index Fund |
All assets | 0.100 | % | |||
Value and Restructuring Fund |
First $3.0 | 0.690 | % | |||
$3.0 to $6.0 | 0.560 | % | ||||
Over $6.0 | 0.540 | % |
(1) | In return for the advisory fee, the Investment Manager has agreed to pay all of the operating costs and expenses of Ultra Short Term Bond Fund other than Independent Trustees fees and expenses, including their legal counsel, auditing expenses, interest incurred on borrowing by Ultra Short Term Bond Fund, if any, portfolio transaction expenses, taxes and extraordinary expenses. This fee is sometimes referred to herein as the Unified Fee. Any custody credits are applied to offset Fund expenses prior to determining the expenses the Investment Manager is required to bear; however, the Investment Manager bears any custodian overdraft charges. |
Diversified Real Return Fund. The Investment Manager has implemented a schedule for Diversified Real Return Funds investment advisory fees whereby the Fund pays (i) 0.00% advisory fee on its assets that are invested in affiliated mutual funds, ETFs and closed-end funds that pay an investment management services fee to the Investment Manager; and (ii) 0.70% advisory fee on securities, instruments and other assets not described above, including without limitation affiliated mutual funds, ETFs and closed-end funds that do not pay an investment management services fee to the Investment Manager, third-party closed-end funds, derivatives and individual securities.
Statement of Additional Information September 1, 2014 | Page 67 |
Risk Allocation Fund. The Investment Manager has implemented a schedule for Risk Allocation Funds investment advisory fees whereby the Fund pays (i) 0.00% advisory fee on its assets that are invested in affiliated mutual funds, ETFs and closed-end funds that pay an investment management services fee to the Investment Manager; (ii) 0.10% advisory fee on its assets that are invested in third-party ETFs and mutual funds; and (iii) an advisory fee rate according to the following schedule on securities, instruments and other assets not described above, including affiliated funds that do not pay an investment management services fee to the Investment Manager, third-party closed-end funds, derivatives and individual securities:
Risk Allocation Fund |
First $0.5 | 0.700 | % | |||
$0.5 to $1.0 | 0.690 | % | ||||
$1.0 to $1.5 | 0.680 | % | ||||
$1.5 to $3.0 | 0.670 | % | ||||
$3.0 to $6.0 | 0.650 | % | ||||
$6.0 to $12.0 | 0.625 | % | ||||
Over $12.0 | 0.600 | % |
In no event shall the advisory fee be negative even if the value of one of the categories is a negative amount (for instance, if the Funds liabilities exceed the value of assets in category (iii)). Although the fee for each category is calculated separately and there is no negative advisory fee, the Investment Manager currently intends to calculate the advisory fee by reducing (but not below $0) any advisory fee payable on one category by any negative advisory fee in another category. The Investment Manager may change this calculation methodology at any time.
Management Fees Paid. The table below shows the total management fees paid by each Fund for the last three fiscal periods. The table is organized by fiscal year end. For amounts waived or reimbursed by the Investment Manager, see Expense Limitations .
Management Fees
Management Fees | ||||||||||||
Fund | 2014 | 2013 | 2012 | |||||||||
For Funds with fiscal period ending March 31 |
||||||||||||
AP Growth Fund |
$ | 9,510,480 | $ | 6,230,101 | | |||||||
Pacific/Asia Fund |
2,684,715 | 2,513,389 | $ | 1,493,109 | ||||||||
Select Large Cap Growth Fund |
36,199,976 | 31,192,885 | 32,252,320 | |||||||||
For Funds with fiscal period ending April 30 |
||||||||||||
Bond Fund (a) |
4,135,423 | 6,213,824 | 9,867,994 | |||||||||
Corporate Income Fund (a) |
6,040,737 | 6,237,060 | 4,666,572 | |||||||||
Intermediate Bond Fund (a) |
18,867,679 | 13,418,625 | 14,158,418 | |||||||||
Small Cap Value Fund I (b) |
10,928,618 | 11,658,742 | 10,740,169 | |||||||||
U.S. Treasury Index Fund (a) |
315,583 | 400,928 | 465,104 | |||||||||
Fund | 2013 | 2012 | 2011 | |||||||||
For Funds with fiscal period ending May 31 |
||||||||||||
Dividend Income Fund (c) |
37,839,114 | 18,535,458 | 20,026,109 | |||||||||
HY Municipal Fund (d) |
4,621,066 | 3,435,899 | 3,084,968 | |||||||||
Risk Allocation Fund (e) |
51,020 | | | |||||||||
For Funds with fiscal period ending July 31 |
||||||||||||
AMT-Free OR Intermediate Muni Bond Fund (g) |
1,992,185 | 1,715,839 | 2,201,895 | |||||||||
Large Cap Growth Fund (f) |
16,526,481 | 13,345,526 | 12,427,666 | |||||||||
Tax-Exempt Fund (h) |
17,140,124 | 11,382,292 | 12,644,779 | |||||||||
Ultra Short Term Bond Fund |
4,262,492 | 2,729,842 | 2,591,553 |
Statement of Additional Information September 1, 2014 | Page 68 |
Management Fees | ||||||||||||
Fund | 2013 | 2012 | 2011 | |||||||||
For Funds with fiscal period ending August 31 |
||||||||||||
AP Alternative Strategies Fund |
$ | 5,713,001 | $ | 1,570,915 | | |||||||
AP Core Plus Bond Fund |
18,964,179 | 6,266,540 | | |||||||||
AP Small Cap Equity Fund |
4,261,994 | 1,163,423 | | |||||||||
Balanced Fund |
8,516,272 | 6,967,277 | $ | 3,750,889 | * | |||||||
Contrarian Core Fund (i) |
16,485,570 | 10,862,663 | 7,499,179 | * | ||||||||
Emerging Markets Fund (j) |
8,951,551 | 7,947,668 | 4,726,989 | * | ||||||||
Global Dividend Opportunity Fund |
5,493,181 | 5,565,472 | 5,777,942 | * | ||||||||
Global Energy and Natural Resources Fund (j) |
2,956,409 | 6,717,718 | 4,436,667 | * | ||||||||
Global Technology Growth Fund |
1,206,218 | 1,640,143 | 2,358,996 | * | ||||||||
Greater China Fund |
1,833,662 | 1,944,751 | 2,368,709 | * | ||||||||
Mid Cap Growth Fund |
15,698,296 | 13,873,055 | 11,840,449 | * | ||||||||
Small Cap Core Fund (i) |
7,942,625 | 5,961,050 | 5,993,236 | * | ||||||||
Small Cap Growth Fund I |
8,867,134 | 8,072,792 | 9,319,430 | * | ||||||||
Value and Restructuring Fund (j) |
16,455,919 | 45,264,126 | 38,529,807 | * | ||||||||
For Funds with fiscal period ending October 31 |
||||||||||||
AMT-Free CT Intermediate Muni Bond Fund |
807,504 | 865,432 | 945,991 | * | ||||||||
AMT-Free Intermediate Muni Bond Fund |
9,938,231 | 10,291,609 | 9,448,247 | * | ||||||||
AMT-Free MA Intermediate Muni Bond Fund |
1,414,463 | 1,511,872 | 1,512,989 | * | ||||||||
AMT-Free NY Intermediate Muni Bond Fund |
1,233,273 | 1,296,104 | 1,257,586 | * | ||||||||
CA Tax-Exempt Fund |
2,089,802 | 2,174,124 | 1,781,596 | * | ||||||||
International Bond Fund (k) |
378,515 | 494,344 | 116,214 | * | ||||||||
NY Tax-Exempt Fund |
761,105 | 768,227 | 468,778 | * | ||||||||
Strategic Income Fund (k) |
13,715,882 | 17,539,908 | 10,514,321 | * | ||||||||
For Funds with fiscal period ending December 31 |
||||||||||||
Real Estate Equity Fund |
4,091,656 | 3,927,019 | 3,831,112 |
* | Prior to May 1, 2010, these Funds were managed by the Previous Adviser. The figures in this table include the management fee paid to both the Investment Manager and the Previous Adviser during the relevant fiscal year. The table below shows the amount paid to each adviser separately during the relevant fiscal year: |
Management fees paid during fiscal period 2010 or 2011 | ||||||||
Fund | Investment Manager | Previous Adviser | ||||||
For Funds with fiscal period ending May 31 |
||||||||
Dividend Income Fund |
$ | 5,934,956 | $ | 7,295,736 | ||||
HY Municipal Fund |
524,788 | 2,361,306 | ||||||
For Funds with fiscal period ending July 31 |
||||||||
AMT-Free OR Intermediate Muni Bond Fund |
799,938 | 1,515,769 | ||||||
Large Cap Growth Fund |
2,643,515 | 3,959,944 | ||||||
Tax-Exempt Fund |
6,340,827 | 4,490,488 | ||||||
Ultra Short Term Bond Fund |
774,383 | 1,643,829 |
Statement of Additional Information September 1, 2014 | Page 69 |
Management fees paid during fiscal period 2010 or 2011 | ||||||||
Fund | Investment Manager | Previous Adviser | ||||||
For Funds with fiscal period ending August 31 |
||||||||
Balanced Fund |
$ | 516,594 | $ | 875,889 | ||||
Contrarian Core Fund |
1,604,740 | 1,929,231 | ||||||
Emerging Markets Fund |
4,340,080 | 386,909 | ||||||
Global Dividend Opportunity Fund |
1,486,665 | 3,136,677 | ||||||
Global Energy and Natural Resources Fund |
4,071,386 | 365,281 | ||||||
Global Technology Growth Fund |
765,180 | 1,638,840 | ||||||
Greater China Fund |
717,794 | 1,561,766 | ||||||
Mid Cap Growth Fund |
2,977,727 | 5,939,170 | ||||||
Small Cap Core Fund |
1,882,143 | 2,495,915 | ||||||
Small Cap Growth Fund I |
2,371,009 | 4,158,194 | ||||||
Value and Restructuring Fund |
34,923,979 | 3,605,829 | ||||||
For Funds with fiscal period ending October 31 |
||||||||
AMT-Free Intermediate Muni Bond Fund |
5,165,472 | 5,091,941 | ||||||
CA Tax-Exempt Fund |
982,935 | 984,233 | ||||||
CT Intermediate Municipal Bond Fund |
602,895 | 580,713 | ||||||
International Bond Fund |
7,487 | 69,573 | ||||||
MA Intermediate Municipal Bond Fund |
885,980 | 844,565 | ||||||
NY Intermediate Municipal Bond Fund |
781,694 | 763,013 | ||||||
NY Tax-Exempt Fund |
171,758 | 166,121 | ||||||
Strategic Income Fund |
949,914 | 10,224,619 |
(a) | These Funds changed their fiscal year end in 2012 from March 31 to April 30. For the fiscal year ended 2012, the information shown is for the 13-month period from April 1, 2011 to April 30, 2012. For the fiscal year ended March 31, 2012, Bond Fund paid management fees of $9,193,773, Corporate Income Fund paid management fees of $4,163,696, Intermediate Bond Fund paid management fees of $12,982,420 and U.S. Treasury Index Fund paid management fees of $429,804. For the fiscal period from April 1, 2012 to April 30, 2012, Bond Fund paid management fees of $674,221, Corporate Income Fund paid management fees of $502,876, Intermediate Bond Fund paid management fees of $1,175,998 and U.S. Treasury Index Fund paid management fees of $35,300. |
(b) | Small Cap Value Fund I changed its fiscal year end in 2012 from June 30 to April 30. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to April 30, 2012. |
(c) | Dividend Income Fund changed its fiscal year end in 2012 from September 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. For the fiscal year from October 1, 2009 to September 30, 2010, the management fees paid were $13,230,692. |
(d) | HY Municipal Fund changed its fiscal year end in 2012 from June 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is from July 1, 2010 to June 30, 2011. For the fiscal year from July 1, 2009 to June 30, 2010, the management fees paid were $2,886,094. |
(e) | For the period from June 19, 2012 (commencement of operations) to May 31, 2013. |
(f) | Large Cap Growth Fund changed its fiscal year end in 2012 from September 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. For the fiscal year from October 1, 2009 to September 30, 2010, the management fees paid were $6,603,459. |
(g) | AMT-Free OR Intermediate Muni Bond Fund changed its fiscal year end in 2012 from August 31 to July 31. For the fiscal year ended 2012, the information shown is for the period from September 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from September 1, 2010 to August 31, 2011. For the fiscal year from September 1, 2009 to August 31, 2010, the management fees paid were $2,315,707. |
(h) | Tax-Exempt Fund changed its fiscal year end in 2012 from November 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from December 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from December 1, 2010 to November 30, 2011. For the fiscal year from December 1, 2009 to November 30, 2010, the management fees paid were $10,831,315. |
(i) | Contrarian Core Fund and Small Cap Core Fund changed their fiscal year ends in 2012 from September 30 to August 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to August 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. For the fiscal year from October 1, 2009 to September 30, 2010, the management fees paid were $3,533,971 for Contrarian Core Fund and $4,378,058 for Small Cap Core Fund. |
(j) |
Emerging Markets Fund, Global Energy and Natural Resources Fund and Value and Restructuring Fund changed their fiscal year ends in 2012 from March 31 to August 31. For the fiscal year ended 2012, the information shown is for the 17-month period from April 1, 2011 to August 31, 2012. For the fiscal year ended March 31, 2012, Emerging Markets Fund paid management fees of $5,473,855, Global Energy and Natural Resources Fund paid management fees of $5,262,966, and Value and Restructuring Fund paid management fees of $36,158,339. For the fiscal period from April 1, 2012 to August 31, 2012, Emerging Markets Fund paid management fees of $2,473,783, Global Energy and Natural Resources Fund paid management fees of $1,454,752, and Value and Restructuring Fund paid management |
Statement of Additional Information September 1, 2014 | Page 70 |
fees of $9,105,787. For the fiscal years ended 2011, the information shown is from April 1, 2010 to March 31, 2011. For the fiscal year ended March 31, 2011, the management fees paid were $4,726,989 for Emerging Markets Fund, $4,436,667 for Global Energy and Natural Resources Funds and $38,529,807 for Value and Restructuring Fund. |
(k) | International Bond Fund and Strategic Income Fund changed their fiscal year ends in 2012 from May 31 to October 31. For the fiscal year ended 2012, the information shown is for the 17-month period from June 1, 2011 to October 31, 2012. For the fiscal year ended May 31, 2012, International Bond Fund paid management fees of $336,309, and Strategic Income Fund paid management fees of $11,871,078. For the fiscal period from June 1, 2012 to October 31, 2012, International Bond Fund paid management fees of $158,035, and Strategic Income Fund paid management fees of $5,668,830. For the fiscal year ended 2011, the information shown is from June 1, 2010 to May 31, 2011. |
Manager of Managers Exemption
The Funds have received an exemptive order from the SEC that permits the Investment Manager, subject to the approval of the Board, to appoint a subadviser or change the terms of a subadvisory agreement for a Fund without first obtaining shareholder approval. The order permits the Fund to add or change unaffiliated subadvisers or the fees paid to subadvisers from time to time without the expense and delays associated with obtaining shareholder approval of the change.
Subadvisory Agreements
The assets of certain Funds are managed by subadvisers that have been selected by the Investment Manager, subject to the review and approval of the Board. The Investment Manager has recommended the subadvisers to the Board based upon its assessment of the skills of the subadvisers in managing other assets in accordance with objectives and investment strategies substantially similar to those of the applicable Fund. Short-term investment performance is not the only factor in selecting or terminating a subadviser, and the Investment Manager does not expect to make frequent changes of subadvisers. Subadvisers affiliated with the Investment Manager must be approved by shareholders.
The Investment Manager allocates the assets of a Fund with multiple subadvisers among the subadvisers. Each subadviser has discretion, subject to oversight by the Board and the Investment Manager, to purchase and sell portfolio assets, consistent with the Funds investment objectives, policies, and restrictions. Generally, the services that a subadviser provides to the Fund are limited to asset management and related recordkeeping services.
The Investment Manager has entered into an advisory agreement with each subadviser under which the subadviser provides investment advisory assistance and day-to-day management of some or all of the Funds portfolio, as well as investment research and statistical information. A subadviser may also serve as a discretionary or non-discretionary investment adviser to management or advisory accounts that are unrelated in any manner to the Investment Manager or its affiliates.
With respect to each of Diversified Real Return Fund and Global ILB Plus Fund, the Funds Board of Trustees has approved a subadvisory agreement between the Investment Manager and Threadneedle, an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Ameriprise Financial. At present, Threadneedle is not providing services to either Fund pursuant to the subadvisory agreement.
The following table shows the advisory fee schedules for fees paid by the Investment Manager to subadvisers for Funds that have subadvisers.
Subadvisers and Subadvisory Agreement Fee Schedules
Fund | Subadviser(s) | Period of Service | Fee Rate | |||
AP Alternative Strategies Fund |
AQR | Since commencement of operations |
0.65% on the first $500 million declining to 0.50% as assets increase (1) |
|||
Wasatch | Since commencement of operations | 0.70% on the first $100 million declining to 0.60% as assets increase | ||||
Water Island |
Since commencement of operations |
0.70% on the first $50 million declining to 0.60% as assets increase |
||||
AP Core Plus Bond Fund |
Federated | Since commencement of operations |
0.15% on the first $100 million declining to 0.08% as assets increase |
|||
TCW | Since commencement of operations |
0.18% on the first $500 million declining to 0.05% as assets increase |
||||
AP Growth Fund |
Loomis Sayles | Effective December 11, 2013 | 0.27% for all assets |
Statement of Additional Information September 1, 2014 | Page 71 |
Fund | Subadviser(s) | Period of Service | Fee Rate | |||
AP Small Cap Equity Fund |
Conestoga | October 1, 2012 | 0.48% on all assets | |||
DGHM | Since commencement of operations |
0.65% of the first $50 million declining to 0.35% as assets increase |
||||
EAM | Since commencement of operations |
0.50% of the first $100 million declining to 0.40% as assets increase |
(1) | The fee is calculated based on the combined net assets of Columbia Funds subject to the subadvisers investment management. |
The following table shows the subadvisory fees paid by the Investment Manager to subadvisers in the last three fiscal periods or, if shorter, since the Funds commencement of operations. The table is organized by fiscal year end.
Subadvisory Fees
Subadvisory Fees Paid | ||||||||||||||
Fund | Subadviser | 2014 | 2013 | 2012 | ||||||||||
For funds with fiscal period ending March 31 |
||||||||||||||
Loomis Sayles (Effective as of December 11, 2013): |
||||||||||||||
AP Growth Fund | Loomis Sayles | $ | 52,526 | N/A | N/A | |||||||||
2013 | 2012 | 2011 | ||||||||||||
For funds with fiscal period ending August 31 |
||||||||||||||
AP Alternative Strategies Fund |
AQR | $ | 912,940 | $ | 255,985 | N/A | ||||||||
Former subadviser: Eaton Vance (through November 25, 2013) | 823,464 | 221,078 | N/A | |||||||||||
Wasatch | 1,185,657 | 312,741 | N/A | |||||||||||
Water Island | 745,392 | 212,015 | N/A | |||||||||||
AP Core Plus Bond Fund |
Federated | 1,516,526 | 549,731 | N/A | ||||||||||
TCW | 2,055,181 | 539,286 | N/A | |||||||||||
AP Small Cap Equity Fund |
Conestoga | 531,558 | N/A | N/A | ||||||||||
DGHM | 524,799 | 121,072 | N/A | |||||||||||
EAM | 580,685 | 159,349 | N/A | |||||||||||
Former subadviser: RS Investments (through September 30, 2012) | 42,593 | 169,473 | N/A |
Additional Information About the Subadvisers.
AQR. AQR is a Delaware limited liability company formed in 1998 and is located at Two Greenwich Plaza, Greenwich, Connecticut 06830. AQR is a wholly-owned subsidiary of AQR Capital Management Holdings, LLC (AQR Holdings), which has no activities other than holding the interest of AQR. AQR Holdings is a subsidiary of AQR Capital Management Group, L.P. (AQR LP) which has no activities other than holding the interests of AQR Holdings. Clifford S. Asness, Ph.D. may be deemed to control AQR indirectly through his significant ownership in AQR LP. Affiliated Managers Group, Inc., a publicly traded holding company, holds a minority interest in AQR Holdings.
Conestoga. Conestoga is a Delaware limited liability company located at 550 East Swedesford Road, Suite 120, Wayne, PA 19087. Conestoga is an employee-owned independent registered investment adviser. Conestoga was organized in 2001 and provides investment management services to institutional and individual clients.
DGHM. DGHM is a Delaware limited liability company located at 565 Fifth Avenue, Suite 2101, New York, New York 10017. DGHM is 80% owned by Boston Private Financial Holdings, Inc., which is organized as a bank holding company
focusing on wealth management through private banking and investment services. The remaining 20% interest in DGHM is employee owned. REMS provides advisory services with respect to investments that the portion of the AP Small Cap Equity Fund managed by DGHM may make in REITs. REMS is located at 1100 Fifth Avenue South, Suite 305, Naples, Florida 34102. The principal owners of REMS are Edward W. Turville, John E. Webster, John S. Whitaker, Michael H. Shelly and Beach Investment Management, LLC.
EAM. EAM is located at 2533 South Coast Highway 101, Suite 240, Cardiff-by-the-Sea, California 92007. Prior to June 13, 2011, the firm was named Eudaimonia Asset Management, LLC. EAM employees/members own approximately 56% of EAM and Bryon C. Roth, through a majority ownership of CR Financial Holdings, Inc., indirectly owns the remaining 44% interest in the firm.
Statement of Additional Information September 1, 2014 | Page 72 |
Federated. Federated is a wholly-owned subsidiary of Federated Investors, Inc. and is located at Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779. Federated Advisory Services Company, an affiliate of Federated, provides certain support services to Federated. The fee for these services is paid by Federated and not by AP Core Plus Bond Fund.
Loomis Sayles. Loomis Sayles is a subsidiary of Natixis US, which is part of Natixis Asset Management, an international asset management group based in Paris, France. It is located at One Financial Center, Boston, MA 02111.
TCW. TCW, which is located at 865 South Figueroa Street, Suite 1800, Los Angeles, California 90017, is a wholly-owned subsidiary of The TCW Group, Inc. On February 6, 2013, The Carlyle Group acquired The TCW Group, Inc. from Société Générale, S.A. (the Carlyle Transaction).
Wasatch. Wasatch, which is located at 505 Wakara Way, Salt Lake City, Utah 84108, is a wholly-owned subsidiary of WA Holdings, Inc., which is 100% owned by the employees of Wasatch.
Water Island. Water Island is located at 41 Madison Avenue, 42 nd Floor, New York, New York 10010. John S. Orrico, President of Water Island, controls Water Island.
Portfolio Managers. The following table provides information about the portfolio managers of each Fund as of the end of the applicable Funds most recent fiscal period, unless otherwise noted. The table is organized by fiscal year end.
Statement of Additional Information September 1, 2014 | Page 73 |
Statement of Additional Information September 1, 2014 | Page 74 |
Statement of Additional Information September 1, 2014 | Page 75 |
Other Accounts Managed (excluding the Fund) |
Ownership
of Fund Shares |
Potential
Conflicts of Interest |
Structure of
Compensation |
|||||||||||
Fund | Portfolio Manager |
Number and Type of
Account* |
Approximate
Total Net Assets |
Performance-Based
Accounts** |
||||||||||
Water Island: |
||||||||||||||
Ted Chen | 1 RIC | $171 million | None | None | (12) | (23) | ||||||||
Gregory Loprete | 2 RICs | $117.591 million | None | None | ||||||||||
Todd W. Munn |
5 RICs 1 PIV |
$3.178 billion
$15.485 million |
None | None | ||||||||||
Roger P. Foltynowicz |
5 RICs 1 PIVs |
$3.178 billion
$15.485 million |
None | None | ||||||||||
AP Core Plus Bond Fund |
Columbia Management: |
|||||||||||||
Carl W. Pappo |
4 RICs 7 PIVs 7 other accounts |
$10.58 billion
$2.04 billion $1.74 million |
None | None |
(2) |
(13) |
||||||||
Brian Lavin |
12 RICs 1 PIV 6 other accounts |
$22.01 billion
$9.02 million $2.28 million |
None | None | ||||||||||
Michael Zazzarino |
5 RICs 1 PIV 11 other accounts |
$11.82 billion
$301.94 million $83.88 million |
None | None | ||||||||||
Federated: |
||||||||||||||
Jerome D. Conner | 1 RIC | $50.0 million | None | None | (7) | (18) | ||||||||
Donald T. Ellenberger |
6 RICs 1 PIV 8 other accounts |
$6.9 billion
$2.0 billion $1.4 billion |
None | None | ||||||||||
TCW: |
||||||||||||||
Tad Rivelle |
22 RICs 37 PIVs 205 other accounts |
$43.110 billion
$5.082 billion $27.660 billion |
2 RICs ($237.6 million) 29 PIVs ($4.150 billion) 6 other accounts ($2.282 billion) |
None |
(9) |
(20) |
||||||||
Stephen M. Kane |
24 RICs 40 PIVs 205 other accounts |
$38.788 billion
$5.489 billion $27.796 billion |
2 RICs ($237.6 million) 30 PIVs ($4.544 billion) 6 other accounts ($2.282 billion) |
None | ||||||||||
Laird R. Landmann |
23 RICs 37 PIVs 205 other accounts |
$38.790 billion
$5.082 billion $27.796 billion |
1 RIC ($231.6 million) 29 PIVs ($4.150 billion) 6 other accounts ($2.282 billion) |
None | ||||||||||
AP Small Cap Equity Fund |
Columbia Management: |
|||||||||||||
Jarl Ginsberg |
1 RIC 13 other accounts |
$1.78 billion
$41.25 million |
None | None | ||||||||||
Christian K. Stadlinger |
1 RIC 13 other accounts |
$1.78 billion
$49.98 million |
None | None | ||||||||||
Conestoga: |
||||||||||||||
Robert M. Mitchell |
3 RICs 1 PIV 141 other accounts |
$588.9 million
$38.3 million $540.2 million |
None | None | (4) | (15) | ||||||||
Joseph F. Monahan |
0 RICs 0 PIVs 0 other accounts |
$0 | None | None |
Statement of Additional Information September 1, 2014 | Page 76 |
Other Accounts Managed (excluding the Fund) |
Ownership
of Fund Shares |
Potential
Conflicts of Interest |
Structure of
Compensation |
|||||||||||
Fund | Portfolio Manager |
Number and Type of
Account* |
Approximate Total
Net Assets |
Performance-Based
Accounts** |
||||||||||
DGHM: |
||||||||||||||
Jeffrey C. Baker |
2 RICs 6 PIVs 75 other accounts |
$62 million
$212 million $1.155 million |
3 PIVs ($39 million) 2 other accounts ($163 million) |
None |
(5) |
(16) |
||||||||
Bruce H. Geller |
2 RICs 6 PIVs 75 other accounts |
$62 million
$212 million $1.155 million |
3 PIVs ($39 million) 2 other accounts ($163 million) |
None | ||||||||||
Peter A. Gulli |
2 RICs 6 PIVs 75 other accounts |
$62 million
$212 million $1.155 million |
3 PIVs ($39 million) 2 other accounts ($163 million) |
None | ||||||||||
Edward W. Turville (with REMS) |
2 RICs 6 PIVs 75 other accounts |
$62 million
$12 million $1.155 million |
3 PIVs ($39 million) 2 other accounts ($163 million) |
None | ||||||||||
EAM: |
||||||||||||||
Montie L. Weisenberger |
1 RIC 1 PIV 5 other accounts |
$89.529 million
$134.785 million $27.382 million |
None | None | (6) | (17) | ||||||||
Balanced Fund | Leonard A. Aplet |
6 RICs 18 PIVs 65 other accounts |
$16.47 billion
$7.61 billion $7.39 billion |
None |
$1
$10,000 (b)
$50,001
|
(2) |
(13) |
|||||||
Brian Lavin |
12 RICs 1 PIV 6 other accounts |
$24.42 billion
$9.02 million $2.28 million |
None | None | ||||||||||
Gregory S. Liechty |
2 RICs 15 PIVs 42 other accounts |
$2.99 billion
$2.70 billion $7.24 billion |
None |
$10,001
$50,000 (b) |
||||||||||
Guy W. Pope |
9 RICs 3 PIVs 44 other accounts |
$8.29 billion
$131.53 million $1.04 billion |
None |
$100,001
$500,000 (a) |
||||||||||
Ronald B. Stahl |
2 RICs 15 PIVs 42 other accounts |
$1.92 billion
$2.70 billion $7.24 billion |
None |
$1
$10,000 (b)
$100,001
|
||||||||||
Contrarian Core Fund | Guy W. Pope |
9 RICs 3 PIVs 44 other accounts |
$6.58 billion
$131.53 million $1.04 billion |
None |
$100,001
$500,000 (b)
$500,001
|
(2) | (13) | |||||||
Emerging Markets Fund | Robert B. Cameron |
1 RIC 1 PIV 8 other accounts |
$873.80 million
$401.77 million $67.29 million |
None |
$10,001
$50,000 (b) |
(2) | (13) | |||||||
Jasmine (Weili) Huang |
3 RICs 1 PIV 12 other accounts |
$1.36 billion
$401.77 million $67.03 million |
None | None | ||||||||||
Dara J. White |
3 RICs 1 PIV 7 other accounts |
$950.77 million
$401.77 million $67.12 million |
None |
$100,001
$500,000 (b)
$50,001
|
||||||||||
Global Energy and Natural Resources Fund | Josh Kapp |
1 PIV 4 other accounts |
$18.74 million
$908,324.53 |
None |
$10,001
$50,000 (b) |
|||||||||
Jonathan Mogil | 9 other accounts | $1.63 million | None | None | (2) | (13) |
Statement of Additional Information September 1, 2014 | Page 77 |
Other Accounts Managed (excluding the Fund) |
Ownership
of Fund Shares |
Potential
Conflicts of Interest |
Structure of
Compensation |
|||||||||||
Fund | Portfolio Manager |
Number and Type of
Account* |
Approximate
Total Net Assets |
Performance-Based
Accounts** |
||||||||||
Global Dividend Opportunity Fund | Steven R. Schroll |
9 RICs 1 PIV 14 other accounts |
$14.23 billion
$5.79 million $608.24 million |
None |
$100,001
$500,000 (b) |
(2) |
(13) |
|||||||
Paul F. Stocking |
9 RICs 1 PIV 18 other accounts |
$14.23 billion
$5.79 million $622.16 million |
None | None | ||||||||||
Dean A. Ramos |
9 RICs 1 PIV 14 other accounts |
$14.23 billion
$5.79 million $548.85 million |
None | None | ||||||||||
Greater China Fund | Jasmine (Weili) Huang |
3 RICs 1 PIV 12 other accounts |
$2.38 billion
$401.77 million $67.03 million |
None |
$10,001
$50,000 (b) |
(2) | (13) | |||||||
Mid Cap Growth Fund | George J. Myers |
5 RICs 3 PIVs 17 other accounts |
$2.21 billion
$280.91 million $166.18 million |
None |
$50,001
$100,000 (b)
$10,001
|
(2) |
(13) |
|||||||
Brian D. Neigut |
5 RICs 3 PIVs 14 other accounts |
$2.21 billion
$280.91 million $165.50 million |
None |
$10,001
$50,000 (b) |
||||||||||
James E. King (1) |
3 RICs 2 PIVs 8 other accounts |
$1.58 billion
$281.84 million $15.21 million |
None |
$10,001
$50,000 (b) |
||||||||||
William Chamberlain (1) |
2 RICs 2 PIVs 6 other accounts |
$1.44 billion
$281.84 million $14.83 million |
None |
$10,001
$50,000 (b) |
||||||||||
Small Cap Core Fund | Richard DAuteuil |
1 PIV 35 other accounts |
$143.44 million
$857.25 million |
None |
$100,001
$500,000 (b)
$100,001
|
(2) | (13) | |||||||
Jeffrey Hershey |
1 PIV 17 other accounts |
$143.44 million
$846.84 million |
None |
$10,001
$50,000 (b) |
||||||||||
Paul S. Szczygiel |
1 PIV 14 other accounts |
$143.44 million
$853.70 million |
None | None | ||||||||||
Small Cap Growth Fund I | Wayne M. Collette |
6 RICs 3 PIVs 11 other accounts |
$3.63 billion
$280.91 million $168.04 million |
None |
$50,001
$100,000 (b) |
(2) | (13) | |||||||
Lawrence W. Lin |
5 RICs 3 PIVs 9 other accounts |
$2.10 billion
$280.91 million $1.47 million |
None |
$10,001
$50,000 (b)
$10,001
|
||||||||||
Rahul Narang (1) |
2 RICs 6 other accounts |
$204.88 million
$491,395.64 |
None | None | ||||||||||
Global Technology Growth Fund | Wayne M. Collette |
6 RICs 3 PIVs 11 other accounts |
$4.86 billion
$280.91 million $168.04 million |
None |
$50,001
$100,000 (b) $1 $10,000 (a) |
(2) | (13) | |||||||
Rahul Narang (2) | 6 other accounts | $483,471.08 | None |
$50,001
$100,000 (b) |
||||||||||
Value and Restructuring Fund | Guy W. Pope |
9 RICs 3 PIVs 44 other accounts |
$7.76 billion
$131.53 million $1.04 billion |
None |
$50,001
$100,000 (b) $1 $10,000 (a) |
(2) | (13) | |||||||
J. Nicholas Smith |
136 other accounts |
$303.09 million | None |
$10,001
$50,000 (b)
$100,001
|
||||||||||
For Funds with fiscal year ending October 31 | ||||||||||||||
AMT-Free CT Intermediate Muni Bond Fund |
Brian McGreevy |
11 RICs 6 other accounts |
$4.24 billion
$374.84 million |
None | None | (2) | (13) |
Statement of Additional Information September 1, 2014 | Page 78 |
Other Accounts Managed (excluding the Fund) |
Ownership
of Fund Shares |
Potential
Conflicts of Interest |
Structure of
Compensation |
|||||||||||
Fund | Portfolio Manager |
Number and Type of
Account* |
Approximate
Total Net Assets |
Performance-Based
Accounts** |
||||||||||
AMT-Free Intermediate Muni Bond Fund |
Paul F. Fuchs |
4 RICs 4 PIVs 3 other accounts |
$872.06 million
$898.95 million $455,104.72 |
None | $1 $10,000 (b) | (2) | (13) | |||||||
Brian McGreevy |
11 RICs 6 other accounts |
$2.26 billion
$374.84 million |
None | $10,001 $50,000 (b) | ||||||||||
AMT-Free MA Intermediate Muni Bond Fund | Paul F. Fuchs |
4 RICs 4 PIVs 3 other accounts |
$2.72 billion
$898.95 million $455,104.72 |
None | None |
(2) |
(13) |
|||||||
Brian McGreevy |
11 RICs 6 other accounts |
$4.11 billion
$374.84 million |
None | $100,001 $500,000 (a) | ||||||||||
AMT-Free NY Intermediate Muni Bond Fund | Paul F. Fuchs |
4 RICs 4 PIVs 3 other accounts |
$2.77 billion
$898.95 million $455,104.72 |
None | None | (2) | (13) | |||||||
Brian McGreevy |
11 RICs 6 other accounts |
$ 4.16 billion
$374.84 million |
None | None | ||||||||||
CA Tax-Exempt Fund | Catherine Stienstra |
4 RICs 3 PIVs 4 other accounts |
$3.12 billion
$1.20 billion $18.35 million |
None | None | (2) | (13) | |||||||
International Bond Fund | Gene Tannuzzo (4) |
6 RICs 72 other accounts |
$4.92 billion
$1.27 billion |
None | None | (2) | (13) | |||||||
Zach Pandl (4) |
3 RICs 7 other accounts |
$4.61 billion
$0.23 million |
None | None | ||||||||||
Threadneedle: |
||||||||||||||
Jim Cielinksi |
4 PIVs 2 RICs 1 other account |
$1.23 million
$1.45 billion $38 million |
2 PIVs ($266 million) |
None (d) | (10) | (21) | ||||||||
Matthew Cobon |
4 PIVs 2 RICs |
$2.10 million
$1.45 billion |
4 PIVs ($2.10 million) |
None (d) | ||||||||||
NY Tax-Exempt Fund | Catherine Stienstra |
4 RICs 3 PIVs 4 other accounts |
$3.41 billion
$1.20 billion $18.35 million |
None | None | (2) | (13) | |||||||
Strategic Income Fund | Brian Lavin |
12 RICs 2 PIVs 4 other accounts |
$23.93 billion
$69.01 million $3.12 million |
None | None | (2) | (13) | |||||||
Colin Lundgren |
2 RICs 72 other accounts |
$2.36 billion
$39.65 million |
None | $100,001 $500,000 (b) | ||||||||||
Zach Pandl |
2 RICs 7 other accounts |
$2.36 billion
$218,129.11 |
None |
$10,001 $50,000
(b)
$10,001 $50,000 (a) |
||||||||||
Gene Tannuzzo |
3 RICs 75 other accounts |
$3.22 billion
$1.19 billion |
None |
$50,001 $100,000
(b)
$100,001 $500,000 (a) |
||||||||||
For the Fund with fiscal year ending December 31 | ||||||||||||||
Real Estate Equity Fund | Arthur J. Hurley |
1 RIC 9 other accounts |
$474.46 million
$1.10 million |
None | $1 $10,000 (a) | (2) | (13) |
* |
RIC refers to a Registered Investment Company; PIV refers to a Pooled Investment Vehicle. |
** | Number and type of accounts for which the advisory fee paid is based in part or wholly on performance and the aggregate net assets in those accounts. |
(a) |
Excludes any notional investments. |
(b) |
Notional investments through a deferred compensation account. |
(c) | Additionally, the portfolio manager holds investments in notional shares of the fund in the range of $10,001 $50,000. |
(d) | The Fund is available for sale only in the U.S. The portfolio managers do not reside in the U.S. and therefore do not hold any shares of the Fund. |
(e) | The portfolio manager began managing the Fund effective March 17, 2014; reporting information is provided as of October 31, 2013. |
(f) | The portfolio manager began managing the Fund effective March 17, 2014; reporting information is provided as of January 31, 2014. |
(1) | Account information provided as of September 30, 2013. |
(2) | Account information provided as of August 31, 2013. |
(3) | The Fund commenced operations March 11, 2014; reporting information is provided as of December 31, 2013. |
(4) | The portfolio manager began managing the fund effective May 31, 2014; reporting information is provided as of January 31, 2014. |
(5) | The portfolio manager began managing the fund after its fiscal year end; reporting information is provided as of April 30, 2014. |
(6) | The portfolio manager will begin managing the fund effective June 2, 2014; reporting information is provided as of April 30, 2014. |
(7) | The portfolio manager began managing the fund effective June 25, 2014; reporting information is provided as of February 28, 2014. |
(8) | The portfolio manager began managing the fund effective September 1, 2014; reporting information is provided as of July 31, 2014. |
Statement of Additional Information September 1, 2014 | Page 79 |
Potential Conflicts of Interest
(1) | Columbia Management: Management of funds-of-funds differs from that of the other Funds. The portfolio management process is set forth generally below and in more detail in the Funds prospectus. |
Portfolio managers of the fund-of-funds may be involved in determining each funds-of-funds allocation among the three main asset classes (equity, fixed income and cash) and the allocation among investment categories within each asset class, as well as each funds-of-funds allocation among the underlying funds.
|
Because of the structure of the funds-of-funds, the potential conflicts of interest for the portfolio managers may be different than the potential conflicts of interest for portfolio managers who manage other Funds. |
|
The Investment Manager and its affiliates may receive higher compensation as a result of allocations to underlying funds with higher fees. |
In addition to the accounts above, portfolio managers may manage accounts in a personal capacity that may include holdings that are similar to, or the same as, those of the Fund. The Investment Manager has in place a Code of Ethics that is designed to address conflicts and that, among other things, imposes restrictions on the ability of the portfolio managers and other investment access persons to invest in securities that may be recommended or traded in the Fund and other client accounts.
To the extent a fund-of-funds invest in securities and instruments other than other Funds, the portfolio manager is subject to the potential conflicts of interest described in (2) below.
A Funds portfolio manager(s) also may have other potential conflicts of interest in managing the Fund, and the description above is not a complete description of every conflict that could exist in managing the fund and other accounts. Many of the potential conflicts of interest to which the Investment Managers portfolio managers are subject are essentially the same or similar to the potential conflicts of interest related to the Investment Management activities of the Investment Manager and its affiliates.
(2) | Columbia Management: Like other investment professionals with multiple clients, a Funds portfolio manager(s) may face certain potential conflicts of interest in connection with managing both the Fund and other accounts at the same time. The Investment Manager and the Funds have adopted compliance policies and procedures that attempt to address certain of the potential conflicts that portfolio managers face in this regard. Certain of these conflicts of interest are summarized below. |
The management of accounts with different advisory fee rates and/or fee structures, including accounts that pay advisory fees based on account performance (performance fee accounts), may raise potential conflicts of interest for a portfolio manager by creating an incentive to favor higher fee accounts.
Potential conflicts of interest also may arise when a portfolio manager has personal investments in other accounts that may create an incentive to favor those accounts. As a general matter and subject to the Investment Managers Code of Ethics and certain limited exceptions, the Investment Managers investment professionals do not have the opportunity to invest in client accounts, other than the Funds.
A portfolio manager who is responsible for managing multiple funds and/or accounts may devote unequal time and attention to the management of those Funds and/or accounts. The effects of this potential conflict may be more pronounced where Funds and/or accounts managed by a particular portfolio manager have different investment strategies.
A portfolio manager may be able to select or influence the selection of the broker/dealers that are used to execute securities transactions for the Funds. A portfolio managers decision as to the selection of broker/dealers could produce disproportionate costs and benefits among the Funds and the other accounts the portfolio manager manages.
A potential conflict of interest may arise when a portfolio manager buys or sells the same securities for a Fund and other accounts. On occasions when a portfolio manager considers the purchase or sale of a security to be in the best interests of a Fund as well as other accounts, the Investment Managers trading desk may, to the extent consistent with applicable laws and regulations, aggregate the securities to be sold or bought in order to obtain the best execution and lower brokerage commissions, if any. Aggregation of trades may create the potential for unfairness to a Fund or another account if a portfolio manager favors one account over another in allocating the securities bought or sold.
Cross trades, in which a portfolio manager sells a particular security held by a Fund to another account (potentially saving transaction costs for both accounts), could involve a potential conflict of interest if, for example, a portfolio manager is permitted to sell a security from one account to another account at a higher price than an independent third party would pay. The Investment Manager and the Funds have adopted compliance procedures that provide that any transactions between a Fund and another account managed by the Investment Manager are to be made at a current market price, consistent with applicable laws and regulations.
Statement of Additional Information September 1, 2014 | Page 80 |
Another potential conflict of interest may arise based on the different investment objectives and strategies of a Fund and other accounts managed by its portfolio manager(s). Depending on another accounts objectives and other factors, a portfolio manager may give advice to and make decisions for a Fund that may differ from advice given, or the timing or nature of decisions made, with respect to another account. A portfolio managers investment decisions are the product of many factors in addition to basic suitability for the particular account involved. Thus, a portfolio manager may buy or sell a particular security for certain accounts, and not for a Fund, even though it could have been bought or sold for the Fund at the same time. A portfolio manager also may buy a particular security for one or more accounts when one or more other accounts are selling the security (including short sales). There may be circumstances when a portfolio managers purchases or sales of portfolio securities for one or more accounts may have an adverse effect on other accounts, including the Funds.
To the extent a Fund invests in underlying Funds, a portfolio manager will be subject to the potential conflicts of interest described in (1) above.
A Funds portfolio manager(s) also may have other potential conflicts of interest in managing the Fund, and the description above is not a complete description of every conflict that could exist in managing the Fund and other accounts. Many of the potential conflicts of interest to which the Investment Managers portfolio managers are subject are essentially the same or similar to the potential conflicts of interest related to the Investment Management activities of the Investment Manager and its affiliates.
(3) | AQR Portfolio Manager Conflicts of Interest . Each of the portfolio managers is also responsible for managing other accounts in addition to the Fund, including other accounts of AQR or its affiliates, such as separately managed accounts for foundations, endowments, pension plans, and high net-worth families. |
Other accounts may also include accounts managed by the portfolio managers in a personal or other capacity, and may include registered investment companies and unregistered investment companies relying on either Section 3(c)(1) or Section 3(c)(7) of the 1940 Act (such companies are commonly referred to as hedge funds). Management of other accounts in addition to the Fund can present certain conflicts of interest.
From time to time, potential conflicts of interest may arise between a portfolio managers management of the investments of the Fund, on the one hand, and the management of other accounts, on the other. The other accounts might have similar investment objectives or strategies as the Fund, or otherwise hold, purchase, or sell securities that are eligible to be held, purchased or sold by the Fund. Because of their positions with the Fund, the portfolio managers know the size, timing and possible market impact of the Funds trades. It is theoretically possible that the portfolio managers could use this information to the advantage of other accounts they manage and to the possible detriment of the Fund. A potential conflict of interest may arise as a result of the portfolio managers management of a number of accounts with similar investment guidelines. Often, an investment opportunity may be suitable for both the Fund and other accounts managed by AQR, but may not be available in sufficient quantities for both the Fund and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by the Fund and another account. Whenever decisions are made to buy or sell securities by the Fund and one or more of the other accounts simultaneously, AQR or the portfolio managers may aggregate the purchases and sales of the securities and will allocate the securities transactions in a manner believed to be equitable under the circumstances. As a result of the allocations, there may be instances when the Fund will not participate in a transaction that is allocated among other accounts or that may not be allocated the full amount of the securities sought to be traded. While these aggregation and allocation policies could have a detrimental effect on the price or amount of the securities available to the Fund from time to time, it is the opinion of AQR that the overall benefits outweigh any disadvantages that may arise from this practice. Subject to applicable laws and/or account restrictions, AQR may buy, sell or hold securities for other accounts while entering into a different or opposite investment decision for the Fund.
AQR and the portfolio managers may also face a conflict of interest where some accounts pay higher fees to AQR than others, such as by means of performance fees.
AQR has implemented specific policies and procedures (e.g., a code of ethics and trade allocation policies) to seek to address potential conflicts that may arise in connection with the management of the Funds, separately managed accounts and other accounts.
(4) | Conestoga Portfolio Manager Conflicts of Interest. Like other investment professionals with multiple clients, portfolio managers may face certain potential conflicts of interest in connection with managing both the portion of the Funds assets allocated to Conestoga (Conestogas Sleeve) and other accounts at the same time. Conestoga has adopted compliance policies and procedures that attempt to address certain of the potential conflicts that Conestogas portfolio managers face in this regard. Certain of those conflicts of interest are summarized below. |
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The management of accounts with different advisory or sub-advisory fee rates and/or fee and expense structures may raise certain potential conflicts of interest for a portfolio manager by creating an incentive to favor higher fee, or higher profit margin accounts.
Potential conflicts of interest also may arise when a portfolio manager has personal investments in other accounts that may create an incentive to favor those accounts. A portfolio manager who is responsible for managing multiple funds and/or accounts may devote unequal time and attention to the management of those funds and/or accounts. The effects of this potential conflict may be more pronounced where funds and/or accounts managed by a particular portfolio manager have different investment strategies.
A portfolio manager may be able to select or influence the selection of the broker-dealers that are used to execute securities transactions for a fund. A portfolio managers decision as to the selection of broker-dealers could produce disproportionate costs and benefits among Conestogas Sleeve and the other accounts the portfolio manager manages.
A potential conflict of interest may arise when a portfolio manager buys or sells the same securities for the Conestogas Sleeve and other accounts. On occasions when a portfolio manager considers the purchase or sale of a security to be in the best interests of Conestogas Sleeve as well as other accounts, the Conestogas trading desk may, to the extent consistent with applicable laws and regulations, aggregate the securities to be sold or bought in order to obtain the best execution and lower brokerage commissions, if any. Aggregation of trades may create the potential for unfairness to Conestogas Sleeve or the Fund or another account if a portfolio manager favors one account over another in allocating the securities bought or sold.
Cross trades, in which a portfolio manager sells a particular security held by Conestogas Sleeve to another account (potentially saving transaction costs for both accounts), could involve a potential conflict of interest if, for example, a portfolio manager is permitted to sell a security from one account to another account at a higher price than an independent third party would pay. The Investment Manager has adopted compliance procedures that provide that any transactions between the Fund and another account managed by Conestoga are to be made at a current market price, consistent with applicable laws and regulations.
Another potential conflict of interest may arise based on the different investment objectives and strategies of Conestogas Sleeve and other accounts managed by its portfolio manager(s). Depending on another accounts objectives and other factors, a portfolio manager may give advice to and make decisions for Conestogas Sleeve that may differ from advice given, or the timing or nature of decisions made, with respect to another account. A portfolio managers investment decisions are the product of many factors in addition to basic suitability for the particular account involved. Thus, a portfolio manager may buy or sell a particular security for certain accounts, and not for Conestogas Sleeve, even though it could have been bought or sold for Conestogas Sleeve at the same time. A portfolio manager also may buy a particular security for one or more accounts when one or more other accounts are selling the security. There may be circumstances when a portfolio managers purchases or sales of portfolio securities for one or more accounts may have an adverse effect on other accounts, including the Fund.
The portfolio manager(s) also may have other potential conflicts of interest in managing Conestogas Sleeve, and the description above is not a complete description of every conflict that could exist in managing Conestogas Sleeve and other accounts. Many of the potential conflicts of interest to which the Conestogas portfolio managers are subject are essentially the same or similar to the potential conflicts of interest related to the investment management activities of the Investment Manager or other subadvisers of the Fund.
(5) | DGHM Portfolio Manager Conflicts of Interest . The portfolio managers management of other accounts may give rise to potential conflicts of interest in connection with their management of the investments of the portion of the Funds assets allocated to DGHM (DGHMs Sleeve), on the one hand, and the investments of the other accounts, on the other. The other accounts include hedge funds, separately managed private clients and discretionary 401(k) accounts (Other Accounts). The Other Accounts might have similar investment objectives as the Fund, be compared to the same index as the Fund, or otherwise hold, purchase, or sell securities that are eligible to be held, purchased, or sold by DGHMs Sleeve. |
Knowledge of the Timing and Size of Fund Trades. A potential conflict of interest may arise as a result of the portfolio managers day-to-day management of DGHMs Sleeve. The portfolio managers know the size and timing of trades for DGHMs Sleeve and the Other Accounts, and may be able to predict the market impact of the DGHMs Sleeve trades. It is theoretically possible that the portfolio managers could use this information to the advantage of Other Accounts they manage and to the possible detriment of DGHMs Sleeve, or vice versa.
Investment Opportunities. DGHM provides investment supervisory services for a number of investment products that have varying investment guidelines. The same portfolio management team works across all investment products. Differences in the compensation structures of DGHMs investment products may give rise to a conflict of interest by
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creating an incentive for DGHM to allocate the investment opportunities it believes might be the most profitable to the client accounts where it might benefit the most from the investment gains.
(6) | EAM Portfolio Manager Conflicts of Interest. The portfolio manager is responsible for managing other accounts invested in the same strategy as the portion of the Funds assets allocated to EAM (EAMs Sleeve). These other accounts include separately managed accounts for pension funds. In addition, other EAM portfolio managers manage accounts which have similar investment strategies and may invest in some of the same securities as EAMs Sleeve or the Fund. |
From time to time, potential conflicts of interest may arise between the portfolio managers management of the investments of EAMs Sleeve, on the one hand, and the management of other accounts, on the other. For example, an investment opportunity may be suitable for both EAMs Sleeve and other accounts, but may not be available in sufficient quantities for both EAMs Sleeve and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment held by EAMs Sleeve and another account. Whenever decisions are made to buy or sell securities by EAMs Sleeve and one or more of the other accounts simultaneously, EAM or the portfolio managers may aggregate the purchases and sales of the securities and will allocate the securities transactions in a manner that it believes to be equitable under the circumstances. As a result of the allocations, there may be instances when EAMs Sleeve will not participate in a transaction that is allocated among other accounts or that may not be allocated the full amount of the securities sought to be traded. Another potential conflict may arise when a portfolio manager may have an incentive to allocate opportunities to an account where EAM and the portfolio manager have a greater financial incentive, such as a performance fee account.
EAM has implemented specific policies and procedures (e.g., a code of ethics and trade allocation policies) that seek to address these potential conflicts.
(7) | Federated Portfolio Manager Conflicts of Interest . As a general matter, certain conflicts of interest may arise in connection with a portfolio managers management of the Funds investments, on the one hand, and the investments of other accounts for which the portfolio manager is responsible, on the other. For example, it is possible that the various accounts managed could have different investment strategies that, at times, might conflict with one another to the possible detriment of the Fund. Alternatively, to the extent that the same investment opportunities might be desirable for more than one account, possible conflicts could arise in determining how to allocate them. Other potential conflicts might include conflicts created by specific portfolio manager compensation arrangements, and conflicts relating to selection of brokers or dealers to execute fund portfolio trades and/or specific uses of commissions from Fund portfolio trades (for example, research or soft dollars). Federated has adopted policies and procedures and has structured the portfolio managers compensation in a manner reasonably designed to safeguard the Fund from being negatively affected as a result of any such potential conflicts. |
(8) | Loomis Sayles Portfolio Manager Conflicts of Interest. Conflicts of interest may arise in the allocation of investment opportunities and the allocation of aggregated orders among the funds and other accounts managed by the portfolio managers. A portfolio manager potentially could give favorable treatment to some accounts for a variety of reasons, including favoring larger accounts, accounts that pay higher fees, accounts that pay performance-based fees or accounts of affiliated companies. Such favorable treatment could lead to more favorable investment opportunities or allocations for some accounts. Loomis Sayles makes investment decisions for all accounts (including institutional accounts, mutual funds, hedge funds and affiliated accounts) based on each accounts availability of other comparable investment opportunities and Loomis Sayles desire to treat all accounts fairly and equitably over time. The goal of Loomis Sayles is to meet its fiduciary obligation with respect to all clients. Loomis Sayles maintains trade allocation and aggregation policies and procedures to address these potential conflicts. Conflicts of interest also may arise to the extent a portfolio manager short sells a stock in one client account but holds that stock long in other accounts, including the Fund, or sells a stock for some accounts while buying the stock for others, and through the use of soft dollar arrangements. |
(9) | TCW Portfolio Manager Conflicts of Interest. TCWs portfolio managers could favor one account over another in allocating new investment opportunities that have limited supply, such as (by way of example but not limitation) initial public offerings and private placements. If, for example, an initial public offering that was expected to appreciate in value significantly shortly after the offering was allocated to a single account, that account may be expected to have better investment performance than other accounts that did not receive an allocation of a particular initial public offering. |
A TCW portfolio manager could favor one account over another in the order in which trades for the accounts are placed. If a TCW portfolio manager decides to purchase a security for more than one account in an aggregate amount that may influence the market price of the security, accounts that purchased or sold the security first may receive a more favorable price than accounts that made subsequent transactions. The less liquid the market for the security or the greater the percentage that the proposed aggregate purchases or sales represent of average daily trading volume, the greater the potential for accounts that make subsequent purchases or sales to receive a less favorable price. When a TCW portfolio manager intends to trade the same security on the same day for more than one account, the trades typically are
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bunched, which means that the trades for the individual accounts are aggregated and each account receives the same price. There are some types of accounts for which bunching may not be possible for contractual reasons. Circumstances may also arise in which the trader believes that bunching the orders may not result in the best possible price. Where those accounts or circumstances are involved, the TCW portfolio manager will place the order in a manner intended to result in as favorable a price as possible for such clients.
A TCW portfolio manager potentially could favor an account if that portfolio managers compensation is tied to the performance of that account to a greater degree than other accounts managed by the TCW portfolio manager. If, for example, the TCW portfolio manager receives a bonus based upon the performance of certain accounts relative to a benchmark while other accounts are disregarded for this purpose, the TCW portfolio manager may have a financial incentive to seek to have the accounts that determine the portfolio managers bonus achieve the best possible performance to the possible detriment of other accounts. Similarly, if TCW receives a performance-based advisory fee from an account, the TCW portfolio manager may have an incentive to favor that account, whether or not the performance of that account directly determines the portfolio managers compensation. This structure may create inherent pressure to allocate investments having a greater potential for higher returns to those accounts with higher performance fees.
A portfolio manager may have an incentive to favor an account if the TCW portfolio manager has a beneficial interest in the account, in order to benefit a large client or to compensate a client that had poor returns. For example, if the TCW portfolio manager held an interest in an investment partnership that was one of the accounts managed by the portfolio manager, the TCW portfolio manager would have an economic incentive to favor the account in which the portfolio manager held an interest.
TCW determines which broker to use to execute each order, consistent with its duty to seek best execution, and aggregates like orders where it believes doing so is beneficial to its client accounts. However, with respect to certain separate accounts, TCW may be limited by the clients or other constraints with respect to the selection of brokers or it may be instructed to direct trades through particular brokers. In these cases, TCW may place separate, non-simultaneous transactions for the Core Fixed Income and U.S. Fixed Income Funds and another account which may temporarily affect the market price of the security or the execution of the transaction to the detriment of one or the other.
If different accounts have materially and potentially conflicting investment objectives or strategies, a conflict of interest could arise. For example, if a TCW portfolio manager purchases a security for one account and sells the same security short for another account, such trading pattern may disadvantage either the account that is long or short. In making portfolio manager assignments, TCW seeks to avoid such potentially conflicting situations. However, where a TCW portfolio manager is responsible for accounts with differing investment objectives and policies, it is possible that the portfolio manager will conclude that it is in the best interest of one account to sell a portfolio security while another account continues to hold or increase the holding in such security.
TCW has in place a Code of Ethics designed to minimize conflicts of interest between clients and its investment personnel. TCW also reviews potential conflicts of interest through its Trading and Allocation Committee.
(10) | Threadneedle Portfolio Manager Conflicts of Interest. Threadneedle portfolio managers may manage one or more mutual funds as well as other types of accounts, including proprietary accounts, separate accounts for institutions, and other pooled investment vehicles. Portfolio managers make investment decisions for an account or portfolio based on its investment objectives and policies, and other relevant investment considerations. A portfolio manager may manage a separate account or other pooled investment vehicle whose fees may be materially greater than the management fees paid by the Fund and may include a performance-based fee. Management of multiple funds and accounts may create potential conflicts of interest relating to the allocation of investment opportunities, and the aggregation and allocation of trades. In addition, a portfolio managers responsibilities at Threadneedle include working as a securities analyst. This dual role may give rise to conflicts with respect to making investment decisions for accounts that he/she manages versus communicating his/her analyses to other portfolio managers concerning securities that he/she follows as an analyst. |
Threadneedle has a fiduciary responsibility to all of the clients for which it manages accounts. Threadneedle seeks to provide best execution of all securities transactions and to aggregate securities transactions and then allocate securities to client accounts in a fair and timely manner. Threadneedle has developed policies and procedures, including brokerage and trade allocation policies and procedures, designed to mitigate and manage the potential conflicts of interest that may arise from the management of multiple types of accounts for multiple clients.
(11) |
Wasatch Portfolio Manager Conflicts of Interest . There may be certain inherent conflicts of interest that arise in connection with a portfolio managers management of the portion of the Funds assets allocated to Wasatch (Wasatchs Sleeve) and the investments of any other fund or client accounts Wasatch or the respective portfolio managers also manages, including Cross Creek Capital, L.P., a pooled investment vehicle whose general partner is an indirect wholly-owned subsidiary of Wasatch and may receive a performance based fee from Cross Creek Capital, L.P. Such conflicts |
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include allocation of investment opportunities among Wasatchs Sleeve and other accounts managed by Wasatch or the portfolio manager; the aggregation of purchase and sale orders believed to be in the best interest of more than one account managed by Wasatch or the portfolio manager and the allocation of such orders across such accounts; and any soft dollar arrangements that Wasatch may have in place that could benefit Wasatchs Sleeve and/or other accounts. Additionally, some funds or accounts managed by a portfolio manager may have different fee structures, including performance fees, which are, or have the potential to be, higher or lower than the fees paid by another fund or account. To minimize the effects of these inherent conflicts of interest, Wasatch has adopted and implemented policies and procedures, including trade aggregation and allocation procedures, that it believes are reasonably designed to mitigate the potential conflicts associated with managing portfolios for multiple clients, including the Fund, and seeks to ensure that no one client is intentionally favored at the expense of another. |
(12) | Water Island Portfolio Manager Conflicts of Interest . The fact that the portfolio managers serve as both portfolio managers of the portion of the Funds assets allocated to Water Island (Water Islands Sleeve) and the other account creates the potential for conflicts of interest. However, Water Island does not believe that their overlapping responsibilities or the various elements of their compensation present any material conflict of interest for the following reasons: |
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Water Islands Sleeve and the other account are similarly managed; |
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Water Island follows strict and detailed written allocation procedures designed to allocate securities purchases and sales between the Funds and the other account in a fair and equitable manner; |
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Water Island has adopted policies limiting the ability of the portfolio managers to cross trade securities between Water Islands Sleeve and other accounts; and |
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all allocations are subject to review by Water Islands chief compliance officer. |
Structure of Compensation
(13) | Columbia Management. Direct compensation is typically comprised of a base salary, and an annual incentive award that is paid either in the form of a cash bonus if the size of the award is under a specified threshold, or, if the size of the award is over a specified threshold, the award is paid in a combination of a cash bonus, an equity incentive award, and deferred compensation. Equity incentive awards are made in the form of Ameriprise Financial restricted stock, or for more senior employees both Ameriprise Financial restricted stock and stock options. The investment return credited on deferred compensation is based on the performance of specified Columbia Mutual funds, in most cases including the mutual funds the portfolio manager manages. |
Base salary is typically determined based on market data relevant to the employees position, as well as other factors including internal equity. Base salaries are reviewed annually, and increases are typically given as promotional increases, internal equity adjustments, or market adjustments.
Annual incentive awards are variable and are based on (1) an evaluation of the employees investment performance and (2) the results of a peer and/or management review of the employee, which takes into account skills and attributes such as team participation, investment process, communication, and professionalism. Scorecards are used to measure performance of Mutual Funds and other accounts managed by the employee versus benchmarks and peer groups. Performance versus benchmark and peer group is generally weighted for the rolling one, three, and five year periods. One year performance is weighted 10%, three year performance is weighted 60%, and five year performance is weighted 30%. Relative asset size is a key determinant for fund weighting on a scorecard. Typically, weighting would be proportional to actual assets. Consideration may also be given to performance in managing client assets in sectors and industries assigned to the employee as part of his/her investment team responsibilities, where applicable. For leaders who also have group management responsibilities, another factor in their evaluation is an assessment of the groups overall investment performance.
Equity incentive awards are designed to align participants interests with those of the shareholders of Ameriprise Financial. Equity incentive awards vest over multiple years, so they help retain employees.
Deferred compensation awards are designed to align participants interests with the investors in the mutual funds and other accounts they manage. The value of the deferral account is based on the performance of Columbia mutual funds. Employees have the option of selecting from various Columbia mutual funds for their mutual fund deferral account, however portfolio managers must allocate a minimum of 25% of their incentive awarded through the deferral program to the Columbia mutual fund(s) they manage. Mutual fund deferrals vest over multiple years, so they help retain employees.
Exceptions to this general approach to bonuses exist for certain teams and individuals. Funding for the bonus pool is determined by management and depends on, among other factors, the levels of compensation generally in the investment
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management industry taking into account investment performance (based on market compensation data) and both Ameriprise Financial and Columbia Management profitability for the year, which is largely determined by assets under management.
For all employees the benefit programs generally are the same, and are competitive within the Financial Services Industry. Employees participate in a wide variety of plans, including options in Medical, Dental, Vision, Health Care and Dependent Spending Accounts, Life Insurance, Long Term Disability Insurance, 401(k), and a cash balance pension plan.
(14) | AQR Portfolio Manager Compensation. The compensation for each of the portfolio managers who is a principal of AQR is in the form of distributions based on the revenues generated by AQR. Distributions to each portfolio manager are based on cumulative research, leadership and other contributions to AQR. Revenue distributions are also a function of assets under management and performance of accounts managed by AQR. There is no direct linkage between performance and compensation. However, there is an indirect linkage in that superior performance tends to attract assets and thus increase revenues. |
The compensation for the portfolio managers that are not principals of AQR primarily consists of a fixed base salary and a discretionary bonus. Under AQRs salary administration system, salary increases are granted on a merit basis, and in this regard, salaries are reviewed at least annually under a formal review program. Job performance contributes significantly to the determination of any salary increase; other factors, such as seniority and contributions to AQR are also considered. Discretionary bonuses are determined by the portfolio managers individual performance, including efficiency, contributions to AQR and quality of work performed. A portfolio managers performance is not based on any specific funds or strategys performance, but is affected by the overall performance of the firm.
(15) | Conestoga Portfolio Manager Compensation. Each of the Funds portfolio managers is a partner of Conestoga. As such, each portfolio manager receives a share of Conestogas annual profits, as specified in the managers partnership agreement with Conestoga, from Conestogas management of the Fund and all other accounts. |
(16) | DGHM Portfolio Manager Compensation. The portfolio managers compensation varies with the general success of the firm. Each portfolio managers compensation consists of a fixed annual salary, plus additional remuneration based on assets under management. The portfolio managers compensation is not directly linked to the performance of the Fund or other accounts managed by the firm, although positive performance and growth in managed assets are factors that may contribute to distributable profits and assets under management. |
(17) | EAM Portfolio Manager Compensation. The portfolio managers compensation is comprised of a base salary, a revenue allocation and firm profit allocation. The salary is in-line with industry specific benchmarks. The revenue allocation is based on firm-wide revenue while the profit allocation is based on firm-wide profitability. There is no direct linkage between performance and compensation, however, there is an indirect linkage as superior performance tends to attract and retain assets and consequently increase revenues and profitability. |
(18) | Federated Portfolio Manager Compensation. Mr. Conner is paid a fixed base salary and a variable annual incentive. Base salary is determined within a market competitive position-specific salary range, based on the portfolio managers experience and performance. The annual incentive amount is determined based primarily on Investment Product Performance (IPP) and, to a lesser extent, Financial Success, and may be paid entirely in cash, or in a combination of cash and restricted stock of Federated Investors Inc. The total combined annual incentive opportunity is intended to be competitive in the market for this portfolio managers role. |
IPP is measured on a rolling one, three and five calendar year pre-tax gross total return basis vs. the Funds relevant benchmark. Performance periods are adjusted if a portfolio manager has been managing an account for less than five years; accounts with less than one year of performance history under a portfolio manager may be excluded. As noted above, Mr. Conner manages other accounts in addition to the Fund. Such other accounts may have different benchmarks, peer groups and IPP weightings.
For purposes of calculating the annual incentive amount, each fund or account is categorized into one of two IPP groups. Within each performance measurement period and IPP group, IPP is calculated on the basis of an assigned weighting to each account or fund managed by the portfolio manager and included in the IPP group. The weighting assigned to the Fund is greater than the weighting assigned to other accounts or funds used to determine IPP. Additionally, a portion of Mr. Conners IPP score is based on the performance of portfolios for which he provides fundamental credit research. A portion of the bonus tied to the IPP score may be adjusted based on managements assessment of overall contribution to fund performance and any other factors as deemed relevant.
The Financial Success category is designed to tie the portfolio managers bonus, in part, to Federateds overall financial results. Funding for the Financial Success category may be determined on a product or asset class basis, as well as on corporate financial results. Senior Management determines individual Financial Success bonuses on a discretionary basis, considering overall contributions and any other factors deemed relevant.
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In addition, Mr. Conner was awarded a grant of restricted Federated stock. Awards of restricted stock are discretionary and are made in variable amounts based on the subjective judgment of Federateds senior management.
(19) | Loomis Sayles Portfolio Manager Compensation. Loomis Sayles believes that portfolio manager compensation should be driven primarily by the delivery of consistent and superior long-term performance for its clients. Portfolio manager compensation is made up primarily of three main components: base salary, variable compensation and a long-term incentive program. Although portfolio manager compensation is not directly tied to assets under management, a portfolio managers base salary and/or variable compensation potential may reflect the amount of assets for which the manager is responsible relative to other portfolio managers. Loomis Sayles also offers a profit sharing plan. Base salary is a fixed amount based on a combination of factors, including industry experience, firm experience, job performance and market considerations. Variable compensation is an incentive-based component and generally represents a significant multiple of base salary. Variable compensation is based on four factors: investment performance, profit growth of the firm, profit growth of the managers business unit and team commitment. Investment performance is the primary component of total variable compensation and generally represents at least 60% of the total for fixed-income managers and 70% for equity managers. The other three factors are used to determine the remainder of variable compensation, subject to the discretion of the Chief Investment Officer (CIO) and senior management. The CIO and senior management evaluate these other factors annually. |
Equity Managers . While mutual fund performance and asset size do not directly contribute to the compensation calculation, investment performance for equity managers is measured by comparing the performance of Loomis Sayles institutional composites to the performance of the applicable Morningstar peer group and/or the Lipper universe. Generally speaking the performance of the respective products fund is compared against the applicable Morningstar peer group and/or the Lipper universe. If the majority of the assets in the product are contained in the mutual fund that comparison will drive compensation. To the extent the majority of assets managed in the fund strategy are for institutional separate accounts, the eVestment Alliance institutional peer group will also be used as an additional comparison. In situations where substantially all of the assets for the strategy are institutional, the institutional peer group will be used as the primary method of comparison. A managers performance relative to the peer group for the 1, 3 and 5 year periods (or since the start of the managers tenure, if shorter) is used to calculate the amount of variable compensation payable due to performance. The 1 year may be eliminated in regards to the Large Cap Growth strategy. Longer-term performance (3 and 5 years or since the start of the managers tenure, if shorter) combined is weighted more than shorter-term performance (1 year). In addition, effective 2013, the performance measurement for equity compensation will incorporate a consistency metric using longer term (3, 5, etc.) rolling excess return compared to peer group over a sustained measurement period (5, 7, etc. years). The exact method may be adjusted to a products particular style. If a manager is responsible for more than one product, the rankings of each product are weighted based on either relative revenue or asset size of accounts represented in each product. The external benchmark used for the investment style utilized by the fund is the Russell 1000 Growth Index
Loomis Sayles uses either an institutional peer group as a point of comparison for equity manager performance, a Morningstar universe and/or the Lipper universe. In cases where the institutional peer groups are used, Loomis Sayles believes they represent the most competitive product universe while closely matching the investment styles offered by the Loomis Sayles fund.
General
Mutual funds are not included in Loomis Sayles composites, so unlike other managed accounts, fund performance and asset size do not directly contribute to this calculation. However, each fund managed by Loomis Sayles employs strategies endorsed by Loomis Sayles and fits into the product category for the relevant investment style. Loomis Sayles may adjust compensation if there is significant dispersion among the returns of the composite and accounts not included in the composite.
Loomis Sayles has developed and implemented two distinct long-term incentive plans to attract and retain investment talent. The plans supplement existing compensation. The first plan has several important components distinguishing it from traditional equity ownership plans:
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the plan grants units that entitle participants to an annual payment based on a percentage of company earnings above an established threshold; |
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upon retirement, a participant will receive a multi-year payout for his or her vested units; and |
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participation is contingent upon signing an award agreement, which includes a non-compete covenant. |
The second plan is similarly constructed although the participants annual participation in company earnings is deferred for two years from the time of award and is only payable if the portfolio manager remains at Loomis Sayles. In this plan, there is no post-retirement payments or non-compete covenants.
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Senior management expects that the variable compensation portion of overall compensation will continue to remain the largest source of income for those investment professionals included in the plan. The plan is initially offered to portfolio managers and over time the scope of eligibility is likely to widen. Management has full discretion over what units are issued and to whom.
Portfolio managers also participate in the Loomis Sayles profit sharing plan, in which Loomis Sayles makes a contribution to the retirement plan of each employee based on a percentage of base salary (up to a maximum amount). The portfolio managers also participate in the Loomis Sayles defined benefit pension plan, which applies to all Loomis Sayles employees who joined the firm prior to May 3, 2003. The defined benefit is based on years of service and base compensation (up to a maximum amount).
(20) | TCW Portfolio Manager Compensation. TCWs ability to attract and retain high-quality investment professionals can be attributed to a compensation philosophy implemented via an incentive-based structure that aligns employee performance and contributions with client and shareholder objectives. Most importantly, key personnel are equity holders and a significant objective of our management is to expand the number of employee stockholders. |
Portfolio managers are compensated with a base salary and performance-based compensation calculated, in general, as a fixed percentage of revenues earned by the product group. This serves to align their interests with achieving returns for clients and ties their compensation directly to their performance. Senior Investment professionals (analysts, traders) are compensated through base salary as well as a bonus based on performance and/or a percentage of revenues earned by the product group. Individuals are evaluated upon: (1) individual performance, (2) contributions to the efforts of the product group, and (3) the success of the Firm.
Contributions to the collective efforts of the product group are critical as the management of client portfolios is conducted on a team basis to capture the best ideas in the process of constructing portfolios. The firms success signals that stakeholder objectives in the aggregate are being achieved, with equity ownership a desirable means to provide and receive compensation.
As mentioned, to foster continuity, highly-valued investment professionals are enfranchised as stakeholders with ownership via equity distribution and incremental vesting. In February of 2010, TCW acquired MetWest, in which a part of the purchase price was paid for with shares of common stock of TCW. In association with the acquisition of MetWest, a retention plan was implemented for former MetWest employees that provided for the issuance of additional shares of TCW common stock. Since MetWest is a subsidiary of The TWC Group, MetWests investment professionals are compensated under the TCW compensation structure.
Also in 2010, TCW approved a Restricted Stock Unit Plan for TCW employees, under which approximately 150 TCW employees have received restricted stock units that vest as shares of TCW common stock over a five-year period. Combining the stock issuable under the Restricted Stock Unit Plan and the stock issuable in the MetWest purchase transaction and related retention arrangements, employee-owners will own up to 19% of TCW (on a fully dilutive basis). With the completion of the Carlyle Transaction, it is now estimated that employee-owners own approximately 40% of TCW (on a fully diluted basis).
Additionally, key members of the team have long term employment contracts that incorporate compensation incentives with associated employment and performance requirements.
To assess the competitiveness of TCWs compensation practices, the Firm conducts annual salary surveys to review benchmark and compensation ranges, both on a national and a regional basis. According to McLagan Partners, a leading compensation consultant in the industry, these studies have shown that the Firm is, on average, above the median in terms of salaries and total compensation provided to its employees.
(21) | Threadneedle Portfolio Manager Compensation. To align the interests of our investment staff with those of its clients, the remuneration plan for senior individuals comprises basic salary and an annual profit share plan (linked to individual performance and the profitability of the company) delivered partly as a cash incentive, and partly as a deferred long-term incentive which Threadneedle believes encourages longevity of service, split equally between Restricted Stock Units in Ameriprise Financial and reinvestment into a suite of Threadneedles own funds. Investment performance is a major factor within that performance appraisal, judged relative to each funds targets on a 1- and 3-year basis, with a bias towards 3-year performance in order to incentivise delivery of longer-term performance. Through the Threadneedle Fund Deferral program, the deferral is notionally invested in a number of Threadneedle funds, vesting in three equal parts over three years, which provides a strong tie for our investment professionals to client interests. |
The split between each component within the remuneration package varies between investment professionals and will be dependent upon performance and the type of funds they manage.
Statement of Additional Information September 1, 2014 | Page 88 |
Incentives are devised to reward:
|
investment performance and Threadneedle client requirements, in particular the alignment with Threadneedle clients through a mandatory deferral into Threadneedles own products; and |
|
team cooperation and values. |
The split of the incentive pool focuses on the:
|
performance of the individuals own funds and research recommendations; and |
|
performance of all portfolios in the individuals team. |
|
overall contribution to the wider thinking and success of the investment team, for example, idea generation, interaction with colleagues and commitment to assist with the sales effort; and |
|
Threadneedle performance. |
|
Consideration of the individuals overall performance is designed to incentivise fund managers to think beyond personal portfolio performance and reflects contributions made in: |
|
inter-team discussions, including asset allocation, global sector themes and weekly investment meetings; |
|
intra-team discussions, stock research and investment insights; and |
|
a fund managers demonstration of Threadneedle values, as part of our team-based investment philosophy. |
It is important to appreciate that for individuals to maximise their rating and hence their incentive remuneration they need to contribute in all areas. Importance is placed not only on producing strong fund performance but also contributing effectively to the team and the wider Investment department and on the Managers demonstration of Threadneedles corporate values. This structure is closely aligned with Threadneedles investment principles of sharing ideas and effective communication.
Investment professionals are formally reviewed once a year, and the performance year runs from January to December. However, we also take into consideration longer-term performance (rolling three and five years) together with a managers contribution to the investment dialogue and desk success and their control of and adherence to our risk controls.
(22) | Wasatch Portfolio Manager Compensation. As of September 30, 2013, the Wasatchs Compensation Committee and Executive Committee reviewed and determined its portfolio managers compensation. The committees may use independent third party investment industry compensation survey results in evaluating competitive market compensation for its investment professionals. The committees may also consult with professional industry recruiters. The elements of total compensation for the portfolio managers are base salary, performance-based bonus, profit sharing and other benefits. Portfolio managers who are also shareholders of Wasatch additionally receive quarterly dividends. Wasatch has balanced the components of pay to provide portfolio managers with an incentive to focus on both shorter and longer term performance. By design, portfolio manager compensation levels fluctuate both up and down with the relative investment performance of the Funds that they manage. |
Each portfolio manager is paid a base salary, a potential bonus based on performance, potential deferred bonus grants based on performance, and possibly stock dividends.
Base Salary Each portfolio manager is paid a fixed base salary depending upon their tenure.
Performance Bonus A large portion of a portfolio managers potential compensation is in the form of a performance bonus. Performance bonus is based on pre-tax performance. At the end of each year, the Board of Directors will allocate a bonus pool that will loosely mirror firm profits net of stock buybacks and deferred compensation payouts. The majority of this bonus pool will be allocated to portfolio managers based on the 1, 3- and 5-year performance of their portfolios, which will provide them with significant economic incentives for achieving top quartile performance relative to the applicable Funds performance benchmark over both the short and long term. Peer groups are also utilized to evaluate performance over both the short and long term. Portfolio managers and research analysts are not paid a commission for the solicitation or acquisition of new clients or the retention of existing clients. However, the amount of revenue generated by each product is overlaid on performance to determine the size of each portfolio managers bonus (e.g., if performance were equal, a portfolio manager on a higher revenue product would receive a larger bonus than one on a smaller revenue product).
For portfolio managers who manage separate accounts and mutual funds as well, they have bonus components calculated based on the performance of each individual product relative to its peer group. Revenue is again used as an element in converting performance results into the bonus amount.
Statement of Additional Information September 1, 2014 | Page 89 |
Portfolio managers are also rewarded for their stock selection contributions to other products and their impact on the overall success of the research team. This incentive is consistent with Wasatchs collaborative team-based approach to portfolio management.
Deferred Bonus Grants Portfolio managers are also eligible for deferred bonus grants, which are payable six years from the date of the grant, with their value directly tied to Wasatchs revenues. Each portfolio managers grant size will be based on individual performance factors similar to those used to determine the annual performance bonus.
Stock/Dividends All of the portfolio managers are shareholders of Wasatch. The relative amount of stock owned by each portfolio manager is at the discretion of Wasatchs Board and will evolve over time, with bigger long-term contributors holding higher levels of ownership. New portfolio manager stock grants typically vest over a five-year period, with the vesting dependent on the performance of the fund(s) managed by the portfolio manager.
It is possible that certain profits of Wasatch could be paid out to shareholders through a stock dividend. However, there are no current plans or expectations for such a dividend.
Other Benefits Portfolio managers are also eligible to participate in broad-based benefit plans offered generally to Wasatchs full-time employees, including 401(k), health and other employee benefit plans
(23) | Water Island Portfolio Manager Compensation. The portfolio managers are compensated in various forms. The following table outlines the forms of compensation paid to the portfolio managers as of May 31, 2013. |
Form of Compensation |
Source of Compensation |
Method Used to Determine Compensation |
||
Salary/Bonus (paid in cash) | Water Island | Each portfolio manager receives compensation that is a combination of salary and a bonus based on the profitability of Water Island. |
Columbia Management Investment Advisers, LLC (which is also the Investment Manager) serves as Administrator of the Funds.
Services Provided
Pursuant to the terms of the Administrative Services Agreement, the Administrator has agreed to provide all of the services necessary for, or appropriate to, the business and effective operation of each Fund that are not (a) provided by employees or other agents engaged by the Fund or (b) required to be provided by any person pursuant to any other agreement or arrangement with the Fund.
Administration Fee Paid by the Funds
The Administrator receives fees as compensation for its services, which are computed daily and paid monthly, as set forth in the Administrative Services Agreement, and as shown in the table below.
Administrative Services Agreement Fee Schedule
Funds |
Asset Levels
(in Billions) |
Applicable
Fee Rate |
||||
AP Alternative Strategies Fund; AP Small Cap Equity Fund; International
Bond Fund;
|
First $0.5 | 0.080 | % | |||
$0.5 to $1.0 | 0.075 | % | ||||
$1.0 to $3.0 | 0.070 | % | ||||
$3.0 to $12.0 | 0.060 | % | ||||
Over $12.0 | 0.050 | % | ||||
AP Growth Fund; Balanced Fund; Contrarian Core Fund; Dividend Income Fund; Global Dividend Opportunity Fund; Large Cap Growth Fund; Mid Cap Growth Fund; Risk Allocation Fund; Select Large Cap Growth Fund |
First $0.5 | 0.060 | % | |||
$0.5 to $1.0 | 0.055 | % | ||||
$1.0 to $3.0 | 0.050 | % | ||||
$3.0 to $12.0 | 0.040 | % | ||||
Over $12.0 | 0.030 | % | ||||
AP Core Plus Bond Fund; Bond Fund; Corporate Income Fund; HY Municipal Fund; Intermediate Bond Fund; AMT-Free Intermediate Muni Bond Fund; Strategic Income Fund; Tax-Exempt Fund |
First $0.5 | 0.070 | % | |||
$0.5 to $1.0 | 0.065 | % | ||||
$1.0 to $3.0 | 0.060 | % | ||||
$3.0 to $12.0 | 0.050 | % | ||||
Over $12.0 | 0.040 | % |
Statement of Additional Information September 1, 2014 | Page 90 |
Funds |
Asset Levels
(in Billions) |
Applicable
Fee Rate |
||||
Emerging Markets Fund |
First $0.75 | 0.080 | % | |||
$0.75 to $1.0 | 0.075 | % | ||||
$1.0 to $3.0 | 0.070 | % | ||||
Over $3.0 | 0.060 | % | ||||
Global Energy and Natural Resources Fund |
First $1.0 | 0.060 | % | |||
$1.0 to $3.0 | 0.050 | % | ||||
Over $3.0 | 0.040 | % | ||||
Global ILB Plus Fund |
All assets | 0.080 | % | |||
Global Technology Growth Fund |
All assets | 0 | % | |||
Greater China Fund |
First $1.0 | 0.080 | % | |||
$1.0 to $1.5 | 0.070 | % | ||||
$1.5 to $3.0 | 0.060 | % | ||||
$3.0 to $6.0 | 0.050 | % | ||||
Over $6.0 | 0.040 | % | ||||
Pacific/Asia Fund |
First $1.0 | 0.080 | % | |||
$1.0 to $3.0 | 0.070 | % | ||||
Over $3.0 | 0.060 | % | ||||
CA Tax-Exempt Fund; AMT-Free CT Intermediate Muni Bond Fund; AMT-Free MA Intermediate Muni Bond Fund; AMT-Free NY Intermediate Muni Bond Fund; NY Tax-Exempt Fund; AMT-Free OR Intermediate Muni Bond Fund |
First $0.25 | 0.070 | % | |||
$0.25 to $1.0 | 0.065 | % | ||||
$1.0 to $3.0 | 0.060 | % | ||||
$3.0 to $12.0 | 0.050 | % | ||||
Over $12.0 | 0.040 | % | ||||
Real Estate Equity Fund |
First $0.5 | 0.060 | % | |||
$0.5 to $1.0 | 0.055 | % | ||||
$1.0 to $3.0 | 0.050 | % | ||||
Over $3.0 | 0.040 | % | ||||
Ultra Short Term Bond Fund |
All assets | 0 | % | |||
U.S. Treasury Index Fund |
All assets | 0.300 | % | |||
Value and Restructuring Fund |
First $3.0 | 0.060 | % | |||
$3.0 to $12.0 | 0.040 | % | ||||
Over $12.0 | 0.030 | % |
Diversified Real Return Fund. The Investment Manager has implemented a schedule for Diversified Real Return Funds administration fees whereby the Fund pays (i) 0.020% administration fee on its assets that are invested in underlying funds (including ETFs) that pay an investment management fee to the Administrator or its affiliate; and (ii) 0.060% administration fee on securities, instruments and other assets not described above, including without limitation affiliated mutual funds, ETFs and closed-end funds that do not pay an investment management services fee to the Investment Manager, third-party closed-end funds, derivatives and individual securities.
The Administrator, from the administration fee it receives from U.S. Treasury Index Fund, pays all operating expenses of the Fund, with the exception of brokerage fees and commissions, interest, fees and expenses of Trustees who are not officers, directors or employees of the Investment Manager or its affiliates, distribution (Rule 12b-1) and/or shareholder servicing fees and any extraordinary non-recurring expenses that may arise, including litigation expenses. Ultra Short Term Bond Fund does not pay an administrative services fee under the Administrative Services Agreement because payment for such services is included in its unitary fee.
The fee is calculated for each calendar day on the basis of net assets as of the close of the preceding day. Fees paid in each of the last three fiscal periods are shown in the table below. As described in Other Services Provided Pricing and Bookkeeping Services , State Street was paid for certain services prior to August 8, 2011 with respect to certain of the Funds. The figures in the table below for periods before such date are net fees paid to the Administrator after deduction for these pricing and bookkeeping fees. The table is organized by fiscal year end.
Statement of Additional Information September 1, 2014 | Page 91 |
Administration Fees
Administration Fees | ||||||||||||
Fund | 2014 | 2013 | 2012 | |||||||||
For Funds with fiscal period ending March 31 |
||||||||||||
AP Growth Fund |
$ | 788,903 | $ | 520,929 | | |||||||
Pacific/Asia Fund |
246,870 | 231,116 | $ | 161,661 | ||||||||
Select Large Cap Growth Fund |
2,844,401 | 2,478,680 | 3,883,788 | |||||||||
For Funds with fiscal period ending April 30 |
|
|||||||||||
Bond Fund (a) |
648,503 | 948,292 | 1,457,228 | |||||||||
Corporate Income Fund (a) |
923,677 | 951,612 | 842,074 | |||||||||
Intermediate Bond Fund (a) |
2,670,960 | 1,979,462 | 2,101,907 | |||||||||
Small Cap Value Fund I (b) |
1,100,362 | 1,173,360 | 1,080,277 | |||||||||
U.S. Treasury Index Fund (a) |
946,749 | 1,202,784 | 1,395,311 | |||||||||
Fund | 2013 | 2012 | 2011 | |||||||||
For Funds with fiscal period ending May 31 |
|
|||||||||||
Dividend Income Fund (c) |
3,225,004 | 1,613,728 | 2,133,693 | |||||||||
HY Municipal Fund (d) |
663,990 | 498,162 | 827,759 | |||||||||
Risk Allocation Fund (e) |
7,391 | | | |||||||||
For Funds with fiscal period ending July 31 |
|
|||||||||||
AMT-Free OR Intermediate Muni Bond Fund (g) |
336,536 | 290,276 | 51,335 | |||||||||
Large Cap Growth Fund (f) |
1,399,749 | 1,128,959 | 1,099,242 | |||||||||
Tax-Exempt Fund (h) |
2,709,174 | 1,799,630 | 1,621,818 | |||||||||
Ultra Short Term Bond Fund |
| | | |||||||||
For Funds with fiscal period ending August 31 |
|
|||||||||||
AP Alternative Strategies Fund |
447,084 | 123,209 | | |||||||||
AP Core Plus Bond Fund |
2,681,881 | 893,526 | | |||||||||
AP Small Cap Equity Fund |
389,342 | 105,377 | | |||||||||
Balanced Fund |
763,256 | 626,931 | 258,601 | |||||||||
Contrarian Core Fund (i) |
1,391,706 | 906,997 | 652,775 | |||||||||
Emerging Markets Fund (j) |
631,189 | 619,432 | 722,394 | * | ||||||||
Global Dividend Opportunity Fund |
460,691 | 466,699 | 901,359 | |||||||||
Global Energy and Natural Resources Fund (j) |
257,079 | 646,021 | 970,041 | * | ||||||||
Global Technology Growth Fund |
| | | |||||||||
Greater China Fund |
168,613 | 178,828 | 32,162 | |||||||||
Mid Cap Growth Fund |
1,226,218 | 1,078,839 | 435,624 | |||||||||
Small Cap Core Fund (i) |
801,561 | 602,264 | 563,842 | |||||||||
Small Cap Growth Fund I |
894,140 | 814,772 | 499,433 | |||||||||
Value and Restructuring Fund (j) |
1,430,949 | 5,527,725 | 9,492,452 | * | ||||||||
For Funds with fiscal period ending October 31 |
|
|||||||||||
AMT-Free CT Intermediate Muni Bond Fund |
141,313 | 151,451 | 152,251 | |||||||||
AMT-Free Intermediate Muni Bond Fund |
1,606,395 | 1,665,246 | 1,527,709 | |||||||||
AMT-Free MA Intermediate Muni Bond Fund |
242,345 | 258,185 | 241,327 | |||||||||
AMT-Free NY Intermediate Muni Bond Fund |
212,901 | 223,123 | 207,519 | |||||||||
CA Tax-Exempt Fund |
354,853 | 369,822 | 204,533 | |||||||||
International Bond Fund (k) |
53,125 | 68,332 | 10,565 | |||||||||
NY Tax-Exempt Fund |
133,193 | 134,440 | 63,589 | |||||||||
Strategic Income Fund (k) |
1,673,890 | 2,142,208 | 101,296 | |||||||||
For Funds with fiscal period ending December 31 |
|
|||||||||||
Real Estate Equity Fund |
351,085 | 338,092 | 289,260 |
* | Prior to May 1, 2010, these Funds were managed by the Previous Adviser. The figures in this table include the administration fee paid to both the Administrator and the Previous Administrator during the relevant fiscal year. The table below shows the amount paid to each adviser separately during the relevant fiscal year: |
Statement of Additional Information September 1, 2014 | Page 92 |
Administration fees paid during fiscal period 2010 or 2011 | ||||||||
Fund | Administrator | Previous Administrator | ||||||
For Funds with fiscal period ending May 31 |
|
|||||||
Dividend Income Fund |
$ | 646,899 | $ | 782,621 | ||||
HY Municipal Fund |
140,597 | 637,176 | ||||||
For Funds with fiscal period ending July 31 |
|
|||||||
Large Cap Growth Fund |
252,993 | 383,524 | ||||||
For Funds with fiscal period ending August 31 |
|
|||||||
Contrarian Core Fund |
154,593 | 184,969 | ||||||
Emerging Markets Fund |
663,413 | 58,981 | ||||||
Global Dividend Opportunity Fund |
382,478 | 810,252 | ||||||
Global Energy and Natural Resources Fund |
1,017,847 | 91,320 | ||||||
Small Cap Core Fund |
170,200 | 224,996 | ||||||
Value and Restructuring Fund |
8,602,661 | 889,791 | ||||||
For Funds with fiscal period ending October 31 |
|
|||||||
AMT-Free CT Intermediate Muni Bond Fund |
84,125 | 81,058 | ||||||
AMT-Free Intermediate Muni Bond Fund |
844,084 | 832,258 | ||||||
AMT-Free MA Intermediate Muni Bond Fund |
123,624 | 117,887 | ||||||
AMT-Free NY Intermediate Muni Bond Fund |
109,072 | 106,504 | ||||||
International Bond Fund |
680 | 6,325 |
(a) | These Funds changed their fiscal year end in 2012 from March 31 to April 30. For the fiscal year ended 2012, the information shown is for the 13-month period from April 1, 2011 to April 30, 2012. For the fiscal year ended March 31, 2012, Bond Fund paid administration fees of $1,355,768, Corporate Income Fund paid administration fees of $765,092, Intermediate Bond Fund paid administration fees of $1,928,439 and U.S. Treasury Index Fund paid administration fees of $1,289,412. For the fiscal period from April 1, 2012 to April 30, 2012, Bond Fund paid administration fees of $101,460, Corporate Income Fund paid administration fees of $76,982, Intermediate Bond Fund paid administration fees of $173,468 and U.S. Treasury Index Fund paid administration fees of $105,899. |
(b) | Small Cap Value Fund I changed its fiscal year end in 2012 from June 30 to April 30. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to April 30, 2012. |
(c) | Dividend Income Fund changed its fiscal year end in 2012 from September 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. For the fiscal year from October 1, 2009 to September 30, 2010, the administrative services fees paid were $1,429,520. |
(d) | HY Municipal Fund changed its fiscal year end in 2012 from June 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is from July 1, 2010 to June 30, 2011. For the fiscal year from July 1, 2009 to June 30, 2010, the administrative services fees paid were $777,773. |
(e) | For the period from June 19, 2012 (commencement of operations) to May 31, 2013. |
(f) | Large Cap Growth Fund changed its fiscal year end in 2012 from September 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. For the fiscal year from October 1, 2009 to September 30, 2010, the administrative services fees paid were $636,518. |
(g) | AMT-Free OR Intermediate Muni Bond Fund changed its fiscal year end in 2012 from August 31 to July 31. For the fiscal year ended 2012, the information shown is for the period from September 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from September 1, 2010 to August 31, 2011. For the fiscal year from September 1, 2009 to August 31, 2010, no administrative services fees were paid. |
(h) | Tax-Exempt Fund changed its fiscal year end in 2012 from November 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from December 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from December 1, 2010 to November 30, 2011. For the fiscal year from December 1, 2009 to November 30, 2010, no administrative services fees were paid. |
(i) | Contrarian Core Fund and Small Cap Core Fund changed their fiscal year ends in 2012 from September 30 to August 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to August 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. For the fiscal year from October 1, 2009 to September 30, 2010, the administrative fees paid were $339,562 for Contrarian Core Fund and $395,196 for Small Cap Core Fund. |
(j) | Emerging Markets Fund, Global Energy and Natural Resources Fund and Value and Restructuring Fund changed their fiscal year ends in 2012 from March 31 to August 31. For the fiscal year ended 2012, the information shown is for the 17-month period from April 1, 2011 to August 31, 2012. For the fiscal year ended March 31, 2012, Emerging Markets Fund paid administration fees of $463,603, Global Energy and Natural Resources Fund paid administration fees of $519,521, and Value and Restructuring Fund paid administration fees of $4,735,917. For the fiscal period from April 1, 2012 to August 31, 2012, Emerging Markets Fund paid administration fees of $155,829, Global Energy and Natural Resources Fund paid administration fees of $126,500, and Value and Restructuring Fund paid administration |
fees of $791,808. For the fiscal years ended 2011, the information shown is from April 1, 2010 to March 31, 2011. For the fiscal year from ended March 31, 2011, the administrative fees paid were $722,394 for Emerging Markets Fund, $970,041 for Global Energy and Natural Resources Funds and $9,492,452 for Value and Restructuring Fund. |
Statement of Additional Information September 1, 2014 | Page 93 |
(k) | International Bond Fund and Strategic Income Fund changed their fiscal year ends in 2012 from May 31 to October 31. For the fiscal year ended 2012, the information shown is for the 17-month period from June 1, 2011 to October 31, 2012. For the fiscal year ended May 31, 2012, International Bond Fund paid administration fees of $46,151, and Strategic Income Fund paid administration fees of $1,450,327. For the fiscal period from June 1, 2012 to October 31, 2012, International Bond Fund paid administration fees of $22,181, and Strategic Income Fund paid administration fees of $691,881. For the fiscal year ended 2011, the information shown is from June 1, 2010 to May 31, 2011. |
Columbia Management Investment Distributors, Inc. (the Distributor), a subsidiary of Ameriprise Financial and an affiliate of the Investment Manager, serves as the principal underwriter and distributor for the continuous offering of shares of the Funds pursuant to a Distribution Agreement. The Distribution Agreement obligates the Distributor to use appropriate efforts to find purchasers for the shares of the Funds. The Distributors address is: 225 Franklin Street, Boston, MA 02110.
Distribution Obligations
Pursuant to the Distribution Agreement, the Distributor, as agent, sells shares of the Funds on a continuous basis and transmits purchase and redemption orders that it receives to the Trust or the Transfer Agent, or their designated agents.
Additionally, the Distributor has agreed to use appropriate efforts to solicit orders for the sale of shares and to undertake advertising and promotion as it believes appropriate in connection with such solicitation. Pursuant to the Distribution Agreement, the Distributor, at its own expense, finances those activities which are primarily intended to result in the sale of shares of the Funds, including, but not limited to, advertising, compensation of underwriters, dealers and sales personnel, the printing and mailing of prospectuses to other than existing shareholders, and the printing and mailing of sales literature. The Distributor, however, may be compensated or reimbursed for all or a portion of such expenses to the extent permitted by a Distribution Plan adopted by the Trust pursuant to Rule 12b-1 under the 1940 Act. See Investment Management and Other Services Distribution and Servicing Plans for more information about the share classes for which the Trust has adopted a Distribution Plan.
See Investment Management and Other Services Other Roles and Relationships of Ameriprise Financial and its Affiliates Certain Conflicts of Interest for more information about conflicts of interest, including those that relate to the Investment Manager and its affiliates.
The Distribution Agreement became effective with respect to each Fund after approval by its Board, and, after an initial two-year period, continues from year to year, provided that such continuation of the Distribution Agreement is specifically approved at least annually by the Board, including its Independent Trustees. The Distribution Agreement terminates automatically in the event of its assignment, and is terminable with respect to each Fund at any time without penalty by the Trust (by vote of the Board or by vote of a majority of the outstanding voting securities of the Fund) or by the Distributor on 60 days written notice.
Underwriting Commissions Paid by the Funds
Each of the Distributor and the Previous Distributor received commissions and other compensation for its services as reflected in the following charts, which show amounts paid to the Distributor and the Previous Distributor, as well as amounts the Distributor and the Previous Distributor retained, after paying commissions, for the three most recently completed fiscal years.
Sales Charges Paid to, and Retained by, Distributor
Sales Charges Paid to Distributor |
Amount Retained by Distributor
After Paying Commissions |
|||||||||||||||||||||||
Fund | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | ||||||||||||||||||
For Funds with fiscal period ending March 31 |
|
|||||||||||||||||||||||
AP Growth Fund |
0 | N/A | N/A | 0 | N/A | N/A | ||||||||||||||||||
Pacific/Asia Fund |
$ | 5,038 | $ | 2,828 | $ | 9,127 | $ | 716 | $ | 481 | $ | 1,250 | ||||||||||||
Select Large Cap Growth Fund |
1,763,649 | 489,559 | 910,993 | 249,119 | 73,612 | 129,051 | ||||||||||||||||||
For Funds with fiscal period ending April 30 |
|
|||||||||||||||||||||||
Bond Fund (a) |
39,971 | 104,298 | 73,780 | 6,105 | 15,841 | 10,795 | ||||||||||||||||||
Corporate Income Fund (a) |
141,793 | 313,196 | 235,909 | 19,858 | 45,617 | 35,675 | ||||||||||||||||||
Intermediate Bond Fund (a) |
262,066 | 182,479 | 121,667 | 35,479 | 24,806 | 16,655 | ||||||||||||||||||
Small Cap Value Fund I (b) |
43,299 | 39,051 | 44,090 | 5,815 | 4,518 | 4,826 | ||||||||||||||||||
U.S. Treasury Index Fund (a) |
23,853 | 56,927 | 50,283 | 2,907 | 7,162 | 6,330 |
Statement of Additional Information September 1, 2014 | Page 94 |
* | Prior to May 1, 2010, these Funds paid sales charges to the Previous Distributor. The figures in this table include the sales charges paid to, and retained by, both the Distributor and the Previous Distributor during the relevant fiscal period. |
(a) | These Funds changed their fiscal year end in 2012 from March 31 to April 30. For the fiscal year ended 2012, the information shown is for the 13-month period from April 1, 2011 to April 30, 2012. For the fiscal year ended March 31, 2012, Bond Fund paid sales charges of $65,647, of which $7,207 was retained by the Distributor, Corporate Income Fund paid sales charges of $215,786, of which $32,720 was retained by the Distributor, Intermediate Bond Fund paid sales charges of $113,250, of which $10,689 was retained by the Distributor, and U.S. Treasury Index Fund paid sales charges of $48,484, of which $5,021 was retained by the Distributor. For the fiscal period from April 1, 2012 to April 30, 2012, Bond Fund paid sales charges of $8,133, of which $1,248 was retained by the Distributor, Corporate Income Fund paid sales charges of $20,123, of which $2,995 was retained by the Distributor, Intermediate Bond Fund paid sales charges of $8,417, of which $1,087 was retained by the Distributor, and U.S. Treasury Index Fund paid sales charges of $1,799, of which $53 was retained by the Distributor. |
(b) | Small Cap Value Fund I changed its fiscal year end in 2012 from June 30 to April 30. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to April 30, 2012. |
(c) | Dividend Income Fund changed its fiscal year end in 2012 from September 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is for the twelve months ended September 30, 2011. |
Statement of Additional Information September 1, 2014 | Page 95 |
(d) | HY Municipal Fund changed its fiscal year end in 2012 from June 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is for the twelve months ended June 30, 2011. |
(e) | Large Cap Growth Fund changed its fiscal year end in 2012 from September 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is for the twelve months ended September 30, 2011. |
(f) | AMT-Free OR Intermediate Muni Bond Fund changed its fiscal year end in 2012 from August 31 to July 31. For the fiscal year ended 2012, the information shown is for the period from September 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is for the twelve months ended August 31, 2011. |
(g) | Tax-Exempt Fund changed its fiscal year end in 2012 from November 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from December 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is for the twelve months ended November 30, 2011. |
(h) | Contrarian Core Fund and Small Cap Core Fund changed their fiscal year ends in 2012 from September 30 to August 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to August 31, 2012. For the fiscal year ended 2011, the information shown is for the twelve months ended September 30, 2011. |
(i) | Emerging Markets Fund, Global Energy and Natural Resources Fund and Value and Restructuring Fund changed their fiscal year ends in 2012 from March 31 to August 31. For the fiscal year ended 2012, the information shown is for the 17-month period from April 1, 2011 to August 31, 2012. For the fiscal year ended March 31, 2012, Emerging Markets Fund paid sales charges of $50,159, of which $7,084 was retained by the Distributor, Global Energy and Natural Resources Fund paid sales charges of $237,223, of which $32,840 was retained by the Distributor, and Value and Restructuring Fund paid sales charges of $66,141, of which $7,846 was retained by the Distributor. For the fiscal period from April 1, 2012 to August 31, 2012, Emerging Markets Fund paid sales charges of $20,896, of which $2,682 was retained by the Distributor, Global Energy and Natural Resources Fund paid sales charges of $45,145, of which $6,002 was retained by the Distributor, and Value and Restructuring Fund paid sales charges of $12,971 of which $1,622 was retained by the Distributor. For the fiscal years ended 2011, the information shown is for the twelve months ended March 31, 2011. |
(j) | International Bond Fund and Strategic Income Fund changed their fiscal year ends in 2012 from May 31 to October 31. For the fiscal year ended 2012, the information shown is for the 17-month period from June 1, 2011 to October 31, 2012. For the fiscal year ended May 31, 2012, International Bond Fund paid sales charges of $16,135, of which $1,927 was retained by the Distributor, and Strategic Income Fund paid sales charges of $1,790,300, of which $268,059 was retained by the Distributor. For the fiscal period from June 1, 2012 to October 31, 2012, International Bond Fund paid sales charges of $3,548, of which $523 was retained by the Distributor, and Strategic Income Fund paid sales charges of $806,439, of which $118,867 was retained by the Distributor. For the fiscal year ended 2011, the information shown is from June 1, 2010 to May 31, 2011. |
Part of the sales charge may be paid to selling dealers who have agreements with the Distributor. The Distributor will retain the balance of the sales charge. At times the entire sales charge may be paid to selling dealers. See the prospectus for amounts retained by Selling Agents as a percentage of the offering price.
Distribution and Servicing Plans
The Trust has adopted distribution and/or shareholder servicing plans for certain share classes. See the cover of this SAI for the share classes offered by the Funds.
The table below shows the annual distribution and/or services fees (payable monthly and calculated based on an annual percentage of average daily net assets) and the combined amount of such fees applicable to each share class. The Trust is not aware as to what amount, if any, of the distribution and service fees paid to the Distributor and Previous Distributor were, on a Fund-by-Fund basis, used for advertising, printing and mailing of prospectuses to other than current shareholders, compensation to broker-dealers, compensation to sales personnel, or interest, carrying or other financing charges.
Distribution Fee | Service Fee | Combined Total | ||||
Class A |
up to 0.10% | 0.25% | Up to 0.25% (a)(b) | |||
Class A for Active Portfolio Funds |
up to 0.25% | up to 0.25% | 0.25% (c) | |||
Class B |
0.75% | 0.25% | 1.00% (b) | |||
Class C |
0.75% | 0.25% | 1.00% (b)(d) | |||
Class E |
0.10% | 0.25% | 0.35% | |||
Class F |
0.75% | 0.25% | 1.00% | |||
Class I |
None | None | None | |||
Class K |
None | None (e) | None | |||
Class R |
0.50% | (f) | 0.50% | |||
Class R4 |
None | None | None | |||
Class R5 |
None | None | None | |||
Class T |
None | 0.50% (g) | 0.50% (g) |
Statement of Additional Information September 1, 2014 | Page 96 |
Distribution Fee | Service Fee | Combined Total | ||||
Class W |
up to 0.25% | up to 0.25% | 0.25% | |||
Class Y |
None | None | None | |||
Class Z |
None | None | None | |||
Shares of Ultra Short Term Bond Fund |
None | None | None |
(a) | As shown in the table below, the maximum distribution and service fees of Class A shares varies among the Funds. |
Funds |
Class A Distribution Fee |
Class A Service Fee |
Class A Combined Total |
|||
Balanced Fund, Contrarian Core Fund, Dividend Income Fund, Intermediate Bond Fund, Large Cap Growth Fund, Mid Cap Growth Fund, AMT-Free OR Intermediate Muni Bond Fund, Real Estate Equity Fund, Small Cap Core Fund, Small Cap Growth Fund I, Global Technology Growth Fund | up to 0.10% | up to 0.25% | Up to 0.35%; these Funds may pay distribution and service fees up to a maximum of 0.35% of their average daily net assets attributable to Class A shares but currently limit such fees to an aggregate fee of not more than 0.25% | |||
Bond Fund, CA Tax-Exempt Fund, AMT-Free CT Intermediate Muni Bond Fund, Corporate Income Fund, Diversified Real Return Fund; Emerging Markets Fund, Global Dividend Opportunity Fund, Global Energy and Natural Resources Fund, Greater China Fund, International Bond Fund, AMT-Free MA Intermediate Muni Bond Fund, AMT-Free NY Intermediate Muni Bond Fund, NY Tax-Exempt Fund, Pacific/Asia Fund, Risk Allocation Fund, Select Large Cap Growth Fund, Small Cap Value Fund I, Strategic Income Fund, U.S. Treasury Index Fund, Value and Restructuring Fund | | 0.25% |
0.25% |
|||
HY Municipal Fund, AMT-Free Intermediate Muni Bond Fund, and Tax-Exempt Fund | | 0.20% |
0.20% |
(b) | Service Fee for Class A, Class B and Class C shares of HY Municipal Fund, Intermediate Municipal Bond Fund and Tax-Exempt Fund The annual service fee may equal up to 0.20% of the average daily net asset value of all shares of such Fund class. Distribution Fee for Class B and Class C shares for Intermediate Municipal Bond Fund The annual distribution fee shall be 0.65% of the average daily net assets of the Funds Class B shares and Class C shares. The Distributor has voluntarily agreed to waive the Service Fee for Class A, Class B and Class C shares of U.S. Treasury Index Fund so that the Service Fee does not exceed 0.15% annually. This arrangement may be modified by the Distributor at any time. |
(c) | Class A shares of Active Portfolio Funds may pay distribution and service fees up to a maximum of 0.25% of the Funds average daily net assets attributable to Class A shares (comprised of up to 0.25% for distribution services and up to 0.25% for shareholder liaison services). |
(d) | The Distributor has voluntarily agreed to waive a portion of the distribution fee for Class C shares of the following Funds so that the distribution fee does not exceed the specified percentage annually: 0.40% for AMT-Free OR Intermediate Muni Bond Fund; 0.45% for CA Tax-Exempt Fund, AMT-Free CT Intermediate Muni Bond Fund, AMT-Free MA Intermediate Muni Bond Fund, AMT-Free NY Intermediate Muni Bond Fund, NY Tax-Exempt Fund and Tax-Exempt Fund; 0.60% for Corporate Income Fund, High Yield Municipal Fund, Intermediate Bond Fund; and 0.70% for U.S. Treasury Index Fund. These arrangements may be modified or terminated by the Distributor at any time. |
(e) | The shareholder service fees for Class K shares are not paid pursuant to a Rule 12b-1 plan. Under a Plan Administration Services Agreement, the Funds Class K shares pay for plan administration services, including services such as implementation and conversion services, account set-up and maintenance, reconciliation and account recordkeeping, education services and administration to various plan types, including 529 plans, retirement plans and health savings accounts. |
(f) | Class R shares pay a distribution fee pursuant to a Funds distribution (Rule 12b-1) plan for Class R shares. The Funds do not have a shareholder service plan for Class R shares. |
(g) | The shareholder servicing fees for Class T shares are up to 0.50% of average daily net assets attributable to Class T shares for equity Funds and 0.40% for fixed income Funds. The Funds currently limit such fees to a maximum of 0.30% for equity Funds and 0.15% for fixed income Funds. See Class T Shares Shareholder Service Fees below for more information. |
If you maintain shares of the Fund directly with the Fund, without working directly with a financial advisor or Selling Agent, distribution and service fees are retained by the Distributor as payment or reimbursement for incurring certain distribution and shareholder service related expenses.
Over time, these distribution and/or shareholder service fees will reduce the return on your investment and may cost you more than paying other types of sales charges. The Fund will pay these fees to the Distributor and/or to eligible Selling
Statement of Additional Information September 1, 2014 | Page 97 |
Agents for as long as the distribution and/or shareholder servicing plans continue in effect. The Fund may reduce or discontinue payments at any time. Your Selling Agent may also charge you other additional fees for providing services to your account, which may be different from those described here.
The shareholder servicing plans permit the Funds to compensate or reimburse servicing agents for the shareholder services they have provided. The distribution plans, adopted pursuant to Rule 12b-1 under the 1940 Act, permit the Funds to compensate or reimburse the Distributor and/or Selling Agents for activities or expenses primarily intended to result in the sale of the classes shares. Payments are made at an annual rate and paid monthly, as a percentage of average daily net assets, set from time to time by the Board, and are charged as expenses of each Fund directly to the applicable share class. A substantial portion of the expenses incurred pursuant to these plans may be paid to affiliates of the Distributor and Ameriprise Financial.
Under the shareholder servicing plan, the Board must review, at least quarterly, a written report of the amounts paid under the servicing agreements and the purposes for which those expenditures were made. The initial term of the shareholder servicing plan is one year and it will continue in effect from year to year provided that its continuance is specifically approved at least annually by a majority of the Board, including a majority of the Independent Trustees who have no direct or indirect financial interest in the operation of the shareholder servicing plan or in any agreement related to it. Any material amendment to the shareholder servicing plan must be approved in the same manner. The shareholder servicing plan is terminable at any time with respect to the Funds by a vote of a majority of the Independent Trustees.
The Trustees believe the Distribution Plans could be a significant factor in the growth and retention of a Funds assets resulting in more advantageous expense ratios and increased investment flexibility which could benefit each class of Fund shareholders. The Distribution Plans will continue in effect from year to year so long as continuance is specifically approved at least annually by a vote of the Trustees, including the Independent Trustees. The Distribution Plans may not be amended to increase the fee materially without approval by vote of a majority of the outstanding voting securities of the relevant class of shares, and all material amendments of the distribution plans must be approved by the Trustees in the manner provided in the foregoing sentence. The distribution plans may be terminated at any time by vote of a majority of the Independent Trustees or by vote of a majority of the outstanding voting securities of the relevant class of shares.
Class T Shares Shareholder Service Fees
The Funds that offer Class T shares have adopted a shareholder services plan that permits them to pay for certain services provided to Class T shareholders by their Selling Agents. Equity Funds may pay shareholder servicing fees up to an aggregate annual rate of 0.50% of the Funds average daily net assets attributable to Class T shares (comprised of up to 0.25% for shareholder liaison services and up to 0.25% for administrative support services). Fixed income Funds may pay shareholder servicing fees up to an aggregate annual rate of 0.40% of the Funds average daily net assets attributable to Class T shares (comprised of an annual rate of up to 0.20% for shareholder liaison services and up to 0.20% for administrative support services). These fees are currently limited to an aggregate annual rate of not more than 0.30% for equity Funds and not more than 0.15% for fixed income Funds. With respect to those Funds that declare dividends on a daily basis, the shareholder servicing fee shall be waived by the selling and/or servicing agents to the extent necessary to prevent net investment income from falling below 0.00% on a daily basis. The Funds consider administrative support services to include, without limitation, (i) aggregating and processing purchase and redemption orders, (ii) providing beneficial owners with statements showing their positions in the Funds, (iii) processing dividend payments, (iv) providing sub-accounting services for Fund shares held beneficially, (v) forwarding shareholder communications, such as proxies, shareholder reports, dividend and tax notices, and updating prospectuses to beneficial owners, (vi) receiving, tabulating and transmitting proxies executed by the beneficial owners, (vii) sub-transfer agent services for beneficial owners of Fund shares and (viii) other similar services.
Fees Paid.
For its most recent fiscal period, each Fund paid distribution and/or service fees as shown in the following table. The table is organized by fiscal year end.
Distribution and Service Fees
Statement of Additional Information September 1, 2014 | Page 98 |
Fund | Class A | Class B | Class C | Class R | Class T | Class W | ||||||||||||||||||
Intermediate Bond Fund | $ | 4,330,030 | $ | 279,304 | $ | 649,681 | $ | 13,927 | $ | N/A | $ | 1,629,174 | ||||||||||||
Small Cap Value Fund I | 1,175,314 | 47,976 | 376,856 | 13,789 | N/A | N/A | ||||||||||||||||||
U.S. Treasury Index Fund | 64,096 | 17,575 | 64,701 | N/A | N/A | 50,099 | ||||||||||||||||||
|
Fiscal Year Ended in 2013 |
|
||||||||||||||||||||||
For Funds with fiscal period ending May 31 | ||||||||||||||||||||||||
Dividend Income Fund | 5,212,345 | 149,527 | 3,606,391 | 258,639 | 241,466 | 105,818 | ||||||||||||||||||
HY Municipal Fund | 189,090 | 16,524 | 110,538 | | | | ||||||||||||||||||
Risk Allocation Fund | 16,647 | | 6,280 | 12 | | 6 | ||||||||||||||||||
For Funds with fiscal period ending July 31 | ||||||||||||||||||||||||
AMT-Free OR Intermediate Muni Bond Fund | 88,490 | 256 | 169,981 | | | | ||||||||||||||||||
Large Cap Growth Fund | 3,436,436 | 385,272 | 453,527 | 5,962 | 456,290 | 9 | ||||||||||||||||||
Tax-Exempt Fund | 7,592,206 | 77,568 | 771,738 | | | | ||||||||||||||||||
Ultra Short Term Bond Fund | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
For Funds with fiscal period ending August 31 | ||||||||||||||||||||||||
AP Alternative Strategies Fund | 1,407,702 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
AP Core Plus Bond Fund | 11,541,254 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
AP Small Cap Equity Fund | 1,220,137 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
Balanced Fund | 2,158,130 | 124,275 | 1,053,511 | 47,390 | N/A | N/A | ||||||||||||||||||
Contrarian Core Fund | 1,791,352 | 180,025 | 812,946 | 44,098 | 375,898 | 466,164 | ||||||||||||||||||
Emerging Markets Fund | 405,085 | 53,722 | 137,266 | 16,252 | N/A | 80,442 | ||||||||||||||||||
Global Dividend Opportunity Fund | 343,049 | 65,895 | 130,498 | 6,306 | N/A | 7 | ||||||||||||||||||
Global Energy and Natural Resources Fund | 288,000 | 35,944 | 168,609 | 7,490 | N/A | N/A | ||||||||||||||||||
Global Technology Growth Fund | 120,827 | 33,226 | 154,804 | N/A | N/A | N/A | ||||||||||||||||||
Greater China Fund | 204,593 | 52,588 | 194,289 | N/A | N/A | 7 | ||||||||||||||||||
Mid Cap Growth Fund | 1,551,563 | 120,026 | 476,978 | 133,490 | 63,649 | 197,722 | ||||||||||||||||||
Small Cap Core Fund | 810,693 | 11,622 | 276,636 | N/A | 216,169 | 169,177 | ||||||||||||||||||
Small Cap Growth Fund I | 365,352 | 26,104 | 161,757 | 8,540 | N/A | N/A | ||||||||||||||||||
Value and Restructuring Fund | 282,810 | N/A | 310,256 | 123,794 | N/A | 7 | ||||||||||||||||||
For Funds with fiscal period ending October 31 | ||||||||||||||||||||||||
AMT-Free CT Intermediate Muni Bond Fund | 22,583 | 1,563 | 48,378 | | 20,972 | | ||||||||||||||||||
AMT-Free Intermediate Muni Bond Fund | 423,189 | 11,904 | 223,113 | | 27,880 | | ||||||||||||||||||
AMT-Free MA Intermediate Muni Bond Fund | 75,422 | 428 | 79,820 | | 39,220 | | ||||||||||||||||||
AMT-Free NY Intermediate Muni Bond Fund | 56,141 | 1,488 | 140,001 | | 13,346 | | ||||||||||||||||||
CA Tax-Exempt Fund | 1,003,711 | 11,359 | 305,481 | | | | ||||||||||||||||||
International Bond Fund | 4,771 | | 1,977 | | | 10,896 | ||||||||||||||||||
NY Tax-Exempt Fund | 412,793 | 10,631 | 134,543 | | | | ||||||||||||||||||
Strategic Income Fund | 3,632,845 | 381,530 | 2,169,552 | 4,262 | | 6 | ||||||||||||||||||
For Funds with fiscal period ending December 31 | ||||||||||||||||||||||||
Real Estate Equity Fund | 291,398 | 48,173 | 211,361 | 38,098 | | 25,174 |
The Transfer Agent
Columbia Management Investment Services Corp. is the transfer agent for the Funds. The Transfer Agent is located at 225 Franklin Street, Boston, MA 02110. Under a Transfer and Dividend Disbursing Agent Agreement, the Transfer Agent provides transfer agency, dividend disbursing agency and shareholder servicing agency services to the Funds. Class I shares and Class Y shares do not pay transfer agency fees. The Funds pay the Transfer Agent an annual transfer agency fee of $19.25 per account, payable monthly for all share classes except for Class I shares and Class Y shares. Prior to July 1, 2013, the Funds paid the Transfer Agent an annual transfer agency fee of $21.00 per account, payable monthly; and prior to July 1, 2012, the Funds paid the Transfer Agent an annual transfer agency fee of $12.08 per account, payable monthly.
In addition to the per-account fee, the Funds pay the Transfer Agent (a) a fee with respect to Class A, Class B, Class C, Class R, Class R4 (beginning November 1, 2012), Class T, Class W and Class Z at the annual rate of 0.20% of the average
Statement of Additional Information September 1, 2014 | Page 99 |
aggregate value of shares maintained in omnibus accounts (other than omnibus accounts for which American Enterprise Investment Services, Inc. is the broker of record or accounts where the beneficial owner is a customer of Ameriprise Financial Services, Inc., for which the transfer agent is reimbursed $16 annually, calculated monthly based on the total number of positions in which accounts at the end of such month) or (b) a fee with respect to Class K and Class R5 shares of 0.05% of the average aggregate value of shares maintained in omnibus accounts, provided that total transfer agency fees for Class K and Class R5 shares, including reimbursements, shall not exceed 0.05%. (Neither Class I shares nor Class Y shares are subject to these fees relating to omnibus accounts.) Prior to November 1, 2012, the fee described above for Class A, Class B, Class C, Class R, Class T, Class W and Class Z on the aggregate value of shares maintained in omnibus accounts (other than accounts for which American Enterprise Investment Services, Inc. was broker) was up to 0.20%. Prior to November 1, 2012, Class R4 shares were subject to a lower transfer agency fee equal to (i) an annual fee of $21 per account and (ii) up to 0.05% of the average aggregate value of shares maintained in omnibus accounts.
The Funds also pay certain reimbursable out-of-pocket expenses of the Transfer Agent. The Transfer Agent also may retain as additional compensation for its services revenues for fees for wire, telephone and redemption orders, IRA trustee agent fees and account transcripts due the Transfer Agent from Fund shareholders and credits (net of bank charges) earned with respect to balances in accounts the Transfer Agent maintains in connection with its services to the Funds. Transfer agency costs for each Fund are calculated separately for each of (i) Class K and Class R5 shares and (ii) all other share classes (except Class I and Class Y shares, which pay no transfer agency fees).
The fees paid to the Transfer Agent may be changed by the Board without shareholder approval.
The Transfer Agent retains BFDS/DST, 2 Heritage Drive, North Quincy, MA 02171 as the Funds sub-transfer agent. BFDS/DST assists the Transfer Agent in carrying out its duties.
Plan Administration Services
The Funds that offer Class K shares have a Plan Administration Services Agreement with the Transfer Agent. Under the agreement, the Funds pay for plan administration services, including services such as implementation and conversion services, account set-up and maintenance, reconciliation and account recordkeeping, education services and administration to various plan types, including 529 plans, retirement plans and Health Savings Accounts (HSAs). The fee for services is equal on an annual basis to 0.25% of the average daily net assets of each Fund attributable to Class K shares.
The Custodian
The Funds securities and cash are held pursuant to a custodian agreement with JPMorgan, 1 Chase Manhattan Plaza, 19th Floor, New York, NY 10005. JPMorgan is responsible for safeguarding the Funds cash and securities, receiving and delivering securities and collecting the Funds interest and dividends. The custodian is permitted to deposit some or all of its securities in central depository systems as allowed by federal law. For its services, each Fund pays its custodian a maintenance charge and a charge per transaction in addition to reimbursing the custodians out-of-pocket expenses.
As part of this arrangement, securities purchased outside the United States are maintained in the custody of various foreign branches of JPMorgan or in other financial institutions as permitted by law and by the Funds custodian agreement.
Pricing and Bookkeeping Services
Prior to August 8, 2011, State Street provided certain pricing and bookkeeping services to the Funds. The Administrator was responsible for overseeing the performance of these services and for certain other services.
Services Provided
Effective December 15, 2006, the Trust entered into a Financial Reporting Services Agreement with State Street and the Previous Adviser (the Financial Reporting Services Agreement) pursuant to which State Street provided financial reporting services to the Funds. Also effective December 15, 2006, the Trust entered into an Accounting Services Agreement with State Street and the Previous Adviser (collectively with the Financial Reporting Services Agreement, the State Street Agreements) pursuant to which State Street provided accounting services to the Funds. Effective May 1, 2010, the State Street Agreements were amended to, among other things, assign and delegate the Previous Advisers rights and obligations under the State Street Agreements to the Administrator. Under the State Street Agreements, each Fund (other than Ultra Short Term Bond Fund) paid State Street an annual fee of $38,000 paid monthly plus an additional monthly fee based on an annualized percentage rate of average daily net assets of the Fund for the month. The aggregate fee for a Fund during any year did not exceed $140,000 annually (exclusive of out-of-pocket expenses and charges). Each Fund (other than Ultra Short Term Bond Fund) also reimbursed State Street for certain out-of-pocket expenses and charges. Ultra Short Term Bond Fund did not pay any separate fees for services rendered under the State Street Agreements; the fees for pricing and bookkeeping services incurred by Ultra Short Term Bond Fund were paid by the Investment Manager as part of the Unified Fee. The State Street Agreements were terminated on August 8, 2011.
Statement of Additional Information September 1, 2014 | Page 100 |
From December 15, 2006 through May 1, 2010, the Trust was party to a Pricing and Bookkeeping Oversight and Services Agreement (the Services Agreement) with the Previous Adviser. Under the Services Agreement, the Previous Adviser provided services related to Fund expenses and the requirements of the Sarbanes-Oxley Act of 2002, and provided oversight of the accounting and financial reporting services provided by State Street. Under the Services Agreement, each Fund reimbursed the Previous Adviser for out-of-pocket expenses and charges, including fees payable to third parties, such as for pricing the Funds portfolio securities, incurred by the Previous Adviser in the performance of services under the Services Agreement. Prior to January 1, 2008, the Funds also reimbursed the Previous Adviser for accounting oversight services and services related to Fund expenses and the requirements of the Sarbanes-Oxley Act of 2002. Effective May 1, 2010, the services previously provided by the Previous Adviser under the Services Agreement began to be provided by the Administrator under the Administrative Services Agreement, and the Services Agreement was terminated. Under the Administrative Services Agreement, fees for pricing and bookkeeping services incurred by U.S. Treasury Index Fund were paid by the Administrator.
Pricing and Bookkeeping Fees Paid by the Funds
The Investment Manager, the Previous Adviser and State Street received fees from the Funds for their services as reflected in the following charts, which show the net pricing and bookkeeping fees paid to State Street, the Investment Manager and the Previous Adviser for the three most recently completed fiscal years, except as otherwise indicated.
Pricing and Bookkeeping Fees
Pricing and Bookkeeping Fees | ||||||||||||
Fund | 2014 | 2013 | 2012 | |||||||||
For Funds with fiscal period ending March 31 |
||||||||||||
AP Growth Fund |
| | | |||||||||
Pacific/Asia Fund |
| | $ | 11,950 | ||||||||
Select Large Cap Growth Fund |
| | 46,858 | |||||||||
For Funds with fiscal period ending April 30 |
||||||||||||
Bond Fund (a) |
| | 29,937 | |||||||||
Corporate Income Fund (a) |
| | 37,889 | |||||||||
Intermediate Bond Fund (a) |
| | 44,820 | |||||||||
Small Cap Value Fund I (b) |
| | | |||||||||
U.S. Treasury Index Fund (a) |
| | | |||||||||
Fund | 2013 |
2012 |
2011 |
|||||||||
For Funds with fiscal period ending May 31 |
||||||||||||
Dividend Income Fund (c) |
| | 108,964 | |||||||||
HY Municipal Fund (d) |
| | 166,025 | |||||||||
Risk Allocation Fund |
| | | |||||||||
For Funds with fiscal period ending July 31 |
||||||||||||
AMT-Free OR Intermediate Muni Bond Fund (f) |
| | 100,389 | |||||||||
Large Cap Growth Fund (e) |
| | 68,328 | |||||||||
Tax-Exempt Fund (g) |
| | 86,802 | |||||||||
Ultra Short Term Bond Fund |
| | | |||||||||
For Funds with fiscal period ending August 31 |
||||||||||||
Balanced Fund |
| | 61,783 | |||||||||
Contrarian Core Fund (h) |
| | 55,983 | |||||||||
Emerging Markets Fund (i) |
| $ | 38,036 | 112,330 | ||||||||
Global Dividend Opportunity Fund |
| | 124,817 | |||||||||
Global Energy and Natural Resources Fund (i) |
| 11,820 | 140,428 | |||||||||
Global Technology Growth Fund |
| | 45,971 | |||||||||
Greater China Fund |
| | 78,553 | |||||||||
Mid Cap Growth Fund |
| | 81,856 | |||||||||
Small Cap Core Fund (h) |
| | 563,842 | |||||||||
Small Cap Growth Fund I |
| | 117,915 | |||||||||
Value and Restructuring Fund (i) |
| 48,156 | 144,761 |
Statement of Additional Information September 1, 2014 | Page 101 |
Pricing and Bookkeeping Fees | ||||||||||||
Fund | 2013 |
2012 |
2011 |
|||||||||
For Funds with fiscal period ending October 31 |
||||||||||||
AMT-Free CT Intermediate Muni Bond Fund |
| | $ | 47,163 | ||||||||
AMT-Free Intermediate Muni Bond Fund |
| | 107,575 | |||||||||
AMT-Free MA Intermediate Muni Bond Fund |
| | 61,320 | |||||||||
AMT-Free NY Intermediate Muni Bond Fund |
| | 56,864 | |||||||||
CA Tax-Exempt Fund |
| | 61,310 | |||||||||
International Bond Fund (j) |
| $ | 3,373 | 50,767 | ||||||||
NY Tax-Exempt Fund |
| | 30,397 | |||||||||
Strategic Income Fund (j) |
| | 181,794 | |||||||||
For Funds with fiscal period ending December 31 |
||||||||||||
Real Estate Equity Fund |
| | 21,361 |
(a) | These Funds changed their fiscal year end in 2012 from March 31 to April 30. The information shown for 2012 is for the twelve months ended March 31, 2012. No pricing and bookkeeping fees were paid for the fiscal period from April 1, 2012 to April 30, 2012. |
(b) | Small Cap Value Fund I changed its fiscal year end in 2012 from June 30 to April 30. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to April 30, 2012. |
(c) | Dividend Income Fund changed its fiscal year end in 2012 from September 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. For the fiscal year from October 1, 2009 to September 30, 2010, the pricing and bookkeeping fees paid were $141,503. |
(d) | HY Municipal Fund changed its fiscal year end in 2012 from June 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is from July 1, 2010 to June 30, 2011. For the fiscal year from July 1, 2009 to June 30, 2010, the pricing and bookkeeping fees paid were $192,931. |
(e) | Large Cap Growth Fund changed its fiscal year end in 2012 from September 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. For the fiscal year from October 1, 2009 to September 30, 2010, the pricing and bookkeeping fees paid were $141,553. |
(f) | AMT-Free OR Intermediate Muni Bond Fund changed its fiscal year end in 2012 from August 31 to July 31. For the fiscal year ended 2012, the information shown is for the period from September 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from September 1, 2010 to August 31, 2011. For the fiscal year from September 1, 2009 to August 31, 2010, the pricing and bookkeeping fees paid were $146,534. |
(g) | Tax-Exempt Fund changed its fiscal year end in 2012 from November 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from December 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from December 1, 2010 to November 30, 2011. For the fiscal year from December 1, 2009 to November 30, 2010, the pricing and bookkeeping fees paid were $196,542. |
(h) | Contrarian Core Fund and Small Cap Core Fund changed their fiscal year ends in 2012 from September 30 to August 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to August 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. For the fiscal year from October 1, 2009 to September 30, 2010, the pricing and bookkeeping fees paid were $115,837 for Contrarian Core Fund and $395,196 for Small Cap Core Fund. |
(i) | Emerging Markets Fund, Global Energy and Natural Resources Fund and Value and Restructuring Fund changed their fiscal year ends in 2012 from March 31 to August 31. The information shown for 2012 is for the twelve months ended March 31, 2012. No pricing and bookkeeping fees were paid for the fiscal period from April 1, 2012 to August 31, 2012. For the fiscal year ended 2011, the information shown is from April 1, 2010 to March 31, 2011. |
(j) | International Bond Fund and Strategic Income Fund changed their fiscal year ends in 2012 from May 31 to October 31. The information shown is for the twelve months ended May 31, 2012. No pricing and bookkeeping fees were paid for the fiscal period from June 1, 2012 to October 31, 2012. For the fiscal year ended 2011, the information shown is from June 1, 2010 to May 31, 2011. |
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP, which is located at 225 South Sixth Street, Minneapolis, MN 55402, is the Funds independent registered public accounting firm. The financial statements contained in each Funds annual report were audited by PricewaterhouseCoopers LLP. The Board has selected PricewaterhouseCoopers LLP as the independent registered public accounting firm to audit the Funds books and review their tax returns for their respective fiscal year ends.
The Reports of Independent Registered Public Accounting Firm and the audited financial statements are included in the annual reports to shareholders of the Funds, and are incorporated herein by reference. No other parts of the annual reports or semiannual reports to shareholders are incorporated by reference herein. The audited financial statements incorporated by reference into the Funds prospectuses and this SAI have been so incorporated in reliance upon the report of the independent registered public accounting firm, given on its authority as an expert in auditing and accounting.
Statement of Additional Information September 1, 2014 | Page 102 |
Counsel
Ropes & Gray LLP serves as legal counsel to the Trust. Its address is Prudential Tower, 800 Boylston St., Boston, Massachusetts 02199. Vedder Price P.C. serves as co-counsel. Its address is 1401 I Street N.W., Suite 1100, Washington, DC 20005.
The Investment Manager and certain of its affiliates have agreed to waive fees and/or reimburse certain expenses (excluding certain fees and expenses, such as transaction costs and certain other investment related expenses, interest, taxes, acquired fund fees and expenses, and extraordinary expenses) so that certain Funds net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Funds custodian, do not exceed specified rates for specified time periods, as described in a Funds prospectus.
The tables below show the expenses reimbursed and fees waived by Investment Manager and its affiliates for the last three fiscal periods. The table is organized by fiscal year end.
Expenses Reimbursed
Amounts Reimbursed | ||||||||||||
Fund | 2014 | 2013 | 2012 | |||||||||
For Funds with fiscal period ended March 31 |
||||||||||||
AP Growth Fund |
$ | 21,114 | $ | 520,356 | N/A | |||||||
Pacific/Asia Fund |
| 162 | $ | 960 | ||||||||
Select Large Cap Growth Fund |
| 3,960 | 5,090 | |||||||||
For Funds with fiscal period ended April 30 |
|
|||||||||||
Bond Fund (a) |
238,061 | 1,169,108 | 4,145,871 | |||||||||
Corporate Income Fund (a) |
1,218 | 107,556 | 428,674 | |||||||||
Intermediate Bond Fund (a) |
2,408,094 | 2,440,859 | 3,584,370 | |||||||||
Small Cap Value Fund I (b) |
| | | |||||||||
U.S. Treasury Index Fund (a) |
657,944 | 827,939 | 969,834 | |||||||||
Fund | 2013 | 2012 | 2011 | |||||||||
For Funds with fiscal period ended May 31 |
|
|||||||||||
Dividend Income Fund (c) |
674,160 | 1,781,743 | 1,966,047 | |||||||||
HY Municipal Fund (d) |
1,028,930 | 1,189,180 | 448,081 | |||||||||
Risk Allocation Fund (e) |
291,148 | | | |||||||||
For Funds with fiscal period ended July 31 |
|
|||||||||||
AMT-Free OR Intermediate Muni Bond Fund (g) |
298,719 | 295,895 | 500,503 | |||||||||
Large Cap Growth Fund (f) |
| 91,537 | 130,442 | |||||||||
Tax-Exempt Fund (h) |
| 37,429 | 575,239 | |||||||||
Ultra Short Term Bond Fund |
113,452 | 146,116 | 105,807 | |||||||||
For Funds with fiscal period ended August 31 |
|
|||||||||||
AP Alternative Strategies Fund |
174,772 | 150,833 | | |||||||||
AP Core Plus Bond Fund |
N/A | | | |||||||||
AP Small Cap Equity Fund |
1,421,145 | 560,869 | | |||||||||
Balanced Fund |
174,344 | 501,495 | 347,362 | |||||||||
Contrarian Core Fund (i) |
57,718 | 397,756 | 335,578 | * | ||||||||
Emerging Markets Fund (j) |
531,115 | 937,684 | 1,262,039 | * | ||||||||
Global Dividend Opportunity Fund |
365,991 | 7 | 368,881 | * | ||||||||
Global Energy and Natural Resources Fund (j) |
N/A | | | |||||||||
Global Technology Growth Fund |
31,538 | | 66,993 | |||||||||
Greater China Fund |
N/A | | 1,426 | |||||||||
Mid Cap Growth Fund |
| | | |||||||||
Small Cap Core Fund (i) |
23,843 | 72,282 | 234,050 | |||||||||
Small Cap Growth Fund I |
53,467 | 79,402 | 306 | |||||||||
Value and Restructuring Fund (j) |
N/A | 3,234,501 | |
Statement of Additional Information September 1, 2014 | Page 103 |
Amounts Reimbursed | ||||||||||||
Fund | 2013 | 2012 | 2011 | |||||||||
For Funds with fiscal period ended October 31 |
|
|||||||||||
AMT-Free CT Intermediate Muni Bond Fund |
$ | 338,425 | $ | 441,958 | $ | 540,983 | ||||||
AMT-Free Intermediate Muni Bond Fund |
3,012,105 | 3,199,657 | 2,892,900 | |||||||||
AMT-Free MA Intermediate Muni Bond Fund |
553,959 | 861,785 | 799,425 | * | ||||||||
AMT-Free NY Intermediate Muni Bond Fund |
611,524 | 782,387 | 628,205 | * | ||||||||
CA Tax-Exempt Fund |
455,738 | 441,438 | 455,210 | * | ||||||||
International Bond Fund (k) |
117,641 | 215,670 | 192,393 | * | ||||||||
NY Tax-Exempt Fund |
241,744 | 275,120 | 229,929 | * | ||||||||
Strategic Income Fund (k) |
159 | 248,867 | 59,857 | * | ||||||||
For Funds with fiscal period ended December 31 |
|
|||||||||||
Real Estate Equity Fund |
| 17,962 | 49,418 |
* | Prior to May 1, 2010, these Funds were managed by the Previous Adviser. The figures in this table include amounts reimbursed by the Previous Adviser and its affiliates and the Investment Manager and its affiliates. The table below shows these amounts separately during the relevant fiscal year: |
Amounts Reimbursed During Fiscal Period 2010 or 2011 | ||||||||
Fund |
Investment Manager and
affiliates |
Previous Adviser and
affiliates |
||||||
For Funds with fiscal period ended May 31 |
|
|||||||
Dividend Income Fund |
$ | 412,201 | $ | 54,673 | ||||
For Funds with fiscal period ended July 31 |
|
|||||||
AMT-Free OR Intermediate Muni Bond Fund |
183,028 | 329,008 | ||||||
Ultra Short Term Bond Fund |
23,307 | 59,090 | ||||||
For Funds with fiscal period ended August 31 |
|
|||||||
Contrarian Core Fund |
213,720 | 71,834 | ||||||
Emerging Markets Fund |
1,166,939 | 95,101 | ||||||
Global Dividend Opportunity Fund |
407,410 | 989,742 | ||||||
Global Technology Growth Fund |
45,469 | | ||||||
For Funds with fiscal period ended October 31 |
|
|||||||
AMT-Free CT Intermediate Muni Bond Fund |
163,248 | 187,129 | ||||||
AMT-Free MA Intermediate Muni Bond Fund |
204,395 | 181,924 | ||||||
AMT-Free NY Intermediate Muni Bond Fund |
210,091 | 201,876 | ||||||
CA Tax-Exempt Fund |
43,089 | 58,176 | ||||||
International Bond Fund |
25,747 | 124,507 | ||||||
NY Tax-Exempt Fund |
96,659 | 91,479 |
(a) | These Funds changed their fiscal year end in 2012 from March 31 to April 30. For the fiscal year ended 2012, the information shown is for the 13-month period from April 1, 2011 to April 30, 2012. For the fiscal year ended March 31, 2012, $3,840,021 in Bond Fund expenses were reimbursed, $395,818 in Corporate Income Fund expenses were reimbursed, $3,258,873 in Intermediate Bond Fund expenses were and $897,060 in U.S. Treasury Index Fund expenses were reimbursed. For the fiscal period from April 1, 2012 to April 30, 2012, $305,850 in Bond Fund expenses were reimbursed, $32,856 in Corporate Income Fund expenses were reimbursed, $325,497 in Intermediate Bond Fund expenses were and $72,774 in U.S. Treasury Index Fund expenses were reimbursed. |
(b) | Small Cap Value Fund I changed its fiscal year end in 2012 from June 30 to April 30. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to April 30, 2012. |
(c) | Dividend Income Fund changed its fiscal year end in 2012 from September 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to May 31, 2012, the information shown is from October 1, 2010 to September 30, 2011. For the fiscal year from October 1, 2009 to September 30, 2010, $466,874 were reimbursed. |
(d) | HY Municipal Fund changed its fiscal year end in 2012 from June 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is from July 1, 2010 to June 30, 2011. |
(e) | For the period from June 19, 2012 (commencement of operations) to May 31, 2013. |
(f) | Large Cap Growth Fund changed its fiscal year end in 2012 from September 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to July 31, 2012. For the fiscal year ended 2011 and 2010, the information shown is for the twelve months ended September 30, 2011 and September 30, 2010, respectively. |
Statement of Additional Information September 1, 2014 | Page 104 |
(g) | AMT-Free OR Intermediate Muni Bond Fund changed its fiscal year end in 2012 from August 31 to July 31. For the fiscal year ended 2012, the information shown is for the period from September 1, 2011 to July 31, 2012. For the fiscal year ended 2011 and 2010, the information shown is for the twelve months ended August 31, 2011 and August 31, 2010, respectively. |
(h) | Tax-Exempt Fund changed its fiscal year end in 2012 from November 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from December 1, 2011 to July 31, 2012. For the fiscal year ended 2011 and 2010, the information shown is for the twelve months ended November 30, 2011 and November 30, 2010, respectively. |
(i) | Contrarian Core Fund and Small Cap Core Fund changed their fiscal year ends in 2012 from September 30 to August 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to August 31, 2012. For the fiscal year ended 2011 and 2010, the information shown is for the twelve months ended September 30, 2011 and September 30, 2010, respectively. |
(j) | Emerging Markets Fund, Global Energy and Natural Resources Fund and Value and Restructuring Fund changed their fiscal year ends in 2012 from March 31 to August 31. For the fiscal year ended 2012, the information shown is for the 17-month period from April 1, 2011 to August 31, 2012. For the fiscal year ended March 31, 2012, $734,739 in Emerging Markets Fund expenses were reimbursed, $0 in Global Energy and Natural Resources Fund expenses were reimbursed, and $2,410,775 in Value and Restructuring Fund expenses were reimbursed. For the fiscal period from April 1, 2012 to August 31, 2012, $202,945 in Emerging Markets Fund expenses were reimbursed, $0 in Global Energy and Natural Resources Fund expenses were reimbursed, and $823,726 in Value and Restructuring Fund expenses were reimbursed. For the fiscal years ended 2011, the information shown is for the twelve months ended March 31, 2011. |
(k) | International Bond Fund and Strategic Income Fund changed their fiscal year ends in 2012 from May 31 to October 31. For the fiscal year ended 2012, the information shown is for the 17-month period from June 1, 2011 to October 31, 2012. For the fiscal year ended May 31, 2012, $111,603 in International Bond Fund expenses were reimbursed and $182,250 in Strategic Income Fund expenses were reimbursed. For the fiscal period from June 1, 2012 to October 31, 2012, $104,067 in International Bond Fund expenses were reimbursed and $66,617 in Strategic Income Fund expenses were reimbursed. For the fiscal year ended 2011, the information shown is for the twelve months ended May 31, 2011. |
Fees Waived
If a Fund is not shown, there were no fees waived for the relevant fiscal periods.
Amounts Waived | ||||||||||||
Fund | 2014 |
2013 |
2012 |
|||||||||
For Funds with fiscal period ended April 30 |
|
|||||||||||
Bond Fund (a) |
$ | 18,710 | $ | 25,716 | $ | 23,276 | ||||||
Corporate Income Fund (a) |
28,402 | 32,985 | 19,237 | |||||||||
Intermediate Bond Fund (a) |
114,650 | 66,685 | 55,357 | |||||||||
U.S. Treasury Index Fund (a) |
11,418 | 17,297 | 20,463 | |||||||||
Fund | 2013 |
2012 |
2011 |
|||||||||
For Funds with fiscal period ended May 31 |
|
|||||||||||
HY Municipal Fund (b) |
20,886 | 13,678 | 13,980 | |||||||||
For Funds with fiscal period ended July 31 |
|
|||||||||||
AMT-Free OR Intermediate Muni Bond Fund (c) |
91,741 | 66,179 | | |||||||||
Tax-Exempt Fund (d) |
198,871 | 87,652 | 84,839 | * | ||||||||
For Funds with fiscal period ended October 31 |
|
|||||||||||
AMT-Free CT Intermediate Muni Bond Fund |
26,076 | 25,209 | 25,305 | * | ||||||||
AMT-Free Intermediate Muni Bond Fund |
251,117 | 197,803 | 119,542 | * | ||||||||
AMT-Free MA Intermediate Muni Bond Fund |
43,021 | 39,241 | 35,026 | * | ||||||||
AMT-Free NY Intermediate Muni Bond Fund |
75,465 | 68,035 | 47,097 | * | ||||||||
CA Tax-Exempt Fund |
131,079 | 126,525 | 97,657 | * | ||||||||
NY Tax-Exempt Fund |
57,732 | 54,467 | 34,835 | * | ||||||||
Strategic Income Fund (e) |
383,776 | 482,776 | 290,741 | * |
* | Prior to May 1, 2010, these Funds were managed by the Previous Adviser. The figures in the table include amounts waived by the Previous Adviser and its affiliates. The table below shows the amount waived by the Investment Manager and its affiliates and the Previous Adviser during the relevant fiscal year. |
Statement of Additional Information September 1, 2014 | Page 105 |
Amounts Waived During Fiscal Period 2010 or 2011 | ||||||||
Fund |
Investment Manager and
affiliates |
Previous Adviser and
affiliates |
||||||
For Funds with fiscal period ended May 31 |
|
|||||||
HY Municipal Fund |
$ | 2,325 | $ | 11,175 | ||||
For Funds with fiscal period ended July 31 |
|
|||||||
AMT-Free OR Intermediate Muni Bond Fund |
18,580 | 30,889 | ||||||
Tax-Exempt Fund |
33,341 | 21,712 | ||||||
For Funds with fiscal period ended October 31 |
|
|||||||
AMT-Free CT Intermediate Muni Bond Fund |
14,122 | 13,994 | ||||||
AMT-Free Intermediate Muni Bond Fund |
53,213 | 32,825 | ||||||
AMT-Free MA Intermediate Muni Bond Fund |
17,706 | 15,939 | ||||||
AMT-Free NY Intermediate Muni Bond Fund |
18,581 | 12,307 | ||||||
CA Tax-Exempt Fund |
46,253 | 44,309 | ||||||
NY Tax-Exempt Fund |
13,926 | 13,574 | ||||||
Strategic Income Fund |
25,214 | 262,119 |
(a) | These Funds changed their fiscal year end in 2012 from March 31 to April 30. For the fiscal year ended 2012, the information shown is for the 13-month period from April 1, 2011 to April 30, 2012. For the fiscal year ended March 31, 2012, $21,128 in Bond Fund expenses were waived, $17,162 in Corporate Income Fund expenses were waived, $50,856 in Intermediate Bond Fund expenses were waived and $18,969 in U.S. Treasury Index Fund expenses were waived. For the fiscal period from April 1, 2012 to April 30, 2012, $2,148 in Bond Fund expenses were waived, $2,075 in Corporate Income Fund expenses were waived, $4,501 in Intermediate Bond Fund expenses were waived and $1,494 in U.S. Treasury Index Fund expenses were waived. |
(b) | HY Municipal Fund changed its fiscal year end in 2012 from June 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is from July 1, 2010 to June 30, 2011. For the fiscal year from July 1, 2009 to June 30, 2010, $13,500 in HY Municipal Fund expenses were waived. |
(c) | AMT-Free OR Intermediate Muni Bond Fund changed its fiscal year end in 2012 from August 31 to July 31. For the fiscal year ended 2012, the information shown is for the period from September 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from September 1, 2010 to August 31, 2011. For the fiscal year from September 1, 2009 to August 31, 2010, $49,469 in OR Intermediate Municipal Bond Fund expenses were waived. |
(d) | Tax-Exempt Fund changed its fiscal year end in 2012 from November 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from December 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from December 1, 2010 to November 30, 2011. For the fiscal year from December 1, 2009 to November 30, 2010, $55,053 in Tax-Exempt Fund expenses were waived. |
(e) | Strategic Income Fund changed its fiscal year end in 2012 from May 31 to October 31. For the fiscal year ended 2012, the information shown is for the 17-month period from June 1, 2011 to October 31, 2012. For the fiscal year ended May 31, 2012, $323,325 in Strategic Income Fund expenses were waived. For the fiscal period from June 1, 2012 to October 31, 2012, $159,451 in Strategic Income Fund expenses were waived. For the fiscal year ended 2011, the information shown is from June 1, 2010 to May 31, 2011. |
Other Roles and Relationships of Ameriprise Financial and Its Affiliates Certain Conflicts of Interest
As described above in the Investment Management and Other Services section of this SAI, and in the More Information About the Fund Primary Service Providers section of each Funds prospectus, the Investment Manager, Administrator, Distributor and Transfer Agent, all affiliates of Ameriprise Financial, receive compensation from the Funds for the various services they provide to the Funds. Additional information as to the specific terms regarding such compensation is set forth in these affiliated service providers contracts with the Funds, each of which typically is included as an exhibit to Part C of each Funds registration statement.
In many instances, the compensation paid to the Investment Manager and other Ameriprise Financial affiliates for the services they provide to the Funds is based, in some manner, on the size of the Funds assets under management. As the size of the Funds assets under management grows, so does the amount of compensation paid to the Investment Manager and other Ameriprise Financial affiliates for providing services to the Funds. This relationship between Fund assets and affiliated service provider compensation may create economic and other conflicts of interests of which Fund investors should be aware. These potential conflicts of interest, as well as additional ones, are discussed in detail below and also are addressed in other disclosure materials, including the Funds prospectuses. These conflicts of interest also are highlighted in account documentation and other disclosure materials of Ameriprise Financial affiliates that make available or offer the Columbia Funds as investments in connection with their respective products and services. In addition, Part 1A of the Investment Managers Form ADV, which it must file with the SEC as an investment adviser registered under the Investment Advisers
Statement of Additional Information September 1, 2014 | Page 106 |
Act of 1940, provides information about the Investment Managers business, assets under management, affiliates and potential conflicts of interest. Part 1A of the Investment Managers Form ADV is available online through the SECs website at www.adviserinfo.sec.gov.
Additional actual or potential conflicts of interest and certain investment activity limitations that could affect the Funds may arise from the financial services activities of Ameriprise Financial and its affiliates, including, for example, the investment advisory/management services provided for clients and customers other than the Funds. In this regard, Ameriprise Financial is a major financial services company. Ameriprise Financial and its affiliates are engaged in a wide range of financial activities beyond the mutual fund-related activities of the Investment Manager, including, among others, broker-dealer (sales and trading), asset management, insurance and other financial activities. The broad range of financial services activities of Ameriprise Financial and its affiliates may involve multiple advisory, transactional, lending, financial and other interests in securities and other instruments, and in companies, that may be bought, sold or held by the Funds. The following describes certain actual and potential conflicts of interest that may be presented.
Actual and Potential Conflicts of Interest Related to the Investment Advisory/Management Activities of Ameriprise Financial and its Affiliates in Connection With Other Advised/Managed Funds and Accounts
The Investment Manager and other affiliates of Ameriprise Financial may advise or manage funds and accounts other than the Funds. In this regard, Ameriprise Financial and its affiliates may provide investment advisory/management and other services to other advised/managed funds and accounts that are similar to those provided to the Funds. The Investment Manager and Ameriprise Financials other investment adviser affiliates (including, for example, Columbia Wanger Asset Management, LLC) will give advice to and make decisions for all advised/managed funds and accounts, including the Funds, as they believe to be in that funds and/or accounts best interests, consistent with their fiduciary duties. The Funds and the other advised/managed funds and accounts of Ameriprise Financial and its affiliates are separately and potentially divergently managed, and there is no assurance that any investment advice Ameriprise Financial and its affiliates give to other advised/managed funds and accounts will also be given simultaneously or otherwise to the Funds.
A variety of other actual and potential conflicts of interest may arise from the advisory relationships of the Investment Manager and other Ameriprise Financial affiliates with other clients and customers. Advice given to the Funds and/or investment decisions made for the Funds by the Investment Manager or other Ameriprise Financial affiliates may differ from, or may conflict with, advice given to and/or investment decisions made for other advised/managed funds and accounts. As a result, the performance of the Funds may differ from the performance of other funds or accounts advised/managed by the Investment Manager or other Ameriprise Financial affiliates. Similarly, a position taken by Ameriprise Financial and its affiliates, including the Investment Manager, on behalf of other funds or accounts may be contrary to a position taken on behalf of the Funds. Moreover, Ameriprise Financial and its affiliates, including the Investment Manager, may take a position on behalf of other advised/managed funds and accounts, or for their own proprietary accounts, that is adverse to companies or other issuers in which the Funds are invested. For example, the Funds may hold equity securities of a company while another advised/managed fund or account may hold debt securities of the same company. If the portfolio company were to experience financial difficulties, it might be in the best interest of the Funds for the company to reorganize while the interests of the other advised/managed fund or account might be better served by the liquidation of the company. This type of conflict of interest could arise as the result of circumstances that cannot be generally foreseen within the broad range of investment advisory/management activities in which Ameriprise Financial and its affiliates engage.
Investment transactions made on behalf of other funds or accounts advised/managed by the Investment Manager or other Ameriprise Financial affiliates also may have a negative effect on the value, price or investment strategies of the Funds. For example, this could occur if another advised/managed fund or account implements an investment decision ahead of, or at the same time as, the Funds and causes the Funds to experience less favorable trading results than they otherwise would have experienced based on market liquidity factors. In addition, the other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates, including the other Columbia Funds, may have the same or very similar investment objective and strategies as the Funds. In this situation, the allocation of, and competition for, investment opportunities among the Funds and other funds and/or accounts advised/managed by the Investment Manager or other Ameriprise Financial affiliates may create conflicts of interest especially where, for example, limited investment availability is involved. The Investment Manager has adopted policies and procedures addressing the allocation of investment opportunities among the Funds and other funds and accounts advised by the Investment Manager and other affiliates of Ameriprise Financial. For more information, see Investment Management and Other Services The Investment Manager and Subadvisers Portfolio Manager(s) Potential Conflicts of Interests .
Sharing of Information among Advised/Managed Accounts
Ameriprise Financial and its affiliates also may possess information that could be material to the management of a Fund and may not be able to, or may determine not to, share that information with the Fund, even though the information might be
Statement of Additional Information September 1, 2014 | Page 107 |
beneficial to the Fund. This information may include actual knowledge regarding the particular investments and transactions of other advised/managed funds and accounts, as well as proprietary investment, trading and other market research, analytical and technical models, and new investment techniques, strategies and opportunities. Depending on the context, Ameriprise Financial and its affiliates generally will have no obligation to share any such information with the Funds. In general, employees of Ameriprise Financial and its affiliates, including the portfolio managers of the Investment Manager, will make investment decisions without regard to information otherwise known by other employees of Ameriprise Financial and its affiliates, and generally will have no obligation to access any such information and may, in some instances, not be able to access such information because of legal and regulatory constraints or the internal policies and procedures of Ameriprise Financial and its affiliates. For example, if the Investment Manager or another Ameriprise Financial affiliate, or their respective employees, come into possession of non-public information regarding another advised/managed fund or account, they may be prohibited by legal and regulatory constraints, or internal policies and procedures, from using that information in connection with transactions made on behalf of the Funds. For more information, see Investment Management and Other Services The Investment Manager and Subadvisers Portfolio Managers Potential Conflicts of Interests .
Soft Dollar Benefits
Certain products and services, commonly referred to as soft dollar services (including, to the extent permitted by law, research reports, economic and financial data, financial publications, proxy analysis, computer databases and other research-oriented materials), that the Investment Manager may receive in connection with brokerage services provided to a Fund may have the inadvertent effect of disproportionately benefiting other advised/managed funds or accounts. This could happen because of the relative amount of brokerage services provided to a Fund as compared to other advised/managed funds or accounts, as well as the relative compensation paid by a Fund.
Services Provided to Other Advised/Managed Accounts
Ameriprise Financial and its affiliates also may act as an investment adviser, investment manager, administrator, transfer agent, custodian, trustee, broker-dealer, agent, or in another capacity, for advised/managed funds and accounts other than the Funds, and may receive compensation for acting in such capacity. This compensation that the Investment Manager, Distributor and Transfer Agent and other Ameriprise Financial affiliates receive could be greater than the compensation Ameriprise Financial and its affiliates receive for acting in the same or similar capacity for the Funds. In addition, the Investment Manager, Distributor and Transfer Agent and other Ameriprise Financial affiliates may receive other benefits, including enhancement of new or existing business relationships. This compensation and/or the benefits that Ameriprise Financial and its affiliates may receive from other advised/managed funds and accounts and other relationships could potentially create incentives to favor other advised/managed funds and accounts over the Funds. Trades made by Ameriprise Financial and its affiliates for the Funds may be, but are not required to be, aggregated with trades made for other funds and accounts advised/managed by the Investment Manager and other Ameriprise Financial affiliates. If trades are aggregated among the Funds and those other funds and accounts, the various prices of the securities being traded may be averaged, which could have the potential effect of disadvantaging the Funds as compared to the other funds and accounts with which trades were aggregated.
Proxy Voting
Although the Investment Manager endeavors to make all proxy voting decisions with respect to the interests of the Funds for which it is responsible in accordance with its proxy voting policies and procedures, the Investment Managers proxy voting decisions with respect to a Funds portfolio securities may or may not benefit other advised/managed funds and accounts, and/or clients, of Ameriprise Financial and its affiliates. The Investment Manager has adopted proxy voting policies and procedures that are designed to provide that all proxy voting is done in the best interests of its clients, including the Funds, without any resulting benefit or detriment to the Investment and/or its affiliates, including Ameriprise Financial and its affiliates. For more information about the Funds proxy voting policies and procedures, see Investment Management and Other Services Proxy Voting Policies and Procedures.
Certain Trading Activities
The directors/trustees, officers and employees of Ameriprise Financial and its affiliates may buy and sell securities or other investments for their own accounts, and in doing so may take a position that is adverse to the Funds. In order to reduce the possibility that such personal investment activities of the directors/trustees, officers and employees of Ameriprise Financial and its affiliates will materially adversely affect the Funds, Ameriprise Financial and its affiliates have adopted policies and procedures, and the Funds, the Board, the Investment Manager and the Distributor have each adopted a Code of Ethics that addresses such personal investment activities. For more information, see Investment Management and Other Services Codes of Ethics .
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Affiliate Transactions
Subject to applicable legal and regulatory requirements, a Fund may enter into transactions in which Ameriprise Financial and/or its affiliates, or companies that are deemed to be affiliates of a Fund because of, among other factors, their or their affiliates ownership or control of shares of the Fund, may have an interest that potentially conflicts with the interests of the Fund. For example, an affiliate of Ameriprise Financial may sell securities to a Fund from an offering in which it is an underwriter or that it owns as a dealer, subject to applicable legal and regulatory requirements. Applicable legal and regulatory requirements also may prevent a Fund from engaging in transactions with an affiliate of the Fund, which may include Ameriprise Financial and its affiliates, or from participating in an investment opportunity in which an affiliate of a Fund participates.
Certain Investment Limitations
Regulatory and other restrictions may limit a Funds investment activities in various ways. For example, certain securities may be subject to ownership limitations due to regulatory limits on investments in certain industries (such as, for example, banking and insurance) and markets (such as emerging or international markets),or certain transactions (such as those involving certain derivatives or other instruments) or mechanisms imposed by certain issuers (such as, among others, poison pills). Certain of these restrictions may impose limits on the aggregate amount of investments that may be made by affiliated investors in the aggregate or in individual issuers. In these circumstances, the Investment Manager may be prevented from acquiring securities for a Fund that it might otherwise prefer to acquire if the acquisition would cause the Fund and its affiliated investors to exceed an applicable limit. These types of regulatory and other applicable limits are complex and vary significantly in different contexts including, among others, from country to country, industry to industry and issuer to issuer. The Investment Manager has policies and procedures in place designed to monitor and interpret these limits. Nonetheless, given the complexity of these limits, the Investment Manager and/or its affiliates may inadvertently breach these limits, and a Fund may therefore be required to sell securities that it might otherwise prefer to hold in order to comply with such limits. In addition, aggregate ownership limitations could cause performance dispersion among funds and accounts managed by the Investment Manager with similar investment objectives and strategies and portfolio management teams. For example, if further purchases in an issuer are restricted due to regulatory or other reasons, a portfolio manager would not be able to acquire securities or other assets of an issuer for a new Fund that may already be held by other funds and accounts with the same/similar investment objectives and strategies that are managed by the same portfolio management team. The Investment Manager may also choose to limit purchases in an issuer to a certain threshold for risk management purposes. If the holdings of the Investment Managers affiliates are included in that limitation, a Fund may be more limited in its ability to purchase a particular security or other asset than if the holdings of the Investment Managers affiliates had been excluded from the calculation. At certain times, a Fund may be restricted in its investment activities because of relationships that an affiliate of the Fund, which may include Ameriprise Financial and its affiliates, may have with the issuers of securities. This could happen, for example, if a Fund desired to buy a security issued by a company for which Ameriprise Financial or an affiliate serves as underwriter. In any of these scenarios, a Funds inability to participate (or participate further) in a particular investment, despite a portfolio managers desire to so participate, may negatively impact Fund performance. The internal policies and procedures of Ameriprise Financial and its affiliates covering these types of restrictions and addressing similar issues also may at times restrict a Funds investment activities. See also About the Funds Investments Certain Investment Activity Limits .
Actual and Potential Conflicts of Interest Related to Ameriprise Financial and its Affiliates Non-Advisory Relationships with Clients and Customers other than the Funds
The financial relationships that Ameriprise Financial and its affiliates may have with companies and other entities in which a Fund may invest can give rise to actual and potential conflicts of interest. Subject to applicable legal and regulatory requirements, a Fund may invest (a) in the securities of Ameriprise Financial and/or its affiliates and/or in companies in which Ameriprise Financial and its affiliates have an equity, debt or other interest, and/or (b) in the securities of companies held by other Columbia Funds. The purchase, holding and sale of such securities by a Fund may enhance the profitability and the business interests of Ameriprise Financial and/or its affiliates and/or other Columbia Funds. There also may be limitations as to the sharing with the Investment Manager of information derived from the non-investment advisory/management activities of Ameriprise Financial and its affiliates because of legal and regulatory constraints and internal policies and procedures (such as information barriers and ethical walls). Because of these limitations, Ameriprise Financial and its affiliates generally will not share information derived from its non-investment advisory/management activities with the Investment Manager.
Actual and Potential Conflicts of Interest Related to Ameriprise Financial Affiliates Marketing and Use of the Columbia Funds as Investment Options
Ameriprise Financial and its affiliates also provide a variety of products and services that, in some manner, may utilize the Columbia Funds as investment options. For example, the Columbia Funds may be offered as investments in connection with
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brokerage and other securities products offered by Ameriprise Financial and its affiliates, and may be utilized as investments in connection with fiduciary, investment management and other accounts offered by affiliates of Ameriprise Financial, as well as for other Columbia Funds structured as funds-of-funds. The use of the Columbia Funds in connection with other products and services offered by Ameriprise Financial and its affiliates may introduce economic and other conflicts of interest. These conflicts of interest are highlighted in account documentation and other disclosure materials for the other products and services offered by Ameriprise Financial and its affiliates.
Ameriprise Financial and its affiliates, including the Investment Manager, may make payments to their affiliates in connection with the promotion and sale of the Funds shares, in addition to the sales-related and other compensation that these parties may receive from the Funds. As a general matter, personnel of Ameriprise Financial and its affiliates do not receive compensation in connection with their sales or use of the Funds that is greater than that paid in connection with their sales of other comparable products and services. Nonetheless, because the compensation that the Investment Manager and other affiliates of Ameriprise Financial may receive for providing services to the Funds is generally based on the Funds assets under management and those assets will grow as shares of the Funds are sold, potential conflicts of interest may exist. See Brokerage Allocation and Related Practices Additional Selling and/or Servicing Agent Payments for more information.
The Funds, the Investment Manager, the subadvisers and the Distributor have adopted Codes of Ethics pursuant to the requirements of the 1940 Act, including Rule 17j-1 under the 1940 Act. These Codes of Ethics permit personnel subject to the Codes of Ethics to invest in securities, including securities that may be bought or held by the Funds. These Codes of Ethics are included as exhibits to Part C of the Funds registration statement. These Codes of Ethics can be reviewed and copied at the SECs Public Reference Room and may be obtained by calling the SEC at 202.551.8090; they also are available on the SECs website at www.sec.gov, and may be obtained, after paying a duplicating fee, by electronic request to publicinfo@sec.gov or by writing to the SECs Public Reference Section, Washington, D.C. 20549-1520.
Proxy Voting Policies and Procedures
General. The Funds have delegated to the Investment Manager the responsibility to vote proxies relating to portfolio securities held by the Funds, including Funds managed by subadvisers. In deciding to delegate this responsibility to the Investment Manager, the Board reviewed the policies adopted by the Investment Manager or summaries of such policies. These included the procedures that the Investment Manager follows when a vote presents a conflict between the interests of the Funds and their shareholders and the Investment Manager and its affiliates.
The Investment Managers policy is to vote all proxies for Fund securities in a manner considered by the Investment Manager to be in the best economic interests of its clients, including the Funds, without regard to any benefit or detriment to the Investment Manager, its employees or its affiliates. The best economic interests of clients is defined for this purpose as the interest of enhancing or protecting the value of client accounts, considered as a group rather than individually, as the Investment Manager determines in its discretion. The Investment Manager endeavors to vote all proxies of which it becomes aware prior to the vote deadline; provided, however, that in certain circumstances the Investment Manager may refrain from voting securities. For instance, the Investment Manager may refrain from voting foreign securities if it determines that the costs of voting outweigh the expected benefits of voting and typically will not vote securities if voting would impose trading restrictions. In addition, the Funds will generally refrain from recalling portfolio securities on loan to vote proxies based upon a determination that the costs and lost revenue to the Funds, combined with the administrative effects of recalling the securities, generally outweigh the benefit of voting the proxy. While in general, neither the Funds nor the Investment Manager assesses the economic impact and benefits of voting loaned securities on a case-by-case basis, situations may arise in which the Funds or the Investment Manager requests that loaned securities be recalled in order to vote a proxy. However, the Board has established a guideline to direct the Investment Manager to endeavor to recall loaned securities if (i) a proposal relating to a merger or acquisition, a material restructuring, a proxy contest or a shareholder rights plan is expected to be on the ballot or (ii) the prior years evaluation of the issuers pay-for-performance practices has raised concerns, based on the determination that, in these situations, the benefits of voting such proxies generally outweigh the costs or lost revenue to the Funds or any potential adverse administrative effects to the Funds of not recalling such securities.
Oversight. The operation of the Investment Managers proxy voting policy and procedures is overseen by a committee (the Proxy Voting Committee) composed of representatives of the Investment Managers equity investments, equity research, compliance, legal and operations functions. The Proxy Voting Committee has the responsibility to review, at least annually, the Investment Managers proxy voting policies to ensure consistency with internal policies, regulatory requirements, conflicts of interest and client disclosures.
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The Proxy Voting Committee also develops predetermined voting guidelines used to vote securities. The voting guidelines indicate whether to vote for, against or abstain from particular proposals, or whether the matter should be considered on a case-by-case basis. The Proxy Voting Committee may determine to vote differently from the guidelines on particular proposals in the event it determines that doing so is in the clients best economic interests. The Investment Manager may also consider the voting recommendations of analysts, portfolio managers and information obtained from outside resources, including one or more third-party research providers. When proposals are not covered by the voting guidelines or a voting determination must be made on a case-by-case basis, a portfolio manager or analyst will make the voting determination based on his or her determination of the clients best economic interests. In addition, the Proxy Voting Committee may determine proxy votes when proposals require special consideration.
Addressing Conflicts of Interest. The Investment Manager seeks to address potential material conflicts of interest by having predetermined voting guidelines. In addition, if the Investment Manager determines that a material conflict of interest exists, the Investment Manager will invoke one or more of the following conflict management practices: (i) causing the proxies to be voted in accordance with the recommendations of an independent third party (which may be the Investment Managers proxy voting administrator or research provider); (ii) causing the proxies to be delegated to an independent third party (which may be the Investment Managers proxy voting administrator or research provider); and (iii) in unusual cases, with the clients consent and upon ample notice, forwarding the proxies to the Investment Managers clients so that they may vote the proxies directly. A member of the Proxy Voting Committee is prohibited from voting on any proposal for which he or she has a conflict of interest by reason of a direct relationship with the issuer or other party affected by a given proposal. Persons making recommendations to the Proxy Voting Committee or its members are required to disclose to the committee any relationship with a party making a proposal or other matter known to the person that would create a potential conflict of interest.
Voting Proxies of Affiliated Underlying Funds . Certain Funds may invest in shares of other Columbia Funds (referred to in this context as underlying funds) and may own substantial portions of these underlying funds. If such Funds are in a master-feeder structure, the feeder Fund will either seek instructions from its shareholders with regard to the voting of proxies with respect to the master funds shares and vote such proxies in accordance with such instructions or vote the shares held by it in the same proportion as the vote of all other master fund shareholders. With respect to Funds that hold shares of underlying funds other than in a master-feeder structure, the holding Funds will vote proxies of underlying funds in the same proportion as the vote of all other holders of the underlying funds shares, unless the Board otherwise instructs.
Proxy Voting Agents. The Investment Manager has retained Institutional Shareholder Services Inc., a third-party vendor, as its proxy voting administrator to implement its proxy voting process and to provide recordkeeping and vote disclosure services. The Investment Manager has retained both Institutional Shareholder Services Inc. and Glass-Lewis & Co. to provide proxy research services.
Additional Information. Information regarding how the Columbia Funds (except certain Columbia Funds that do not invest in voting securities) voted proxies relating to portfolio securities during the most recent twelve month period ended June 30 will be available by August 31 of this year free of charge: (i) through the Columbia Funds website at www.columbiamanagement.com and (ii) on the SECs website at www.sec.gov. For a copy of the Investment Managers voting guidelines in effect on the date of this SAI, see Appendix C to this SAI.
Organization and Management of Wholly-Owned Subsidiaries
AP Alternative Strategies Fund (for purposes of this section, the Fund) may invest up to 25% of its total assets in one or more wholly-owned subsidiaries (referred to herein collectively as the Subsidiary) organized under the laws of the Cayman Islands, which will gain exposure to the commodities markets. The Subsidiarys commodity-linked investments (including commodity-linked futures contracts, structured notes, swaps and options), swaps and other investments are expected to produce leveraged exposure to the performance of the commodities markets. The Subsidiary also invests in investment-grade fixed income and other securities that may serve as collateral for its commodity-linked positions and may hold cash or cash equivalents, and may invest directly in commodities.
The Subsidiary is overseen by its own board of directors and is not registered under the 1940 Act. The Fund, as the sole shareholder of the Subsidiary, does not have all of the protections offered by the 1940 Act to shareholders of investment companies registered under the 1940 Act. However, the Subsidiary is wholly-owned and controlled by the Fund and the Funds Board of Trustees oversees the investment activities of the Fund, including its investment in the Subsidiary, and the
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Funds role as sole shareholder of the Subsidiary. The Investment Manager and the Funds subadvisers are responsible for the Subsidiarys day-to-day business pursuant to their separate agreements with, or in respect of, the Subsidiary. The following individuals serve as Directors of the Subsidiary:
Name, address,
year of birth |
Position held
with Subsidiary and length of service |
Principal occupation
during past five years |
||
Anthony P. Haugen 807 Ameriprise Financial Center Minneapolis, MN 55474-2405 1964 |
Director since 2013 | Vice President Finance, Ameriprise Financial, Inc. since June 2004 | ||
Amy K. Johnson 5228 Ameriprise Financial Center Minneapolis, MN 55474-2405 1965 |
Director since 2013 | See Fund Governance The Officers | ||
Paul D. Pearson 5228 Ameriprise Financial Center Minneapolis, MN 55474-2405 1956 |
Director since 2013 | See Fund Governance The Officers |
The Subsidiary has entered into separate contracts for the provision of advisory, administrative and custody services with the same service providers who provide those services to the Fund. Each Subsidiary will bear the fees and expenses incurred in connection with the services it receives pursuant to those agreements.
The financial information of the Subsidiary will be consolidated into the Funds financial statements, as contained within the Funds annual and semiannual reports provided to shareholders.
As described below under TAXATION Qualification as a Regulated Investment Company , in order to qualify for the special tax treatment accorded to RICs under the Code, the Fund must satisfy a 90% gross income requirement and an asset diversification requirement. These requirements are not applicable to the Subsidiary. The Subsidiary will take steps to ensure that income recognized by the Fund in respect of the Subsidiary will be qualifying income for purposes of the 90% gross income requirement. For purposes of the asset diversification requirement, the Fund will limit its investment in the Subsidiary in the aggregate to 25% or less of the Funds total assets as of the end of every quarter of its taxable year; the asset diversification requirement applies to the Funds interest in the Subsidiary but not to the Subsidiarys investments.
Changes in U.S. laws and/or the laws of the Cayman Islands could prevent the Fund and/or the Subsidiary from operating as described in the Funds prospectus and this SAI, and could negatively affect the Fund and its shareholders. For example, the Cayman Islands currently does not impose certain taxes on the Subsidiary, including any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax. If Cayman Islands laws were changed to require the Subsidiary to pay Cayman Islands taxes, the investment returns of the Fund would likely decrease.
By investing in one or more wholly owned subsidiaries organized under the laws of the Cayman Islands (Subsidiary), the Fund is indirectly exposed to the risks associated with the Subsidiarys investments. The derivatives and other investments held by the Subsidiary are subject to the same risks that would apply to similar investments if held directly by the Fund. The Subsidiary is subject to the same principal risk that the Fund is subject to (which are described in the applicable Funds prospectus). There can be no assurance that the investment objective of the Subsidiary will be achieved. The Subsidiary is not registered under the 1940 Act and, except as otherwise noted, is not subject to the investor protections of the 1940 Act. However, the Fund wholly owns and controls the Subsidiary, and the Fund and the Subsidiary are both managed by the Investment Manager, making it unlikely that the Subsidiary will take action contrary to the interests of the Fund and its shareholders. The Funds Board has oversight responsibility for the investment activities of the Fund, including its investment in the Subsidiary, and the Funds role as sole shareholder of the Subsidiary. In managing the Subsidiarys investment portfolio, the Investment Manager will manage the Subsidiarys portfolio in accordance with the Funds investment policies and restrictions. Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary, respectively, are organized, could result in the inability of the Fund and/or the Subsidiary to operate as described in the applicable prospectus and this SAI and could adversely affect the Fund and its shareholders. For example, the Cayman Islands currently does not impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax on the Subsidiary. If Cayman Islands law were changed and the Subsidiary was required to pay Cayman Island taxes, the investment returns of the Fund would likely decrease.
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Leadership Structure and Risk Oversight
The Board oversees the Trust and the Funds. The Trustees are responsible for overseeing the management and operations of the Trust. The Board consists of ten Trustees who have varied experience and skills. Nine of the Trustees including the Chairman of the Board, are Independent Trustees. The remaining Trustee, Mr. William F. Truscott, is an interested person (as defined in the 1940 Act) of the Columbia Funds by reason of his service as chairman of the board and president of the Investment Manager and director and chief executive officer of the Distributor. With respect to Mr. Truscott, the Trustees have concluded that having a senior officer of the Investment Manager serve as a Trustee benefits Fund shareholders by facilitating communication between the Independent Trustees and the senior management of the Investment Manager, and by assisting efforts to align the interests of the Investment Manager more closely with those of Fund shareholders. Further information about the backgrounds and qualifications of the Trustees can be found in the section Trustee Biographical Information and Qualifications . The Board has several standing committees, which are an integral part of each Funds overall governance and risk oversight structure. The committees include the Audit Committee, the Governance Committee, the Advisory Fees & Expenses Committee, the Compliance Committee, the Investment Oversight Committees and the Product and Distribution Committee. All of the members of each of the committees are Independent Trustees. The roles of each committee are more fully described in the section Standing Committees below.
The Funds have retained the Investment Manager as the Funds investment adviser and administrator. The Investment Manager provides the Funds with investment advisory services, and is responsible for day-to-day administration of the Funds and management of the risks that arise from the Funds investments and operations. The Board provides oversight of the services provided by the Investment Manager, including risk management services. In addition, each committee of the Board provides oversight of the Investment Managers risk management services with respect to the particular activities within the committees purview. In the course of providing oversight, the Board and the committees receive a wide range of reports with respect to the Funds activities, including reports regarding each Funds investment portfolio, the compliance of the Funds with applicable laws, and the Funds financial accounting and reporting. The Board and the relevant committees meet periodically with officers of the Funds and the Investment Manager and with representatives of various of the Funds service providers. The Board and certain committees also meet periodically with the Funds Chief Compliance Officer to receive reports regarding the compliance of the Funds and the Investment Manager with the federal securities laws and their internal compliance policies and procedures. In addition, the Board meets periodically with the portfolio managers of the Funds to receive reports regarding the management of the Funds, including their investment risks.
The Board reviews its leadership structure periodically and believes that its structure is appropriate, in light of the size of the Trust and the nature of its business, to enable the Board to exercise its oversight of the Funds and the other investment companies overseen by the Trustees. In particular, the Board believes that having an Independent Trustee serve as the chair of the Board and having other Independent Trustees serve as chairs of each committee promotes independence from the Investment Manager in setting agendas and conducting meetings. The Board believes that its committee structure makes the oversight process more efficient and more effective by allowing, among other things, smaller groups of Trustees to bring increased focus to matters within the purview of each committee.
Standing Committees
Ms. Lukitsh and Messrs. Hacker, Nelson, Neuhauser and Simpson are members of the Advisory Fees & Expenses Committee. The Advisory Fees & Expenses Committees functions include reviewing and making recommendations to the Board as to contracts requiring approval of a majority of the Independent Trustees and as to any other contracts that may be referred to the Advisory Fees & Expenses Committee by the Board.
Ms. Verville and Messrs. Hacker, Moffett and Simpson are members of the Audit Committee. The Audit Committees functions include making recommendations to the Board regarding the selection and performance of the independent registered public accounting firm, and reviewing matters relating to accounting and auditing practices and procedures, accounting records and the internal accounting controls of the Funds and certain service providers.
Mses. Kelly and Verville and Messrs. Moffett and Nelson are members of the Compliance Committee. The Compliance Committees functions include, among other things, monitoring, supervising and assessing the performance of the Funds Chief Compliance Officer and reviewing his compensation, reviewing periodically and recommending changes to the codes of ethics and compliance policies of the Funds and its service providers, and reviewing each Funds portfolio execution.
Mses. Kelly and Lukitsh and Messrs. Mayer and Neuhauser are members of the Product and Distribution Committee. The Product and Distribution Committees functions include, among other things, reviewing such matters relating to the
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marketing of the Funds and the distribution of the Funds shares, including matters relating to the design and positioning of funds, marketing and distribution strategies for the Funds and the effectiveness and competitiveness of such strategies, as the Committee may deem appropriate.
Messrs. Hacker, Mayer and Simpson and Ms. Kelly are members of the Governance Committee. The Governance Committees functions include recommending to the Board nominees for Independent Trustee positions and for appointments to various committees, overseeing the Boards periodic evaluations of the effectiveness of the Board, reviewing and recommending to the Board governance and other policies and practices to be followed in carrying out the Trustees duties and responsibilities and reviewing and making recommendations to the Board regarding the compensation of the Independent Trustees.
The Governance Committee will consider nominees for Trustee recommended by shareholders provided that such recommendations are submitted by the date disclosed in a Funds proxy statement and otherwise comply with applicable securities laws, including Rule 14a-8 under the 1934 Act. Such shareholder recommendations must be in writing and should be sent to the attention of the Governance Committee in care of the Fund at 225 Franklin Street, Boston, MA 02110. Shareholder recommendations should include the proposed nominees biographical information (including business experience for the past ten years) and a description of the qualifications of the proposed nominee, along with a statement from the proposed nominee that he or she is willing to serve and meets the requirements to serve as an Independent Trustee, if applicable.
Each Independent Trustee also serves on an Investment Oversight Committee (IOC). Each IOC is responsible for monitoring, on an ongoing basis, a select group of Columbia Funds overseen by the Board and gives particular consideration to such matters as each Funds adherence to its investment mandates, historical performance, changes in investment processes and personnel, and proposed changes to investment objectives. Investment personnel who manage the Funds attend IOC meetings from time to time to assist each IOC in its review of the Funds. Each IOC meets four times a year, as the applicable IOC did for each Funds most recently completed fiscal year. The members of the respective IOCs are as follows:
IOC #1: Messrs. Moffett, Neuhauser and Simpson and Ms. Verville.
IOC #2: Mr. Hacker, Mses. Kelly and Lukitsh, and Messrs. Mayer and Nelson.
The table below shows the number of times each committee met during each Funds most recent fiscal year. The table is organized by fiscal year end.
Fiscal Period |
Audit
Committee |
Governance
Committee |
Advisory Fees &
Expenses Committee |
Compliance
Committee |
Investment
Committee |
Product &
Distribution Committee |
||||||
For Funds with fiscal periods ending March 31 | 6 | 6 | 5 | 5 | 12 | 5 | ||||||
For Funds with fiscal periods
ending April 30 |
6 | 6 | 6 | 5 | 12 | 5 | ||||||
For Funds with fiscal periods
ending May 31 |
6 | 6 | 6 | 6 | 4 | 6 | ||||||
For Funds with fiscal periods
ending July 31 |
6 | 6 | 6 | 6 | 4 | 6 | ||||||
For Funds with fiscal periods ending August 31 | 6 | 6 | 6 | 6 | 4 | 6 | ||||||
For Funds with fiscal periods ending October 31 | 6 | 6 | 6 | 6 | 4 | 6 | ||||||
For Fund with fiscal periods ending December 31 | 5 | 5 | 5 | 4 | 4 | 5 |
Trustee Biographical Information and Qualifications
The following provides an overview of the considerations that led the Board to conclude that each individual serving as a Trustee should so serve. Generally, no one factor was decisive in the selection of an individual to join the Board. Among the factors the Board considered when concluding that an individual should serve on the Board were the following: (i) the individuals business and professional experience and accomplishments; (ii) the individuals ability to work effectively with the other Trustees; (iii) the individuals prior experience, if any, serving on the boards of public companies (including, where relevant, other investment companies) and other complex enterprises and organizations; and (iv) how the individuals skills, experience and attributes would contribute to an appropriate mix of relevant skills and experience on the Board.
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In respect of each current Trustee, the individuals substantial professional accomplishments and experience, including in fields related to the operations of the Fund, were a significant factor in the determination that, in light of the business and structure of the Trust, the individual should serve as a Trustee. Following is a summary of each Trustees particular professional experience and additional considerations that contributed to the Boards conclusion that an individual should serve as a Trustee:
Douglas A. Hacker Mr. Hacker has extensive executive experience, having served in various executive roles with United Airlines and more recently as an independent business executive. Mr. Hacker also has experience on other boards of directors. As former chief financial officer of United Airlines, Mr. Hacker has significant experience in accounting and financial management, including in a public company setting.
Janet Langford Kelly Ms. Kelly is Senior Vice President, General Counsel and Corporate Secretary for ConocoPhillips. Prior to joining ConocoPhillips Ms. Kelly held senior legal and leadership roles in other large corporations and law firms, including as a partner at the law firms Sidley & Austin and at Zelle, Hoffman, Voelbel, Mason and Gette. Ms. Kelly has previously served on the board of directors for a public company and various industry groups and non-profit organizations.
Nancy T. Lukitsh Ms. Lukitsh has extensive executive experience in the financial services industries, particularly with respect to the marketing of investment products, having served as Senior Vice President, Partner and Director of Marketing for Wellington Management Company, LLP. Ms. Lukitsh has previously served as Chair of Wellington Management Portfolios (commingled investment pools designed for non-U.S. institutional investors) and as a director of other Wellington affiliates. In addition, she has previously served on the boards of directors of various non-profit organizations. She is also a Chartered Financial Analyst.
William E. Mayer Mr. Mayer has significant executive and board experience with financial services and investment companies. Mr. Mayer, currently a partner at a private equity firm, also has significant executive experience and experience working in finance. Previously, Mr. Mayer was a professor and Dean of the College of Business and Management at the University of Maryland and was President and CEO of The First Boston Corporation.
David M. Moffett Mr. Moffett has extensive executive and board of director experience, including serving on audit committees for public companies. Mr. Moffett was selected as CEO when the Federal Home Loan Mortgage Corporation was placed under conservatorship in 2008, and served as a consultant to its interim chief executive officer and the board of directors until 2009. Formerly, Mr. Moffett was the CFO of a large U.S. bank holding company where his responsibilities included trust and wealth management.
Charles R. Nelson Dr. Nelson is an experienced investment company trustee, having served on the Board, and the boards of predecessor funds, since 1981. He served as Professor of Economics at the University of Washington from 1976 to 2011, he has written several books, authored numerous articles in economics and finance, and served on editorial boards of professional journals. He is a Fellow of the Econometric Society and his contributions were the subject of a conference at the Federal Reserve Bank of Atlanta in 2006. Additionally, he is an experienced consultant on economic and statistical matters.
John J. Neuhauser Dr. Neuhauser is an experienced investment company trustee, having served on the Board since 1985 and on the boards of other investment companies. In addition to his board experience, Dr. Neuhauser has extensive executive experience. He is currently the President of Saint Michaels College and has served in a variety of other leadership roles in higher education.
Patrick J. Simpson Mr. Simpson is a partner in the Portland, Oregon office of Perkins Coie LLP, an international law firm. Mr. Simpsons practice includes such relevant areas as corporate governance, corporate finance and securities law compliance.
Anne-Lee Verville Ms. Verville has significant executive experience. Prior to her retirement in 1997, she held various leadership and executive roles with IBM Corporation. Ms. Verville has previously served on the board of directors for a public company and non-profit organizations.
William F. Truscott Mr. Truscott has significant executive and board experience with financial services and investment companies. Mr. Truscott has served on the Board of Trustees of the Legacy RiverSource Funds and affiliated funds (Columbia Funds Board) since 2001. He has served as chairman of the board of the Investment Manager since May 2010 and since February 2012 has served as its president. From 2001 to April 2010, Mr. Truscott served as the president, chairman of the board and chief investment officer of the Investment Manager. He has served as director of the Distributor since May 2010 and since February 2012 has served as its chief executive officer. From 2008 to April 2010, Mr. Truscott served as chairman of the board and chief executive officer of the Distributor.
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The following table provides additional biographical information about the Trustees as of the date of this SAI, including their principal occupations during the past five years, although their specific titles may have varied over the period. The mailing address of each Trustee is: c/o Columbia Management Investment Advisers, LLC, 225 Franklin Street, Mail Drop BX32 05228, Boston, MA 02110.
Independent Trustee Biographical Information
Name, Year of Birth
and Position Held with the Trust |
Year First Appointed
or Elected as Trustee to any Fund Currently in the Columbia Funds Complex or a Predecessor Thereof |
Principal Occupation(s)
During the Past Five Years |
Number of
Funds in the Columbia Funds Complex Overseen |
Other Directorships Held by Trustee
Past Five Years |
||||
Douglas A. Hacker
(Born 1955) Trustee and Chairman of the Board |
1996 | Independent business executive since May 2006; Executive Vice President Strategy of United Airlines from December 2002 to May 2006; President of UAL Loyalty Services (airline marketing company) from September 2001 to December 2002; Executive Vice President and Chief Financial Officer of United Airlines from July 1999 to September 2001 | 56 | Spartan Stores, Inc. (food distributor); Nash Finch Company (food distributor) from 2005 to 2013; Aircastle Limited (aircraft leasing); and SeaCube Container Leasing Ltd. (container leasing) from 2010 to 2013 | ||||
Janet Langford Kelly
(Born 1957) Trustee |
1996 | Senior Vice President, General Counsel and Corporate Secretary, ConocoPhillips (integrated energy company) since September 2007; Deputy General Counsel Corporate Legal Services, ConocoPhillips from August 2006 to August 2007; Partner, Zelle, Hofmann, Voelbel, Mason & Gette LLP (law firm) from March 2005 to July 2006; Adjunct Professor of Law, Northwestern University from September 2004 to June 2006; Director, UAL Corporation (airline) from February 2006 to July 2006; Chief Administrative Officer and Senior Vice President, Kmart Holding Corporation (consumer goods) from September 2003 to March 2004 | 56 | None | ||||
Nancy T. Lukitsh (Born 1956) Trustee |
2011 | Senior Vice President, Partner and Director of Marketing, Wellington Management Company, LLP (investment adviser) from 1997 to 2010; Chair, Wellington Management Investment Portfolios (commingled non-U.S. investment pools) from 2007 to 2010; Director, Wellington Trust Company, NA and other Wellington affiliates from 1997 to 2010 | 56 | None | ||||
William E. Mayer (Born 1940)
Trustee |
1994 | Partner, Park Avenue Equity Partners (private equity) since February 1999; Dean and Professor, College of Business and Management, University of Maryland from 1992 to 1996 | 56 | DynaVox Inc. (speech creation); Lee Enterprises (print media); WR Hambrecht + Co. (financial service provider) from 2000 to 2012; BlackRock Kelso Capital Corporation (investment company); Premier, Inc. (healthcare) |
Statement of Additional Information September 1, 2014 | Page 116 |
Name, Year of Birth
and Position Held with the Trust |
Year First Appointed
or Elected as Trustee to any Fund Currently in the Columbia Funds Complex or a Predecessor Thereof |
Principal Occupation(s)
During the Past Five Years |
Number of
Funds in the Columbia Funds Complex Overseen |
Other Directorships Held by Trustee
Past Five Years |
||||
David M. Moffett (Born 1952) Trustee |
2011 | Retired. Chief Executive Officer, Federal Home Loan Mortgage Corporation, from 2008 to 2009; Senior Adviser, Global Financial Services Group, Carlyle Group, Inc., from 2007 to 2008; Vice Chairman and Chief Financial Officer, U.S. Bancorp, from 1993 to 2007 | 56 | CIT Group Inc. (commercial and consumer finance); eBay Inc. (online trading community); MBIA Inc. (financial service provider); E.W. Scripps Co. (print and television media); Building Materials Holding Corp. (building materials and construction services); Genworth Financial, Inc. (financial and insurance products and services); and University of Oklahoma Foundation | ||||
Charles R. Nelson
(Born 1942) Trustee |
1981 | Retired. Professor Emeritus, University of Washington since 2011; Professor of Economics, University of Washington from 1976 to 2011; Ford and Louisa Van Voorhis Professor of Political Economy, University of Washington from 1993 to 2011; Adjunct Professor of Statistics, University of Washington from 1980 to 2011; Associate Editor, Journal of Money, Credit and Banking from September 1993 to 2008; consultant on econometric and statistical matters | 56 | None | ||||
John J. Neuhauser
(Born 1943) Trustee |
1984 | President, Saint Michaels College since August 2007; Director or Trustee of several non-profit organizations, including Fletcher Allen Health Care, Inc.; Academic Vice President and Dean of Faculties, Boston College from August 1999 to October 2005; University Professor, Boston College from November 2005 to August 2007 | 56 | Liberty All-Star Equity Fund and Liberty All-Star Growth Fund (closed-end funds) | ||||
Patrick J. Simpson
(Born 1944) Trustee |
2000 | Partner, Perkins Coie LLP (law firm) | 56 | None | ||||
Anne-Lee
Verville
(Born 1945) Trustee |
1998 | Retired. General Manager, Global Education Industry from 1994 to 1997, President Application Systems Division from 1991 to 1994, Chief Financial Officer US Marketing & Services from 1988 to 1991, and Chief Information Officer from 1987 to 1988, IBM Corporation (computer and technology) | 56 | Enesco Group, Inc. (producer of giftware and home and garden decor products) from 2001 to 2006 |
Statement of Additional Information September 1, 2014 | Page 117 |
Interested Trustee Biographical Information
Name, Year of Birth
and Position Held with the Trust |
Year First Appointed
or Elected as Trustee to the Board |
Principal Occupation(s)
During the Past Five Years |
Number of
Funds in the Columbia Funds Complex Overseen |
Other Directorships
Past Five Years |
||||
William F. Truscott
(Born 1960) Trustee |
2012 | President, Columbia Management Investment Advisers, LLC since February 2012 (previously President, Chairman of the Board and Chief Investment Officer, from 2001 to April 2010); Chief Executive Officer, Global Asset Management, Ameriprise Financial, Inc. since September 2012 (previously, Chief Executive Officer, U.S. Asset Management & President, Annuities, from May 2010 to September 2012 and President U.S. Asset Management and Chief Investment Officer from 2005 to April 2010); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively (previously Chairman of the Board and Chief Executive Officer from 2006 to April 2010); Chairman of the Board and Chief Executive Officer, RiverSource Distributors, Inc. since 2006; Director, Threadneedle Asset management Holdings, SARL since 2014; President and Chief Executive Officer, Ameriprise Certificate Company, 2006 to August 2012 | 188 | Chairman of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; Director, Ameriprise Certificate Company, 2006 to January 2013 |
Trustees are compensated for their services to the Columbia Funds complex on a complex-wide basis, as shown in the table below. Mr. Truscott as an Interested Trustee receives no compensation from the Funds.
Aggregate Compensation from Fund
Independent Trustees |
||||||||||||||||||||||||||||||||||||||||
Fund |
Rodman L.
Drake (1) |
Douglas A.
Hacker |
Janet
Langford Kelly (2) |
Nancy T. Lukitsh |
William E.
Mayer |
David M. Moffett |
Charles R.
Nelson |
John J.
Neuhauser |
Patrick J. Simpson (3) |
Anne-Lee
Verville (4) |
||||||||||||||||||||||||||||||
For Funds with fiscal year ending March 31 |
|
|||||||||||||||||||||||||||||||||||||||
AP Growth Fund | $ | 6,289 | $ | 4,892 | $ | 4,459 | $ | 4,696 | $ | 4,459 | $ | 4,678 | $ | 4,457 | $ | 4,836 | $ | 4,510 | $ | 4,743 | ||||||||||||||||||||
Amount deferred | 671 | | 4,459 | | | | | | 1,436 | | ||||||||||||||||||||||||||||||
Pacific/Asia Fund | 3,111 | 2,400 | 2,184 | 2,307 | 2,184 | 2,308 | 2,187 | 2,379 | 2,208 | 2,330 | ||||||||||||||||||||||||||||||
Amount deferred | 294 | | 2,184 | | | | | | 703 | | ||||||||||||||||||||||||||||||
Select Large Cap Growth Fund | 20,788 | 16,126 | 14,693 | 15,497 | 14,693 | 15,448 | 14,696 | 15,960 | 14,857 | 15,629 | ||||||||||||||||||||||||||||||
Amount deferred | 2,234 | | 14,693 | | | | | | 4,617 | | ||||||||||||||||||||||||||||||
For Funds with fiscal year ending April 30 |
|
|||||||||||||||||||||||||||||||||||||||
Bond Fund | 5,397 | 4,139 | 3,789 | 3,972 | 3,789 | 3,987 | 3,780 | 4,097 | 3,829 | 3,994 | ||||||||||||||||||||||||||||||
Amount deferred | 536 | | 3,789 | | | | | | 1,244 | |
Statement of Additional Information September 1, 2014 | Page 118 |
Aggregate Compensation from Fund
Independent Trustees |
||||||||||||||||||||||||||||||||||||||||
Fund |
Rodman L.
Drake (1) |
Douglas A.
Hacker |
Janet
Langford Kelly (2) |
Nancy T. Lukitsh |
William E.
Mayer |
David M. Moffett |
Charles R.
Nelson |
John J.
Neuhauser |
Patrick J. Simpson (3) |
Anne-Lee
Verville (4) |
||||||||||||||||||||||||||||||
Corporate Income Fund | $ | 6,763 | $ | 5,185 | $ | 4,743 | $ | 4,985 | $ | 4,743 | $ | 4,966 | $ | 4,740 | $ | 5,136 | $ | 4,793 | $ | 4,984 | ||||||||||||||||||||
Amount deferred | 743 | | 4,743 | | | | | | 1,486 | | ||||||||||||||||||||||||||||||
Intermediate Bond Fund | 17,279 | 13,253 | 12,130 | 12,718 | 12,130 | 12,764 | 12,102 | 13,120 | 12,260 | 12,785 | ||||||||||||||||||||||||||||||
Amount deferred | 1,716 | | 12,130 | | | | | | 3,984 | | ||||||||||||||||||||||||||||||
Small Cap Value Fund I | 6,944 | 5,322 | 4,870 | 5,115 | 4,870 | 5,106 | 4,863 | 5,270 | 4,922 | 5,124 | ||||||||||||||||||||||||||||||
Amount deferred | 734 | | 4,870 | | | | | | 1,554 | | ||||||||||||||||||||||||||||||
U.S. Treasury Index Fund | 3,223 | 2,471 | 2,260 | 2,375 | 2,260 | 2,368 | 2,258 | 2,447 | 2,284 | 2,376 | ||||||||||||||||||||||||||||||
Amount deferred | 351 | | 2,260 | | | | | | 710 | | ||||||||||||||||||||||||||||||
For Funds with fiscal year ending May 31 |
|
|||||||||||||||||||||||||||||||||||||||
Dividend Income Fund | 21,420 | 17,434 | 15,565 | 16,739 | 15,688 | 17,196 | 15,567 | 17,130 | 15,856 | 16,612 | ||||||||||||||||||||||||||||||
Amount deferred | 4,595 | | 10,212 | | | | | | 7,243 | | ||||||||||||||||||||||||||||||
HY Municipal Fund | 5,009 | 3,897 | 3,479 | 3,743 | 3,505 | 3,844 | 3,481 | 3,830 | 3,544 | 3,714 | ||||||||||||||||||||||||||||||
Amount deferred | 1,042 | | 2,265 | | | | | | 1,623 | | ||||||||||||||||||||||||||||||
Risk Allocation Fund | 1,685 | 1,290 | 1,152 | 1,244 | 1,162 | 1,275 | 1,154 | 1,274 | 1,178 | 1,232 | ||||||||||||||||||||||||||||||
Amount deferred | 292 | | 810 | | | | | | 498 | | ||||||||||||||||||||||||||||||
For Funds with fiscal year ending July 31 |
|
|||||||||||||||||||||||||||||||||||||||
AMT-Free OR Intermediate Muni Bond Fund | 3,508 | 2,750 | 2,461 | 2,643 | 2,479 | 2,712 | 2,463 | 2,702 | 2,507 | 2,623 | ||||||||||||||||||||||||||||||
Amount deferred | 529 | | 1,842 | | | | | | 1,132 | | ||||||||||||||||||||||||||||||
Large Cap Growth Fund | 10,174 | 7,962 | 7,132 | 7,655 | 7,184 | 7,861 | 7,134 | 7,828 | 7,257 | 7,601 | ||||||||||||||||||||||||||||||
Amount deferred | 1,531 | | 5,340 | | | | | | 3,266 | | ||||||||||||||||||||||||||||||
Tax-Exempt Fund | 16,861 | 13,234 | 11,849 | 12,710 | 11,938 | 13,051 | 11,850 | 12,997 | 12,063 | 8,598 | ||||||||||||||||||||||||||||||
Amount deferred | 2,591 | | 8,816 | | | | | | 5,478 | | ||||||||||||||||||||||||||||||
Ultra Short Term Bond Fund | 6,831 | 5,376 | 4,812 | 5,161 | 4,849 | 5,299 | 4,814 | 5,277 | 4,903 | 5,124 | ||||||||||||||||||||||||||||||
Amount deferred | 1,010 | | 3,629 | | | | | | 2,242 | | ||||||||||||||||||||||||||||||
For the Funds with fiscal year ending August 31 |
|
|||||||||||||||||||||||||||||||||||||||
AP Core Plus Bond Fund | 16,467 | 12,822 | 11,594 | 12,187 | 11,686 | 12,756 | 11,477 | 12,591 | 11,816 | 12,338 | ||||||||||||||||||||||||||||||
Amount deferred | 1,701 | | 9,594 | | | | | | 5,420 | | ||||||||||||||||||||||||||||||
AP Small Cap Equity Fund | 3,343 | 2,604 | 2,361 | 2,473 | 2,378 | 2,598 | 2,333 | 2,558 | 2,403 | 2,513 | ||||||||||||||||||||||||||||||
Amount deferred | 315 | | 1,991 | | | | | | 1,109 | | ||||||||||||||||||||||||||||||
AP Alternative Strategies Fund | 5,073 | 4,283 | 4,023 | 4,143 | 4,040 | 4,275 | 3,993 | 4,234 | 4,067 | 4,185 | ||||||||||||||||||||||||||||||
Amount deferred | 1,837 | | 2,126 | | | | | | 2,684 | | ||||||||||||||||||||||||||||||
Balanced Fund | 6,016 | 4,686 | 4,249 | 4,450 | 4,279 | 4,674 | 4,198 | 4,603 | 4,323 | 4,522 | ||||||||||||||||||||||||||||||
Amount deferred | 572 | | 3,577 | | | | | | 1,995 | | ||||||||||||||||||||||||||||||
Contrarian Core Fund | 9,361 | 7,334 | 6,661 | 6,948 | 6,707 | 7,317 | 6,571 | 7,193 | 6,770 | 7,081 | ||||||||||||||||||||||||||||||
Amount deferred | 856 | | 5,566 | | | | | | 3,099 | | ||||||||||||||||||||||||||||||
Emerging Markets Fund | 4,047 | 3,178 | 2,893 | 3,005 | 2,911 | 3,177 | 2,850 | 3,117 | 2,937 | 3,075 | ||||||||||||||||||||||||||||||
Amount deferred | 331 | | 2,504 | | | | | | 1,397 | | ||||||||||||||||||||||||||||||
Global Energy and Natural Resources Fund f | 3,398 | 2,622 | 2,373 | 2,499 | 2,390 | 2,616 | 2,350 | 2,583 | 2,417 | 2,530 | ||||||||||||||||||||||||||||||
Amount deferred | 335 | | 1,979 | | | | | | 1,080 | | ||||||||||||||||||||||||||||||
Global Dividend Opportunity Fund | 4,396 | 3,406 | 3,085 | 3,240 | 3,108 | 3,398 | 3,052 | 3,351 | 3,141 | 3,287 | ||||||||||||||||||||||||||||||
Amount deferred | 420 | | 2,592 | | | | | | 1,424 | | ||||||||||||||||||||||||||||||
Global Technology Growth Fund | 2,392 | 1,851 | 1,677 | 1,762 | 1,689 | 1,848 | 1,659 | 1,822 | 1,708 | 1,787 | ||||||||||||||||||||||||||||||
Amount deferred | 227 | | 1,390 | | | | | | 772 | |
Statement of Additional Information September 1, 2014 | Page 119 |
Aggregate Compensation from Fund
Independent Trustees |
||||||||||||||||||||||||||||||||||||||||
Fund |
Rodman L.
Drake (1) |
Douglas A.
Hacker |
Janet
Langford Kelly (2) |
Nancy T. Lukitsh |
William E.
Mayer |
David M. Moffett |
Charles R.
Nelson |
John J.
Neuhauser |
Patrick J. Simpson (3) |
Anne-Lee
Verville (4) |
||||||||||||||||||||||||||||||
Greater China Fund | $ | 2,610 | $ | 2,023 | $ | 1,832 | $ | 1,925 | $ | 1,845 | $ | 2,017 | $ | 1,813 | $ | 1,991 | $ | 1,866 | $ | 1,951 | ||||||||||||||||||||
Amount deferred | 251 | | 1,537 | | | | | | 847 | | ||||||||||||||||||||||||||||||
Mid Cap Growth Fund | 8,929 | 6,930 | 6,291 | 6,583 | 6,333 | 6,927 | 6,213 | 6,816 | 6,393 | 6,701 | ||||||||||||||||||||||||||||||
Amount deferred | 812 | | 5,337 | | | | | | 2,925 | | ||||||||||||||||||||||||||||||
Small Cap Core Fund | 4,990 | 3,882 | 3,522 | 3,688 | 3,546 | 3,875 | 3,479 | 3,815 | 3,582 | 3,749 | ||||||||||||||||||||||||||||||
Amount deferred | 466 | | 2,974 | | | | | | 1,649 | | ||||||||||||||||||||||||||||||
Small Cap Growth Fund I | 5,491 | 4,260 | 3,867 | 4,048 | 3,893 | 4,258 | 3,819 | 4,190 | 3,931 | 4,120 | ||||||||||||||||||||||||||||||
Amount deferred | 500 | | 3,279 | | | | | | 1,798 | | ||||||||||||||||||||||||||||||
Value and Restructuring Fund | 10,392 | 7,931 | 7,178 | 7,582 | 7,230 | 7,934 | 7,111 | 7,835 | 7,306 | 7,672 | ||||||||||||||||||||||||||||||
Amount deferred | 1,024 | | 5,976 | | | | | | 3,157 | | ||||||||||||||||||||||||||||||
For Funds with fiscal year ending October 31 |
|
|||||||||||||||||||||||||||||||||||||||
AMT-Free CT Intermediate Muni Bond Fund | 2,573 | 1,974 | 1,785 | 1,877 | 1,798 | 1,988 | 1,767 | 1,941 | 1,840 | 1,923 | ||||||||||||||||||||||||||||||
Amount deferred | 114 | | 1,649 | | | | | | 792 | | ||||||||||||||||||||||||||||||
AMT-Free Intermediate Muni Bond Fund | 9,891 | 7,605 | 6,876 | 7,229 | 6,932 | 7,643 | 6,805 | 7,476 | 7,082 | 7,393 | ||||||||||||||||||||||||||||||
Amount deferred | 483 | | 6,300 | | | | | | 3,059 | | ||||||||||||||||||||||||||||||
AMT-Free MA Intermediate Muni Bond Fund | 3,051 | 2,341 | 2,118 | 2,226 | 2,134 | 2,358 | 2,096 | 2,303 | 2,182 | 2,281 | ||||||||||||||||||||||||||||||
Amount deferred | 138 | | 1,953 | | | | | | 940 | | ||||||||||||||||||||||||||||||
AMT-Free NY Intermediate Muni Bond Fund | 2,910 | 2,234 | 2,020 | 2,124 | 2,035 | 2,249 | 1,999 | 2,197 | 2,082 | 2,175 | ||||||||||||||||||||||||||||||
Amount deferred | 132 | | 1,863 | | | | | | 897 | | ||||||||||||||||||||||||||||||
Columbia California Tax-Exempt Fund | 3,585 | 2,753 | 2,490 | 2,617 | 2,509 | 2,771 | 2,464 | 2,707 | 2,565 | 2,680 | ||||||||||||||||||||||||||||||
Amount deferred | 165 | | 2,293 | | | | | | 1,106 | | ||||||||||||||||||||||||||||||
International Bond Fund | 2,144 | 1,645 | 1,488 | 1,564 | 1,499 | 1,658 | 1,472 | 1,618 | 1,534 | 1,604 | ||||||||||||||||||||||||||||||
Amount deferred | 93 | | 1,377 | | | | | | 662 | | ||||||||||||||||||||||||||||||
Columbia New York Tax-Exempt Fund | 2,526 | 1,939 | 1,754 | 1,843 | 1,767 | 1,953 | 1,736 | 1,907 | 1,808 | 1,890 | ||||||||||||||||||||||||||||||
Amount deferred | 112 | | 1,620 | | | | | | 781 | | ||||||||||||||||||||||||||||||
Columbia Strategic Income Fund | 10,043 | 7,743 | 7,003 | 7,352 | 7,059 | 7,782 | 6,928 | 7,605 | 7,212 | 7,529 | ||||||||||||||||||||||||||||||
Amount deferred | 484 | | 6,426 | | | | | | 3,148 | | ||||||||||||||||||||||||||||||
For the Fund with fiscal period ended December 31 |
|
|||||||||||||||||||||||||||||||||||||||
Real Estate Equity Fund | 3,816 | 2,966 | 2,662 | 2,825 | 2,681 | 2,958 | 2,666 | 2,921 | 2,740 | 2,863 | ||||||||||||||||||||||||||||||
Deferred | | | 2,662 | | | | | | 1,206 | |
1 | Mr. Drake served as Trustee until June 24, 2014. As of December 31, 2013, the value of Mr. Drakes account under the deferred compensation plan was $540,406. |
2 | As of December 31, 2013, the value of Ms. Kellys account under the deferred compensation plan was $358,719. |
3 |
As of December 31, 2013, the value of Mr. Simpsons account under the deferred compensation plan was $1,913,498. |
4 | As of December 31, 2013, the value of Ms. Vervilles account under the deferred compensation plan was $832,419. |
William F. Truscott, the Interested Trustee, is not compensated by the Funds for his services on the Board.
Statement of Additional Information September 1, 2014 | Page 120 |
Independent Trustee Compensation for the Fiscal Year Ended April 30, 2014
Name of Trustee |
Total Compensation from
the Columbia Funds Complex Paid to Independent Trustees For the Fiscal Year Ended* April 30, 2014 |
|||
Rodman L. Drake** |
$ | 343,000 | ||
Amount deferred |
$ | 38,500 | ||
Douglas A. Hacker |
$ | 263,000 | ||
Amount deferred |
| |||
Janet Langford Kelly |
$ | 240,500 | ||
Amount deferred |
$ | 240,500 | ||
Nancy Lukitsh |
$ | 253,000 | ||
Amount deferred |
| |||
William E. Mayer |
$ | 240,500 | ||
Amount deferred |
| |||
David M. Moffett |
$ | 251,500 | ||
Amount deferred |
| |||
Charles R. Nelson |
$ | 240,500 | ||
Amount deferred |
| |||
John J. Neuhauser |
$ | 260,500 | ||
Amount deferred |
| |||
Patrick J. Simpson |
$ | 243,000 | ||
Amount deferred |
$ | 74,500 | ||
Anne-Lee Verville |
$ | 252,500 | ||
Amount deferred |
|
* | All Trustees receive reimbursements for reasonable expenses related to their attendance at meetings of the Board or standing committees, which are not included in the amounts shown. |
** | Mr. Drake served as Trustee until June 24, 2014. |
Interested Trustee Compensation for the Fiscal Year Ended April 30, 2014
Name of Trustee |
Total Compensation from
the Columbia Funds Complex Paid to Interested Trustee for the Fiscal Year Ended April 30, 2014* |
|||
William F. Truscott |
$ | |
* | Mr. Truscott receives reimbursements for reasonable expenses related to his attendance at meetings of the Board or standing committees, which are not included in the amounts shown. Mr. Truscott became a Trustee in March 2012. |
Columbia Funds Deferred Compensation Plan
Under the terms of the Deferred Fee Agreement (the Deferred Compensation Plan), each eligible Trustee may elect, on an annual basis, to defer receipt of all or a portion of compensation payable to him or her for service as a Trustee for that calendar year (expressly, a Trustee may elect to defer his/her annual retainer, his/her attendance fees, or both components, which together comprise total compensation for service). Fees deferred by a Trustee are credited to a book reserve account (the Deferral Account) established by the Columbia Funds, the value of which is derived from the rate of return of one or more Columbia Funds selected by the Trustee (with accruals to the Deferral Account beginning at such time as a Trustees fund elections having been established, and proceeds for service having been paid into such account, and terminating at such time as when proceeds become payable to such Trustee under the Deferred Compensation Plan). Trustees may change their fund elections only in accordance with the provisions of the Deferred Compensation Plan.
Distributions from a Trustees Deferral Account will be paid by check, either in a lump sum or in annual installments. Payments made in annual installments are disbursed over a period of up to ten years, following such time as a Trustee may
Statement of Additional Information September 1, 2014 | Page 121 |
qualify to receive such payments. If a deferring Trustee dies prior to or after the commencement of the disbursement of amounts accrued in his/her Deferral Account, the balance of the account will be distributed to his/her designated beneficiary either in lump sum or in annual payments as established by such Trustee himself/herself, his/her beneficiary or his/her estate. Amounts payable under the Deferred Compensation Plan are not funded or secured in any way, and each deferring Trustee has the status of an unsecured creditor of the Columbia Fund(s) from which compensation has been deferred.
The tables below show, for each Trustee, the amount of Fund equity securities beneficially owned by the Trustee and the aggregate value of all investments in equity securities of the Funds, including notional amounts through the Deferred Compensation Plan, as noted, stated as one of the following ranges: A = $0; B = $1-$10,000; C = $10,001-$50,000; D = $50,001-$100,000; and E = over $100,000. The tables do not include ownership of Columbia Funds overseen by other boards of trustees/directors.
Independent Trustee Ownership for the Calendar Year Ended December 31, 2013
Fund |
Douglas A.
Hacker |
Janet Langford
Kelly |
Nancy T.
Lukitsh |
William E.
Mayer |
David
Moffett |
Charles R. Nelson |
||||||
AMT-Free CT Intermediate Muni Bond Fund |
A | A | A | A | A | A | ||||||
AMT-Free Intermediate Muni Bond Fund |
A | A | A | A | A | A | ||||||
AMT-Free MA Intermediate Muni Bond Fund |
A | A | A | A | A | A | ||||||
AMT-Free NY Intermediate Muni Bond Fund |
A | A | A | A | A | A | ||||||
AMT-Free OR Intermediate Muni Bond Fund |
A | A | A | A | A | A | ||||||
AP Alternative Strategies Fund |
A | A | A | A | A | A | ||||||
AP Core Plus Bond Fund |
A | A | A | A | A | A | ||||||
AP Growth Fund |
A | A | A | A | A | A | ||||||
AP Small Cap Equity Fund |
A | A | A | A | A | A | ||||||
Balanced Fund |
A | A | A | A | A | A | ||||||
Bond Fund |
A | A | A | A | A | A | ||||||
CA Tax-Exempt Fund |
A | A | A | A | A | A | ||||||
Contrarian Core Fund |
A | A | A | A | A | A | ||||||
Corporate Income Fund |
A | D 1 | A | A | A | E | ||||||
Diversified Real Return Fund |
A | A | A | A | A | A | ||||||
Dividend Income Fund |
A | E 1 | A | A | A | A | ||||||
Emerging Markets Fund |
E | A | A | A | A | A | ||||||
Global Dividend Opportunity Fund |
A | A | A | A | A | A | ||||||
Global Energy and Natural Resources Fund |
A | A | A | A | A | A | ||||||
Global ILB Plus Fund |
A | A | A | A | A | A | ||||||
Global Technology Growth Fund |
A | A | A | A | A | A | ||||||
Greater China Fund |
E | A | A | A | A | A | ||||||
High Yield Municipal Fund |
A | A | A | A | A | A | ||||||
Intermediate Bond Fund |
A | A | A | A | A | E | ||||||
International Bond Fund |
A | A | A | A | A | A | ||||||
Large Cap Growth Fund |
A | A | A | A | A | E | ||||||
Mid Cap Growth Fund |
A | A | A | A | A | E | ||||||
NY Tax-Exempt Fund |
A | A | A | A | A | A | ||||||
Pacific/Asia Fund |
A | A | A | A | A | A | ||||||
Real Estate Equity Fund |
A | A | A | A | A | A | ||||||
Risk Allocation Fund |
A | A | A | A | A | A | ||||||
Select Large Cap Growth Fund |
E | A | A | A | A | A | ||||||
Small Cap Core Fund |
A | A | A | A | A | A | ||||||
Small Cap Growth Fund I |
A | A | A | A | A | A | ||||||
Small Cap Value Fund I |
A | A | A | A | A | A |
Statement of Additional Information September 1, 2014 | Page 122 |
Fund |
Douglas A.
Hacker |
Janet Langford
Kelly |
Nancy T.
Lukitsh |
William E.
Mayer |
David
Moffett |
Charles R. Nelson |
||||||
Strategic Income Fund |
A | A | A | A | A | A | ||||||
Tax-Exempt Fund |
A | A | A | A | A | A | ||||||
Ultra Short Term Bond Fund |
A | A | A | A | A | A | ||||||
U.S. Treasury Index Fund |
A | A | A | A | A | A | ||||||
Value and Restructuring Fund |
A | A | A | A | A | A | ||||||
Aggregate Dollar Range of Equity Securities in all Funds in the Columbia Funds Complex Overseen by the Trustee |
E | E 1 | A | A | A | E |
1 | Includes the value of compensation payable under the Deferred Compensation Plan that is determined as if the amounts deferred had been invested, as of the date of deferral, in shares of one or more funds in the Columbia Funds Family overseen by the Trustee as specified by each Trustee. |
Independent Trustee Ownership for the Calendar Year Ended December 31, 2013
Fund |
John J.
Neuhauser |
Patrick J
Simpson |
AnneLee
Verville |
|||
AMT-Free CT Intermediate Muni Bond Fund |
A | A | A | |||
AMT-Free Intermediate Muni Bond Fund |
A | A | A | |||
AMT-Free MA Intermediate Muni Bond Fund |
A | A | A | |||
AMT-Free NY Intermediate Muni Bond Fund |
A | A | A | |||
AMT-Free OR Intermediate Muni Bond Fund |
A | A | A | |||
AP Alternative Strategies Fund |
A | A | A | |||
AP Core Plus Bond Fund |
A | A | A | |||
AP Growth Fund |
A | A | A | |||
AP Small Cap Equity Fund |
A | A | A | |||
Balanced Fund |
A | D | E 1 | |||
Bond Fund |
A | A | C 1 | |||
CA Tax-Exempt Fund |
A | A | A | |||
Contrarian Core Fund |
A | A | A | |||
Corporate Income Fund |
A | A | A | |||
Diversified Real Return Fund |
A | A | A | |||
Dividend Income Fund |
A | E 1 | E 1 | |||
Emerging Markets Fund |
A | E 1 | A | |||
Global Dividend Opportunity Fund |
A | A | A | |||
Global Energy and Natural Resources Fund |
A | E 1 | A | |||
Global ILB Plus Fund |
A | A | A | |||
Global Technology Growth Fund |
A | A | A | |||
Greater China Fund |
A | A | A | |||
High Yield Municipal Fund |
A | A | A | |||
Intermediate Bond Fund |
A | E 1 | A | |||
International Bond Fund |
A | A | A | |||
Large Cap Growth Fund |
A | E 1 | E 1 | |||
Mid Cap Growth Fund |
A | B | A | |||
NY Tax-Exempt Fund |
A | A | A | |||
Pacific/Asia Fund |
A | A | A | |||
Real Estate Equity Fund |
A | E 1 | A | |||
Risk Allocation Fund |
A | A | A | |||
Select Large Cap Growth Fund |
A | A | A | |||
Small Cap Core Fund |
A | A | A | |||
Small Cap Growth Fund I |
A | E 1 | A | |||
Small Cap Value Fund I |
D | E 1 | A |
Statement of Additional Information September 1, 2014 | Page 123 |
Fund |
John J.
Neuhauser |
Patrick J
Simpson |
AnneLee
Verville |
|||
Strategic Income Fund |
A | A | D 1 | |||
Tax-Exempt Fund |
E | A | A | |||
Ultra Short Term Bond Fund |
A | A | A | |||
U.S. Treasury Index Fund |
A | A | A | |||
Value and Restructuring Fund |
A | A | A | |||
Aggregate Dollar Range of Equity Securities in all Funds in the Columbia Funds Complex Overseen by the Trustee |
E | E 1 | E 1 |
1 | Includes the value of compensation payable under the Deferred Compensation Plan that is determined as if the amounts deferred had been invested, as of the date of deferral, in shares of one or more funds in the Columbia Funds Family overseen by the Trustee as specified by each Trustee. |
Interested Trustee Ownership for the Calendar Year Ended December 31, 2013
Fund |
William F.
Truscott |
|
AMT-Free CT Intermediate Muni Bond Fund |
A | |
AMT-Free Intermediate Muni Bond Fund |
A | |
AMT-Free MA Intermediate Muni Bond Fund |
A | |
AMT-Free NY Intermediate Muni Bond Fund |
A | |
AMT-Free OR Intermediate Muni Bond Fund |
A | |
AP Alternative Strategies Fund |
A | |
AP Core Plus Bond Fund |
A | |
AP Growth Fund |
A | |
AP Small Cap Equity Fund |
A | |
Balanced Fund |
A | |
Bond Fund |
A | |
CA Tax-Exempt Fund |
A | |
Contrarian Core Fund |
E | |
Corporate Income Fund |
C | |
Diversified Real Return Fund |
A | |
Dividend Income Fund |
A | |
Emerging Markets Fund |
E | |
Global Dividend Opportunity Fund |
A | |
Global Energy and Natural Resources Fund |
A | |
Global ILB Plus Fund |
A | |
Global Technology Growth Fund |
A | |
Greater China Fund |
A | |
High Yield Municipal Fund |
A | |
Intermediate Bond Fund |
C | |
International Bond Fund |
A | |
Large Cap Growth Fund |
C | |
Mid Cap Growth Fund |
A | |
NY Tax-Exempt Fund |
A | |
Pacific/Asia Fund |
A | |
Real Estate Equity Fund |
A | |
Risk Allocation Fund |
E | |
Select Large Cap Growth Fund |
E | |
Small Cap Core Fund |
C | |
Small Cap Growth Fund I |
A | |
Small Cap Value Fund I |
A |
Statement of Additional Information September 1, 2014 | Page 124 |
Fund |
William F.
Truscott |
|
Strategic Income Fund |
A | |
Tax-Exempt Fund |
A | |
Ultra Short Term Bond Fund |
A | |
U.S. Treasury Index Fund |
A | |
Value and Restructuring Fund |
A | |
Aggregate Dollar Range of Equity Securities in all Funds in the Columbia Funds Complex Overseen by the Trustee |
E |
The Officers
The following table provides basic information about the Officers of the Trust as of the date of this SAI, including their principal occupations during the past five years, although their specific titles may have varied over the period. The mailing address of each Officer is: c/o Columbia Management Investment Advisers, LLC, 225 Franklin Street, Mail Drop BX32 05228, Boston, MA 02110. In addition to Mr. Truscott, who is a Senior Vice President, the other officers are:
Officer Biographical Information
Name, address and year of birth |
Position and year first
predecessor thereof |
Principal occupation(s)
during past five years |
||
J. Kevin Connaughton 225 Franklin Street Boston, MA 02110 Born 1964 |
President and Principal Executive Officer (2009) | Senior Vice President and General Manager Mutual Fund Products, Columbia Management Investment Advisers, LLC, since May 2010; and President, Columbia Funds since 2009; previously, Managing Director, Columbia Management Advisors, LLC, from December 2004 to April 2010; Senior Vice President and Chief Financial Officer, Columbia Funds, from June 2008 to January 2009; and senior officer of Columbia Funds and affiliated funds since 2003. | ||
Michael G. Clarke 225 Franklin Street Boston, MA 02110 Born 1969 |
Treasurer (2011) and Chief Financial Officer (2009) | Vice President, Columbia Management Investment Advisers, LLC, since May 2010; previously, Managing Director of Fund Administration, Columbia Management Advisors, LLC, from September 2004 to April 2010; and senior officer of Columbia Funds and affiliated funds since 2002. | ||
Scott R. Plummer 5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1959 |
Senior Vice President (2006), Chief Legal Officer (2006) and Assistant Secretary (2011) | Senior Vice President and Assistant General Counsel Global Asset Management, Ameriprise Financial since February 2014 (previously, Senior Vice President and Lead Chief Counsel Asset Management, 2012February 2014; Vice President and Lead Chief Counsel Asset Management, 20102012; and Vice President and Chief Counsel Asset Management, 20052010); Senior Vice President, Chief Legal Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since June 2005; Vice President, Chief Counsel and Assistant Secretary, Columbia Management Investment Distributors, Inc. since 2008; Vice President, General Counsel and Secretary, Ameriprise Certificate Company since 2005; Chief Counsel, RiverSource Distributors, Inc. since 2006; senior officer of Columbia Funds and affiliated funds since 2006. | ||
Thomas P. McGuire 225 Franklin Street Boston, MA 02110 Born 1972 |
Chief Compliance Officer (2012) | Vice President Asset Management Compliance, Ameriprise Financial, Inc., since May 2010; Chief Compliance Officer, Ameriprise Certificate Company, since September 2010; Compliance Executive, Bank of America, from 2005 to April 2010. | ||
Colin Moore 225 Franklin Street Boston, MA 02110 Born 1958 |
Senior Vice President (2010) | Executive Vice President and Global Chief Investment Officer, Ameriprise Financial, Inc., since July 2013; Director and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC, since May 2010; previously, Manager, Managing Director and Chief Investment Officer, Columbia Management Advisors, LLC, from 2007 to April 2010. |
Statement of Additional Information September 1, 2014 | Page 125 |
Name, address and year of birth |
Position and year first
predecessor thereof |
Principal occupation(s)
during past five years |
||
Michael E. DeFao 225 Franklin Street Boston, MA 02110 Born 1968 |
Vice President (2011) and Assistant Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc., since May 2010; Associate General Counsel, Bank of America from 2005 to April 2010. | ||
Joseph F. DiMaria 225 Franklin Street Boston, MA 02110 Born 1968 |
Vice President (2011) and Chief Accounting Officer (2008) | Vice President Mutual Fund Administration, Columbia Management Investment Advisers, LLC, since May 2010; previously, Director of Fund Administration, Columbia Management Advisors, LLC, from 2006 to April 2010. | ||
Paul B. Goucher 100 Park Avenue New York, NY 10017 Born 1968 |
Vice President (2011) and Assistant Secretary (2008) | Vice President and Lead Chief Counsel, Ameriprise Financial, Inc., since November 2008 and January 2013, respectively (previously, Chief Counsel, from January 2010 to January 2013, and Group Counsel from November 2008 to January 2010); previously, Director, Managing Director and General Counsel, J. & W. Seligman & Co. Incorporated, from July 2008 to November 2008. | ||
Amy Johnson 5228 Ameriprise Financial Center Minneapolis, MN Born 1965 |
Vice President (2006) | Managing Director and Chief Operating Officer, Columbia Management Investment Advisers, LLC, since May 2010 (previously, Chief Administrative Officer, from 2009 to April 2010 and Vice President Asset Management and Trust Company Services, from 2006 to 2009). | ||
Paul D. Pearson 5228 Ameriprise Financial Center Minneapolis, MN Born 1956 |
Vice President (2011) and Assistant Treasurer (1999) | Vice President Investment Accounting, Columbia Management Investment Advisers, LLC, since May 2010; previously, Vice President Managed Assets, Investment Accounting, Ameriprise Financial, Inc. from 1998 to April 2010. | ||
Christopher O. Petersen 5228 Ameriprise Financial Center Minneapolis, MN 55474 Born 1970 |
Vice President and Secretary (2010) | Vice President and Chief Counsel, Ameriprise Financial, Inc., since January 2010 (previously, Vice President and Group Counsel or Counsel from 2004 to January 2010); officer of Columbia Funds and affiliated funds since 2007. | ||
Stephen T. Welsh 225 Franklin Street Boston, MA 02110 Born 1957 |
Vice President (2006) | President and Director, Columbia Management Investment Services Corp., since May 2010; previously, President and Director, Columbia Management Services, Inc., from 2004 to April 2010; and Managing Director, Columbia Management Distributors, Inc., from 2007 to April 2010. |
Statement of Additional Information September 1, 2014 | Page 126 |
BROKERAGE ALLOCATION AND RELATED PRACTICES
General Brokerage Policy, Brokerage Transactions and Broker Selection
The Investment Manager (or the investment subadviser(s) who make the day-to-day investment decisions for a Fund, as applicable) is responsible for decisions to buy and sell securities for each Fund, for the selection of broker-dealers, for the execution of a Funds securities transactions and for the allocation of brokerage commissions in connection with such transactions, subject to policies established by the Board. The Investment Managers primary consideration in effecting a security transaction is to obtain the best net price and the most favorable execution of the order. Purchases and sales of securities on a securities exchange are effected through brokers who charge negotiated commissions for their services. Orders may be directed to any broker to the extent and in the manner permitted by applicable law.
In the over-the-counter market, securities generally are traded on a net basis with dealers acting as principals for their own accounts without stated commissions, although the price of a security usually includes a profit to the dealer. In underwritten offerings, securities are bought at a fixed price that includes an amount of compensation to the underwriter, generally referred to as the underwriters concession or discount. On occasion, certain money market instruments may be bought directly from an issuer, in which case no commissions or discounts are paid.
In placing orders for portfolio securities of the Funds, the Investment Manager gives primary consideration to obtaining the best net prices and most favorable execution. This means that the Investment Manager will seek to execute each transaction at a price and commission, if any, which provides the most favorable total cost or proceeds reasonably attainable in the circumstances. In seeking such execution, the Investment Manager will use its best judgment in evaluating the terms of a transaction, and will give consideration to various relevant factors, including, without limitation, the size and type of the transaction, the nature and character of the market for the security, the confidentiality, speed and certainty of effective execution required for the transaction, the general execution and operational capabilities of the broker-dealer, the reputation, reliability, experience and financial condition of the broker-dealer, the value and quality of the services rendered by the broker-dealer in this instance and other transactions and the reasonableness of the spread or commission, if any. Research services received from broker-dealers supplement the Investment Managers own research and may include the following types of information: statistical and background information on industry groups and individual companies; forecasts and interpretations with respect to U.S. and foreign economies, securities, markets, specific industry groups and individual companies; information on political developments; Fund management strategies; performance information on securities and information concerning prices of securities; and information supplied by specialized services to the Investment Manager and to the Board with respect to the performance, investment activities and fees and expenses of other mutual funds. Such information may be communicated electronically, orally or in written form. Research services also may include the arranging of meetings with management of companies and the provision of access to consultants who supply research information.
The outside research is useful to the Investment Manager since, in certain instances, the broker-dealers utilized by the Investment Manager may follow a different universe of securities issuers and other matters than those that the Investment Managers staff can follow. In addition, this research provides the Investment Manager with a different perspective on financial markets, even if the securities research obtained relates to issuers followed by the Investment Manager. Research services that are provided to the Investment Manager by broker-dealers are available for the benefit of all accounts managed or advised by the Investment Manager. In some cases, the research services are available only from the broker-dealer providing such services. In other cases, the research services may be obtainable from alternative sources. The Investment Manager is of the opinion that because the broker-dealer research supplements rather than replaces the Investment Managers own research, the receipt of such research does not tend to decrease the Investment Managers expenses, but tends to improve the quality of its investment advice. However, to the extent that the Investment Manager would have bought any such research services had such services not been provided by broker-dealers, the expenses of such services to the Investment Manager could be considered to have been reduced accordingly. Certain research services furnished by broker-dealers may be useful to the clients of the Investment Manager other than the Funds. Conversely, any research services received by the Investment Manager through the placement of transactions of other clients may be of value to the Investment Manager in fulfilling its obligations to the Funds. The Investment Manager is of the opinion that this material is beneficial in supplementing its research and analysis; and, therefore, it may benefit the Trust by improving the quality of the Investment Managers investment advice. The advisory fees paid by the Trust are not reduced because the Investment Manager receives such services.
Under Section 28(e) of the 1934 Act, the Investment Manager shall not be deemed to have acted unlawfully or to have breached its fiduciary duty solely because under certain circumstances it has caused the account to pay a higher commission than the lowest available. To obtain the benefit of Section 28(e), the Investment Manager must make a good faith
Statement of Additional Information September 1, 2014 | Page 127 |
determination that the commissions paid are reasonable in relation to the value of the brokerage and research services provided by such member, broker, or dealer, viewed in terms of either that particular transaction or his overall responsibilities with respect to the accounts as to which he exercises investment discretion. Accordingly, the price to a Fund in any transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the portfolio execution services offered. Some broker-dealers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by the Investment Managers clients, including the Funds.
Commission rates are established pursuant to negotiations with broker-dealers based on the quality and quantity of execution services provided by broker-dealers in light of generally prevailing rates. On exchanges on which commissions are negotiated, the cost of transactions may vary among different broker-dealers. Transactions on foreign stock exchanges involve payment of brokerage commissions that generally are fixed. Transactions in both foreign and domestic over-the-counter markets generally are principal transactions with dealers, and the costs of such transactions involve dealer spreads rather than brokerage commissions. With respect to over-the-counter transactions, the Investment Manager, where possible, will deal directly with dealers who make a market in the securities involved, except in those circumstances in which better prices and execution are available elsewhere.
In certain instances, there may be securities that are suitable for a Fund as well as for one or more of the other clients of the Investment Manager. Investment decisions for the Funds and for the Investment Managers other clients are made with the goal of achieving their respective investment objectives. A particular security may be bought or sold for only one client even though it may be held by, or bought or sold for, other clients. Likewise, a particular security may be bought for one or more clients when one or more other clients are selling that same security. Some simultaneous transactions are inevitable when a number of accounts receive investment advice from the same investment adviser, particularly when the same security is suitable for the investment objectives of more than one client. When two or more clients are engaged simultaneously in the purchase or sale of the same security, the securities are allocated among clients in a manner believed to be equitable to each. In some cases, this policy could have a detrimental effect on the price or volume of the security in a particular transaction that may affect the Funds.
The Funds may participate, if and when practicable, in bidding for the purchase of portfolio securities directly from an issuer in order to take advantage of the lower purchase price available to members of a bidding group. A Fund will engage in this practice, however, only when the Investment Manager, in its sole discretion, believes such practice to be otherwise in such Funds interests.
The Trust will not execute portfolio transactions through, or buy or sell portfolio securities from or to, the Distributor, the Investment Manager, the Administrator or their affiliates acting as principal (including repurchase and reverse repurchase agreements), except to the extent permitted by applicable law, regulation or order. However, the Investment Manager is authorized to allocate buy and sell orders for portfolio securities to certain broker-dealers and financial institutions, including, in the case of agency transactions, broker-dealers and financial institutions that are affiliated with Ameriprise Financial. To the extent that a Fund executes any securities trades with an affiliate of Ameriprise Financial, such Fund does so in conformity with Rule 17e-1 under the 1940 Act and the procedures that such Fund has adopted pursuant to the rule. In this regard, for each transaction, the Board will determine that the transaction is effected in accordance with the Funds Rule 17e-1 procedures, which require: (i) the transaction resulted in prices for and execution of securities transactions at least as favorable to the particular Fund as those likely to be derived from a non-affiliated qualified broker-dealer; (ii) the affiliated broker-dealer charged the Fund commission rates consistent with those charged by the affiliated broker-dealer in similar transactions to clients comparable to the Fund and that are not affiliated with the broker-dealer in question; and (iii) the fees, commissions or other remuneration paid by the Fund did not exceed 2% of the sales price of the securities if the sale was effected in connection with a secondary distribution, or 1% of the purchase or sale price of such securities if effected in other than a secondary distribution.
Certain affiliates of Ameriprise Financial may have deposit, loan or commercial banking relationships with the corporate users of facilities financed by industrial development revenue bonds or private activity bonds bought by certain of the Columbia Funds. Ameriprise Financial or certain of its affiliates may serve as trustee, custodian, tender agent, guarantor, placement agent, underwriter, or in some other capacity, with respect to certain issues of securities. Under certain circumstances, a Fund may buy securities from a member of an underwriting syndicate in which an affiliate of Ameriprise Financial is a member. The Trust has adopted procedures pursuant to Rule 10f-3 under the 1940 Act, and intends to comply with the requirements of Rule 10f-3, in connection with any purchases of securities that may be subject to Rule 10f-3.
Given the breadth of the Investment Managers investment management activities, investment decisions for the Funds are not always made independently from those for other funds, or other investment companies and accounts advised or managed by
Statement of Additional Information September 1, 2014 | Page 128 |
the Investment Manager. When a purchase or sale of the same security is made at substantially the same time on behalf of one or more of the Columbia Funds and another investment portfolio, investment company or account, the transaction will be averaged as to price and available investments allocated as to amount in a manner which the Investment Manager believes to be equitable to the Funds and such other funds, investment portfolio, investment company or account. In some instances, this investment procedure may adversely affect the price paid or received by a Fund or the size of the position obtained or sold by the Fund. To the extent permitted by law, the Investment Manager may aggregate the securities to be sold or bought for the Funds with those to be sold or bought for other funds, investment portfolios, investment companies, or accounts in executing transactions.
See Investment Management and Other Services Other Roles and Relationships of Ameriprise Financial and its Affiliates Certain Conflicts of Interest for more information about these and other conflicts of interest.
The following charts reflect the amounts of brokerage commissions paid by the Funds for the three most recently completed fiscal years. In certain instances, the Funds may pay brokerage commissions to broker-dealers that are affiliates of Ameriprise Financial. As indicated above, all such transactions involving the payment of brokerage commissions to affiliates are done in compliance with Rule 17e-1 under the 1940 Act.
Aggregate Brokerage Commissions Paid by the Funds
The following charts reflect the aggregate amount of brokerage commissions paid by the Funds for the three most recently completed fiscal years. Differences, year to year, in the amount of brokerage commissions paid by a Fund were primarily the result of increased market volatility as well as shareholder purchase and redemption activity in the Fund.
Total Brokerage Commissions
Fund | 2014 | 2013 | 2012 | |||||||||
For Funds with fiscal period ended March 31 |
||||||||||||
AP Growth Fund |
$ | 603,846 | $ | 408,004 | | |||||||
Pacific/Asia Fund |
975,653 | 794,725 | $ | 664,375 | ||||||||
Select Large Cap Growth Fund |
2,355,987 | 2,086,104 | 3,367,597 | |||||||||
For Funds with fiscal period ended April 30 |
||||||||||||
Bond Fund (a) |
14,153 | 21,942 | 10,809 | |||||||||
Corporate Income Fund (a) |
18,989 | 23,676 | 12,744 | |||||||||
Intermediate Bond Fund (a) |
62,945 | 80,619 | 53,399 | |||||||||
Small Cap Value Fund I (b) |
2,220,756 | 2,478,374 | 1,748,075 | |||||||||
U.S. Treasury Index Fund (a) |
0 | | | |||||||||
Fund | 2013 |
2012 |
2011 |
|||||||||
For Funds with fiscal period ended May 31 |
||||||||||||
Dividend Income Fund (c) |
1,853,861 | 2,176,548 | 1,118,331 | |||||||||
HY Municipal Fund (d) |
| | | |||||||||
Risk Allocation Fund |
3,356 | | | |||||||||
For Funds with fiscal period ended July 31 |
||||||||||||
AMT-Free OR Intermediate Muni Bond Fund (f) |
| | | |||||||||
Large Cap Growth Fund (e) |
2,900,260 | 3,500,338 | 3,408,197 | |||||||||
Tax-Exempt Fund (g) |
| | 1,886 | |||||||||
Ultra Short Term Bond Fund |
| | | |||||||||
For Funds with fiscal period ended August 31 |
||||||||||||
AP Alternative Strategies Fund (k) |
544,925 | 264,107 | | |||||||||
AP Core Plus Bond Fund (k) |
149,453 | 54,942 | | |||||||||
AP Small Cap Equity Fund (k) |
965,684 | 4,440,156 | | |||||||||
Balanced Fund |
524,505 | 587,880 | 498,630 |
Statement of Additional Information September 1, 2014 | Page 129 |
Fund | 2013 |
2012 |
2011 |
|||||||||
Contrarian Core Fund (h) |
$ | 1,494,935 | $ | 1,516,809 | $ | 1,488,918 | ||||||
Emerging Markets Fund (i) |
3,805,177 | 3,789,468 | 1,684,409 | |||||||||
Global Dividend Opportunity Fund |
890,272 | 1,570,568 | 1,325,739 | |||||||||
Global Energy and Natural Resources Fund (i) |
373,043 | 2,465,946 | 6,137,174 | |||||||||
Global Technology Growth Fund |
347,976 | 869,734 | 1,388,641 | |||||||||
Greater China Fund |
390,131 | 225,863 | 326,213 | |||||||||
Mid Cap Growth Fund |
3,171,321 | 3,638,725 | 3,716,464 | |||||||||
Small Cap Core Fund (h) |
800,017 | 669,303 | 748,746 | |||||||||
Small Cap Growth Fund I |
2,759,776 | 2,781,535 | 3,227,355 | |||||||||
Value and Restructuring Fund (i) |
1,328,880 | 5,937,219 | 3,324,224 | |||||||||
For Funds with fiscal period ended October 31 |
||||||||||||
AMT-Free CT Intermediate Muni Bond Fund |
| | | |||||||||
AMT-Free Intermediate Muni Bond Fund |
| | | |||||||||
AMT-Free MA Intermediate Muni Bond Fund |
| | | |||||||||
AMT-Free NY Intermediate Muni Bond Fund |
| | | |||||||||
CA Tax-Exempt Fund |
| | | |||||||||
International Bond Fund (j) |
445 | 354 | 60 | |||||||||
NY Tax-Exempt Fund |
| | | |||||||||
Strategic Income Fund (j) |
143,363 | 137,974 | 86,139 | |||||||||
For Funds with fiscal period ended December 31 |
||||||||||||
Real Estate Equity Fund |
816,359 | 640,257 | 1,099,715 |
(a) | These Funds changed their fiscal year end in 2012 from March 31 to April 30. For the fiscal year ended 2012, the information shown is for the 13-month period from April 1, 2011 to April 30, 2012. For the fiscal year ended March 31, 2012, Bond Fund paid brokerage commissions of $7,922, Corporate Income Fund paid brokerage commissions of $12,300 and Intermediate Bond Fund paid brokerage commissions of $48,655. For the fiscal period from April 1, 2012 to April 30, 2012 Bond Fund paid brokerage commissions of $2,887, Corporate Income Fund paid brokerage commissions of $444 and Intermediate Bond Fund paid brokerage commissions of $4,744. |
(b) | Small Cap Value Fund I changed its fiscal year end in 2012 from June 30 to April 30. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to April 30, 2012. |
(c) | Dividend Income Fund changed its fiscal year end in 2012 from September 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. |
(d) | HY Municipal Fund changed its fiscal year end in 2012 from June 30 to May 31. For the fiscal year ended 2012, the information shown is for the period from July 1, 2011 to May 31, 2012. For the fiscal year ended 2011, the information shown is from July 1, 2010 to June 30, 2011. |
(e) | Large Cap Growth Fund changed its fiscal year end in 2012 from September 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to September 30, 2011. |
(f) | AMT-Free OR Intermediate Muni Bond Fund changed its fiscal year end in 2012 from August 31 to July 31. For the fiscal year ended 2012, the information shown is for the period from September 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from September 1, 2010 to August 31, 2011. |
(g) | Tax-Exempt Fund changed its fiscal year end in 2012 from November 30 to July 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to July 31, 2012. For the fiscal year ended 2011, the information shown is from October 1, 2010 to November 30, 2011. |
(h) | Contrarian Core Fund and Small Cap Core Fund changed their fiscal year ends in 2012 from September 30 to August 31. For the fiscal year ended 2012, the information shown is for the period from October 1, 2011 to August 31, 2012. For the fiscal year ended 2011, the information shown is for the twelve months ended September 30, 2011. |
(i) | Emerging Markets Fund, Global Energy and Natural Resources Fund and Value and Restructuring Fund changed their fiscal year ends in 2012 from March 31 to August 31. For the fiscal year ended 2012, the information shown is for the 17-month period from April 1, 2011 to August 31, 2012. For the fiscal year ended March 31, 2012, Emerging Markets Fund paid brokerage commissions of $1,973,067, Global Energy and Natural Resources Fund paid brokerage commissions of 1,876,448, and Value and Restructuring Fund paid brokerage commissions of $2,905,070. For the fiscal period from April 1, 2012 to August 31, 2012, Emerging Markets Fund paid brokerage commissions of $1,816,401, Global Energy and Natural Resources Fund paid brokerage commissions of 589,498, and Value and Restructuring Fund paid brokerage commissions of $3,032,149. For the fiscal years ended 2011, the information shown is for the twelve months ended March 31, 2011. |
(j) |
International Bond Fund and Strategic Income Fund changed their fiscal year ends in 2012 from May 31 to October 31. For the fiscal year ended 2012, the information shown is for the 17-month period from June 1, 2011 to October 31, 2012. For the fiscal year ended May 31, 2012, International Bond Fund paid brokerage commissions of $200 and Strategic Income Fund paid brokerage commissions of |
Statement of Additional Information September 1, 2014 | Page 130 |
$73,021. For the fiscal period from June 1, 2012 to October 31, 2012, International Bond Fund paid brokerage commissions of $154 and Strategic Income Fund paid brokerage commissions of $64,953. For the fiscal years ended 2011, the information shown is for the twelve months ended May 31, 2011. |
(k) | AP Core Plus Bond and AP Small Cap Equity Fund commenced operations on April 20, 2012 and AP Alternative Strategies Fund commenced operations on April 23, 2012. For the fiscal year ended 2012, the information shown is from commencement of operations to August 31, 2012. |
Brokerage Commissions Paid by the Funds to Certain Broker-Dealers
Certain Funds paid brokerage commissions to affiliated broker-dealer, Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), during the three most recently completed fiscal years, as indicated in the following table:
Fund | Broker-Dealer |
Aggregate dollar
amount of commissions paid to broker |
Percentage of the funds
aggregate brokerage commission paid to the certain broker-dealer during the funds most recent fiscal year |
Percentage of the funds
aggregate dollar amount of transactions involving the payment of commission effected through the certain broker-dealer during the most recent fiscal year funds |
||||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||||||
For Funds with fiscal period ending August 31: |
|
|||||||||||||||||||||||
Contrarian Core Fund |
|
Merrill Lynch*
Pierce Fenner Smith (MLPFS) |
|
| | $ | 7,713 | 0 | % | 0 | % | |||||||||||||
Emerging Markets Fund |
MLPFS | | | $ | 7,484 | 0 | % | 0 | % | |||||||||||||||
Global Energy and Natural Resources Fund |
MLPFS | | | $ | 1,572 | 0 | % | 0 | % | |||||||||||||||
Global Dividend Opportunity Fund |
MLPFS | | | $ | 8,363 | 0 | % | 0 | % |
* | Prior to May 1, 2010, MLPF&S (as of January 1, 2009) and other broker-dealers affiliated with BANA were affiliated broker-dealers of the Fund by virtue of being under common control with the Previous Adviser. The affiliation created by this relationship ended on May 1, 2010, when the investment advisory agreement with the Previous Adviser was terminated and the Fund entered into a new investment management services agreement with the Investment Manager. However, BANA, on behalf of its fiduciary accounts, continues to have investments in certain of the Columbia Funds. The amounts shown include any brokerage commissions paid to MLPF&S after May 1, 2010. |
The Funds or the Investment Manager, through an agreement or understanding with a broker-dealer, or otherwise through an internal allocation procedure, may direct, subject to applicable legal requirements, the Funds brokerage transactions to a broker-dealer because of the research services it provides the Funds or the Investment Manager.
During each Funds most recent applicable fiscal year (or period), the Funds directed certain brokerage transactions and paid related commissions in the amounts as follows:
Brokerage Directed for Research
Fund |
Amount of
transactions |
Amount of
commissions imputed or paid |
||||||
For fiscal period ended in 2014 | ||||||||
For Funds with fiscal period ending March 31 |
||||||||
AP Growth Fund |
$ | 663,284,793 | $ | 277,059 | ||||
Pacific/Asia Fund |
35,557,614 | 52,107 | ||||||
Select Large Cap Growth Fund |
2,155,348,198 | 955,568 | ||||||
For Funds with fiscal period ending April 30 |
||||||||
Bond Fund |
| | ||||||
Corporate Income Fund |
| | ||||||
Intermediate Bond Fund |
| | ||||||
Small Cap Value Fund I |
$ | 600,734,088 | $ | 894,590 | ||||
U.S. Treasury Index Fund |
| |
Statement of Additional Information September 1, 2014 | Page 131 |
Amount of
transactions |
Amount of
commissions imputed or paid |
|||||||
Fund | For fiscal period ended in 2013 | |||||||
For Funds with fiscal period ending May 31 |
||||||||
Dividend Income Fund |
$ | 1,240,649,632 | $ | 740,922 | ||||
HY Municipal Fund |
| | ||||||
Risk Allocation Fund |
1,294,030 | 1,317 | ||||||
For Funds with fiscal period ending July 31 |
|
|||||||
AMT-Free OR Intermediate Muni Bond Fund |
| | ||||||
Large Cap Growth Fund |
3,136,679,500 | 1,744,117 | ||||||
Tax-Exempt Fund (e) |
| | ||||||
Ultra Short Term Bond Fund |
| | ||||||
For Funds with fiscal period ending August 31 |
|
|||||||
AP Alternative Strategies Fund |
516,276,267 | 219,417 | ||||||
AP Core Plus Bond Fund |
0 | 0 | ||||||
AP Small Cap Equity Fund |
136,365,817 | 219,138 | ||||||
Balanced Fund |
882,781,009 | 452,055 | ||||||
Contrarian Core Fund |
2,439,851,785 | 1,243,003 | ||||||
Emerging Markets Fund |
65,646,006 | 51,962 | ||||||
Global Dividend Opportunity Fund |
240,369,719 | 168,205 | ||||||
Global Energy and Natural Resources Fund |
156,039,876 | 93,360 | ||||||
Global Technology Growth Fund |
157,058,762 | 120,639 | ||||||
Greater China Fund |
17,506,627 | 23,802 | ||||||
Mid Cap Growth Fund |
918,184,583 | 522,276 | ||||||
Small Cap Core Fund |
110,310,504 | 135,872 | ||||||
Small Cap Growth Fund I |
308,742,151 | 299,896 | ||||||
Value and Restructuring Fund |
1,790,644,372 | 950,311 | ||||||
For Funds with fiscal period ending October 31 |
|
|||||||
AMT-Free CT Intermediate Muni Bond Fund |
| | ||||||
AMT-Free Intermediate Muni Bond Fund |
| | ||||||
AMT-Free MA Intermediate Muni Bond Fund |
| | ||||||
AMT-Free NY Intermediate Muni Bond Fund |
| | ||||||
CA Tax-Exempt Fund |
| | ||||||
International Bond Fund (a) |
| | ||||||
NY Tax-Exempt Fund |
| | ||||||
Strategic Income Fund (a) |
| | ||||||
For Funds with fiscal period ending December 31 |
|
|||||||
Real Estate Equity Fund |
89,725,633 | 72,805 |
(a) | International Bond Fund and Strategic Income Fund changed their fiscal year ends in 2012 from May 31 to October 31. For the fiscal year ended 2012, the information shown is for the 17-month period from June 1, 2011 to October 31, 2012. |
Securities of Regular Broker-Dealers
In certain cases, the Funds, as part of their principal investment strategies, or otherwise as a permissible investment, will invest in the common stock or debt obligations of the regular broker-dealers that the Investment Manager uses to transact brokerage for the Funds.
Statement of Additional Information September 1, 2014 | Page 132 |
As of each Funds most recent applicable fiscal year (or period) end, the Funds owned securities of their regular brokers or dealers or their parents, as defined in Rule 10b-1 under the 1940 Act, as shown in the table below:
Investments in Securities of Regular Brokers or Dealers
Fund | Issuer |
Value of securities owned at
end of fiscal period |
||||
For Fiscal Period Ended in 2014 |
||||||
For Funds with fiscal period ending March 31 |
|
|||||
AP Growth Fund |
None | N/A | ||||
Pacific/Asia Fund |
None | N/A | ||||
Select Large Cap Growth Fund |
None | N/A | ||||
For Fiscal Period Ended in 2013 |
||||||
For Funds with fiscal period ending April 30 |
|
|||||
Bond Fund |
Chase Issuance Trust | $ | 13,352,946 | |||
Citigroup Mortgage Loan Trust, Inc. | 93,418 | |||||
Citigroup Capital XIII | 3,409,272 | |||||
Credit Suisse Mortgage Capital Certificates | 1,594,522 | |||||
Credit Suisse Commercial Mortgage Trust | 3,319,355 | |||||
GS Mortgage Securities Trust | 3,023,600 | |||||
JPMorgan Chase Capital XXI | 495,075 | |||||
JPMorgan Chase Capital XXIII | 4,114,500 | |||||
JPMorgan Chase Commercial Mortgage Securities Corp. | 1,995,767 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust | 903,069 | |||||
Merrill Lynch/Countrywide Commercial Mortgage Trust | 8,498,379 | |||||
Morgan Stanley Re-Remic Trust | 3,130,908 | |||||
PNC Financial Services Group, Inc.(The) | 3,949,763 | |||||
Corporate Income Fund |
Citigroup, Inc. | 19,020,738 | ||||
E*TRADE Financial Corp. | 506,192 | |||||
The Goldman Sachs Group, Inc. | 23,228,039 | |||||
Nuveen Investments, Inc. | 1,207,526 | |||||
Intermediate Bond Fund |
Bear Stearns Commercial Mortgage Securities | 89,219 | ||||
Chase Issuance Trust | 42,586,588 | |||||
Citigroup, Inc. | 37,156,275 | |||||
Citigroup Commercial Mortgage Trust | 5,531,031 | |||||
Citigroup/Deutsche Bank Commercial Mortgage Trust | 2,602,270 | |||||
Citigroup Mortgage Loan Trust, Inc. | 22,253,767 | |||||
Citigroup Capital XIII | 40,247,999 | |||||
Credit Suisse Mortgage Capital Certificates | 20,104,013 | |||||
Credit Suisse Commercial Mortgage Trust | 6,897,362 | |||||
CS First Boston Mortgage Securities Corp. | 5,838,353 | |||||
E*TRADE Financial Corp. | 740,822 | |||||
GS Mortgage Securities Trust | 14,207,251 | |||||
Jefferies Resecuritization Trust | 1,424,631 | |||||
JPMorgan Chase & Co. | 23,028,548 | |||||
JPMorgan Chase Capital XXI | 24,473,610 | |||||
JPMorgan Chase Capital XXIII | 12,862,200 |
Statement of Additional Information September 1, 2014 | Page 133 |
Fund | Issuer |
Value of securities owned at
end of fiscal period |
||||
JPMorgan Commercial Mortgage Securities Trust | $ | 5,431,309 | ||||
LB-UBS Commercial Mortgage Trust | 26,724,436 | |||||
Merrill Lynch Mortgage Investors Trust | 67,887 | |||||
Merrill Lynch/Countrywide Commercial Mortgage Trust | 34,824,441 | |||||
Morgan Stanley Capital I Trust | 25,091,077 | |||||
Morgan Stanley Re-Remic Trust | 48,545,743 | |||||
Morgan Stanley Resecuritization Trust | 16,584,949 | |||||
Nuveen Investments, Inc. | 1,297,328 | |||||
PNC Financial Services Group, Inc.(The) | 28,031,323 | |||||
Small Cap Value Fund I |
None | N/A | ||||
U.S. Treasury Index Fund |
None | N/A | ||||
For Funds with fiscal period ending May 31 |
|
|||||
Dividend Income Fund |
JPMorgan Chase & Co. | 181,637,307 | ||||
PNC Financial Services Group, Inc. | 71,675,820 | |||||
HY Municipal Fund |
None | N/A | ||||
Risk Allocation Fund |
None | N/A | ||||
For Funds with fiscal period ending July 31 |
|
|||||
AMT-Free OR Intermediate Muni Bond Fund |
None | N/A | ||||
Large Cap Growth Fund |
Citigroup, Inc. | 38,114,340 | ||||
Tax-Exempt Fund |
None | N/A | ||||
Ultra Short Term Bond Fund |
Bear Stearns Commercial Mortgage Securities | 26,158,761 | ||||
Citigroup, Inc. | 12,802,486 | |||||
Citigroup Commercial Mortgage Trust | 1,660,459 | |||||
Credit Suisse Mortgage Capital Certificates | 644,552 | |||||
Credit Suisse First Boston Mortgage Securities Corp. | 4,535,182 | |||||
GS Mortgage Securities Corp. II | 7,034,481 | |||||
The Goldman Sachs Group, Inc. | 12,791,419 | |||||
JPMorgan Chase & Co. | 15,154,070 | |||||
JPMorgan Chase Commercial Mortgage Securities | 16,669,914 | |||||
JPMorgan Resecuritization Trust | 1,281,365 | |||||
LB-UBS Commercial Mortgage Trust | 24,736,553 | |||||
Merrill Lynch Mortgage Trust | 19,370,653 | |||||
Morgan Stanley | 11,518,353 | |||||
Morgan Stanley Capital I, Trust | 9,200,544 | |||||
PNC Financial Services Group, Inc. | 10,427,480 | |||||
For Funds with fiscal period ending August 31 |
|
|||||
AP Alternative Strategies Fund |
Citigroup, Inc. | 1,678,501 | ||||
Citigroup Capital IX | 526,680 | |||||
AP Core Plus Bond Fund |
Banc of America Merrill Lynch Commercial Mortgage, Inc. | 2,488,561 | ||||
Citigroup, Inc. | 32,706,177 | |||||
Citigroup Commercial Mortgage Trust | 3,811,152 | |||||
Citigroup/Deutsche Bank Commercial Mortgage Trust | 7,867,389 | |||||
Citigroup Mortgage Loan Trust, Inc. | 16,856,203 |
Statement of Additional Information September 1, 2014 | Page 134 |
Fund | Issuer |
Value of securities owned at
end of fiscal period |
||||
Citigroup Capital XIII | $ | 12,012,000 | ||||
Credit Suisse Mortgage Capital Certificates | 10,449,675 | |||||
Credit Suisse Commercial Mortgage Trust | 1,184,641 | |||||
Credit Suisse First Boston Mortgage Securities Corp. | 2,075,093 | |||||
E*TRADE Financial Corp. | 196,300 | |||||
GS Mortgage Securities Corp. II | 12,073,729 | |||||
The Goldman Sachs Group, Inc. | 16,582,528 | |||||
Jefferies & Co., Inc. | 449,370 | |||||
Jefferies Group, Inc. | 4,999,383 | |||||
JPMorgan Chase & Co. | 13,535,733 | |||||
JPMorgan Chase Bank | 4,434,589 | |||||
JPMorgan Chase Commercial Mortgage Securities | 28,814,469 | |||||
JPMorgan Mortgage Acquisition Corp. | 4,030,170 | |||||
JPMorgan Mortgage Trust | 5,001,706 | |||||
JPMorgan Chase Capital XXI | 21,115,500 | |||||
JPMorgan Chase Capital XXIII | 5,268,800 | |||||
Legg Mason, Inc. | 622,737 | |||||
LB-UBS Commercial Mortgage Trust | 12,297,785 | |||||
Lehman XS Trust | 15,640,824 | |||||
Merrill Lynch & Co., Inc. | 2,306,278 | |||||
Merrill Lynch Mortgage Trust | 4,255,081 | |||||
Merrill Lynch Mortgage Loan Trust | 12,529,594 | |||||
Morgan Stanley | 14,216,387 | |||||
Morgan Stanley Capital I | 25,761,993 | |||||
Morgan Stanley Reremic Trust | 16,924,973 | |||||
Nuveen Investments, Inc. | 757,925 | |||||
PNC Financial Services Group, Inc. | 8,764,322 | |||||
Raymond James Financial, Inc. | 3,526,168 | |||||
TD Ameritrade Holding Corp. | 1,043,447 | |||||
AP Small Cap Equity Fund |
Piper Jaffray Companieis | 1,669,649 | ||||
Westwood Holdings Group, Inc. | 2,262,115 | |||||
Balanced Fund |
Bear Stearns Commercial Mortgage Securities | 1,159,143 | ||||
Bear Stearns Companies LLC | 3,114,632 | |||||
Citigroup, Inc. | 27,479,444 | |||||
Citigroup Commercial Mortgage Trust | 1,537,718 | |||||
Citigroup/Deutsche Bank Commercial Mortgage Trust | 942,889 | |||||
Credit Suisse Commercial Mortgage Trust | 215,577 | |||||
Credit Suisse First Boston Mortgage Securities Corp. | 302,272 | |||||
E*TRADE Financial Corp. | 67,200 | |||||
GS Mortgage Securities Corp. II | 328,286 | |||||
The Goldman Sachs Group, Inc. | 2,321,363 | |||||
JPMorgan Chase & Co. | 24,556,216 | |||||
JPMorgan Chase Commercial Mortgage Securities | 7,759,030 |
Statement of Additional Information September 1, 2014 | Page 135 |
Fund | Issuer |
Value of securities owned at
end of fiscal period |
||||
LB-UBS Commercial Mortgage Trust | $ | 841,989 | ||||
Merrill Lynch & Co., Inc. | 2,442,191 | |||||
Morgan Stanley | 1,862,356 | |||||
Morgan Stanley Capital I | 329,473 | |||||
Morgan Stanley Reremic Trust | 911,835 | |||||
Nuveen Investments, Inc. | 152,388 | |||||
PNC Financial Services Group, Inc. | 1,948,190 | |||||
Contrarian Core Fund |
Citigroup, Inc. | 80,925,492 | ||||
JPMorgan Chase & Co. | 80,000,006 | |||||
Morgan Stanley | 25,630,788 | |||||
Emerging Markets Fund |
None | N/A | ||||
Global Dividend Opportunity Fund |
Citigroup, Inc. | 6,025,833 | ||||
JPMorgan Chase & Co. | 25,687,077 | |||||
Morgan Stanley | 6,242,910 | |||||
Global Energy and Natural Resources Fund |
None | N/A | ||||
Global Technology Growth Fund |
None | N/A | ||||
Greater China Fund |
None | N/A | ||||
Mid Cap Growth Fund |
Affiliated Managers Group, Inc. | 42,561,274 | ||||
Small Cap Core Fund |
Investment Technology Group, Inc. | 10,527,165 | ||||
Small Cap Growth Fund I |
None | N/A | ||||
Value and Restructuring Fund |
Citigroup, Inc. | 54,281,840 | ||||
JPMorgan Chase & Co. | 56,760,854 | |||||
Morgan Stanley | 16,291,268 | |||||
For Funds with fiscal period ending October 31 |
|
|||||
AMT-Free CT Intermediate Muni Bond Fund |
None | N/A | ||||
AMT-Free Intermediate Muni Bond Fund |
None | N/A | ||||
AMT-Free MA Intermediate Muni Bond Fund |
None | N/A | ||||
AMT-Free NY Intermediate Muni Bond Fund |
None | N/A | ||||
CA Tax-Exempt Fund |
None | N/A | ||||
International Bond Fund |
None | N/A | ||||
NY Tax-Exempt Fund |
None | N/A | ||||
Strategic Income Fund |
Bear Stearns Commercial Mortgage Securities | 1,700,985 | ||||
Citigroup Mortgage Loan Trust, Inc. | 27,333,244 | |||||
Citigroup, Inc. | 15,902 | |||||
Credit Suisse Mortgage Capital Certificates | 25,346,137 | |||||
E*TRADE Financial Corp. | 2,897,560 | |||||
JPMorgan Chase & Co. | 1,323,409 | |||||
Nuveen Investments, Inc. | 5,229,051 | |||||
For Funds with fiscal period ending December 31 |
|
|||||
Real Estate Equity Fund |
None | N/A |
Statement of Additional Information September 1, 2014 | Page 136 |
Effective beginning with performance reporting for the December 31, 2011 year end, in presenting performance information for newer share classes, if any, of a Fund, the Fund typically includes, for periods prior to the offering of such share classes, the performance of the Funds oldest share class (except as otherwise disclosed), adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable, based on the expense ratios of those share classes for the Funds most recently completed fiscal year for which data was available at December 31, 2011 or, for funds and classes first offered after January 1, 2011, the expected expense differential at the time the newer share class is first offered. Actual expense differentials across classes will vary over time. The performance of the Funds newer share classes would have been substantially similar to the performance of the Funds oldest share class because all share classes of a Fund are invested in the same portfolio of securities, and would have differed only to the extent that the classes do not have the same sales charges and/or expenses (although differences in expenses between share classes may change over time).
Prior to December 31, 2011, in presenting performance information for a newer share class of a Fund, the Fund would typically include, for periods prior to the offering of such newer share class, the performance of an older share class, the class-related operating expense structure of which was most similar to that of the newer share class, and for periods prior to the initial offering of such older share class, would include the performance of successively older share classes with successively less similar expense structures. Such performance information was not restated to reflect any differences in expenses between share classes and if such differences had been reflected, the performance shown might have been lower. Because, prior to December 31, 2011, the Funds used a different methodology for presenting performance information for a newer share class, such performance information published before December 31, 2011 may differ from corresponding performance information published after December 31, 2011.
For certain Funds, performance shown includes the returns of a predecessor to the Fund. The table below identifies the predecessor fund for certain of these Funds and shows the periods when performance shown is that of the predecessor fund or a predecessor to that fund.
Fund | Predecessor Fund | For periods prior to: | ||
Bond Fund |
Excelsior Core Bond Fund, a series of
Excelsior Funds, Inc. |
March 31, 2008 | ||
CT Intermediate Municipal Bond Fund |
Galaxy Connecticut Intermediate Municipal
Bond Fund, a series of The Galaxy Fund |
November 18, 2002 | ||
Contrarian Core Fund |
Galaxy Growth & Income Fund, a series of
The Galaxy Fund |
December 9, 2002 | ||
Dividend Income Fund |
Galaxy Strategic Equity Fund, a series of
The Galaxy Fund |
November 25, 2002 | ||
Emerging Markets Fund |
Excelsior Emerging Markets Fund, a series
of Excelsior Funds, Inc. |
March 31, 2008 | ||
Global Energy and Natural Resources Fund |
Excelsior Energy and Natural Resources
Fund, a series of Excelsior Funds, Inc. |
March 31, 2008 | ||
Intermediate Municipal Bond Fund |
Galaxy Intermediate Tax-Exempt Bond
Fund, a series of The Galaxy Fund |
November 25, 2002 | ||
Large Cap Growth Fund |
Galaxy Equity Growth Fund, a series of
The Galaxy Fund |
November 18, 2002 | ||
MA Intermediate Municipal Bond Fund |
Galaxy Massachusetts Intermediate
Municipal Bond Fund, a series of The Galaxy Fund |
December 9, 2002 | ||
Pacific/Asia Fund |
Excelsior Pacific/Asia Fund, a series of
Excelsior Funds, Inc. |
March 31, 2008 | ||
Select Large Cap Growth Fund |
Excelsior Large Cap Growth Fund, a series
of Excelsior Funds, Inc. |
March 31, 2008 | ||
Small Cap Core Fund |
Galaxy Small Cap Value Fund, a series of
The Galaxy Fund |
November 18, 2002 |
Statement of Additional Information September 1, 2014 | Page 137 |
Fund | Predecessor Fund | For periods prior to: | ||
U.S. Treasury Index Fund |
Galaxy II U.S. Treasury Index Fund, a
series of The Galaxy Fund |
November 25, 2002 | ||
Value and Restructuring Fund |
Excelsior Value and Restructuring Fund, a
series of Excelsior Funds, Inc. |
March 31, 2008 |
A change in the securities held by a Fund is known as portfolio turnover. High portfolio turnover involves correspondingly greater expenses to the Fund, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestments in other securities. Such sales may also result in adverse tax consequences to a Funds shareholders. The trading costs and tax effects associated with portfolio turnover may adversely affect a Funds performance. For each Funds portfolio turnover rate, see the Fees and Expenses of the Fund Portfolio Turnover section in the prospectuses for that Fund.
In any particular year, market conditions may result in greater rates than are presently anticipated. The rate of a Funds turnover may vary significantly from time to time depending on the volatility of economic and market conditions.
See below for an explanation for any significant variation in a Funds portfolio turnover rates over the two most recently completed fiscal years, if applicable:
The variation in turnover rates for AP Core Plus Bond Fund was due to the fact that the fiscal year ended August 31, 2013 was the funds first full fiscal year end.
A significant portion of the increase in portfolio turnover rate for Bond Fund was due to strategic investment decisions based on market factors and maintenance of liquidity.
Disclosure of Portfolio Holdings Information
The Board and the Investment Manager believe that the investment ideas of the Investment Manager and any subadviser with respect to portfolio management of a Fund should seek to benefit the Fund and its shareholders, and do not want to afford speculators an opportunity to profit by anticipating Fund trading strategies. However, the Board also believes that knowledge of a Funds portfolio holdings can assist shareholders in monitoring their investments, making asset allocation decisions, and evaluating portfolio management techniques.
The Board has therefore adopted policies and procedures relating to disclosure of the Funds portfolio securities. These policies and procedures are intended to protect the confidentiality of Fund portfolio holdings information and generally prohibit the release of such information until such information is made available to the general public, unless such persons have been authorized to receive such information on a selective basis, as described below. It is the policy of the Fund not to provide or permit others to provide portfolio holdings on a selective basis, and the Investment Manager does not intend to selectively disclose portfolio holdings or expect that such holdings information will be selectively disclosed, except where necessary for the Funds operation or where there are other legitimate business purposes for doing so and, in any case, where conditions are met that are designed to protect the interests of the Funds and their shareholders.
Although the Investment Manager seeks to limit the selective disclosure of portfolio holdings information and such selective disclosure is monitored under the Funds compliance program for conformity with the policies and procedures, there can be no assurance that these policies will protect the Fund from the potential misuse of holdings information by individuals or firms in possession of that information. Under no circumstances may the Investment Manager, its affiliates or any employee thereof receive any consideration or compensation for disclosing such holdings information.
Public Disclosures
The Funds portfolio holdings are currently disclosed to the public through filings with the SEC and postings on the Funds website. The information is available on the Funds website as described below.
|
For equity, alternative and flexible Funds (other than the equity Funds identified below and fund-of-funds (equity and fixed income)), a complete list of Fund portfolio holdings as of month-end is posted approximately, but no earlier than, 15 calendar days after such month-end. |
|
For Funds that are subadvised by Marsico Capital, Columbia Small Cap Growth Fund I and Columbia Variable Portfolio Small Company Growth Fund, a complete list of Fund portfolio holdings as of month-end is posted approximately, but no earlier than, 30 calendar days after such month-end. |
|
For fixed-income Funds (other than money market funds), a complete list of Fund portfolio holdings as of calendar quarter-end is posted approximately, but no earlier than, 30 calendar days after such quarter-end. |
|
For money market Funds, a complete list of Fund portfolio holdings as of month-end is posted no later than five business days after such month-end. Such month-end holdings are continuously available on the website for at least six months, |
Statement of Additional Information September 1, 2014 | Page 138 |
together with a link to an SEC webpage where a user of the website may obtain access to the Funds most recent 12 months of publicly available filings on Form N-MFP. Money market Fund portfolio holdings information posted on the website, at minimum, includes with respect to each holding, the name of the issuer, the category of investment (e.g., Treasury debt, government agency debt, asset backed commercial paper, structured investment vehicle note), the CUSIP number (if any), the principal amount, the maturity date (as determined under Rule 2a-7 for purposes of calculating weighted average maturity), the final maturity date (if different from the maturity date previously described), coupon or yield and the amortized cost value. The money market Funds will also disclose on the website the overall weighted average maturity and weighted average life maturity of a holding. |
Portfolio holdings of Funds owned solely by affiliates of the Investment Manager are not disclosed on the website. A complete schedule of each Funds portfolio holdings is available semiannually and annually in shareholder reports filed on Form N-CSR and, after the first and third fiscal quarters, in regulatory filings on Form N-Q. These shareholder reports and regulatory filings are filed with the SEC in accordance with federal securities laws. Shareholders may obtain each Funds Form N-CSR and N-Q filings on the SECs website at www.sec.gov. In addition, each Funds Form N-CSR and N-Q filings may be reviewed and copied at the SECs public reference room in Washington, D.C. You may call the SEC at 202.551.8090 for information about the SECs website or the operation of the public reference room.
In addition, the Investment Manager makes publicly available information regarding certain Funds largest five to fifteen holdings, as a percentage of the market value of the Funds portfolios as of a month-end. This holdings information is made publicly available through the website columbiamanagement.com, approximately 15 calendar days following the month-end. The scope of the information that is made available on the Funds websites pursuant to the Funds policies may change from time to time without prior notice.
The Investment Manager may also disclose more current portfolio holdings information as of specified dates on the Funds website.
The Funds, the Investment Manager and their affiliates may include portfolio holdings information that already has been made public through a website posting or SEC filing in marketing literature and other communications to shareholders, advisors or other parties, provided that the information is disclosed no earlier than when the information is disclosed publicly on the funds website or no earlier than the time a fund files such information in a publicly available SEC filing required to include such information.
Other Disclosures
The Funds policies and procedures provide that no disclosures of the Funds portfolio holdings may be made prior to the portfolio holdings information being made available to the general public unless (i) the Funds have a legitimate business purpose for making such disclosure, (ii) the Funds or their authorized agents authorize such non-public disclosure of information, and (iii) the party receiving the non-public information enters into an appropriate confidentiality agreement or is otherwise subject to a confidentiality obligation.
In determining the existence of a legitimate business purpose for making portfolio disclosures, the following factors, among others, are considered: (i) any prior disclosure must be consistent with the anti-fraud provisions of the federal securities laws and the fiduciary duties of the Investment Manager; (ii) any conflicts of interest between the interests of Fund shareholders, on the one hand, and those of the Investment Manager, the Funds Distributor or any affiliated person of a Fund, the Investment Manager or Distributor on the other; and (iii) any prior disclosure to a third party, although subject to a confidentiality agreement, would not make conduct lawful that is otherwise unlawful.
In addition, the Funds periodically disclose their portfolio information on a confidential basis to various service providers that require such information to assist the Funds with their day-to-day business affairs. These service providers include each Funds subadviser(s) (if any) and vendors or other entities each subadviser may also hire to perform services for the funds, affiliates of the Investment Manager, the Funds custodian, subcustodians, the Funds independent registered public accounting firm, legal counsel, operational system vendors, financial printers, proxy solicitor and proxy voting service provider, as well as ratings agencies that maintain ratings on certain Funds. These service providers are required to keep such information confidential, and are prohibited from trading based on the information or otherwise using the information except as necessary in providing services to the Funds. The Funds also may disclose portfolio holdings information to broker/dealers and certain other entities in connection with potential transactions and management of the Funds, provided that reasonable precautions, including limitations on the scope of the portfolio holdings information disclosed, are taken to avoid any potential misuse of the disclosed information.
The Funds also disclose portfolio holdings information as required by federal, state or international securities laws, and may disclose portfolio holdings information in response to requests by governmental authorities, or in connection with litigation or potential litigation, a restructuring of a holding, where such disclosure is necessary to participate or explore participation in a restructuring of the holding (e.g., as part of a bondholder group), or to the issuer of a holding, pursuant to a request of the issuer or any other party who is duly authorized by the issuer.
The Board has adopted policies to ensure that the Funds portfolio holdings information is only disclosed in accordance with these policies. Before any selective disclosure of portfolio holdings information is permitted, the person seeking to disclose such holdings information must submit a written request to the Portfolio Holdings Committee (PHC). The PHC, which is chaired by the Funds Chief Compliance Officer, is comprised of members from the Investment Managers legal department,
Statement of Additional Information September 1, 2014 | Page 139 |
compliance department, and the Funds President. The PHC is authorized by the Board to perform an initial review of requests for disclosure of holdings information to evaluate whether there is a legitimate business purpose for selective disclosure, whether selective disclosure is in the best interests of a Fund and its shareholders, to consider any potential conflicts of interest between the Fund, the Investment Manager, and its affiliates, and to safeguard against improper use of holdings information. Factors considered in this analysis are whether the recipient has agreed to or has a duty to keep the holdings information confidential and whether risks have been mitigated such that the recipient has agreed or has a duty to use the holdings information only as necessary to effectuate the purpose for which selective disclosure may be authorized, including a duty not to trade on such information. Before portfolio holdings may be selectively disclosed, requests approved by the PHC must also be authorized by the Funds President, Chief Compliance Officer or General Counsel/Chief Legal Officer or their respective designees. On at least an annual basis, the PHC reviews the approved recipients of selective disclosure and may require a resubmission of the request, in order to re-authorize certain ongoing arrangements. These procedures are intended to be reasonably designed to protect the confidentiality of Fund holdings information and to prohibit their release to individual investors, institutional investors, intermediaries that distribute the Funds shares, and other parties, until such holdings information is made public or unless such persons have been authorized to receive such holdings information on a selective basis, as set forth above.
Ongoing Portfolio Holdings Disclosure Arrangements:
The Funds currently have ongoing arrangements with certain approved recipients with respect to the disclosure of portfolio holdings information prior to such information being made public. Portfolio holdings information disclosed to such recipients is current as of the time of its disclosure, is disclosed to each recipient solely for purposes consistent with the services described below and has been authorized in accordance with the policy. No compensation or consideration is received in exchange for this information. In addition to the daily information provided to a Funds custodians, subcustodians, Administrator, Investment Manager and subadvisers, the following disclosure arrangements are in place:
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Identity of Recipient | Conditions/restrictions on use of information |
Frequency of
Disclosure |
||
Recipients under arrangements with subadvisers: | ||||
Advent | Used by certain subadvisers for portfolio management information systems. | Ad hoc | ||
Advisory Compliance Associates Group | Used by certain subadvisers for best execution analysis. | Quarterly | ||
Barclays Capital | Used by certain subadvisers for analytics and modeling. | Daily | ||
Barra Portfolio Manager/MSCI | Used as a hosted portfolio management platform designed for research, reporting, strategy development, portfolio construction, and performance and risk attribution. | Daily | ||
Bloomberg | Used by certain subadvisers to upload holdings information for internal reporting and portfolio analysis, for order management services, and for analytical and statistical information. | Daily | ||
Capital I.Q. | Used by certain subadvisers for internal reporting and portfolio analysis. | Daily | ||
Charles River | Used by certain subadvisers for order management. | Daily | ||
Electra | Used by certain subadvisers for portfolio reconciliation. | Monthly | ||
Ernst and Young | Used by certain subadvisers to provide general audit services. | As Needed | ||
EVARE/SS&C | Used by certain subadvisers for reconciliation. | Daily | ||
FactSet Research Systems, Inc. | Used by certain subadvisers for portfolio management, analystical and statistical information, risk modeling and stock research. | Daily | ||
Glass Lewis | Used by certain subadvisers for proxy voting administration and research on proxy matters. | Daily | ||
Infinit-O | Used by certain subadvisers for reconciling cash and positions. | Daily | ||
Informa Investment Solutions | Used by certain subadvisers for performance and accounting. | Daily | ||
Institutional Shareholder Services Inc. (ISS) | Used by certain subadvisers for proxy voting administration and research on proxy matters. | Daily | ||
Market ClearPar | Used by certain subadvisers to confirm and settle bank loan trades. | As Needed | ||
MarkitSERV | Used by certain subadvisers to upload derivatives trades (CDS, IRS) for matching and confimation. | As Needed | ||
Northern Trust | Used by certain subadvisers for middle-office operational services | Daily | ||
Omgeo, LLC | Used by certain subadvisers for trade settlement. | Daily | ||
SmartStream | Used by certain subadvisers for back office transactions and holdings reconciliation. | Daily | ||
Statpro | Daily | |||
SunGard Data Systems, Inc. | Used by certain subadvisers for corporate actions. | Daily | ||
The Yield Book | Used by certain subadvisers for analytics and modeling. | Daily | ||
William ONeil | Used by certain subadvisers for research, analytical and statistical information. | Daily |
In addition, portfolio holdings information may be provided from time to time to the Funds counsel, counsel to the independent trustees and the Funds independent auditors in connection with the services they provide to the Fund or the trustees. Portfolio holdings information may also be provided to affiliates of the Investment Manager to monitor risks and various holdings limitations that must be aggregated with affiliated funds and accounts, among other purposes. The Investment Manager and the subadvisers use a variety of broker-dealers and other agents to effect securities transactions on behalf of the Funds. These broker-dealers may become aware of the Funds intentions, transactions and positions in performing their functions.
Additional Shareholder Servicing Payments
The Funds, along with the Transfer Agent, the Distributor and the Investment Manager, may pay significant amounts to Selling Agents, including other Ameriprise Financial affiliates, for providing the types of services that would typically be provided directly by a mutual funds transfer agent. The level of payments made to Selling Agents may vary. A number of factors may be considered in determining payments to a Selling Agent, including, without limitation, the nature of the services provided to shareholders or retirement plan participants that invest in the Funds through retirement plans. These services may include sub-accounting, sub-transfer agency or similar recordkeeping services, shareholder or participant reporting, shareholder or participant transaction processing, and/or the provision of call center support (additional shareholder services). These payments for shareholder servicing support vary by Selling Agent but generally are not expected, with certain limited exceptions, to exceed 0.40% of the average aggregate value of each Funds shares on an annual basis.
The Board has authorized each Fund to pay up to 0.20% of the average aggregate value of each Funds shares. Such payments will be made by a Fund to the Transfer Agent who will in turn make payments to the Selling Agent for the provision of such additional shareholder services. The Funds Transfer Agent, Distributor or their affiliates will pay, from its or their own resources, amounts in excess of the amount paid by the Funds to Selling Agents in connection with the provision of these additional shareholder services and other services.
The Funds also may make additional payments to Selling Agents that charge networking fees for certain services provided in connection with the maintenance of shareholder accounts through the NSCC.
In addition, the Distributor and other Ameriprise Financial affiliates may make lump sum payments to selected Selling Agents receiving shareholder servicing payments in reimbursement of printing costs for literature for participants, account maintenance fees or fees for establishment of the Funds on the Selling Agents system or other similar services.
As of April 2014, the Distributor and/or other Ameriprise Financial affiliates had agreed to make shareholder servicing payments with respect to the Funds to the Selling Agents or their affiliates shown below.
Recipients of Shareholder Servicing Payments with Respect to the Funds from the Distributor and/or other Ameriprise Financial Affiliates
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ADP Broker-Dealer, Inc. |
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American Century Investment Management, Inc. |
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American United Life Insurance Co. |
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Ameriprise Financial Services, Inc.* |
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Ascensus, Inc. |
|
AXA Advisors |
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|
AXA Equitable Life Insurance |
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Bank of America, N.A. |
|
Benefit Plan Administrators |
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Benefit Trust |
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Charles Schwab & Co., Inc. |
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Charles Schwab Trust Co. |
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Clearview Correspondent Services/BB&T Securities |
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Davenport & Company City National Bank |
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CPI Qualified Plan Consultants, Inc. |
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Daily Access Concepts, Inc. |
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Digital Retirement Solutions |
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Edward D. Jones & Co., LP |
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ExpertPlan |
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Fidelity Brokerage Services, Inc. |
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Fidelity Investments Institutional Operations Co. |
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Guardian Life and Annuity Company Inc. |
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Genworth Life and Annuity Insurance Company |
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GWFS Equities, Inc. |
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Hartford Life Insurance Company |
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Hartford Securities Distribution |
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HD Vest |
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Hewitt Associates LLC |
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ICMA Retirement Corporation |
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ING Life Insurance and Annuity Company |
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ING Institutional Plan Services, LLP |
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Janney Montgomery Scott, Inc. |
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JJB Hilliard Lyons |
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John Hancock Life Insurance Company (USA) |
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John Hancock Life Insurance Company of New York |
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JP Morgan Retirement Plan Services LLC |
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Lincoln National Life Insurance Company |
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Lincoln Retirement Services |
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LPL Financial Corporation |
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Marshall & Illsley Trust Company |
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Massachusetts Mutual Life Insurance Company |
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Mercer HR Services, LLC |
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Merrill Lynch, Pierce, Fenner & Smith Incorporated |
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Mid Atlantic Capital Corporation |
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Minnesota Life Insurance Co. |
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Morgan Stanley Smith Barney |
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Morgan Keegan & Company |
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MSCS Financial Services Division of Broadridge Business Process Outsourcing LLC |
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National Financial Services |
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Nationwide Investment Services |
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Newport Retirement Services, Inc. |
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New York State Deferred Compensation Plan |
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NYLife Distributors LLC |
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Oppenheimer |
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Plan Administrators, Inc. |
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PNC Bank |
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Principal Life Insurance Company of America |
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Prudential Insurance Company of America |
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Prudential Retirement Insurance & Annuity Company |
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Pershing LLC |
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Raymond James & Associates |
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RBC Capital Markets |
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Reliance Trust |
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Robert W. Baird & Co., Inc. |
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Standard Insurance Company |
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Stifel Nicolaus & Co. |
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TD Ameritrade Clearing, Inc. |
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TD Ameritrade Trust Company |
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The Retirement Plan Company |
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Teachers Insurance and Annuity Association of America |
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Transamerica Advisors Life Insurance Company |
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Transamerica Life Insurance Company |
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T. Rowe Price Group, Inc. |
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UBS Financial Services, Inc. |
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Unified Trust Company, N.A. |
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Upromise Investments, Inc. |
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USAA Investment Management Co |
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Vanguard Group, Inc. |
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VALIC Retirement Services Company |
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Wells Fargo Advisors |
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Wells Fargo Bank, N.A. |
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Wells Fargo Funds Management, LLC |
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Wilmington Trust Company |
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Wilmington Trust Retirement & Institutional Services Company |
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Xerox HR Solutions |
* | Ameriprise Financial affiliate |
Statement of Additional Information September 1, 2014 | Page 142 |
The Distributor and/or other Ameriprise Financial affiliates may enter into similar arrangements with other Selling Agents from time to time. Therefore, the preceding list is subject to change at any time without notice.
Additional Selling Agent Payments
Selling Agents may receive different commissions, sales charge reallowances and other payments with respect to sales of different classes of shares of the Funds. These other payments may include servicing payments to retirement plan administrators and other institutions at rates up to those described above under Brokerage Allocation and Other Practices Additional Shareholder Servicing Payments .
The Distributor and other Ameriprise Financial affiliates may pay additional compensation to selected Selling Agents, including other Ameriprise Financial affiliates, under the categories described below. These categories are not mutually exclusive, and a single Selling Agent may receive payments under all categories. A Selling Agent also may receive payments described above in Brokerage Allocation and Related Practices Additional Shareholder Servicing Payments . These payments may create an incentive for a Selling Agent or its representatives to recommend or offer shares of a Fund to its customers. The amount of payments made to Selling Agents may vary. In determining the amount of payments to be made, the Distributor and other Ameriprise Financial affiliates may consider a number of factors, including, without limitation, asset mix and length of relationship with the Selling Agent, the size of the customer/shareholder base of the Selling Agent, the manner in which customers of the Selling Agent make investments in the Funds, the nature and scope of marketing support or services provided by the Selling Agent (as described more fully below) and the costs incurred by the Selling Agent in connection with maintaining the infrastructure necessary or desirable to support investments in the Funds.
These additional payments by the Distributor and other Ameriprise Financial affiliates are made pursuant to agreements between the Distributor and other Ameriprise Financial affiliates and Selling Agents, and do not change the price paid by investors for the purchase of a share, the amount a Fund will receive as proceeds from such sales or the distribution fees and expenses paid by the Fund as shown under the heading Fees and Expenses of the Fund in the Funds prospectuses.
Marketing/Sales Support Payments
The Distributor, the Investment Manager and their affiliates may make payments, from their own resources, to certain Selling Agents, including other Ameriprise Financial affiliates, for marketing/sales support services relating to the Columbia Funds, including, but not limited to, business planning assistance, educating financial intermediary personnel about the Funds and shareholder financial planning needs, placement on the financial intermediarys preferred or recommended fund list or otherwise identifying the Funds as being part of a complex to be accorded a higher degree of marketing support than complexes not making such payments, access to sales meetings, sales representatives and management representatives of the financial intermediary, client servicing and systems infrastructure support. These payments are generally based upon one or more of the following factors: average net assets of the Columbia Funds distributed by the Distributor attributable to that Selling Agent, gross sales of the Columbia Funds distributed by the Distributor attributable to that Selling Agent, reimbursement of ticket charges (fees that a Selling Agent firm charges its representatives for effecting transactions in Fund shares) or a negotiated lump sum payment.
While the financial arrangements may vary for each Selling Agent, the marketing support payments to each Selling Agent generally are expected to be between 0.05% and 0.50% on an annual basis for payments based on average net assets of the Columbia Funds attributable to the Selling Agent, and between 0.05% and 0.25% on an annual basis for firms receiving a payment based on gross sales of the Columbia Funds attributable to the Selling Agent. The Distributor and other Ameriprise Financial affiliates may make payments in materially larger amounts or on a basis materially different from those described above when dealing with certain Selling Agents. Such increased payments may enable the Selling Agents to offset credits that they may provide to their customers.
As of April 2014, the Distributor, the Investment Manager or their affiliates had agreed to make marketing support payments with respect to the Funds to the Selling Agents or their affiliates shown below.
Recipients of Marketing Support Payments with Respect to the Funds from the Distributor and/or other Ameriprise Financial Affiliates
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AIG Advisor Group |
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Ameriprise Financial Services, Inc.* |
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AXA Advisors, LLC |
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Citigroup Global Markets Inc./Citibank |
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Commonwealth Financial Network |
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Investacorp |
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J.J.B. Hilliard, W.L. Lyons, Inc. |
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J.P. Morgan Chase Clearing Corp. |
Statement of Additional Information September 1, 2014 | Page 143 |
|
Lincoln Financial Advisors Corp. |
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Linsco/Private Ledger Corp. |
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Merrill Lynch, Pierce, Fenner & Smith Incorporated |
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Morgan Stanley Smith Barney |
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Oppenheimer & Co., Inc. |
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Raymond James & Associates, Inc. |
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Raymond James Financial Services, Inc. |
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RBC Capital Markets |
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Securities America, Inc. |
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Triad Advisors |
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UBS Financial Services Inc. |
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U.S. Trust/Bank of America |
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Wells Fargo Advisors |
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Vanguard Marketing Corp |
* | Ameriprise Financial affiliate |
The Distributor, the Investment Manager and their affiliates may enter into similar arrangements with other Selling Agents from time to time. Therefore, the preceding list is subject to change at any time without notice.
Other Payments
From time to time, the Distributor, from its own resources, may provide additional compensation to certain Selling Agents that sell or arrange for the sale of shares of the Funds to the extent not prohibited by laws or the rules of any self-regulatory agency, such as the Financial Industry Regulatory Authority (FINRA). Such compensation provided by the Distributor may include financial assistance to Selling Agents that enable the Distributor to participate in and/or present at Selling Agent-sponsored conferences or seminars, sales or training programs for invited registered representatives and other Selling Agent employees, financial intermediary entertainment and other sponsored events, and travel expenses, including lodging incurred by registered representatives and other employees in connection with prospecting, retention and due diligence trips. The Distributor makes payments for entertainment events it deems appropriate, subject to the Distributors internal guidelines and applicable law. These payments may vary depending upon the nature of the event. Your Selling Agent may charge you fees or commissions in addition to those disclosed in this SAI. You should consult with your financial intermediary and review carefully any disclosure your Selling Agent provides regarding its services and compensation. Depending on the financial arrangement in place at any particular time, a Selling Agent and its financial consultants may have a financial incentive for recommending a particular fund or a particular share class over other funds or share classes. See Investment Management and Other Services Other Roles and Relationships of Ameriprise Financial and its Affiliates Certain Conflicts of Interest for more information.
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CAPITAL STOCK AND OTHER SECURITIES
Description of the Trusts Shares
The Trust may issue an unlimited number of full and fractional shares of beneficial interest of each Fund, without par value, and to divide or combine the shares of any series into a greater or lesser number of shares of that Fund without thereby changing the proportionate beneficial interests in that Fund and to divide such shares into classes. Most of the Funds are authorized to issue multiple classes of shares. Such classes are designated as Class A, Class B, Class C, Class E, Class F, Class I, Class K, Class R, Class R4, Class R5, Class T, Class W, Class Y and Class Z. Each share of a class of a Fund represents an equal proportional interest in that Fund with each other share in the same class and is entitled to such distributions out of the income earned on the assets belonging to that Fund as are declared in the discretion of the Board. However, different share classes of a Fund pay different distribution amounts because each share class has different expenses. Each time a distribution is made, the net asset value per share of the share class is reduced by the amount of the distribution.
Subject to certain limited exceptions discussed in each Funds prospectuses and in this SAI, a Fund may no longer be accepting new investments from current shareholders or prospective investors in general or with respect to one or more classes of shares. The Funds, however, may at any time and without notice, accept new investments in general or with respect to one or more previously closed classes of shares.
Restrictions on Holding or Disposing of Shares
There are no restrictions on the right of shareholders to retain or dispose of the Funds shares, other than the possible future termination of the Funds or the relevant class. The Funds may be terminated by reorganization into another mutual fund or by liquidation and distribution of their assets. Unless terminated by reorganization or liquidation, the Funds and classes will continue indefinitely.
Liability
The Trust is organized as a business trust under Massachusetts law. Under Massachusetts law, shareholders of a Massachusetts business trust may, under certain circumstances, be held personally liable as partners for its obligation. However, the Declaration of Trust that establishes a trust, a copy of which, together with all amendments thereto (the Declaration of Trust), is on file with the office of the Secretary of the Commonwealth of Massachusetts, contains an express disclaimer of shareholder liability for acts or obligations of the Trust, or of any series in the Trust. The Declaration of Trust provides that, if any shareholder (or former shareholder) of a series of the Trust is held to be personally liable solely by reason of being or having been a shareholder and not because of such shareholders acts or omissions or for some other reason, the shareholder or former shareholder (or the heirs, executors, administrators or other legal representatives thereof, or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the assets of the Fund (or attributable to the class) of which such shareholder or former shareholder is or was the holder of shares to be held harmless from and indemnified against all loss and expense arising from such liability.
The Declaration of Trust also provides that the Trust may maintain appropriate insurance (for example, fidelity bond and errors and omissions insurance) for the protection of the Trust, its shareholders, Trustees, officers, employees, agents or service providers covering claims and liabilities. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which both inadequate insurance existed and the Trust itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of the Trust are not binding upon the Trustees individually, but only upon the assets and property of the Trust, and that Trustees are not liable for their own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and are not be liable for errors of judgment or mistakes of fact or law.
The Trustees may fill any vacancies on the Board except that the Trustees may not fill a vacancy if, immediately after filling such vacancy, less than two-thirds of the Trustees then in office would have been elected to such office by the shareholders. In addition, at such times as less than a majority of the Trustees then in office have been elected to such office by the shareholders, the Trustees must call a meeting of shareholders. Trustees may be removed from office by a written consent signed by holders of a majority of the outstanding shares of the Trust or by a vote of the holders of a majority of the outstanding shares at a meeting duly called for the purpose. Except as otherwise disclosed in a Funds prospectuses and this SAI, the Trustees shall continue to hold office and may appoint their successors.
By becoming a shareholder of the Fund, each shareholder shall be expressly held to have assented to and agreed to be bound by the provisions of the Declaration of Trust.
Statement of Additional Information September 1, 2014 | Page 145 |
Dividend Rights
The shareholders of a Fund are entitled to receive any dividends or other distributions declared for the Fund. No shares have priority or preference over any other shares of the Funds with respect to distributions. Distributions will be made from the assets of the Funds, and will be paid pro rata to all shareholders of each Fund (or class) according to the number of shares of each Fund (or class) held by shareholders on the record date. The amount of income dividends per share may vary between separate share classes of the Funds based upon differences in the way that expenses are allocated between share classes pursuant to a multiple class plan.
Voting Rights and Shareholder Meetings
Shareholders have the power to vote only as expressly granted under the 1940 Act or under Massachusetts business trust law. Each whole share (or fractional share) outstanding on the applicable record date shall be entitled to a number of votes on any matter on which it is entitled to vote equal to the net asset value of the share (or fractional share) in U.S. dollars determined at the close of business on the record date (for example, a share having a net asset value of $10.50 would be entitled to 10.5 votes).
Shareholders have no independent right to vote on any matter, including the creation, operation, dissolution or termination of the Trust. Shareholders have the right to vote on other matters only as the Board authorizes. Currently, the 1940 Act requires that shareholders have the right to vote, under certain circumstances, to: (i) elect Trustees; (ii) approve investment advisory agreements; (iii) approve a change in subclassification of a Fund; (iv) approve any change in fundamental investment policies; (v) approve a distribution plan under Rule 12b-1 under the 1940 Act; and (vi) to terminate the independent accountant. With respect to matters that affect one class but not another, shareholders vote as a class; for example, the approval of a distribution plan applicable to that class is voted on by holders of that class of shares. Subject to the foregoing, all shares of the Trust have equal voting rights and will be voted in the aggregate, and not by Fund, except where voting by Fund is required by law or where the matter involved only affects one Fund. For example, a change in a Funds fundamental investment policy affects only one Fund and would be voted upon only by shareholders of the Fund involved. Additionally, approval of an investment advisory agreement (if shareholder approval is required under exemptive relief) or investment subadvisory agreement, since it only affects one Fund, is a matter to be determined separately by each Fund. Approval by the shareholders of one Fund is effective as to that Fund whether or not sufficient votes are received from the shareholders of the other series to approve the proposal as to those Funds. Shareholders are entitled to one vote for each whole share held and a proportional fractional vote for each fractional vote held, on matters on which they are entitled to vote. Fund shareholders do not have cumulative voting rights. The Trust is not required to hold, and have no present intention of holding, annual meetings of shareholders.
Liquidation Rights
In the event of the liquidation or dissolution of the Trust or the Funds, shareholders of the Funds are entitled to receive the assets attributable to the relevant class of shares of the Funds that are available for distribution and to a distribution of any general assets not attributable to a particular investment portfolio that are available for distribution in such manner and on such basis as the Board may determine.
Preemptive Rights
There are no preemptive rights associated with Fund shares.
Conversion Rights
Conversion features and exchange privileges are described in the Funds prospectuses and Appendix S to this SAI.
Redemptions
Each Funds dividend, distribution and redemption policies can be found in its prospectus. However, the Board may suspend the right of shareholders to sell shares when permitted or required to do so by law or compel sales of shares in certain cases.
Sinking Fund Provisions
The Trust has no sinking fund provisions.
Calls or Assessment
All Fund shares are issued in uncertificated form only and when issued will be fully paid and non-assessable by the Trust.
Statement of Additional Information September 1, 2014 | Page 146 |
An investor may buy, sell and transfer shares in the Funds utilizing the methods, and subject to the restrictions, described in the Funds prospectuses. The following information and Appendix S to this SAI supplements information in the Funds prospectuses.
The Funds have authorized one or more broker-dealers to accept buy and sell orders on the Funds behalf. These broker-dealers are authorized to designate other intermediaries to accept buy and sell orders on the Funds behalf. The Funds will be deemed to have received a buy or sell order when an authorized broker-dealer, or, if applicable, a broker-dealers authorized designee, accepts the order. Customer orders will be priced at each Funds net asset value next computed after they are accepted by an authorized broker-dealer or the brokers authorized designee.
Should a Fund stop selling shares, the Board may make a deduction from the value of the assets held by the Fund to cover the cost of future liquidations of the assets so as to distribute these costs fairly among all shareholders.
The Trust also may make payment for sales in readily marketable securities or other property if it is appropriate to do so in light of the Trusts responsibilities under the 1940 Act.
Under the 1940 Act, the Funds may suspend the right of redemption or postpone the date of payment for shares during any period when (i) trading on the NYSE is restricted by applicable rules and regulations of the SEC; (ii) the NYSE is closed for other than customary weekend and holiday closings; (iii) the SEC has by order permitted such suspension; (iv) an emergency exists as determined by the SEC. (The Funds may also suspend or postpone the recordation of the transfer of their shares upon the occurrence of any of the foregoing conditions).
The Trust has elected to be governed by Rule 18f-1 under the 1940 Act, as a result of which each Fund is obligated to redeem shares, subject to the exceptions listed above, with respect to any one shareholder during any 90-day period, solely in cash up to the lesser of $250,000 or 1% of the net asset value of each Fund at the beginning of the period. Although redemptions in excess of this limitation would normally be paid in cash, the Fund reserves the right to make these payments in whole or in part in securities or other assets in case of an emergency, or if the payment of a redemption in cash would be detrimental to the existing shareholders of the Fund as determined by the Board. In these circumstances, the securities distributed would be valued as set forth in this SAI. Should a Fund distribute securities, a shareholder may incur brokerage fees or other transaction costs in converting the securities to cash.
The timing and magnitude of cash inflows from investors buying Fund shares could prevent a Fund from always being fully invested. Conversely, the timing and magnitude of cash outflows to investors redeeming Fund shares could require large ready reserves of uninvested cash to meet shareholder redemptions. Either situation could adversely impact a Funds performance.
Potential Adverse Effects of Large Investors
Each Fund may from time to time sell to one or more investors, including other funds advised by the Investment Manager or third parties, a substantial amount of its shares, and may thereafter be required to satisfy redemption requests by such investors. Such sales and redemptions may be very substantial relative to the size of the Fund. While it is not possible to predict the overall effect of such sales and redemptions over time, such transactions may adversely affect the Funds performance to the extent that the Fund is required to invest cash received in connection with a sale or to sell portfolio securities to facilitate a redemption at, in either case, a time when the Fund otherwise would not invest or sell. Such transactions also may increase a Funds transaction costs, which would detract from Fund performance. If a Fund is forced to sell portfolio securities that have appreciated in value, such sales may accelerate the realization of taxable income.
Anti-Money Laundering Compliance
The Funds are required to comply with various anti-money laundering laws and regulations. Consequently, the Funds may request additional required information from you to verify your identity. Your application will be rejected if it does not contain your name, social security number, date of birth and permanent street address. If at any time the Funds believe a shareholder may be involved in suspicious activity or if certain account information matches information on government lists of suspicious persons, the Funds may choose not to establish a new account or may be required to freeze a shareholders account. The Funds also may be required to provide a governmental agency with information about transactions that have occurred in a shareholders account or to transfer monies received to establish a new account, transfer an existing account or transfer the proceeds of an existing account to a governmental agency. In some circumstances, the law may not permit the Funds to inform the shareholder that it has taken the actions described above.
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Pay-out Plans
You can use any of several pay-out plans to redeem your investment in regular installments. If you redeem shares, you may be subject to a contingent deferred sales charge as discussed in the prospectus. While the plans differ on how the pay-out is figured, they all are based on the redemption of your investment. Net investment income dividends and any capital gain distributions will automatically be reinvested, unless you elect to receive them in cash. If you redeem an IRA or a qualified retirement account, certain restrictions, federal tax penalties, and special federal income tax reporting requirements may apply. You should consult your tax advisor about this complex area of the tax law.
Applications for a systematic investment in a class of a Fund subject to a sales charge normally will not be accepted while a pay-out plan for any of those Funds is in effect. Occasional investments, however, may be accepted.
To start any of these plans, please consult your financial intermediary. Your authorization must be received at least five days before the date you want your payments to begin. Payments will be made on a monthly, bimonthly, quarterly, semiannual, or annual basis. Your choice is effective until you change or cancel it.
The share price of each Fund is based on each Funds net asset value per share, which is calculated separately for each class of shares as of the close of regular trading on the NYSE (which is usually 4:00 p.m. Eastern Time unless the NYSE closes earlier) on each day the Fund is open for business, unless the Board determines otherwise. The Funds do not value their shares on days that the NYSE is closed.
For Funds Other than Money Market Funds. The value of each Funds portfolio securities is determined in accordance with the Trusts valuation procedures, which are approved by the Board. Except as described below under Fair Valuation of Portfolio Securities, the Funds portfolio securities are typically valued using the following methodologies:
Equity Securities . Equity securities (including common stocks, preferred stocks, convertible securities, warrants and ETFs) listed on an exchange are valued at the closing price on their primary exchange (which, in the case of foreign securities, may be a foreign exchange) or, if a closing price is not readily available, at the mean of the closing bid and asked prices. Over-the-counter equity securities not listed on any national exchange but included in the NASDAQ National Market System are valued at the NASDAQ Official Closing Price or, if the official closing price is not readily available, at the mean between the closing bid and asked prices. Equity securities and ETFs that are not listed on any national exchange and are not included in the NASDAQ National Market System are valued at the primary exchange last sale price, or if the last sale price is not readily available, at the mean between the closing bid and asked prices. Shares of other open-end investment companies (other than ETFs) are valued at the latest net asset value reported by those companies.
Fixed Income Securities . Short-term debt securities purchased with remaining maturities of 60 days or less and long-term debt securities with remaining maturities of 60 days or less are valued at their amortized cost value. Amortized cost is an approximation of market value determined by systematically increasing the carrying value of a security if acquired at a discount, or reducing the carrying value if acquired at a premium, so that the carrying value is equal to maturity value on the maturity date. The value of short-term debt securities with remaining maturities in excess of 60 days is the market price, which may be obtained from a pricing service or, if a market price is not available from a pricing service, a bid quote from a broker or dealer. Short-term variable rate demand notes are typically valued at their par value. Other debt securities typically are valued using an evaluated bid provided by a pricing service. If pricing information is unavailable from a pricing service or the Investment Managers valuation committee believes such information is not reflective of market value, then a quote from a broker or dealer may be used. Newly issued debt securities may be valued at purchase price for up to two days following purchase.
Futures, Options and Other Derivatives . Futures and options on futures are valued based on the settle price at the close of regular trading on their principal exchange or, in the absence of transactions, they are valued at the mean of the closing bid and asked prices closest to the last reported sale price. Listed options are valued at the mean of the closing bid and asked prices. If market quotations are not readily available, futures and options are valued using quotations from brokers. Customized derivative products are valued at a price provided by a pricing service or, if such a price is unavailable, a broker quote or at a price derived from an internal valuation model.
Repurchase Agreements . Repurchase agreements are generally valued at a price equal to the amount of the cash invested in a repurchase agreement
Foreign Currencies . Foreign currencies and securities denominated in foreign currencies are valued in U.S. dollars utilizing spot exchange rates at the close of regular trading on the NYSE. Forward foreign currency contracts are valued in U.S. dollars utilizing the applicable forward currency exchange rate as of the close of regular trading on the NYSE.
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Fair Valuation of Portfolio Securities. Rather than using the methods described above, the Investment Managers valuation committee will, in accordance with valuation procedures, which are approved by the Board, determine in good faith a securitys fair value in the event that (i) quotations are not readily available, such as when trading is halted or securities are not actively traded; (ii) valuations obtained for a security are deemed, in the judgment of the valuation committee, not to be reflective of market value (prices deemed unreliable); or (iii) a significant event has been recognized in relation to a security or class of securities that is not reflected in quotations from other sources, such as when an event impacting a foreign security occurs after the closing of the securitys foreign exchange but before the closing of the NYSE. The fair value of a security is likely to be different from the quoted or published price and fair value determinations often require significant judgment.
In general, any relevant factors may be taken into account in determining fair value, including the following, among others: the fundamental analytical data relating to the security; the value of other financial instruments, including derivative securities traded on other markets or among dealers; trading volumes on markets, exchanges, or among dealers; values of baskets of securities on markets, exchanges, or among dealers; changes in interest rates; observations from financial institutions; government actions or pronouncements; other news events; information as to any transactions or offers with respect to the security; price and extent of public trading in similar securities of the issuer or comparable companies; nature and expected duration of the event, if any, giving rise to the valuation issue; pricing history; the relative size of the position in the portfolio; internal models; and other relevant information.
With respect to securities traded on foreign markets, relevant factors may include, but not be limited to, the following: the value of foreign securities traded on other foreign markets; ADR and/or GDR trading; closed-end fund trading; foreign currency exchange activity and prices; and the trading of financial products that are tied to baskets of foreign securities, such as certain exchange-traded index funds. A systematic independent fair value pricing service assists in the fair valuation process for foreign securities in order to adjust for possible changes in value that may occur between the close of the foreign exchange and the time at which a Funds NAV is determined. Although the use of this service is intended to decrease opportunities for time zone arbitrage transactions, there can be no assurance that it will successfully decrease arbitrage opportunities.
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The following information supplements and should be read in conjunction with the section in the Funds prospectuses entitled Distributions and Taxes . The prospectuses generally describe the U.S. federal income tax treatment of distributions by the Funds. This section of the SAI provides additional information concerning U.S. federal income taxes. It is based on the Code, applicable Treasury Regulations, judicial authority, and administrative rulings and practice, all as in effect as of the date of this SAI and all of which are subject to change, including changes with retroactive effect. Except as specifically set forth below, the following discussion does not address any state, local or foreign tax matters.
A shareholders tax treatment may vary depending upon his or her particular situation. This discussion applies only to shareholders holding Fund shares as capital assets within the meaning of the Code. Except as otherwise noted, it may not apply to certain types of shareholders who may be subject to special rules, such as insurance companies, tax-exempt organizations, shareholders holding Fund shares through tax-advantaged accounts (such as 401(k) Plan Accounts or Individual Retirement Accounts), financial institutions, broker-dealers, entities that are not organized under the laws of the United States or a political subdivision thereof, persons who are neither citizens nor residents of the United States, shareholders holding Fund shares as part of a hedge, straddle, or conversion transaction, and shareholders who are subject to the U.S. federal alternative minimum tax.
The Trust has not requested and will not request an advance ruling from the IRS as to the U.S. federal income tax matters described below. The IRS could adopt positions contrary to those discussed below and such positions could be sustained. In addition, the following discussion and the discussions in the prospectuses applicable to each shareholder address only some of the U.S. federal income tax considerations generally affecting investments in the Funds. Prospective shareholders are urged to consult with their own tax advisors and financial planners regarding the U.S. federal tax consequences of an investment in a Fund, the application of state, local, or foreign laws, and the effect of any possible changes in applicable tax laws on their investment in the Funds.
Qualification as a Regulated Investment Company
It is intended that each Fund qualify as a regulated investment company under Subchapter M of Subtitle A, Chapter 1 of the Code. Each Fund will be treated as a separate entity for U.S. federal income tax purposes. Thus, the provisions of the Code applicable to regulated investment companies generally will apply separately to each Fund, even though each Fund is a series of the Trust. Furthermore, each Fund will separately determine its income, gains, losses, and expenses for U.S. federal income tax purposes.
In order to qualify for the special tax treatment accorded regulated investment companies and their shareholders, each Fund must, among other things, derive at least 90% of its gross income each taxable year generally from (i) dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of stock, securities or foreign currencies, or other income attributable to its business of investing in such stock, securities or foreign currencies (including, but not limited to, gains from options, futures or forward contracts) and (ii) net income derived from an interest in a qualified publicly traded partnership, as defined below. In general, for purposes of this 90% gross income requirement, income derived from a partnership (other than a qualified publicly traded partnership) will be treated as qualifying income only to the extent such income is attributable to items of income of the partnership which would be qualifying income if realized directly by the regulated investment company. However, 100% of the net income derived from an interest in a qualified publicly traded partnership (defined as a partnership (x) the interests in which are traded on an established securities market or readily tradable on a secondary market or the substantial equivalent thereof, and (y) that derives less than 90% of its gross income from the qualifying income described in clause (i) above) will be treated as qualifying income. In general, such entities will be treated as partnerships for federal income tax purposes if they meet the passive-type income requirement under Code section 7704(c)(2). Certain of a Funds investments in master limited partnerships (MLPs) and ETFs, if any, may qualify as interests in qualified publicly traded partnerships. In addition, although in general the passive loss rules do not apply to a regulated investment company, such rules do apply to a regulated investment company with respect to items attributable to an interest in a qualified publicly traded partnership.
Each Fund must also diversify its holdings so that, at the end of each quarter of the Funds taxable year: (i) at least 50% of the fair market value of its total assets consists of (A) cash and cash items (including receivables), U.S. government securities and securities of other regulated investment companies, and (B) other securities, limited in respect of any one issuer (other than those described in clause (A)) to the extent such securities do not exceed 5% of the value of the Funds total assets and are not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of the Funds total assets consists of the securities of any one issuer (other than those described in clause (i)(A)), the securities (other than securities of other regulated investment companies) of two or more issuers the Fund controls and which are engaged in the same, similar, or related trades or businesses, or the securities of one or more qualified publicly traded partnerships.
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In addition, for purposes of meeting this diversification requirement, the term outstanding voting securities of such issuer includes the equity securities of a qualified publicly traded partnership and in the case of a Funds investments in loan participations, the Fund shall treat both the financial intermediary and the issuer of the underlying loan as an issuer. The qualifying income and diversification requirements described above may limit the extent to which a Fund can engage in certain derivative transactions, as well as the extent to which it can invest in MLPs.
In addition, each Fund generally must distribute to its shareholders at least 90% of its investment company taxable income for the taxable year, which generally includes its ordinary income and the excess of any net short-term capital gain over net long-term capital loss, and at least 90% of its net tax-exempt interest income (if any) for the taxable year.
If a Fund qualifies as a regulated investment company that is accorded special tax treatment, it generally will not be subject to U.S. federal income tax on any of the investment company taxable income and net capital gain ( i.e. , the excess of net long-term capital gain over net short-term capital loss) it distributes to its shareholders. Each Fund generally intends to distribute at least annually substantially all of its investment company taxable income (computed without regard to the dividends-paid deduction) and its net capital gain. However, no assurance can be given that a Fund will not be subject to U.S. federal income taxation. Any investment company taxable income or net capital gain retained by a Fund will be subject to tax at regular corporate rates.
If a Fund retains any net capital gain, it will be subject to a tax at regular corporate rates on the amount retained, but may designate the retained amount as undistributed capital gains in a notice mailed within 60 days of the close of the Funds taxable year to its shareholders, who (i) will be required to include in income for U.S. federal income tax purposes, as long-term capital gain, their shares of such undistributed amount, and (ii) will be entitled to credit their proportionate shares of the tax paid by the Fund on such undistributed amount against their U.S. federal income tax liabilities, if any, and to claim refunds to the extent the credit exceeds such liabilities. For U.S. federal income tax purposes, the tax basis of shares owned by a shareholder of a Fund will be increased by an amount equal under current law to the difference between the amount of undistributed capital gains included in the shareholders gross income under clause (i) of the preceding sentence and the tax deemed paid by the shareholder under clause (ii) of the preceding sentence.
In determining its net capital gain, including in connection with determining the amount available to support a Capital Gain Dividend (as defined below), its taxable income, and its earnings and profits, a regulated investment company generally may elect to treat part or all of any post-October capital loss (defined as the greatest of net capital loss, net long-term capital loss, or net short-term capital loss, in each case attributable to the portion of the taxable year after October 31) or late-year ordinary loss (generally, (i) net ordinary loss from the sale, exchange or other taxable disposition of property, attributable to the portion of the taxable year after October 31, plus (ii) other net ordinary loss attributable to the portion of the taxable year after December 31) as if incurred in the succeeding taxable year.
In order to comply with the distribution requirements described above applicable to regulated investment companies, a Fund generally must make the distributions in the same taxable year that it realizes the income and gain, although in certain circumstances, a Fund may make the distributions in the following taxable year in respect of income and gains from the prior taxable year. Shareholders generally are taxed on any distributions from a Fund in the year they are actually distributed. If a Fund declares a distribution to shareholders of record in October, November or December of one calendar year and pays the distribution by January 31 of the following calendar year, however, the Fund and its shareholders will be treated as if the Fund paid the distribution by December 31 of the earlier year.
If the Fund were to fail to meet the income, diversification or distribution test described above, the Fund could in some cases cure such failure including by paying a fund-level tax or interest, making additional distributions, or disposing of certain assets. If the Fund were ineligible to or otherwise did not cure such failure for any year, or were otherwise to fail to qualify as a regulated investment company accorded special tax treatment under the Code, it would be taxed in the same manner as an ordinary corporation without any deduction for its distributions to shareholders. In this case, all distributions from the Funds current and accumulated earnings and profits (including any distributions of its net tax-exempt income and net long-term capital gains) to its shareholders would be taxable to shareholders as dividend income. In addition, the Fund could be required to recognize unrealized gains, pay substantial taxes and interest and make substantial distributions before requalifying as a regulated investment company.
Excise Tax
If a Fund fails to distribute by December 31 of each calendar year at least the sum of 98% of its ordinary income for that year (excluding capital gains and losses) and 98.2% of its capital gain net income (adjusted for net ordinary losses) for the 1-year period ending on October 31 of that year (or November 30 or December 31 of that year if the Fund is permitted to elect and so elects), and any of its ordinary income and capital gain net income from previous years that were not distributed during such years, the Fund will be subject to a nondeductible 4% excise tax on the undistributed amounts. For these purposes, ordinary gains and losses from the sale, exchange, or other taxable disposition of property that would be properly taken
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into account after October 31 of a calendar year (or November 30 or December 31 if the Fund is permitted to elect and so elects) are generally treated as arising on January 1 of the following calendar year. For purposes of the excise tax, a Fund will be treated as having distributed any amount on which it has been subject to corporate income tax in the taxable year ending within the calendar year. Each Fund generally intends to actually distribute or be deemed to have distributed substantially all of its ordinary income and capital gain net income, if any, by the end of each calendar year and, thus, expects not to be subject to the excise tax. However, no assurance can be given that a Fund will not be subject to the excise tax. Moreover, each Fund reserves the right to pay an excise tax rather than make an additional distribution when circumstances warrant (for example, if the amount of excise tax to be paid is deemed de minimis by a Fund).
Capital Loss Carryforwards
Capital losses in excess of capital gains (net capital losses) are not permitted to be deducted against a Funds net investment income. Instead, potentially subject to certain limitations, a Fund is able to carry forward a net capital loss from any taxable year to offset its capital gains, if any, realized during a subsequent taxable year. If a Fund incurs or has incurred net capital losses in taxable years beginning after December 22, 2010 (post-2010 losses), those losses will be carried forward to one or more subsequent taxable years without expiration; any such carryforward losses will retain their character as short-term or long-term. If a Fund incurred net capital losses in a taxable year beginning on or before December 22, 2010 (pre-2011 losses), the Fund is permitted to carry such losses forward for eight taxable years; in the year to which they are carried forward, such losses are treated as short-term capital losses that first offset short-term capital gains, and then offset any long-term capital gains. The Fund must use any post 2010-losses, which will not expire, before it uses any pre-2011 losses. This increases the likelihood that pre-2011 losses will expire unused at the conclusion of the eight-year carryforward period. Capital gains that are offset by carried forward capital losses are not subject to fund-level U.S. federal income taxation, regardless of whether they are distributed to shareholders. Accordingly, the Funds do not expect to distribute any such capital gains. The Funds cannot carry back or carry forward any net operating losses.
Capital Loss Carryforward
Fund |
Total
Capital Loss Carryforward |
Amount Expiring in | Amount Not Expiring | |||||||||||||||||||||||||||||||||
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Short-term | Long-term | |||||||||||||||||||||||||||||
For Funds with fiscal period ending March 31 | ||||||||||||||||||||||||||||||||||||
AP Growth Fund | $ | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||
Pacific/Asia Fund | $ | 21,392,416 | $0 | $0 | $0 | $9,165,902 | $9,618,892 | $790,415 | $1,817,207 | $0 | ||||||||||||||||||||||||||
Select Large Cap Growth Fund | $ | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||
For Funds with fiscal period ending April 30 | ||||||||||||||||||||||||||||||||||||
Bond Fund | $ | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||
Corporate Income Fund | $ | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||
Intermediate Bond Fund | $ | 23,304,264 | $0 | $0 | $0 | $0 | $0 | $0 | $23,304,264 | $0 | ||||||||||||||||||||||||||
Small Cap Value Fund I | $ | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||
U.S. Treasury Index Fund | $ | 723,342 | $0 | $0 | $0 | $0 | $0 | $0 | $723,342 | $0 | ||||||||||||||||||||||||||
For Funds with fiscal period ending May 31 | ||||||||||||||||||||||||||||||||||||
Dividend Income Fund | $ | 1,266,110 | $1,266,110 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||
HY Municipal Fund | $ | 84,346,998 | $466,991 | $1,471,699 | $5,694,295 | $17,741,445 | $35,721,468 | $4,244,605 | $152,354 | $18,854,141 | ||||||||||||||||||||||||||
Risk Allocation Fund | $ | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||
For Funds with fiscal period ending July 31 | ||||||||||||||||||||||||||||||||||||
AMT-Free OR Intermediate Muni Bond Fund | $ | 0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||
Large Cap Growth Fund | $ | 189,632,517 | $0 | $169,026,889 | $20,605,628 | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||||||||||
Tax-Exempt Fund | $ | 88,625,795 | $0 | $8,298,230 | $57,869,171 | $1,455,576 | $6,621,391 | $14,381,427 | $0 | $0 | ||||||||||||||||||||||||||
Ultra Short Term Bond Fund | $ | 27,218,620 | $627,248 | $685,751 | $213,699 | $2,249,159 | $1,023,617 | $11,369,928 | $4,155,779 | $6,893,439 |
Statement of Additional Information September 1, 2014 | Page 152 |
Equalization Accounting
Each Fund may use the so-called equalization method of accounting to allocate a portion of its accumulated earnings and profits, which generally equals a Funds undistributed net investment income and realized capital gains, with certain adjustments, to redemption proceeds. This method permits a Fund to achieve more balanced distributions for both continuing and redeeming shareholders. Although using this method generally will not affect a Funds total returns, it may reduce the amount of income and gains that the Fund would otherwise distribute to continuing shareholders by reducing the effect of redemptions of Fund shares on Fund distributions to shareholders. The IRS has not sanctioned the particular equalization method used by the Funds, and thus a Funds use of this method may be subject to IRS scrutiny.
Taxation of Fund Investments
In general, realized gains or losses on the sale of securities held by a Fund will be treated as capital gains or losses, and long-term capital gains or losses if the Fund has held or is deemed to have held the securities for more than one year at the time of disposition.
If a Fund purchases a debt obligation with original issue discount (OID) (generally a debt obligation with an issue price less than its stated principal amount, such as a zero-coupon bond), the Fund may be required to annually include in its income a portion of the OID as ordinary income, even though the Fund will not receive cash payments for such discount until maturity or disposition of the obligation. Inflation-protected bonds generally can be expected to produce OID income as their principal amounts are adjusted upward for inflation. In general, gains recognized on the disposition of (or the receipt of any partial payment of principal on) a debt obligation (including a municipal obligation) purchased by a Fund at a market discount, generally at a price less than its principal amount, will be treated as ordinary income to the extent of the portion of market discount which accrued, but was not previously recognized pursuant to an available election, during the term that the Fund held the debt obligation. A Fund generally will be required to make distributions to shareholders representing the OID or market discount (if an election is made by the Fund to accrue market discount over the holding period of the applicable debt obligation) on debt securities that is currently includible in income, even though the cash representing such income may not have been received by the Fund. Cash to pay such distributions may be obtained from borrowing or from sales proceeds of securities held by a Fund which the Fund otherwise might have continued to hold; obtaining such cash might be disadvantageous for the Fund.
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In addition, payment-in-kind securities similarly will give rise to income which is required to be distributed and is taxable even though a Fund receives no cash interest payment on the security during the year. A portion of the interest paid or accrued on certain high-yield discount obligations (such as high-yield corporate debt securities) may not (and interest paid on debt obligations owned by a Fund that are considered for tax purposes to be payable in the equity of the issuer or a related party will not) be deductible to the issuer, possibly affecting the cash flow of the issuer.
If a Fund invests in debt obligations that are in the lowest rating categories or are unrated, including debt obligations of issuers not currently paying interest or who are in default, special tax issues may exist for the Fund. Tax rules are not entirely clear about issues such as whether a Fund should recognize market discount on a debt obligation and, if so, the amount of market discount the Fund should recognize, when a Fund may cease to accrue interest, OID or market discount, when and to what extent deductions may be taken for bad debts or worthless securities and how payments received on obligations in default should be allocated between principal and income. These and other related issues will be addressed by a Fund when, as and if it invests in such securities, in order to seek to ensure that it distributes sufficient income to preserve its status as a regulated investment company and does not become subject to U.S. federal income or excise tax.
Very generally, when a Fund purchases a bond at a price that exceeds the redemption price at maturity that is, at a premium the premium is amortizable over the remaining term of the bond. In the case of a taxable bond, if a Fund makes an election applicable to all such bonds it purchases, which election cannot be revoked without consent of the IRS, the Fund reduces the current taxable income from the bond by the amortized premium and reduces its basis in the bond by the amount of such offset; upon the disposition or maturity of such bonds acquired on or after January 4, 2013, a Fund is permitted to deduct any remaining premium allocable to a prior period. In the case of a tax-exempt bond, tax rules require a Fund to reduce its tax basis by the amount of the amortized premium.
If an option granted by a Fund is sold, lapses or is otherwise terminated through a closing transaction, such as a repurchase by the Fund of the option from its holder, the Fund generally will realize a short-term capital gain or loss, depending on whether the premium income is greater or less than the amount paid by the Fund in the closing transaction. Some capital losses realized by a Fund in the sale, exchange, exercise or other disposition of an option may be deferred if they result from a position that is part of a straddle, discussed below. If securities are sold by a Fund pursuant to the exercise of a covered call option granted by it, the Fund generally will add the premium received to the sale price of the securities delivered in determining the amount of gain or loss on the sale. If securities are purchased by a Fund pursuant to the exercise of a put option written by it, the Fund generally will subtract the premium received from its cost basis in the securities purchased.
Some regulated futures contracts, foreign currency contracts, and non-equity, listed options that may be used by a Fund will be deemed Section 1256 contracts. A Fund will be required to mark to market any such contracts held at the end of the taxable year by treating them as if they had been sold on the last day of that year at market value. Sixty percent of any net gain or loss realized on all dispositions of Section 1256 contracts, including deemed dispositions under the mark-to-market rule, generally will be treated as long-term capital gain or loss, and the remaining 40% will be treated as short-term capital gain or loss, although certain foreign currency gains and losses from such contracts may be treated as entirely ordinary income or loss as described below. These provisions may require a Fund to recognize income or gains without a concurrent receipt of cash. Transactions that qualify as designated hedges are exempt from the mark-to-market rule and the 60%/40% rule and may require the Fund to defer the recognition of losses on certain futures contracts, foreign currency contracts, and non-equity options.
Foreign exchange gains and losses realized by a Fund in connection with certain transactions involving foreign currency-denominated debt securities, certain options, futures contracts, forward contracts and similar instruments relating to foreign currencies, or payables or receivables denominated in a foreign currency are subject to Section 988 of the Code, which generally causes such gains and losses to be treated as ordinary income or loss and may affect the amount and timing of recognition of the Funds income. Under future Treasury Regulations, any such transactions that are not directly related to a Funds investments in stock or securities (or its options contracts or futures contracts with respect to stock or securities) may have to be limited in order to enable the Fund to satisfy the 90% qualifying income test described above. If the net foreign exchange loss exceeds a Funds net investment company taxable income (computed without regard to such loss) for a taxable year, the resulting ordinary loss for such year will not be available as a carryforward and thus cannot be deducted by the Fund or its shareholders in future years.
Offsetting positions held by a Fund involving certain derivative instruments, such as forward, futures and options contracts, may be considered, for U.S. federal income tax purposes, to constitute straddles. Straddles are defined to include offsetting positions in actively traded personal property. The tax treatment of straddles is governed by Section 1092 of the Code which, in certain circumstances, overrides or modifies the provisions of Section 1256. If a Fund is treated as entering into a straddle and at least one (but not all) of the Funds positions in derivative contracts comprising a part of such straddle is governed by Section 1256 of the Code, described above, then such straddle could be characterized as a
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mixed straddle. A Fund may make one or more elections with respect to mixed straddles. Depending upon which election is made, if any, the results with respect to a Fund may differ. Generally, to the extent the straddle rules apply to positions established by a Fund, losses realized by the Fund may be deferred to the extent of unrealized gain in any offsetting positions. Moreover, as a result of the straddle rules, short-term capital loss on straddle positions may be recharacterized as long-term capital loss, and long-term capital gain may be characterized as short-term capital gain. In addition, the existence of a straddle may affect the holding period of the offsetting positions. As a result, the straddle rules could cause distributions that would otherwise constitute qualified dividend income or qualify for the dividends-received deduction to fail to satisfy the applicable holding period requirements (as described below). Furthermore, the Fund may be required to capitalize, rather than deduct currently, any interest expense and carrying charges applicable to a position that is part of a straddle, including any interest on indebtedness incurred or continued to purchase or carry any positions that are part of a straddle. The application of the straddle rules to certain offsetting Fund positions can therefore affect the amount, timing, and character of distributions to shareholders, and may result in significant differences from the amount, timing and character of distributions that would have been made by the Fund if it had not entered into offsetting positions in respect of certain of its portfolio securities.
If a Fund enters into a constructive sale of any appreciated financial position in stock, a partnership interest, or certain debt instruments, the Fund will be treated as if it had sold and immediately repurchased the property and must recognize gain (but not loss) with respect to that position. A constructive sale of an appreciated financial position occurs when a Fund enters into certain offsetting transactions with respect to the same or substantially identical property, including, but not limited to: (i) a short sale; (ii) an offsetting notional principal contract; (iii) a futures or forward contract; or (iv) other transactions identified in future Treasury Regulations. The character of the gain from constructive sales will depend upon a Funds holding period in the appreciated financial position. Losses realized from a sale of a position that was previously the subject of a constructive sale will be recognized when the position is subsequently disposed of. The character of such losses will depend upon a Funds holding period in the position beginning with the date the constructive sale was deemed to have occurred and the application of various loss deferral provisions in the Code. Constructive sale treatment does not apply to certain closed transactions, including if such a transaction is closed on or before the 30th day after the close of the Funds taxable year and the Fund holds the appreciated financial position unhedged throughout the 60-day period beginning with the day such transaction was closed.
The amount of long-term capital gain a Fund may recognize from certain derivative transactions with respect to interests in certain pass-through entities is limited under the Codes constructive ownership rules. The amount of long-term capital gain is limited to the amount of such gain the Fund would have had if the Fund directly invested in the pass-through entity during the term of the derivative contract. Any gain in excess of this amount is treated as ordinary income. An interest charge is imposed on the amount of gain that is treated as ordinary income.
If a Fund makes a distribution of income received by the Fund in lieu of dividends (a substitute payment) with respect to securities on loan pursuant to a securities lending transaction, such income will not constitute qualified dividend income to individual shareholders and will not be eligible for the dividends-received deduction for corporate shareholders. Similar consequences may apply to repurchase and other derivative transactions. Similarly, to the extent that a Fund makes distributions of income received by such Fund in lieu of tax-exempt interest with respect to securities on loan, such distributions will not constitute exempt-interest dividends (defined below) to shareholders.
In addition, a Funds transactions in securities and certain types of derivatives (e.g., options, futures contracts, forward contracts and swap agreements) may be subject to other special tax rules, such as the wash sale rules or the short-sale rules, the effect of which may be to accelerate income to the Fund, defer losses to the Fund, cause adjustments in the holding periods of the Funds securities, convert long-term capital gains into short-term capital gains, and/or convert short-term capital losses into long-term capital losses. These rules could therefore affect the amount, timing and character of distributions to shareholders.
Certain of a Funds investments in derivative instruments and foreign currency-denominated instruments, as well as any of its foreign currency transactions and hedging activities, are likely to produce a difference between its book income and its taxable income. If a Funds book income exceeds the sum of its taxable income and net tax-exempt income (if any), the distribution (if any) of such excess generally will be treated as (i) a dividend to the extent of the Funds remaining earnings and profits (including earnings and profits arising from tax-exempt income), (ii) thereafter, as a return of capital to the extent of the recipients basis in its shares, and (iii) thereafter, as gain from the sale or exchange of a capital asset. If a Funds book income is less than the sum of its taxable income and net tax-exempt income (if any), the Fund could be required to make distributions exceeding book income to qualify as a regulated investment company that is accorded special tax treatment.
Rules governing the U.S. federal income tax aspects of derivatives, including swap agreements and certain commodity-linked investments, are in a developing stage and are not entirely clear in certain respects. Accordingly, while each Fund intends to account for such transactions in a manner it deems to be appropriate, an adverse determination or future guidance by the IRS
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with respect to these rules (which determination or guidance could be retroactive) may affect whether a Fund has made sufficient distributions, and otherwise satisfied the relevant requirements to maintain its qualification as a regulated investment company and avoid fund-level tax. Certain requirements that must be met under the Code in order for a Fund to qualify as a regulated investment company may limit the extent to which a Fund will be able to engage in certain derivatives transactions.
Certain of the Funds employ a multi-manager approach in which the Investment Manager and one or more investment subadvisers each provide day-to-day portfolio management for a portion (or sleeve) of the Funds assets. Due to this multi-manager approach, certain of these Funds investments may be more likely to be subject to one or more special tax rules (including, but not limited to, wash sale, constructive sale, short sale, and straddle rules) that may affect the timing, character and/or amount of a Funds distributions to shareholders.
Any investment by a Fund in equity securities of a REIT may result in the Funds receipt of cash in excess of the REITs earnings; if the Fund distributes these amounts, these distributions could constitute a return of capital to Fund shareholders for U.S. federal income tax purposes. Investments in equity securities of a REIT or another regulated investment company also may require a Fund to accrue and distribute income not yet received. To generate sufficient cash to make the requisite distributions, the Fund may be required to sell securities in its portfolio (including when it is not advantageous to do so) that it otherwise would have continued to hold. Dividends received by the Fund from a REIT generally will not constitute qualified dividend income and will not qualify for the dividends-received deduction.
A Fund may invest directly or indirectly in residual interests in REMICs or equity interests in taxable mortgage pools (TMPs). Under an IRS notice, and Treasury Regulations that have yet to be issued but may apply retroactively, a portion of a Funds income (including income allocated to the Fund from a REIT, a regulated investment company or other pass-through entity) that is attributable to a residual interest in a REMIC or an equity interest in a TMP (referred to in the Code as an excess inclusion) will be subject to U.S. federal income tax in all events. This notice also provides, and the regulations are expected to provide, that excess inclusion income of a regulated investment company, such as a Fund, will be allocated to shareholders of the regulated investment company in proportion to the dividends received by such shareholders, with the same consequences as if the shareholders held the related interest directly. As a result, the Fund may not be a suitable investment for certain tax-exempt shareholders, as noted under Tax-Exempt Shareholders below.
In general, excess inclusion income allocated to shareholders (i) cannot be offset by net operating losses (subject to a limited exception for certain thrift institutions), (ii) will constitute unrelated business taxable income (UBTI) to entities (including a qualified pension plan, an individual retirement account, a 401(k) plan, a Keogh plan or certain other tax-exempt entities) subject to tax on UBTI, thereby potentially requiring such an entity that is allocated excess inclusion income, and otherwise might not be required to file a tax return, to file a tax return and pay tax on such income, and (iii) in the case of a foreign shareholder, will not qualify for any reduction in U.S. federal withholding tax.
Some amounts received by a Fund from its investments in MLPs will likely be treated as returns of capital because of accelerated deductions available with respect to the activities of MLPs. On the disposition of an investment in such an MLP, the Fund will likely realize taxable income in excess of economic gain from that asset (or, in later periods, if a Fund does not dispose of the MLP, the Fund will likely realize taxable income in excess of cash flow received by the Fund from the MLP), and the Fund must take such income into account in determining whether the Fund has satisfied its regulated investment company distribution requirements. The Fund may have to borrow or liquidate securities to satisfy its distribution requirements and meet its redemption requests, even though investment considerations might otherwise make it undesirable for the Fund to borrow money or sell securities at the time. In addition, distributions attributable to gain from the sale of MLPs that are characterized as ordinary income under the Codes recapture provisions will be taxable to Fund shareholders as ordinary income.
As noted above, certain of the ETFs and MLPs in which a Fund may invest qualify as qualified publicly traded partnerships. In such cases, the net income derived from such investments will constitute qualifying income for purposes of the 90% gross income requirement described earlier for qualification as a regulated investment company. If, however, such a vehicle were to fail to qualify as a qualified publicly traded partnership in a particular year, a portion of the gross income derived from it in such year could constitute non-qualifying income to a Fund for purposes of the 90% gross income requirement and thus could adversely affect the Funds ability to qualify as a regulated investment company for a particular year. In addition, as described above, the diversification requirement for regulated investment company qualification will limit a Funds investments in one or more vehicles that are qualified publicly traded partnerships to 25% of the Funds total assets as of the end of each quarter of the Funds taxable year.
Passive foreign investment companies (PFICs) are generally defined as foreign corporations where at least 75% of their gross income for their taxable year is income from passive sources (such as certain interest, dividends, rents and royalties, or capital gains) or at least 50% of their assets on average produce or are held for the production of such passive income. If a
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Fund acquires any equity interest in a PFIC, the Fund could be subject to U.S. federal income tax and interest charges on excess distributions received from the PFIC or on gain from the sale of such equity interest in the PFIC, even if all income or gain actually received by the Fund is timely distributed to its shareholders. Excess distributions and gain from the sale of interests in PFICs may be characterized as ordinary income even though, absent the application of PFIC rules, these amounts may otherwise have been classified as capital gain.
A Fund will not be permitted to pass through to its shareholders any credit or deduction for these special taxes and interest charges incurred with respect to a PFIC. Elections may be available that would ameliorate these adverse tax consequences, but such elections would require a Fund to include its share of the PFICs income and net capital gains annually, regardless of whether it receives any distribution from the PFIC (in the case of a QEF election), or to mark the gains (and to a limited extent losses) in its interests in the PFIC to the market as though the Fund had sold and repurchased such interests on the last day of the Funds taxable year, treating such gains and losses as ordinary income and loss (in the case of a mark-to-market election). The QEF and mark-to-market elections may require a Fund to recognize taxable income or gain without the concurrent receipt of cash and increase the amount required to be distributed by the Fund to avoid taxation. Making either of these elections therefore may require a Fund to liquidate other investments prematurely to meet the minimum distribution requirements described above, which also may accelerate the recognition of gain and adversely affect the Funds total return. Each Fund may attempt to limit and/or manage its holdings in PFICs to minimize tax liability and/or maximize returns from these investments but there can be no assurance that it will be able to do so. Moreover, because it is not always possible to identify a foreign corporation as a PFIC, a Fund may incur the tax and interest charges described above in some instances. Dividends paid by PFICs will not be eligible to be treated as qualified dividend income, as defined below.
A U.S. person, including a Fund, who owns (directly or indirectly) 10% or more of the total combined voting power of all classes of stock of a foreign corporation is a U.S. Shareholder for purposes of the controlled foreign corporation (CFC) provisions of the Code. Very generally, a CFC is a foreign corporation that is owned (directly, indirectly, or constructively) more than 50% (measured by voting power or value) by U.S. Shareholders. The wholly-owned subsidiaries of AP Alternative Strategies Fund (for purposes of this paragraph, the Fund) are expected to be CFCs in which the Fund will be a U.S. Shareholder. As a U.S. Shareholder, the Fund is required to include in gross income for U.S. federal income tax purposes all of a CFCs subpart F income, whether or not such income is actually distributed by the CFC. Subpart F income generally includes net gains from the disposition of stocks or securities, receipts with respect to securities loans, net gains from transactions (including futures, forward, and similar transactions) in commodities, and net payments received with respect to equity swaps and similar derivatives. Subpart F income is treated as ordinary income, regardless of the character of the CFCs underlying income. Net losses incurred by a CFC during a tax year do not flow through to the Fund and thus will not be available to offset income or capital gain generated from the Funds other investments. In addition, net losses incurred by a CFC during a tax year generally cannot be carried forward by the CFC to offset gains realized by it in subsequent taxable years. To the extent the Fund recognizes subpart F income in excess of actual cash distributions from a CFC, the Fund may be required to sell assets (including when it is not advantageous to do so) to generate the cash necessary to distribute as dividends to its shareholders all of its income and gains and therefore to eliminate any tax liability at the Fund level.
In addition, if any income earned by the Subsidiary were treated as effectively connected with the conduct of a trade or business in the United States (effectively connected income or ECI), such income would be subject to both a so-called branch profits tax of 30% and a federal income tax at the rates applicable to U.S. corporations, at the entity level. If, for U.S. federal income tax purposes, the Subsidiary were to earn ECI in connection with its direct investment activities, a portion or all of the Subsidiarys income would be subject to these U.S. taxes. The Fund expects that, in general, the activities of the Subsidiary will be conducted in such a manner that it will not be treated as engaged in a U.S. trade or business, but there can be no assurance that the entity will not recognize any effectively connected income. The imposition of U.S. taxes on ECI could significantly reduce shareholders returns on their investments in the Fund.
In addition to the investments described above, prospective shareholders should be aware that other investments made by a Fund may involve complex tax rules that may result in income or gain recognition by the Fund without corresponding current cash receipts. Although each Fund seeks to avoid significant noncash income, such noncash income could be recognized by a Fund, in which case the Fund may distribute cash derived from other sources in order to meet the minimum distribution requirements described above. In this regard, a Fund could be required at times to liquidate investments prematurely in order to satisfy its minimum distribution requirements, which may accelerate the recognition of gain and adversely affect the Funds total return.
Taxation of Distributions
Except for exempt-interest dividends (defined below) paid by a Fund, distributions paid out of a Funds current and accumulated earnings and profits, whether paid in cash or reinvested in the Fund, generally are deemed to be taxable distributions and must be reported by each shareholder who is required to file a U.S. federal income tax return. Dividends and
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distributions on a Funds shares are generally subject to U.S. federal income tax as described herein to the extent they do not exceed the Funds realized income and gains, even though such dividends and distributions may economically represent a return of a particular shareholders investment. Such distributions are likely to occur in respect of shares purchased at a time when the Funds net asset value reflects either unrealized gains, or realized but undistributed income or gains. Such realized income and gains may be required to be distributed even when the Funds net asset value also reflects unrealized losses. For U.S. federal income tax purposes, a Funds earnings and profits, described above, are determined at the end of the Funds taxable year. Distributions in excess of a Funds current and accumulated earnings and profits will first be treated as a return of capital up to the amount of a shareholders tax basis in his or her Fund shares and then as capital gain. A return of capital is not taxable, but it reduces a shareholders tax basis in his or her Fund shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the shareholder of his or her shares. A Fund may make distributions in excess of its earnings and profits to a limited extent, from time to time.
For U.S. federal income tax purposes, distributions of investment income (except for exempt-interest dividends and qualified dividend income, each defined below) are generally taxable as ordinary income, and distributions of gains from the sale of investments that a Fund owned (or is deemed to have owned) for one year or less will be taxable as short term capital gains (which bear the same rate as ordinary income). Distributions properly reported by a Fund as capital gain dividends (Capital Gain Dividends) will be taxable to shareholders as long-term capital gain (to the extent such distributions do not exceed the Funds actual net long-term capital gain for the taxable year), regardless of how long a shareholder has held Fund shares, and do not qualify as dividends for purposes of the dividends-received deduction or as qualified dividend income (defined below). Each Fund will report Capital Gain Dividends, if any, in written statements furnished to its shareholders.
Some states will not tax distributions made to individual shareholders that are attributable to interest a Fund earns on direct obligations of the U.S. government if the Fund meets the states minimum investment or reporting requirements, if any. Investments in GNMA or FNMA securities, bankers acceptances, commercial paper, and repurchase agreements collateralized by U.S. government securities generally do not qualify for tax-free treatment. This exemption may not apply to corporate shareholders.
Sales and Exchanges of Fund Shares
If a shareholder sells or exchanges his or her Fund shares, he or she generally will realize a taxable capital gain or loss on the difference between the amount received for the shares (or deemed received in the case of an exchange) and his or her tax basis in the shares. This gain or loss will be long-term capital gain or loss if he or she has held (or is deemed to have held) such Fund shares for more than one year at the time of the sale or exchange, and short-term capital gain or loss otherwise.
If a shareholder incurs a sales charge in acquiring Fund shares and sells or exchanges those Fund shares within 90 days of having acquired such shares and if, as a result of having initially acquired those shares, he or she subsequently pays a reduced sales charge on a new purchase of shares of the Fund or a different regulated investment company, the sales charge previously incurred in acquiring the Funds shares generally shall not be taken into account (to the extent the previous sales charges do not exceed the reduction in sales charges on the new purchase) for the purpose of determining the amount of gain or loss on the disposition, but generally will be treated as having been incurred in the new purchase. This sales charge basis deferral rule shall apply only when a shareholder makes such new acquisition of Fund shares or shares of a different regulated investment company during the period beginning on the date the original Fund shares are disposed of and ending on January 31 of the calendar year following the calendar year the original Fund shares are disposed of. Also, if a shareholder realizes a loss on a disposition of Fund shares, the loss will be disallowed under wash sale rules to the extent that he or she purchases (including through the reinvestment of dividends) substantially identical shares within the 61-day period beginning 30 days before and ending 30 days after the disposition. Any disallowed loss generally will be reflected in an adjustment to the tax basis of the purchased shares.
If a shareholder receives a Capital Gain Dividend or is deemed to receive a distribution of long-term capital gain with respect to any Fund share and such Fund share is held or treated as held for six months or less, then (unless otherwise disallowed) any loss on the sale or exchange of that Fund share will be treated as a long-term capital loss to the extent of the Capital Gain Dividend or deemed long-term capital gain distribution. If Fund shares are sold at a loss after being held for six months or less, the loss will generally be disallowed to the extent of any exempt-interest dividends (defined below) received on those shares. However, this loss disallowance does not apply with respect to redemptions of Fund shares with a holding period beginning after December 22, 2010 if such Fund declares substantially all of its net tax-exempt income as exempt-interest dividends on a daily basis, and pays such dividends on at least a monthly basis (as would typically be the case for tax-exempt money market funds).
Cost Basis Reporting
Each Fund generally is required to report to shareholders and the IRS gross proceeds on sales, redemptions or exchanges of Fund shares. In addition, for shares purchased, including shares purchased through dividend reinvestment, on or after
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January 1, 2012 the Funds (or the shareholders Selling Agent, if Fund shares are held through a Selling Agent) generally are required to provide the shareholders and the IRS, upon the sale, redemption or exchange of Fund shares, with cost basis information about those shares as well as information about whether any gain or loss is short- or long-term and whether any loss is disallowed under the wash sale rules. This reporting is not required for Fund shares held in a retirement or other tax-advantaged account. With respect to Fund shares in accounts held directly with a Fund, each Fund will calculate and report cost basis using the Funds default method of average cost, unless the shareholder instructs the Fund to use a different calculation method. A Fund will not report cost basis for shares whose cost basis is uncertain or unknown to the Fund. Please visit the Funds website at www.columbiamanagement.com or contact the Funds at 800.345.6611 for more information regarding average cost basis reporting and other available methods for cost basis reporting and how to select or change a particular method or to choose specific shares to sell, redeem or exchange. If a shareholder retains Fund shares through a Selling Agent, he or she should contact their Selling Agent to learn about the Funds cost basis reporting default method and the reporting elections available to his or her account. The Funds do not recommend any particular method of determining cost basis. The shareholder should consult a tax advisor to determine which available cost basis method is best. When completing U.S. federal and state income tax returns, shareholders should carefully review the cost basis and other information provided and make any additional basis, holding period or other adjustments that may be required.
Foreign Taxes
Amounts realized by a Fund from sources within foreign countries may be subject to withholding and other taxes imposed by such countries. Tax conventions between certain countries and the United States may reduce or eliminate such taxes. If more than 50% of the value of a Funds total assets at the close of its taxable year consists of securities of foreign corporations, the Fund will be eligible to file an annual election with the IRS pursuant to which the Fund may pass through to its shareholders on a pro rata basis foreign income and similar taxes paid by the Fund with respect to foreign securities that the Fund has held for at least the minimum holding periods specified in the Code and such taxes may be claimed, subject to certain limitations, either as a tax credit or deduction by the shareholders. In some cases, a Fund may also be eligible to pass through to its shareholders the foreign taxes paid by underlying funds (as defined below) in which it invests that themselves elected to pass through such taxes to their shareholders, see Special Tax Considerations Pertaining to Funds-of-Funds below.
Certain Funds may qualify for and make the election; however, even if a Fund qualifies for the election for any year, it may determine not to make the election for such year. If a Fund does not so qualify or qualifies but does not so elect, then shareholders will not be entitled to claim a credit or deduction with respect to foreign taxes paid by or withheld from payments to the Fund. A Fund will notify its shareholders in written statements if it has elected for the foreign taxes paid by it to pass through for that year.
In general, if a Fund makes the election, the Fund itself will not be permitted to claim a credit or deduction for foreign taxes paid in that year, and the Funds dividends-paid deduction will be increased by the amount of foreign taxes paid that year. Fund shareholders generally shall include their proportionate share of the foreign taxes paid by the Fund in their gross income and treat that amount as paid by them for the purpose of the foreign tax credit or deduction, provided that any applicable holding period and other requirements have been met. If a shareholder claims a credit for foreign taxes paid, in general, the credit will be subject to certain limits. A deduction for foreign taxes paid may be claimed only by shareholders that itemize their deductions. Shareholders that are not subject to U.S. federal income tax, and those who invest in the Fund through tax-exempt accounts (including those who invest through IRAs or other tax-advantaged retirement plans), generally will receive no benefit from any tax credit or deduction passed through by the Fund.
Special Tax Considerations Pertaining to Tax-Exempt Funds
If, at the close of each quarter of a regulated investment companys taxable year, at least 50% of the value of its total assets consists of obligations the interest on which is exempt from U.S. federal income tax under Section 103(a) of the Code, then the regulated investment company may qualify to pay exempt-interest dividends and pass through to its shareholders the tax-exempt character of its income from such obligations. Certain of the Funds intend to so qualify and are designed to provide shareholders with a high level of income in the form of exempt-interest dividends, which are generally exempt from U.S. federal income tax (each such qualifying Fund, a Tax-Exempt Fund). In some cases, a Fund may also be eligible to pass through to its shareholders the tax-exempt character of any exempt-interest dividends it receives from underlying funds (as defined below) in which it invests, see Special Tax Considerations Pertaining to Funds-of-Funds below.
Distributions by a Tax-Exempt Fund, other than those attributable to interest on the Tax-Exempt Funds tax-exempt obligations and properly reported as exempt-interest dividends, will be taxable to shareholders as ordinary income or long-term capital gain or, in some cases, could constitute a return of capital to shareholders. See Taxation of Distributions above. Each Tax-Exempt Fund will notify its shareholders in written statements of the portion of the distributions for the taxable year that constitutes exempt-interest dividends. The percentage of a shareholders income reported as tax-exempt for
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any particular distribution may be substantially different from the percentage of the Tax-Exempt Funds income that was tax-exempt during the period covered by the distribution. The deductibility of interest paid or accrued on indebtedness incurred by a shareholder to purchase or carry shares of a Tax-Exempt Fund may be limited. The portion of such interest that is non-deductible generally equals the amount of such interest times the ratio of a Tax-Exempt Funds exempt-interest dividends received by the shareholder to all of the Tax-Exempt Funds dividends received by the shareholder (excluding Capital Gain Dividends and any capital gains required to be included in the shareholders long term capital gains in respect of capital gains retained by the Tax-Exempt Fund, as described earlier).
Although exempt-interest dividends are generally exempt from U.S. federal income tax, there may not be a similar exemption under the laws of a particular state or local taxing jurisdiction. Thus, exempt-interest dividends may be subject to state and local taxes; however, each state-specific Tax-Exempt Fund generally invests at least 80% of its net assets in municipal bonds that pay interest that is exempt not only from U.S. federal income tax, but also from the applicable states personal income tax (but not necessarily local taxes or taxes of other states).
You should consult your tax advisor to discuss the tax consequences of your investment in a Tax-Exempt Fund. Tax-exempt interest on certain private activity bonds has been designated as a tax preference item and must be added back to taxable income for purposes of calculating U.S. federal alternative minimum tax (AMT). To the extent that a Tax-Exempt Fund invests in certain private activity bonds, its shareholders will be required to report that portion of the Tax-Exempt Funds distributions attributable to income from the bonds as a tax preference item in determining their U.S. federal AMT, if any. Shareholders will be notified of the tax status of distributions made by a Tax-Exempt Fund. Persons who may be substantial users (or related persons of substantial users) of facilities financed by private activity bonds should consult their tax advisors before purchasing shares in a Tax-Exempt Fund. In addition, exempt-interest dividends paid by a Tax-Exempt Fund to a corporate shareholder are, with very limited exceptions, included in the shareholders adjusted current earnings as part of its U.S. federal AMT calculation. As of the date of this SAI, individuals are subject to the U.S. federal AMT at a maximum rate of 28% and corporations at a maximum rate of 20%. Shareholders with questions or concerns about the U.S. federal AMT should consult their own tax advisors.
Ordinarily, a Tax-Exempt Fund relies on an opinion from the issuers bond counsel that interest on the issuers obligation will be exempt from U.S. federal income taxation. However, no assurance can be given that the IRS will not successfully challenge such exemption, which could cause interest on the obligation to be taxable and could jeopardize a Tax-Exempt Funds ability to pay exempt-interest dividends. Similar challenges may occur as to state-specific exemptions. Also, from time to time legislation may be introduced or litigation may arise that would change the treatment of exempt-interest dividends. Such litigation or legislation may have the effect of raising the state or other taxes payable by shareholders on such dividends. Shareholders should consult their tax advisors for the current law on exempt-interest dividends.
A shareholder who receives Social Security or railroad retirement benefits should consult his or her tax advisor to determine what effect, if any, an investment in a Tax-Exempt Fund may have on the federal taxation of such benefits. Exempt-interest dividends are included in income for purposes of determining the amount of benefits that are taxable.
Special Tax Considerations Pertaining to Funds of Funds-of-Funds
Certain Funds (each such fund, a Fund-of-Funds) invest their assets primarily in shares of other mutual funds, ETFs or other companies that are regulated investment companies (collectively, underlying funds). Consequently, their income and gains will normally consist primarily of distributions from underlying funds and gains and losses on the disposition of shares of underlying funds. To the extent that an underlying fund realizes net losses on its investments for a given taxable year, a Fund-of-Funds will not be able to benefit from those losses until (i) the underlying fund realizes gains that it can reduce by those losses, or (ii) the Fund-of-Funds recognizes its share of those losses (so as to offset distributions of net income or capital gains from other underlying funds) when it disposes of shares of the underlying fund. Moreover, even when a Fund-of-Funds does make such a disposition, a portion of its loss may be recognized as a long-term capital loss, which will not be treated as favorably for U.S. federal income tax purposes as a short-term capital loss or an ordinary deduction. In particular, a Fund-of-Funds will not be able to offset any capital losses from its dispositions of underlying fund shares against its ordinary income (including distributions of any net short-term capital gains realized by an underlying fund).
In addition, in certain circumstances, the wash sale rules may apply to sales of underlying fund shares by a Fund-of-Funds. As discussed above, a wash sale occurs if shares of an underlying fund are sold by a Fund-of-Funds at a loss and the Fund-of-Funds acquires additional shares of that same underlying fund 30 days before or after the date of the sale. The wash-sale rules could defer losses of a Fund-of-Funds on sales of underlying fund shares (to the extent such sales are wash sales) for extended (and, in certain cases, potentially indefinite) periods of time.
As a result of the foregoing rules, and certain other special rules, it is possible that the amounts of net investment income and net capital gain that a Fund-of-Funds will be required to distribute to shareholders will be greater than such amounts would
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have been had the Fund-of-Funds invested directly in the securities held by the underlying funds, rather than investing in shares of the underlying funds. For similar reasons, the character of distributions from a Fund-of-Funds (e.g., long-term capital gain, exempt interest, eligibility for dividends-received deduction) will not necessarily be the same as it would have been had the Fund-of-Funds invested directly in the securities held by the underlying funds.
Depending on the percentage ownership of a Fund-of-Funds in an underlying fund before and after a redemption of underlying fund shares, the redemption of shares by the Fund-of-Funds of such underlying fund may cause the Fund-of-Funds to be treated as receiving a dividend in the full amount of the redemption proceeds instead of receiving a capital gain or loss on the redemption of shares of the underlying fund. This could be the case where a Fund-of-Funds holds a significant interest in an underlying fund that is not publicly offered (as defined in the Code) and redeems only a small portion of such interest. Dividend treatment of a redemption by a Fund-of-Funds would affect the amount and character of income required to be distributed by both the Fund-of-Funds and the underlying fund for the year in which the redemption occurred. It is possible that such a dividend would qualify as qualified dividend income; otherwise, it would be taxable as ordinary income and could cause shareholders of a Fund-of-Funds to recognize higher amounts of ordinary income than if the shareholders had held shares of the underlying fund directly.
If a Fund-of-Funds receives dividends from an underlying fund, and the underlying fund reports such dividends as qualified dividend income, as discussed below, then the Fund-of-Funds is permitted, in turn, to report a portion of its distributions as qualified dividend income, provided the Fund-of-Funds meets the holding period and other requirements with respect to shares of the underlying fund. If a Fund-of-Funds receives dividends from an underlying fund, and the underlying fund reports such dividends as eligible for the dividends-received deduction, then the Fund-of-Funds is permitted, in turn, to report a portion of its distributions as eligible for the dividends-received deduction, provided the Fund-of-Funds meets the holding period and other requirements with respect to shares of the underlying fund.
If a Fund-of-Funds is a qualified fund-of-funds (a regulated investment company that invests at least 50% of its total assets in other regulated investment companies at the close of each quarter of its taxable year), it will be able to distribute exempt-interest dividends and thereby pass through to its shareholders the tax-exempt character of any interest received on tax-exempt obligations in which it directly invests or any exempt-interest dividends it receives from underlying funds in which it invests. For further considerations pertaining to exempt-interest dividends, see Special Tax Considerations Pertaining to Tax-Exempt Funds above.
Further, if a Fund-of-Funds is a qualified fund-of-funds, it will be able to elect to pass through to its shareholders any foreign income and other similar taxes paid by the Fund-of-Funds or paid by an underlying fund in which the Fund-of-Funds invests that itself elected to pass such taxes through to shareholders, so that shareholders of the Fund-of-Funds will be eligible to claim a tax credit or deduction for such taxes, subject to applicable limitations. However, even if a Fund-of-Funds qualifies to make the election for any year, it may determine not to do so. For further considerations pertaining to foreign taxes paid by a Fund, see Foreign Taxes above.
U.S. Federal Income Tax Rates
The maximum stated U.S. federal income tax rate applicable to individuals generally is 39.6% for ordinary income and 20% for net long-term capital gain (in each case, not including the 3.8% Medicare contribution tax described below).
In general, qualified dividend income is income attributable to dividends received by a Fund from certain domestic and foreign corporations, as long as certain holding period and other requirements are met by the Fund with respect to the dividend-paying corporations stock and by the shareholders with respect to the Funds shares. If 95% or more of a Funds gross income (excluding net long-term capital gain over net short-term capital loss) constitutes qualified dividend income, all of its distributions (other than Capital Gain Dividends) will be generally treated as qualified dividend income in the hands of individual shareholders, as long as they have owned their Fund shares for at least 61 days during the 121-day period beginning 60 days before the Funds ex-dividend date (or, in the case of certain preferred stock, 91 days during the 181-day period beginning 90 days before such date) and meet certain other requirements specified in the Code. In general, if less than 95% of a Funds gross income is attributable to qualified dividend income, then only the portion of the Funds distributions that is attributable to qualified dividend income and reported as such in a timely manner will be so treated in the hands of individual shareholders who meet the aforementioned holding period requirements. Qualified dividend income is taxable to individual shareholders at tax rates applicable to long-term capital gain. The rules regarding the qualification of Fund distributions as qualified dividend income are complex, including the holding period requirements. Individual Fund shareholders therefore are urged to consult their own tax advisors and financial planners. Fixed income funds typically do not distribute significant amounts of qualified dividend income.
The maximum stated corporate U.S. federal income tax rate applicable to ordinary income and net capital gain currently is 35%. Actual marginal tax rates may be higher for some shareholders, for example, through reductions in deductions.
Statement of Additional Information September 1, 2014 | Page 161 |
Naturally, the amount of tax payable by any taxpayer will be affected by a combination of tax laws covering, for example, deductions, credits, deferrals, exemptions, sources of income and other matters. U.S. federal income tax rates are set to increase in future years under various sunset provisions of U.S. federal income tax laws.
The Code generally imposes a 3.8% Medicare contribution tax on certain high-income individuals, trusts and estates. For individuals, the 3.8% tax applies to the lesser of (1) the amount (if any) by which the taxpayers modified adjusted gross income exceeds certain threshold amounts or (2) the taxpayers net investment income. For this purpose, net investment income generally includes, among other things, (i) distributions paid by a Fund of net investment income and capital gains (other than exempt-interest dividends) as described above, and (ii) any net gain recognized on the sale, redemption, exchange or other taxable disposition of Fund shares. Certain details of the implementation of the tax remain subject to future guidance. Shareholders are advised to consult their tax advisors regarding the possible implications of this additional tax on their investment in a Fund.
Backup Withholding
Each Fund generally is required to withhold, and remit to the U.S. Treasury, subject to certain exemptions, an amount equal to 28% of all distributions and redemption proceeds (including proceeds from exchanges and redemptions in-kind) paid or credited to a Fund shareholder if (1) the shareholder fails to furnish the Fund with a correct taxpayer identification number (TIN) or has not certified to the Fund that withholding does not apply or (2) the IRS notifies the Fund that the shareholders TIN is incorrect or the shareholder is otherwise subject to backup withholding. These backup withholding rules may also apply to distributions that are properly reported as exempt-interest dividends (defined above). This backup withholding is not an additional tax imposed on the shareholder. The shareholder may apply amounts required to be withheld as a credit against his or her future U.S. federal income tax liability, provided that the required information is furnished to the IRS. If a shareholder fails to furnish a valid TIN upon request, the shareholder can also be subject to IRS penalties.
Tax-Deferred Plans
The shares of a Fund may be available for a variety of tax-deferred retirement and other tax-advantaged plans and accounts. Prospective investors should contact their tax advisors and financial planners regarding the tax consequences to them of holding Fund shares through such plans and/or accounts.
Corporate Shareholders
Subject to limitations and other rules, a corporate shareholder of a Fund may be eligible for the dividends-received deduction on Fund distributions attributable to dividends received by the Fund from domestic corporations, which, if received directly by the corporate shareholder, would qualify for such a deduction. For eligible corporate shareholders, the dividends-received deduction may be subject to certain reductions, and a distribution by a Fund attributable to dividends of a domestic corporation will be eligible for the deduction only if certain holding period and other requirements are met. For information regarding eligibility for the dividends-received deduction of dividend income derived by an underlying fund in which a Fund-of-Funds invests, see Special Tax Considerations Pertaining to Funds-of-Funds above. These requirements are complex; therefore, corporate shareholders of the Funds are urged to consult their own tax advisors and financial planners.
As discussed above, a portion of the interest paid or accrued on certain high-yield discount obligations that a Fund may own may not be deductible to the issuer. If a portion of the interest paid or accrued on these obligations is not deductible, that portion will be treated as a dividend. In such cases, if the issuer of the obligation is a domestic corporation, dividend payments by a Fund may be eligible for the dividends-received deduction to the extent of the dividend portion of such interest.
Foreign Shareholders
For purposes of this discussion, foreign shareholders generally include: (i) nonresident alien individuals, (ii) foreign trusts ( i.e. , a trust other than a trust with respect to which a U.S. court is able to exercise primary supervision over administration of that trust and one or more U.S. persons have authority to control substantial decisions of that trust), (iii) foreign estates ( i.e. , the income of which is not subject to U.S. tax regardless of source), and (iv) foreign corporations.
Generally, unless an exception applies, dividend distributions made to foreign shareholders other than Capital Gain Dividends and exempt-interest dividends (defined above) will be subject to non-refundable U.S. federal income tax withholding at a 30% rate (or such lower rate as may be provided under an applicable income tax treaty) even if they are funded by income or gains (such as portfolio interest, short-term capital gains, or foreign-source dividend and interest income) that, if paid to a foreign person directly, would not be subject to withholding. However, generally, for taxable years beginning before January 1, 2014, distributions made to foreign shareholders and properly reported by a Fund as interest-related dividends were exempt from U.S. federal income tax withholding. The exemption for interest-related dividends did not apply to any
Statement of Additional Information September 1, 2014 | Page 162 |
distribution to a foreign shareholder (i) to the extent that the dividend was attributable to certain interest on an obligation if the foreign shareholder was the issuer or was a 10% shareholder of the issuer, (ii) that was within certain foreign countries that had inadequate information exchange with the United States, or (iii) to the extent the dividend was attributable to interest paid by a person that is a related person of the foreign shareholder and the foreign shareholder was a controlled foreign corporation. Interest-related dividends were generally dividends attributable to the Funds net U.S.-source interest income of types similar to those not subject to U.S. federal income tax if earned directly by an individual foreign shareholder. In order for a distribution to qualify as an interest-related dividend, the Fund was required to report it as such in a written notice furnished to its shareholders. Notwithstanding the foregoing, if a distribution described above is effectively connected with a U.S. trade or business (or, if an income tax treaty applies, is attributable to a U.S. permanent establishment) of the recipient foreign shareholder, neither U.S. federal income tax withholding nor the exemption for interest-related dividends (if otherwise applicable) will apply. Instead, the distribution will be subject to the tax, reporting and withholding requirements generally applicable to U.S. persons, and an additional branch profits tax may apply if the recipient foreign shareholder is a foreign corporation.
In general, a foreign shareholders capital gains realized on the disposition of Fund shares and distributions properly reported as Capital Gain Dividends are not subject to U.S. federal income or withholding tax, unless: (i) such gains or distributions are effectively connected with a U.S. trade or business (or, if an income tax treaty applies, are attributable to a U.S. permanent establishment) of the foreign shareholder; (ii) in the case of an individual foreign shareholder, the shareholder is present in the U.S. for a period or periods aggregating 183 days or more during the year of the disposition of Fund shares or the receipt of Capital Gain Dividends and certain other conditions are met; or (iii) the Fund shares on which the foreign shareholder realized gain constitute U.S. real property interests (USRPIs, defined below) or, in certain cases, the distributions are attributable to gain from the sale or exchange of a USRPI, as discussed below. If the requirements of clause (i) are met, the tax, reporting and withholding requirements applicable to U.S. persons generally will apply to the foreign shareholder and an additional branch profits tax may apply if the foreign shareholder is a foreign corporation. If the requirements of clause (i) are not met, but the requirements of clause (ii) are met, such gains and distributions will be subject to U.S. federal income tax at a 30% rate (or such lower rate as may be provided under an applicable income tax treaty). Please see below for a discussion of the tax implications to foreign shareholders in the event that clause (iii) applies. With respect to taxable years of a Fund beginning before January 1, 2014, a distribution to a foreign shareholder attributable to the Funds net short-term capital gain in excess of its net long-term capital loss and reported as such by the Fund in a written statement, furnished to its shareholders (short-term capital gain dividends) was generally not subject to U.S. federal income or withholding tax unless clause (i), (ii) or (iii) above applied to such distributions.
This exemption from withholding for interest-related and short-term capital gain dividends has expired for distributions with respect to taxable years of a Fund beginning on or after January 1, 2014. Therefore, as of the date of this SAl, each Fund (or intermediary, as applicable) is currently required to withhold on distributions to foreign shareholders attributable to net interest or short-term capital gains that were formerly eligible for this withholding exemption.
It is currently unclear whether Congress will extend this exemption for distributions with respect to taxable years of a Fund beginning on or after January 1, 2014, or what the terms of such an extension would be, including whether such extension would have retroactive effect. Even if permitted to do so, each Fund provides no assurance that it would report any distributions as interest-related dividends or short-term capital gain dividends.
In the case of shares held through an intermediary, even if a Fund reports a payment as exempt from U.S. federal withholding tax (e.g., as a short-term capital gain or interest-related dividend), no assurance can be made that the intermediary will respect such classification, and an intermediary may withhold in spite of such reporting by a Fund. Foreign shareholders should contact their intermediaries regarding the application of these rules to their accounts. Special rules apply to distributions to foreign shareholders from a Fund if it is either a U.S. real property holding corporation (USRPHC) or would be a USRPHC but for the operation of certain exceptions from USRPI treatment for interests in domestically controlled REITs (or, prior to January 1, 2014, regulated investment companies) and not-greater-than-5% interests in publicly traded classes of stock in REITs or regulated investment companies. Additionally, special rules apply to the sale of shares in a Fund if it is a USRPHC.
Generally, a USRPHC is a domestic corporation that holds USRPIs defined generally as any interest in U.S. real property or any equity interest in a USRPHC the fair market value of which equals or exceeds 50% of the sum of the fair market values of the corporations USRPIs, interests in real property located outside the United States and other assets. If a Fund holds (directly or indirectly) significant interests in REITs, it may be a USRPHC.
If a Fund is a USRPHC or would be a USRPHC but for certain of the above-mentioned exceptions, under a special look-through rule, amounts that are attributable directly or indirectly to distributions received by the Fund from a lower-tier REIT that the Fund is required to treat as USRPI gain in its hands generally will retain their character as such in the hands of the Funds foreign shareholders. Prior to January 1, 2014, this special look-through rule described above for distributions by the Fund to foreign shareholders also applied to distributions attributable to (i) gains realized on the disposition of USRPIs by
Statement of Additional Information September 1, 2014 | Page 163 |
the Fund and (ii) distributions received by the Fund from a lower-tier RIC that the Fund was required to treat as USRPI gain in its hands. It is currently unclear whether Congress will extend these former look-through provisions to distributions made on or after January 1, 2014, and what the terms of any such extension would be, including whether any such extension would have retroactive effect. In the hands of a foreign shareholder that holds (or has held in the prior 12 months) more than a 5% interest in any class of the Fund, any such amounts treated as USRPI gains generally will be treated as gains effectively connected with the conduct of a U.S. trade or business, and subject to tax at graduated rates. Moreover, such shareholder generally will be required to file a U.S. income tax return for the year recognized, and the Fund must withhold 35% of the amount of such distribution. Otherwise, in the case of all other foreign shareholders ( i.e. , those whose interest in any class of the Fund did not exceed 5% at any time during the prior 12 months), such amounts generally will be treated as ordinary income (regardless of whether the Fund otherwise reported such distribution as a short-term capital gain dividend or Capital Gain Dividend), and the Fund must withhold 30% (or a lower applicable treaty rate) of the amount of the distribution paid to such shareholders. If a Fund is subject to the rules of this paragraph, its foreign shareholders may also be subject to wash sale rules to prevent the avoidance of the foregoing tax-filing and payment obligations through the sale and repurchase of Fund shares.
Prior to January 1, 2014, the special look-through rule discussed above for distributions by the Fund to foreign shareholders also applied to distributions attributable to (i) gains realized by on the disposition of USRPIs by the Fund and (ii) distributions received by the Fund from a lower-tier RIC that the Fund was required to treat as USRPI gain in its hands. It is currently unclear whether Congress will extend these former look-through provisions to distributions made on or after January 1, 2014, and what the terms of any such extension would be, including whether any such extension would have retroactive effect.
In addition, if a Fund is a USRPHC, it generally must withhold 10% of the amount realized in redemption by a greater-than-5% foreign shareholder, and that shareholder must file a U.S. income tax return for the year of the disposition of the USRPI and pay any additional tax due on the gain. Prior to January 1, 2014, such withholding generally was not required with respect to amounts paid in redemption of shares of a Fund if it was a domestically controlled USRPHC, or, in certain limited cases, if the Fund (whether or not domestically controlled) held substantial investments in regulated investment companies that were domestically controlled USRPHCs. The exemption from withholding for redemptions has expired and such withholding is required without regard to whether the Fund or any regulated investment company in which it invests is domestically controlled. It is currently unclear whether Congress will extend this exemption for redemptions made on or after January 1, 2014, and what the terms of any such extension would be, including whether any such extension would have retroactive effect.
In order to qualify for any exemptions from withholding described above or for lower withholding tax rates under income tax treaties, or to establish an exemption from backup withholding, a foreign shareholder must comply with applicable certification requirements relating to its foreign status (including, in general, furnishing an IRS Form W-8BEN or substitute form). Foreign shareholders should consult their tax advisors in this regard.
Special rules (including withholding and reporting requirements) apply to foreign partnerships and those holding Fund shares through foreign partnerships. In addition, additional considerations may apply to foreign trusts and foreign estates. Investors holding Fund shares through foreign entities should consult their tax advisors about their particular situation.
A beneficial holder of shares who is a foreign person may be subject to state and local tax and to the U.S. federal estate tax in addition to the U.S. federal income tax referred to above.
Tax-Exempt Shareholders
Under current law, a Fund serves to block (that is, prevent the attribution to shareholders of) UBTI from being realized by tax-exempt shareholders. Notwithstanding this blocking effect, a tax-exempt shareholder could realize UBTI by virtue of its investment in a Fund if shares in the Fund constitute debt-financed property in the hands of the tax-exempt shareholder within the meaning of Code Section 514(b).
It is possible that a tax-exempt shareholder will also recognize UBTI if a Fund recognizes excess inclusion income (as described above) derived from direct or indirect investments in residual interests in REMICs or equity interests in TMPs. Furthermore, any investment in residual interests of a CMO that has elected to be treated as a REMIC can create complex tax consequences, especially if the Fund has state or local governments or other tax-exempt organizations as shareholders.
In addition, special tax consequences apply to charitable remainder trusts (CRTs) that invest in regulated investment companies that invest directly or indirectly in residual interests in REMICs or equity interests in TMPs. Under legislation enacted in December 2006, a CRT, as defined in Section 664 of the Code, that realizes UBTI for a taxable year must pay an excise tax annually of an amount equal to such UBTI. Under IRS guidance issued in October 2006, a CRT will not recognize UBTI solely as a result of investing in a Fund to the extent that it recognizes excess inclusion income. Rather, if at any time during any taxable year a CRT (or one of certain other tax-exempt shareholders, such as the United States, a state or political
Statement of Additional Information September 1, 2014 | Page 164 |
subdivision, or an agency or instrumentality thereof, and certain energy cooperatives) is a record holder of a share in a Fund and the Fund recognizes excess inclusion income, then the Fund will be subject to a tax on that portion of its excess inclusion income for the taxable year that is allocable to such shareholders at the highest U.S. federal corporate income tax rate. The extent to which the IRS guidance remains applicable in light of the December 2006 legislation is unclear. To the extent permitted under the 1940 Act, each Fund may elect to specially allocate any such tax to the applicable CRT, or other shareholder, and thus reduce such shareholders distributions for the year by the amount of the tax that relates to such shareholders interest in the Fund. Each Fund has not yet determined whether such an election will be made. CRTs are urged to consult their tax advisors concerning the consequences of investing in a Fund.
Shareholder Reporting Obligations With Respect to Foreign Bank and Financial Accounts
Shareholders that are U.S. persons and own, directly or indirectly, more than 50% of a Fund could be required to report annually their financial interest in the Funds foreign financial accounts, if any, on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Shareholders should consult a tax advisor, and persons investing in the Fund through an intermediary should contact their intermediary, regarding the applicability to them of this reporting requirement.
Other Reporting and Withholding Requirements
The Foreign Account Tax Compliance Act (FATCA), which took effect July 1, 2014, generally requires a Fund to obtain information sufficient to identify the status of each of its shareholders under FATCA, as described more fully below. If a shareholder fails to provide this information or otherwise fails to comply with FATCA, the Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on dividends (other than exempt-interest dividends), including Capital Gain Dividends and the proceeds of the sale, redemption or exchange of Fund shares. If a payment by a Fund is subject to FATCA withholding, the Fund is required to withhold even if such payment would otherwise be exempt from withholding under the rules applicable to foreign shareholders described above (e.g., Capital Gain Dividends and short-term capital gain and interest-related dividends).
Payments to a shareholder will generally not be subject to FATCA withholding, provided the shareholder provides a Fund with such certifications, waivers or other documentation or information as the Fund requires, including, to the extent required, with regard to such shareholders direct and indirect owners, to establish the shareholders FATCA status and otherwise to comply with these rules. In order to avoid withholding, a shareholder that is a foreign financial institution (FFI) must either (i) become a participating FFI by entering into a valid U.S. tax compliance agreement with the IRS, (ii) qualify for an exception from the requirement to enter into such an agreement, for example by becoming a deemed-compliant FFI, or (iii) be covered by an applicable intergovernmental agreement between the United States and a non-U.S. government to implement FATCA and improve international tax compliance. In any of these cases, the investing FFI generally will be required to provide its Fund with appropriate identifiers, certifications or documentation concerning its status.
A Fund may disclose the information that it receives from (or concerning) its shareholders to the IRS, non-U.S. taxing authorities or other parties as necessary to comply with FATCA, related intergovernmental agreements or other applicable law or regulation.
Each prospective investor is urged to consult its tax adviser regarding the applicability of FATCA and any other reporting requirements with respect to the prospective investors own situation, including investments through an intermediary.
Tax Shelter Reporting Regulations
Under Treasury Regulations, if a shareholder recognizes a loss of $2 million or more for an individual shareholder or $10 million or more for a corporate shareholder, the shareholder must file with the IRS a disclosure statement on IRS Form 8886. Direct shareholders of portfolio securities are in many cases excepted from this reporting requirement, but under current guidance, shareholders of a regulated investment company are not excepted. Future guidance may extend the current exception from this reporting requirement to shareholders of most or all regulated investment companies. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the taxpayers treatment of the loss is proper. Shareholders should consult their tax advisors to determine the applicability of these regulations in light of their individual circumstances.
Statement of Additional Information September 1, 2014 | Page 165 |
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Management Ownership
As of July 31, 2014, the Trustees and Officers of the Trust, as a group, beneficially owned less than 1% of each class of shares of each Fund, except as set forth in the table below:
Fund | Class |
Percentage of Class
Beneficially Owned |
||
Balanced Fund | K | 3.58% | ||
Greater China Fund | Z | 2.52% | ||
Risk Allocation | A | 11.05% |
Principal Shareholders and Control Persons
The tables below identify the names, address and ownership percentage of each person who owns of record or is known by the Trust to own beneficially 5% or more of any class of a Funds outstanding shares (Principal Holders) or 25% or more of a Funds outstanding shares (Control Persons). A shareholder who beneficially owns more than 25% of a Funds shares is presumed to control the Fund, as that term is defined in the 1940 Act, and may have a significant impact on matters submitted to a shareholder vote. A shareholder who beneficially owns more than 50% of a Funds outstanding shares may be able to approve proposals, or prevent approval of proposals, without regard to votes by other Fund shareholders. Additional information about Control Persons is provided following the tables. The information provided for each Fund is as of a date no more than 30 days prior to the date of filing a post-effective amendment to the applicable Trusts registration statement with respect to such Fund.
Funds with Fiscal Year Ending January 31:
Except as otherwise indicated, the information below is as of April 30, 2014.
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
(if greater than 25%) |
||||||||
Diversified Real Return Fund |
ANASTASIA G PASMANIK
1532 CLARKSON ST BALTIMORE MD 21230-4406 |
Class A | 100.00% | N/A | ||||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT
50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class C Class R4
Class R5 Class Z |
|
100.00%
100.00% 100.00% 100.00% |
|
99.98% |
Funds with Fiscal Year Ending March 31:
Except as otherwise indicated, the information below is as of June 30, 2014.
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
AP Growth Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A | 100.00% | 100% | ||||||||
Pacific/Asia Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class C |
|
24.26%
48.02% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FBO CUSTOMERS ATTENTION MUTUAL FUND 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class C | 10.64% | N/A |
Statement of Additional Information September 1, 2014 | Page 166 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class R4 Class W |
|
71.27%
100.00% |
|
N/A | |||||||
JPMCB NA CUST FOR SC529 PLAN COLUMBIA AGGRESSIVE GROWTH 529 PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254 |
Class Z | 12.68% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 14.79% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 43.61% | 31.04% | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 24.25% | N/A | |||||||||
JPMCB NA CUST FOR SC529 PLAN COLUMBIA GROWTH 529 PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class Z | 13.98% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 7.69% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA MASTERS INTERNATIONAL EQUITY PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 6.18% | N/A | |||||||||
JPMCB NA AS CUST FOR THE SC529 PLAN COLUMBIA MODERATE 529 PORTFOLIO 14201 N DALLAS PARKWAY FL 13 DALLAS TX 75254-2916 |
Class Z | 9.42% | N/A | |||||||||
JPMCB NA AS CUST FOR THE SC529 PLAN COLUMBIA MODERATE GROWTH 529 PORTFOLIO 14201 N DALLAS PARKWAY FL 13 DALLAS TX 75254-2916 |
Class Z | 12.72% | N/A | |||||||||
LPL FINANCIAL 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class A | 32.63% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF IT CUSTOMER 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class Z | 31.70% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class C | 7.73% | N/A |
Statement of Additional Information September 1, 2014 | Page 167 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
NORTHERN TRUST AS TRUSTEE FBO GRAND TRUNK WESTERN RR CO PO BOX 92956 CHICAGO IL 60675-2956 |
Class Z | 8.29% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class A Class C Class R4 |
|
14.67%
9.51% 28.73% |
|
N/A | |||||||
STATE STREET BK & TR ROTH IRA HARRY KIMURA 3027 ALEXANDER AVE SANTA CLARA CA 95051-5507 |
Class C | 7.16% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class A | 11.73% | N/A | |||||||||
Select Large Cap
Growth Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class C Class W |
|
35.60%
6.02% 99.99% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY FBO CUSTOMERS ATTN MUTUAL FUND DEPT 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class R5 | 8.24% | N/A | |||||||||
COLUMBIA THERMOSTAT FUND C/O PAULA RYAN 227 W MONROE ST STE 3000 CHICAGO IL 60606-5018 |
Class I | 7.39% | N/A | |||||||||
EDWARD D JONES & CO FOR THE BENEFIT OF CUSTOMERS 12555 MANCHESTER RD SAINT LOUIS MO 63131-3729 |
Class Z | 9.50% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class C | 5.74% | N/A | |||||||||
GREAT-WEST TRUST COMPANY LLC TTEE F EMPLOYEE BENEFITS CLIENTS 401K 8515 E ORCHARD RD 2T2 GREENWOOD VILLAGE CO 80111-5002 |
Class R | 10.16% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 11.90% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 34.05% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 17.68% | N/A |
Statement of Additional Information September 1, 2014 | Page 168 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 27.73% | N/A | |||||||||
KEYBANK NA FBO MEDCENTRAL PEN-COLUMBIA SELECT PO BOX 94871 CLEVELAND OH 44101-4871 |
Class Y | 19.23% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF IT CUSTOMER 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class Z | 56.62% | 33.74% | |||||||||
MERRILL LYNCH, PIERCE,
FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class C | 24.54% | N/A | |||||||||
MG TRUST COMPANY TRUSTEE VIRGINIA HEALTH SERVICES INC 717 17TH ST STE 1300 DENVER CO 80202-3304 |
Class R | 6.05% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class A Class C Class Z |
|
14.70%
17.53% 8.03% |
|
N/A | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class A Class C Class R4 Class R5 Class Y |
|
34.46%
24.47% 60.41% 68.87% 49.34% |
|
N/A | |||||||
NEW YORK LIFE TRUST COMPANY 690 CANTON ST STE 100 WESTWOOD MA 02090-2344 |
Class Y | 7.55% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class R4 Class R5 |
|
37.87%
16.60% |
|
N/A | |||||||
RELIANCE TRUST CO CUST FBO MASSMUTUAL OMNIBUS PLL/SMF PO BOX 48529 ATLANTA GA 30362-1529 |
Class R | 13.67% | N/A | |||||||||
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226 |
Class R5 | 5.33% | N/A | |||||||||
VANGUARD FDUCIARY TRUST CO PO BOX 2600 VM 613 ATTN: OUTSIDE FUNDS VALLEY FORGE PA 19482-2600 |
Class Y | 22.36% | N/A |
Statement of Additional Information September 1, 2014 | Page 169 |
Funds with Fiscal Year Ending April 30:
Except as otherwise indicated, the information below is as of July 31, 2014.
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of fund (if greater than 25%) |
||||||||
Bond Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C |
|
10.85%
13.41% 11.16% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FBO CUSTOMERS ATTN MUTUAL FUND DEPT 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class R5 | 89.66% | N/A | |||||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN KATRINA MACBAIN 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class I Class R4 Class W |
|
100.00%
35.90% 100.00% |
|
N/A | |||||||
EDWARD D JONES & CO FOR THE BENEFIT OF CUSTOMERS 12555 MANCHESTER RD SAINT LOUIS MO 63131-3729 |
Class B | 5.27% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class B Class C |
|
19.78%
9.38% |
|
N/A | |||||||
FRONTIER TRUST COMPANY FBO ED FAGAN INC 401 K PLAN PO BOX 10758 FARGO ND 58106-0758 |
Class R | 20.86% | N/A | |||||||||
FRONTIER TRUST COMPANY FBO FINANCIAL NETWORK AUDIT LLC 401 K PO BOX 10758 FARGO ND 58106-0758 |
Class R | 13.63% | N/A | |||||||||
FRONTIER TRUST COMPANY FBO HOSPICE ADVANTAGE 401 K PLAN PO BOX 10758 FARGO ND 58106-0758 |
Class R | 24.56% | N/A | |||||||||
FRONTIER TRUST COMPANY FBO NORDAAS AMERICAN HOMES OF MN LAKE PO BOX 10758 FARGO ND 58106-0758 |
Class R | 6.54% | N/A | |||||||||
FRONTIER TRUST COMPANY FBO NTVB CUSTOM MEDIA 401(K) PLAN PO BOX 10758 FARGO ND 58106-0758 |
Class R5 | 5.48% | N/A | |||||||||
FRONTIER TRUST COMPANY FBO RGS 401 K PLAN PO BOX 10758 FARGO ND 58106-0758 |
Class R | 7.47% | N/A | |||||||||
FRONTIER TRUST COMPANY FBO RHEUMATOLOGY CONSULTANTS WNY PC 40 PO BOX 10758 FARGO ND 58106-0758 |
Class R | 14.88% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 6.71% | N/A |
Statement of Additional Information September 1, 2014 | Page 170 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of fund (if greater than 25%) |
||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DR E FL 3 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C Class T Class Y Class Z |
|
26.05%
34.93% 16.80% 23.49% 99.96% 83.94% |
|
77.50% | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class A Class Z |
|
10.63%
5.40% |
|
N/A | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010 |
Class R4 | 64.10% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class A Class B |
|
7.62%
5.23% |
|
N/A | |||||||
Corporate Income Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C Class W |
|
38.52%
17.18% 23.27% 99.99% |
|
N/A | ||||||
BAND & CO C/O US BANK NA 1555 N RIVERCENTER DR STE 302 MILWAUKEE WI 53212-3958 |
Class Z | 7.74% | N/A | |||||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FBO CUSTOMERS ATTN MUTUAL FUND DEPT 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class R5 Class Z |
|
35.42%
5.43% |
|
N/A | |||||||
EDWARD D JONES & CO FOR THE BENEFIT OF CUSTOMERS 12555 MANCHESTER RD SAINT LOUIS MO 63131-3729 |
Class A | 5.60% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class B Class C |
|
25.32%
9.71% |
|
N/A | |||||||
JPMCB NA AS CUST FOR THE SC529 PLAN COLUMBIA MODERATE GROWTH 529 PORTFOLIO 14201 N DALLAS PARKWAY FL 13 DALLAS TX 75254-2916 |
Class Z | 5.50% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION CONSERVATIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 10.24% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 30.65% | N/A |
Statement of Additional Information September 1, 2014 | Page 171 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of fund (if greater than 25%) |
||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE CONSERVATIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 20.86% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 22.82% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA INCOME BUILDER FUND 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 9.65% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 6.74% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class B Class A Class C Class Z |
|
25.72%
6.05% 14.91% 49.15% |
|
N/A | |||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 7.03% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class A Class C Class R5 Class Z |
|
6.00%
7.40% 40.27% 6.65% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class B Class C Class R4 Class R5 |
|
8.42%
9.18% 65.97% 12.64% |
|
N/A | |||||||
TAYNIK & CO C/O INVESTORS BANK & TRUST CO 200 CLARENDON ST FL 17 BOSTON MA 02116-5097 |
Class R4 | 29.54% | N/A | |||||||||
WILMINGTON TRUST RISC AS TTEE FBO REGION 10 457B PLAN PO BOX 52129 PHOENIX AZ 85072-2129 |
Class Y | 99.72% | N/A | |||||||||
Intermediate Bond Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C Class W |
|
30.95%
27.42% 14.51% 100.00% |
|
25.33% | ||||||
CAPITAL BANK & TRUST COMPANY TTEE F SMITHGROUP RA 401K 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R5 | 28.63% | N/A |
Statement of Additional Information September 1, 2014 | Page 172 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of fund (if greater than 25%) |
||||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FBO CUSTOMERS ATTN MUTUAL FUND DEPT 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class R5 Class Z |
|
15.98%
11.77% |
|
N/A | |||||||
CITY NATIONAL BANK FBO BSBP&A LLP 401 K PLAN I 555 S FLOWER ST FL 10 LOS ANGELES CA 90071-2300 |
Class Y | 11.61% | N/A | |||||||||
COLUMBIA THERMOSTAT FUND C/O PAULA RYAN 227 W MONROE ST STE 3000 CHICAGO IL 60606-5018 |
Class I | 56.14% | N/A | |||||||||
FIIOC FBO TEAM INC SALARY DEFERRAL PLAN AND TRUST 100 MAGELLAN WAY # KW1C COVINGTON KY 41015-1987 |
Class R4 | 28.01% | N/A | |||||||||
FRONTIER TRUST CO FBO O NEILL MCFADDEN & WILLETT LLP 40 PO BOX 10758 FARGO ND 58106-0758 |
Class R | 6.36% | N/A | |||||||||
FRONTIER TRUST CO FBO REGGIO REGISTER CO INC 401K PO BOX 10758 FARGO ND 58106-0758 |
Class R | 7.55% | N/A | |||||||||
FRONTIER TRUST CO FBO RKT SAVINGS & RETPLAN 2122 PO BOX 10758 FARGO ND 58106-0758 |
Class R | 20.16% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 43.86% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class B Class C Class Z |
|
7.57%
12.91% 58.59% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class R Class R4 |
|
12.15%
6.64% |
|
N/A | |||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 20.97% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R4 Class Y |
|
5.40%
8.30% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 173 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of fund (if greater than 25%) |
||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class C Class R4 Class R5 |
|
7.33%
51.57% 55.22% |
|
N/A | |||||||
PIMS/PRUDENTIAL RETIREMENT AS NOMINEE FOR THE TTEE/CUST PL 111 OWENSBORO HEALTH 403 B MATCH P O BOX 20007 1201 PLEASANT VALLEY RD OWENSBORO KY 42303-9811 |
Class Y | 48.94% | N/A | |||||||||
STATE STREET CORPORATION FBO ADP ACCESS 1 LINCOLN ST BOSTON MA 02111-2901 |
Class R4 | 8.12% | N/A | |||||||||
WELLS FARGO BANK FBO 1525 W W T HARRIS BLVD CHARLOTTE NC 28262-8522 |
Class K | 99.35% | N/A | |||||||||
WELLS FARGO BANK FBO DWYER INSTRUMENTS INC 401K PSP 1525 WEST WT HARRIS BLVD CHARLOTTE NC 28288-1076 |
Class Y | 12.97% | N/A | |||||||||
WILMINGTON TRUST RISC AS AGENT FBO OWENSBORO HEALTH NQ SUPPL PLAN PO BOX 52129 PHOENIX AZ 85072-2129 |
Class Y | 13.84% | N/A | |||||||||
Small Cap Value Fund I | AMERICAN ENTERPRISE INVESTMENT SVC | Class A | 9.18% | N/A | ||||||||
707 2ND AVE S | Class B | 16.15% | ||||||||||
MINNEAPOLIS MN 55402-2405 | Class C | 5.05% | ||||||||||
CAPITAL BANK & TRUST COMPANY TTEE F FORT BELVOIR FEDERAL CREDIT UNION 4 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 17.95% | N/A | |||||||||
CAPITAL BANK & TRUST CO TTEE F PARK AVE MOTOR CORP 401K SVGS PL 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 55.45% | N/A | |||||||||
CAPITAL BANK & TRUST COMPANY TTEE F TRABON COMPANIES 401K 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 16.36% | N/A | |||||||||
EDWARD D JONES & CO FOR THE BENEFIT OF CUSTOMERS 12555 MANCHESTER RD SAINT LOUIS MO 63131-3729 |
Class Z | 39.40% | N/A | |||||||||
FIIOC FBO AIRTRAN AIRWAYS INC 401(K) PLAN 100 MAGELLAN WAY (KW1C) COVINGTON KY 41015-1987 |
Class R4 | 19.66% | N/A |
Statement of Additional Information September 1, 2014 | Page 174 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of fund (if greater than 25%) |
||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class B Class C |
|
19.54%
10.13% |
|
N/A | |||||||
FRONTIER TRUST COMPANY FBO FARMINGTON ACUTE CARE EMERGENCY SPE PO BOX 10758 FARGO ND 58106-0758 |
Class R5 | 13.97% | N/A | |||||||||
JPMORGAN CHASE AS TRUSTEE FBO THE ESI 401 K PLAN 11500 OUTLOOK ST OVERLAND PARK KS 66211-1804 |
Class Y | 9.13% | N/A | |||||||||
JP MORGAN CHASE BANK TTEE FBO TIAA-CREF RETIREMENT PLAN PROGRAM 3 METROTECH CENTER 5TH FLOOR BROOKLYN NY 11201-8401 |
Class Y | 34.41% | N/A | |||||||||
JP MORGAN CHASE BANK TTEE/CUST FBO THE RETIREMENT PLANS FOR WHICH TIAA-CREF ACTS AS RECORD KEEPER 4 NEW YORK PLZ LBBY A NEW YORK NY 10004-2413 |
Class R5 Class Z |
|
54.46%
6.35% |
|
N/A | |||||||
JPMCB NA CUST FOR COLUMBIA INCOME BUILDER FUND 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 100.00% | N/A | |||||||||
LINCOLN RETIREMENT SERVICES COMPANY FBO: HARTFORD COUNTY 403B PO BOX 7876 FORT WAYNE IN 46801-7876 |
Class Y | 37.29% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 8.38% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C |
|
7.89%
5.52% 17.03% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class Y Class Z |
|
12.35%
18.42% |
|
N/A | |||||||
MG TRUST COMPANY CUST. FBO PLACEWORKS 401 (K) PLAN 717 17TH ST STE 1300 DENVER CO 80202-3304 |
Class R | 5.26% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 14.24% | N/A |
Statement of Additional Information September 1, 2014 | Page 175 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class A Class B Class C Class R4 Class R5 Class Z |
|
5.68%
15.20% 6.11% 25.09% 21.90% 6.37% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class B Class C Class R4 |
|
14.82%
8.13% 21.02% |
|
N/A | |||||||
PIMS/PRUDENTIAL RETIREMENT AS NOMINEE FOR THE TTEE/CUST PL 709 A&E TELEVISION NETWORKS LLC 235 E 45TH ST NEW YORK NY 10017-3305 |
Class R4 | 20.98% | N/A | |||||||||
PIMS/PRUDENTIAL RETIREMENT AS NOMINEE FOR THE TTEE/CUST PL 719 PHRMA 950 F ST NW WASHINGTON DC 20004-1438 |
Class R4 | 9.65% | N/A | |||||||||
RAYMOND JAMES FBO OMNIBUS FOR MUTUAL FUNDS ATTN: COURTNEY WALLER 880 CARILLON PKWY ST PETERSBURG FL 33716-1100 |
Class C | 7.72% | N/A | |||||||||
U.S. Treasury Index Fund | AMERICAN ENTERPRISE INVESTMENT SVC | Class A | 8.09% | N/A | ||||||||
707 2ND AVE S | Class C | 9.74% | ||||||||||
MINNEAPOLIS MN 55402-2405 | Class W | 99.91% | ||||||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FBO CUSTOMERS ATTN MUTUAL FUND DEPT 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class R5 Class Z |
|
98.11%
9.97% |
|
N/A | |||||||
EDWARD D JONES & CO FOR THE BENEFIT OF CUSTOMERS 12555 MANCHESTER RD SAINT LOUIS MO 63131-3729 |
Class C | 6.29% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class B Class C |
|
38.37%
28.21% |
|
N/A | |||||||
JPMCB NA AS CUSTODIAN FOR THE SC529 PLAN COLUMBIA MODERATE 529 PORTFOLIO 14201 DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class Z | 8.52% | N/A | |||||||||
JPMCB NA AS CUSTODIAN FOR THE SC529 PLAN COLUMBIA MODERATE GROWTH 529 PORTFOLIO 14201 DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class Z | 5.24% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION CONSERVATIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 32.18% | N/A |
Statement of Additional Information September 1, 2014 | Page 176 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 29.98% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE CONSERVATIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 16.45% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA INCOME BUILDER FUND 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 9.79% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA VP-ASSET ALLOCATION FUND 14201 N DALLAS PKWAY FL 13 DALLAS TX 75254-2916 |
Class I | 11.58% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 8.22% | N/A | |||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class A Class B Class Z |
|
16.12%
40.05% 27.23% |
|
N/A | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class C | 5.06% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class A | 6.87% | N/A | |||||||||
RAYMOND JAMES FBO OMNIBUS FOR MUTUAL FUNDS ATTN: COURTNEY WALLER 880 CARILLON PKWY ST PETERSBURG FL 33716-1100 |
Class C | 17.20% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class A Class C |
|
9.05%
8.08% |
|
N/A |
Funds with fiscal year Ending May 31:
Except as otherwise indicated, the information below is as of August 31, 2013.
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
Dividend Income Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C Class W |
|
37.61%
34.86% 14.67% 99.96% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 177 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCOUNT FOR THE EXCLUSIVE BENEFIT OF CUSTOMERS ATTN MUTUAL FUNDS 101 MONTGOMERY STREET SAN FRANCISCO CA 94104-4151 |
Class R5 Class T Class Z |
|
35.75%
20.42% 8.99% |
|
N/A | |||||||
COLUMBIA THERMOSTAT FUND C/O PAULA RYAN 227 W MONROE ST STE 3000 CHICAGO IL 60606-5018 |
Class I | 14.30% | N/A | |||||||||
EQUITABLE LIFE FOR SA NO65 ON BEHALF OF VARIOUS 401K EXPEDITER PLANS 1290 AVENUE OF THE AMERICAS NEW YORK NY 10104-0101 |
Class R | 32.18% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class B Class C |
|
12.85%
7.52% |
|
N/A | |||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 5.49% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 20.84% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE CONSERVATIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 6.45% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 14.67% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 34.58% | N/A | |||||||||
JPMORGAN CHASE AS TRUSTEE FBO THE BNA 401 K PLAN 11500 OUTLOOK ST OVERLAND PARK KS 66211-1804 |
Class Y | 82.57% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 6.72% | N/A |
Statement of Additional Information September 1, 2014 | Page 178 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATOR 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C |
|
6.97%
20.15% 19.89% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class R | 16.40% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class T Class Z |
|
15.97%
47.11% |
|
26.74% | |||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 8.80% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class A Class C Class R Class R5 Class Y Class Z |
|
11.14%
8.43% 6.41% 36.58% 17.17% 17.47% |
|
N/A | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010 |
Class R4 | 66.71% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class B Class C Class R4 |
|
8.01%
7.29% 25.28% |
|
N/A | |||||||
RAYMOND JAMES FBO OMNIBUS FOR MUTUAL FUNDS ATTN: COURTNEY WALLER 880 CARILLON PKWY ST PETERSBURG FL 33716-1100 |
Class C | 9.11% | N/A | |||||||||
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226 |
Class R5 | 11.33% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class C | 6.61% | N/A | |||||||||
High Yield Municipal Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class C |
|
30.27%
22.59% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 179 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN T ARMBRUSTMACHER & V GEHLHAR 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class R4 | 100.00% | N/A | |||||||||
EDWARD D JONES & CO FOR THE BENEFIT OF CUSTOMERS 12555 MANCHESTER RD SAINT LOUIS MO 63131-3729 |
Class A | 5.96% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A Class B Class C |
|
8.75%
36.99% 10.81% |
|
N/A | |||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 11.38% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C Class Z |
|
12.41%
51.88% 22.66% 83.98% |
|
76.11% | |||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class A Class C |
|
5.87%
6.80% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class A Class R5 |
|
6.17%
99.82% |
|
N/A | |||||||
RAYMOND JAMES FBO OMNIBUS FOR MUTUAL FUNDS ATTN: COURTNEY WALLER 880 CARILLON PKWY ST PETERSBURG FL 33716-1100 |
Class C | 10.01% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class C | 6.81% | N/A | |||||||||
Risk Allocation Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class C |
|
29.46%
98.30% |
|
N/A | ||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN T ARMBRUSTMACHER & V GEHLHAR 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class A Class K Class R Class R5 Class W Class Z |
|
62.07%
100.00% 100.00% 100.00% 100.00% 97.83% |
|
70.21% |
Statement of Additional Information September 1 2014 | Page 180 |
Funds with Fiscal Year Ending July 31:
Except as otherwise indicated, the information below is as of October 31, 2013.
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
Large Cap Growth Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class W Class A Class B Class C |
|
100.00%
7.41% 8.28% 6.78% |
|
N/A | ||||||
ANDREW NEUMANN ADVANTAGE PLAN TRUST TRUST END DATE 08/15/2027 C/O CHRISTOPHER M NEUMANN 101 RAMBLE WOOD DR SKANEATELES NY 13152-2275 |
Class F | 14.54% | N/A | |||||||||
BRIDGET NEUMANN ADVANTAGE PLAN TRUST END DATE 11/17/2026 C/O CHRISTOPHER M NEUMANN 101 RAMBLE WOOD DR SKANEATELES NY 13152-2275 |
Class F | 14.54% | N/A | |||||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FOR EXCLUSIVE OF CUSTOMERS ATTN: MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class R5 Class K Class Z |
|
73.79%
57.97% 5.53% |
|
N/A | |||||||
CLAIRE NEUMANN ADVANTAGE PLAN TRUST TRUST END DATE 09/01/2030 ROBERT S NEUMANN 101 RAMBLE WOOD DR SKANEATELES NY 13152-2275 |
Class F | 12.75% | N/A | |||||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN T ARMBRUSTMACHER & V GEHLHAR 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class K Class R4 Class R5 |
|
10.78%
9.12% 24.12% |
|
N/A | |||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class C | 8.26% | N/A | |||||||||
FIRST CLEARING LLC 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class K Class K |
|
16.79%
12.08% |
|
N/A | |||||||
FRONTIER TRUST COMPANY FBO FINANCIAL NETWORK AUDIT, LLC 401(K) PO BOX 10758 FARGO ND 58106-0758 |
Class R | 16.98% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 8.66% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 33.39% | N/A |
Statement of Additional Information September 1, 2014 | Page 181 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE CONSERVATIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 8.37% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 13.00% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 32.60% | N/A | |||||||||
KAYLA HALL ADVANTAGE PLAN TRUST TRUST END DATE 08/21/2033 C/O MAUREEN HALL 49 RAYMOND PL STATEN ISLAND NY 10310-2231 |
Class F | 9.23% | N/A | |||||||||
LILY ELIZABETH KRAMER ADVANTAGE PLAN TRUST TRUST END DATE 01/18/2028 C/O LEIGH A NEUMANN 5203 SILVER FOX DR JAMESVILLE NY 13078-8742 |
Class F | 12.73% | N/A | |||||||||
MATTHEW PATRICK NEUMANN ADVANTAGE PLAN TRUST TRUST END DATE 03/01/2024 C/O CHRISTOPHER M NEUMANN 101 RAMBLE WOOD DR SKANEATELES NY 13152-2275 |
Class F | 12.70% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 3 JACKSONVILLE FL 32246-6484 |
Class R Class C |
|
50.05%
19.10% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class Y Class Z |
|
99.92%
33.66% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class T | 25.04% | N/A | |||||||||
MIRANDA E KRAMER ADVANTAGE PLAN TRUST TRUST END DATE 06/09/2025 C/O LEIGH A NEUMANN 5203 SILVER FOX DR JAMESVILLE NY 13078-8742 |
Class F | 12.85% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 5.40% | N/A |
Statement of Additional Information September 1, 2014 | Page 182 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R4 Class Z |
|
90.88%
5.56% |
|
N/A | |||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class C | 5.30% | N/A | |||||||||
AMT-Free OR Intermediate Muni Bond Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C |
|
28.54%
47.02% 13.35% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FBO CUSTOMERS ATTN MUTUAL FUND DEPT 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class Z Class R5 |
|
16.67%
27.43% |
|
N/A | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN T ARMBRUSTMACHER & V GEHLHAR 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class R4 | 100.00% | N/A | |||||||||
EDWARD D JONES & CO FOR THE BENEFIT OF CUSTOMERS 12555 MANCHESTER RD SAINT LOUIS MO 63131-3729 |
Class A Class B Class C |
|
19.52%
52.98% 10.00% |
|
N/A | |||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A Class C |
|
17.97%
29.67% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATOR 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class C | 11.34% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOM 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class Z | 8.54% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 23.76% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R5 | 31.00% | N/A | |||||||||
RAYMOND JAMES FBO OMNIBUS FOR MUTUAL FUNDS ATTN: COURTNEY WALLER 880 CARILLON PKWY ST PETERSBURG FL 33716-1100 |
Class A | 5.22% | N/A |
Statement of Additional Information September 1, 2014 | Page 183 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226 |
Class R5 | 40.55% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class A | 13.01% | N/A | |||||||||
Global ILB Plus Fund* |
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS, MN 55474-0508 |
Class Z | 100% | N/A | ||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION CONSERVATIVE PORTFOLIO 14201 DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 24.41% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE CONSERVATIVE PORTFOLIO 14201 DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 33.09% | 33.02% | |||||||||
JPMCB NA CUST FOR COLUMBIA DIVERSIFIED REAL RETURN FUND 14201 DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 42.28% | 42.19% | |||||||||
Tax-Exempt Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C |
|
5.06%
10.97% 16.13% |
|
N/A | ||||||
EDWARD D JONES & CO FOR THE BENEFIT OF CUSTOMERS 12555 MANCHESTER RD SAINT LOUIS MO 63131-3729 |
Class A | 9.54% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A Class B Class C |
|
5.07%
11.53% 10.22% |
|
N/A | |||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 5.07% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class B Class C |
|
10.17%
16.46% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class Z | 55.63% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 10.09% | N/A |
Statement of Additional Information September 1, 2014 | Page 184 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R4 | 61.87% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class R4 | 35.89% | N/A | |||||||||
Ultra Short Term Bond Fund |
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
N/A | 95.51% | 95.51% |
* | Information provided as of May 31, 2014. |
Funds with Fiscal Year Ending August 31:
Except as otherwise indicated, the information below is as of November 30, 2013.
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
AP Alternative Strategies Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A | 100.00% | 100% | ||||||||
AP Core Plus Bond Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A | 100.00% | 100% | ||||||||
AP Small Cap Equity Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A | 100.00% | 100% | ||||||||
Balanced Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C |
|
17.39%
19.72% 31.01% |
|
N/A | ||||||
CBNA AS CUSTODIAN FBO FRINGE BENEFITS DESIGN RETIREMENT P6 RHOADS DR STE 7 UTICA NY 13502-6317 |
Class R | 7.06% | N/A | |||||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FOR EXCLUSIVE OF CUSTOMERS ATTN:MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class Z | 6.26% | N/A | |||||||||
DCGT AS TTEE AND/OR CUST FBO PRINCIPAL FINANCIAL GROUP QUALIFIED FIA OMNIBUS ATTN NPIO TRADE DESK 711 HIGH ST DES MOINES IA 50392-0001 |
Class R | 8.88% | N/A | |||||||||
DCGT TRUSTEE & OR CUSTODIAN FBO PRINCIPAL FINANCIAL GROUP QUALIFIED PRIN ADVTG OMNIBUS ATTN NPIO TRADE DESK 711 HIGH ST DES MOINES IA 50392-0001 |
Class R | 14.08% | N/A |
Statement of Additional Information September 1, 2014 | Page 185 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
FIIOC FBO CAMBRIDGE ISOTOPE LABORATORIES INC 401(K) PLAN & TRUST 100 MAGELLAN WAY COVINGTON KY 41015-1987 |
Class R4 | 25.66% | N/A | |||||||||
FIIOC FBO HELIX ENERGY SOLUTIONS GROUP INC EMPLOYEES 401(K) SAVINGS PLAN 100 MAGELLAN WAY # KW1C COVINGTON KY 41015-1987 |
Class R4 | 23.53% | N/A | |||||||||
FIIOC FBO PAREX USA INC 401(K) PLAN 100 MAGELLAN WAY COVINGTON KY 41015-1987 |
Class R | 5.04% | N/A | |||||||||
FIIOC FBO STAGE STORES INC 401(K) PLAN 100 MAGELLAN WAY # KW1C COVINGTON KY 41015-1987 |
Class R5 | 13.70% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class B Class C |
|
5.39%
12.05% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class B Class C Class R |
|
9.65%
11.95% 13.05% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class R4 | 41.97% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOM 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class Z | 15.39% | N/A | |||||||||
MID-ATLANTIC TRUST COMPANY CUST FBO HEARTLAND FINANCIAL RETIREMENT PLAN 1251 WATERFRONT PL STE 525 PITTSBURGH PA 15222-4228 |
Class Y | 38.33% | N/A | |||||||||
MID ATLANTIC TRUST COMPANY CUST FBO HODGE COMPANY 1251 WATERFRONT PL STE 525 PITTSBURGH PA 15222-4228 |
Class Y | 12.89% | N/A | |||||||||
MID ATLANTIC TRUST COMPANY FBO INSIGHT LIGHTING INC 401 K PLAN 1251 WATERFRONT PL STE 525 PITTSBURGH PA 15222-4228 |
Class Y | 7.36% | N/A | |||||||||
MG TRUST COMPANY CUST FBO SHEET METAL WORKERS LOCAL 29 717 17TH ST STE 1300 DENVER CO 80202-3304 |
Class R | 6.08% | N/A |
Statement of Additional Information September 1, 2014 | Page 186 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
MG TRUST COMPANY TRUSTEE VIRGINIA HEALTH SERVICES INC 717 17TH ST STE 1300 DENVER CO 80202-3304 |
Class R | 7.19% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 9.36% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class Y Class Z |
|
18.57%
10.06% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class C Class R5 |
|
6.76%
10.99% |
|
N/A | |||||||
TAYNIK & CO C/O INVESTORS BANK & TRUST CO 200 CLARENDON ST FL 17 BOSTON MA 02116-5097 |
Class R5 | 62.68% | N/A | |||||||||
WELLS FARGO BANK FBO 1525 W W T HARRIS BLVD CHARLOTTE NC 28262-8522 |
Class K | 87.45% | N/A | |||||||||
WELLS FARGO BANK FBO CRENLO RETIREMENT 401 K 1525 WEST WT HARRIS BLVD CHARLOTTE NC 28288-1076 |
Class K | 9.05% | N/A | |||||||||
Contrarian Core Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C Class W |
|
32.87%
17.91% 12.99% 100.00% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FBO CUSTOMERS ATTN MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class K Class R5 Class Z |
|
70.12%
11.62% 6.42% |
|
N/A | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class K | 11.62% | N/A | |||||||||
DWS TRUST CO TTEE/CUST FBO ADP ENTERPRISE PRODUCT PO BOX 1757 SALEM NH 03079-1143 |
Class R4 | 10.89% | N/A | |||||||||
FIIOC FBO MAZAK CORPORATION 100 MAGELLAN WAY (KW1C) COVINGTON KY 41015-1987 |
Class R4 | 13.76% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class C Class K |
|
5.20%
18.26% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 187 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
FRONTIER TRUST COMPANY FBO ZAIS GROUP LLC PROFIT SHARING PLAN PO BOX 10758 FARGO ND 58106-0758 |
Class Y | 98.39% | N/A | |||||||||
GREAT WEST TRUST CO FBO EMPLOYEE BENEFITS CLIENTS 401(K) PLAN 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R4 | 6.79% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 11.68% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 36.46% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE CONSERVATIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 6.77% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 25.24% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 11.24% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 5.58% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 3 JACKSONVILLE FL 32246-6484 |
Class C | 20.75% | N/A | |||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class R | 29.40% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class T Class Z |
|
30.01%
35.88% |
|
N/A | |||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 11.57% | N/A |
Statement of Additional Information September 1, 2014 | Page 188 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class C Class R5 Class Z |
|
6.61%
75.80% 10.61% |
|
N/A | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 499 WASHINGTON BLVD JERSEY CITY NJ 07310-2010 |
Class R4 | 7.47% | N/A | |||||||||
PIMS/PRUDENTIAL RETIREMENT AS NOMINEE FOR THE TTEE/CUST PL 010 NEXCOM 401(K) PLAN 3280 VIRGINIA BEACH BLVD VIRGINIA BCH VA 23452-5724 |
Class R4 | 34.73% | N/A | |||||||||
RAYMOND JAMES FBO OMNIBUS FOR MUTUAL FUNDS ATTN: COURTNEY WALLER 880 CARILLON PKWY ST PETERSBURG FL 33716-1100 |
Class C | 10.36% | N/A | |||||||||
TAYNIK & CO C/O INVESTORS BANK & TRUST CO 200 CLARENDON ST FL 17 # FPG90 BOSTON MA 02116-5097 |
Class R | 12.06% | N/A | |||||||||
Emerging Markets Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class C Class W Class B |
|
22.78%
14.87% 99.99% 28.21% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FOR BENEFIT OF CUSTOMERS ATTN MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class Z Class K |
|
7.82%
68.68% |
|
N/A | |||||||
DAVID BREGGER TTEE FBO BREGGER & ASSOCIATES 401K C/O FASCORE LLC 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R5 | 5.20% | N/A | |||||||||
FIIOC FBO RGM ADVISORS, LLC 401K P/S PLAN 100 MAGELLAN WAY (KW1C) COVINGTON KY 41015-1987 |
Class Y | 12.73% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class K | 30.03% | N/A | |||||||||
FRONTIER TRUST COMPANY FBO TAYLOR LUMBER INC 401 K PLAN 21 PO BOX 10758 FARGO ND 58106-0758 |
Class Y Class R4 Class R5 |
|
86.96%
6.02% 10.70% |
|
N/A | |||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 16.95% | N/A |
Statement of Additional Information September 1, 2014 | Page 189 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 44.06% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 16.09% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 17.33% | N/A | |||||||||
MLPF&S FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DRIVE EAST 3RD FL JACKSONVILLE FL 32246-6484 |
Class R | 70.16% | N/A | |||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class C | 18.46% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF IT CUSTOMER 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class Z | 86.16% | 46.69% | |||||||||
MID ATLANTIC TRUST COMPANY FBO NAPC INC 401 K PROFIT SHARING PLAN & TRUST 1251 WATERFRONT PL STE 525 PITTSBURGH PA 15222-4228 |
Class R4 | 18.05% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 5.04% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R4 Class R5 |
|
20.13%
70.24% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class R4 | 54.29% | N/A | |||||||||
RAYMOND JAMES FBO OMNIBUS FOR MUTUAL FUNDS ATTN: COURTNEY WALLER 880 CARILLON PKWY ST PETERSBURG FL 33716-1100 |
Class C | 5.56% | N/A | |||||||||
TD AMERITRADE TRUST COMPANY ATTN: HOUSE P.O. BOX 17748 DENVER CO 80217-0748 |
Class R5 | 8.07% | N/A |
Statement of Additional Information September 1, 2014 | Page 190 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
Global Dividend Opportunity Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C |
|
9.95%
9.37% 9.81% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FOR BENFT CUST ATTN MUTUAL FUND 101 MONTGOMERY STREET SAN FRANCISCO CA 94104-4151 |
Class A Class B Class C Class Z |
|
5.15%
8.44% 6.81% 7.12% |
|
N/A | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class R4 Class W Class Y |
|
8.63%
100.00% 100.00% |
|
N/A | |||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A Class B Class C |
|
5.46%
22.51% 5.35% |
|
N/A | |||||||
HARTFORD SECURITIES DISTRIBUTION COMPANY INC ATTN UIT OPERATIONS/PRG PO BOX 2999 HARTFORD CT 06104-2999 |
Class R | 86.03% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA INCOME BUILDER FUND 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 56.06% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 43.93% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 9.31% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C |
|
7.75%
19.68% 18.16% |
|
N/A | |||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 7.91% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class A Class R4 Class B |
|
6.85%
38.25% 5.70% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class C Class R4 |
|
5.00%
53.12% |
|
N/A | |||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class C | 13.07% | N/A |
Statement of Additional Information September 1, 2014 | Page 191 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
Global Energy and Natural Resources Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C |
|
23.08%
28.24% 24.52% |
|
N/A | ||||||
BAILEY REHABILITATION SERVICES TTEEBAILEY REHABILITATION SERVICES INC C/O FASCORE LLC 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 9.96% | N/A | |||||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FBO CUSTOMERS ATTN MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class K Class Z |
|
13.02%
37.71% |
|
N/A | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class K | 5.57% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class B Class C Class K |
|
5.80%
9.77% 81.40% |
|
N/A | |||||||
GLOBAL MINE SERVICES INC TTEE FBO GLOBAL MINE SERVICE INC 401K PLAN C/O FASCORE 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 5.80% | N/A | |||||||||
HOEHN MOTORS TTEE FBO THE HOEHN MOTORS RETIREMENT PLAN 40 C/O FASCORE LLC 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 5.21% | N/A | |||||||||
JEFFREY DICKERSON TTEE FBO RIDGE CARE 401K C/O FASCORE LLC 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 7.15% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 99.97% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 11.37% | N/A | |||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class C | 10.06% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R5 Class Z |
|
95.27%
18.05% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 192 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
PEAK ENERGY OPERATING 2 LLC TTEE PEAK ENERGY OPERATING 2 LLC 401 K C/O FASCORE LLC 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 7.04% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class C Class R4 |
|
7.32%
99.88% |
|
N/A | |||||||
RAYMOND JAMES FBO OMNIBUS FOR MUTUAL FUNDS ATTN: COURTNEY WALLER 880 CARILLON PKWY ST PETERSBURG FL 33716-1100 |
Class C | 9.95% | N/A | |||||||||
Greater China Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class B | 5.80% | N/A | ||||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FBO CUSTOMERS ATTN MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class B | 5.85% | N/A | |||||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class R4 Class W |
|
16.18%
100.00% |
|
N/A | |||||||
EDWARD D JONES & CO FOR THE BENEFIT OF CUSTOMERS 12555 MANCHESTER RD SAINT LOUIS MO 63131-3729 |
Class B | 6.30% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A Class B Class C Class Z |
|
9.02%
5.86% 14.13% 9.68% |
|
N/A | |||||||
GREAT-WEST TRUST COMPANY LLC TTEE FEMPLOYEE BENEFITS CLIENTS 401K 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R5 | 50.17% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA VP-ASSET ALLOCATION FUND 14201 N DALLAS PKWAY FL 13 DALLAS TX 75254-2916 |
Class I | 99.74% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class B | 6.57% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C |
|
10.92%
22.56% 25.94% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class Z | 22.05% | N/A |
Statement of Additional Information September 1, 2014 | Page 193 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class A Class B Class C |
|
9.86%
7.94% 12.09% |
|
N/A | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class A Class B Class C Class R4 |
|
12.05%
14.10% 9.19% 83.82% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class A Class B Class C |
|
6.67%
9.27% 9.76% |
|
N/A | |||||||
RBC CAPITAL MARKETS, LLC MUTUAL FUND OMNIBUS PROCESSING OMNIBUS ATTN MUTUAL FUND OPS MANAGER 510 MARQUETTE AVE S MINNEAPOLIS MN 55402-1110 |
Class Z | 15.50% | N/A | |||||||||
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226 |
Class R5 | 46.53% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class A Class C |
|
5.15%
5.98% |
|
N/A | |||||||
Mid Cap Growth Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class W Class A Class B Class C |
|
99.98%
7.66% 12.10% 6.25% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC CUST A/C FOR THE EXCLUSIVE BENEFIT ATTENTION MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class K Class Z |
|
40.29%
8.99% |
|
N/A | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class R4 Class Y |
|
6.30%
8.18% |
|
N/A | |||||||
COR CLEARING LLC 9300 UNDERWOOD AVE STE 400 OMAHA NE 68114-2685 |
Class R4 | 5.92% | N/A | |||||||||
DCGT TRUSTEE & OR CUSTODIAN FBO PRINCIPAL FINANCIAL GROUP QUALIFIED FIA OMNIBUS ATTN NPIO TRADE DESK 711 HIGH ST DES MOINES IA 50392-0001 |
Class R | 12.40% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class K Class C |
|
19.07%
10.20% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 194 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 15.04% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 38.88% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 17.33% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 23.33% | N/A | |||||||||
KENNETH MECK TRUSTEE PA ASSOC OF CONSERVATION 401 (K) PROFIT SHARING PLAN & TRUST 25 NORTH FRONT STREET HARRISBURG PA 17101-1627 |
Class K | 9.15% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATOR 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class C | 15.67% | N/A | |||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class R Class T |
|
22.89%
15.09% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOM 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class Z | 29.75% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 6.85% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R5 Class T Class Z |
|
75.43%
5.84% 16.06% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class R4 Class C |
|
81.76%
8.42% |
|
N/A | |||||||
STATE STREET CORPORATION FBO ADP ACCESS 1 LINCOLN ST BOSTON MA 02111-2901 |
Class K | 9.67% | N/A |
Statement of Additional Information September 1, 2014 | Page 195 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226 |
Class R5 | 19.61% | N/A | |||||||||
WTRISC AS TTEE FBO FIRST BANKERS TRUSTSHARES INC 401K PROFIT SHARING PLAN PO BOX 52129 PHOENIX AZ 85072-2129 |
Class Y | 91.82% | N/A | |||||||||
Small Cap Core Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class W Class A Class B Class C |
|
99.99%
41.13% 21.50% 16.66% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FBO CUSTOMERS ATTN MUTUAL FUND DEPT 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class R5 | 5.83% | N/A | |||||||||
DCGT AS TTEE AND/OR CUST FBO PRINCIPAL FINANCIAL GROUP QUALIFIED FIA OMNIBUS ATTN NPIO TRADE DESK 711 HIGH ST DES MOINES IA 50392-0001 |
Class A | 5.67% | N/A | |||||||||
FIIOC FBO AEGIS TECHNOLOGIES GROUP INC 100 MAGELLAN WAY # KW1C COVINGTON KY 41015-1987 |
Class R4 | 41.84% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class B Class C |
|
12.28%
13.03% |
|
N/A | |||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 16.43% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 20.70% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE CONSERVATIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 19.22% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 40.20% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class B | 7.27% | N/A |
Statement of Additional Information September 1, 2014 | Page 196 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class R4 Class Z |
|
13.74%
49.85% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 3 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C |
|
14.47%
14.30% 18.92% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class T | 29.83% | N/A | |||||||||
MG TRUST COMPANY CUST FBO EVERENCE SERVICES LLC 717 17TH ST STE 1300 DENVER CO 80202-3304 |
Class R4 | 23.95% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 10.47% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R4 Class Y Class B Class C Class Z |
|
15.72%
96.95% 6.69% 8.33% 13.56% |
|
N/A | |||||||
NORTHERN TRUST CO TTEE FBO APOLLO DV PO BOX 92994 CHICAGO IL 60675-2994 |
Class Z | 5.76% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class B Class C |
|
10.18%
9.51% |
|
N/A | |||||||
TAYNIK & CO C/O INVESTORS BANK & TRUST CO 200 CLARENDON ST FL 17 # FPG90 BOSTON MA 02116-5097 |
Class R5 | 88.61% | N/A | |||||||||
Small Cap Growth Fund I |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B |
|
8.01%
10.95% |
|
N/A | ||||||
ANCHORAGE POLICE & FIRE RETIREMENT SYSTEM ATTN CHARLES M LAIRD 3600 DR MARTIN LUTHER KING JR AVE STE 207 ANCHORAGE AK 99507-1222 |
Class Y | 99.98% | N/A | |||||||||
CHARLES SCHWAB & CO INC CUST A/C FOR THE EXCLUSIVE BENEFIT ATTENTION MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class K Class R5 Class Z |
|
62.11%
15.51% 9.24% |
|
N/A | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class K | 27.11% | N/A |
Statement of Additional Information September 1, 2014 | Page 197 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
DCGT AS TTEE AND/OR CUST FBO PRINCIPAL FINANCIAL GROUP QUALIFIED FIA OMNIBUS ATTN NPIO TRADE DESK 711 HIGH ST DES MOINES IA 50392-0001 |
Class R | 7.11% | N/A | |||||||||
DCGT AS TTEE AND/OR CUST FBO PRINCIPAL FINANCIAL GROUP QUALIFIED PRIN ADVTG OMNIBUS ATTN NPIO TRADE DESK 711 HIGH ST DES MOINES IA 50392-0001 |
Class R | 6.22% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class K Class B Class C |
|
8.22%
13.65% 14.93% |
|
N/A | |||||||
FRONTIER TRUST CO FBO ACTIGRAPH LLC 401K PLAN 213246 PO BOX 10758 FARGO ND 58106-0758 |
Class R | 5.03% | N/A | |||||||||
FRONTIER TRUST CO FBO RYANGOLF 590736 PO BOX 10758 FARGO ND 58106-0758 |
Class R | 6.07% | N/A | |||||||||
HARTFORD SECURITIES DISTRIBUTION COMPANY INC ATTN UIT OPERATIONS/PRG PO BOX 2999 HARTFORD CT 06104-2999 |
Class R | 52.72% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 6.53% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 48.20% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 8.57% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 33.73% | N/A | |||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class A Class B Class C |
|
13.05%
8.21% 18.08% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOM 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class Z | 36.94% | 26.29% |
Statement of Additional Information September 1, 2014 | Page 198 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 5.76% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R5 Class A Class B Class Z Class R4 |
|
41.46%
5.16% 6.31% 16.67% 11.09% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class B Class C Class R4 |
|
8.21%
6.50% 7.24% |
|
N/A | |||||||
STATE STREET CORPORATION FBO ADP ACCESS 1 LINCOLN ST BOSTON MA 02111-2901 |
Class R4 | 81.34% | N/A | |||||||||
TD AMERITRADE TRUST COMPANY ATTN HOUSE PO BOX 17748 DENVER CO 80217-0748 |
Class R5 | 42.03% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class C | 6.22% | N/A | |||||||||
Global Technology Growth Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B |
|
18.83%
11.62% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FBO CUSTOMERS ATTN MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class B Class R5 Class Z |
|
5.76%
94.99% 9.10% |
|
N/A | |||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class B Class C |
|
16.45%
7.92% |
|
N/A | |||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class A Class C Class Z |
|
7.74%
9.51% 12.66% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class B Class C Class Z |
|
10.13%
37.61% 36.55% |
|
N/A | |||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class B Class C |
|
12.57%
11.07% |
|
N/A | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class B Class R4 |
|
7.76%
7.16% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 199 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class B Class A Class C Class R4 |
|
15.19%
12.41% 6.94% 92.32% |
|
N/A | |||||||
Value and Restructuring Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class C |
|
36.86%
11.20% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FBO CUSTOMERS ATTN MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class A Class Z Class R5 |
|
5.00%
34.71% 33.82% |
|
32.33% | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class I Class W |
|
100.00%
100.00% |
|
N/A | |||||||
DCGT AS TTEE AND/OR CUST FBO PRINCIPAL FINANCIAL GROUP QUALIFIED FIA OMNIBUS ATTN NPIO TRADE DESK 711 HIGH ST DES MOINES IA 50392-0001 |
Class R | 19.34% | N/A | |||||||||
DCGT AS TTEE AND/OR CUST FBO PRINCIPAL FINANCIAL GROUP QUALIFIED PRIN ADVTG OMNIBUS ATTN NPIO TRADE DESK 711 HIGH ST DES MOINES IA 50392-0001 |
Class R | 17.42% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class C | 6.87% | N/A | |||||||||
FRONTIER TRUST CO FBO WILD FLAVORS INC SAVINGS & PS PLA PO BOX 10758 FARGO ND 58106-0758 |
Class R | 15.01% | N/A | |||||||||
HARTFORD SECURITIES DISTRIBUTION COMPANY INC ATTN UIT OPERATIONS/PRG PO BOX 2999 HARTFORD CT 06104-2999 |
Class R | 7.97% | N/A | |||||||||
LPL FINANCIAL 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 9.69% | N/A | |||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class A Class C |
|
5.80%
11.30% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF IT CUSTOMER 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class Z | 13.96% | N/A |
Statement of Additional Information September 1, 2014 | Page 200 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 12.73% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class A Class C Class Z Class R5 Class R4 |
|
5.32%
8.29% 18.01% 39.96% 27.55% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class A Class C Class Y Class R4 |
|
10.83%
16.19% 99.42% 13.98% |
|
N/A | |||||||
RAYMOND JAMES FBO OMNIBUS FOR MUTUAL FUNDS ATTN: COURTNEY WALLER 880 CARILLON PKWY ST PETERSBURG FL 33716-1100 |
Class A Class C |
|
5.16%
9.34% |
|
N/A | |||||||
TAYNIK & CO C/O INVESTORS BANK & TRUST CO 200 CLARENDON ST FL 17 BOSTON MA 02116-5097 |
Class R4 | 58.40% | N/A | |||||||||
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226 |
Class R5 | 24.67% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class A Class C |
|
8.66%
8.11% |
|
N/A |
Funds with Fiscal Year Ending October 31:
Except as otherwise indicated, the information below is as of January 31, 2014.
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
CA Tax-Exempt Fund |
AMERICAN ENTERPRISE INV SVCS, INC ATTN: MFIS CUSTOMER 2003 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0020 |
Class B | 14.66% | N/A | ||||||||
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C |
|
7.87%
24.05% 6.02% |
|
N/A | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class R4 | 100.00% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A Class B Class C |
|
7.41%
11.18% 12.44% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 201 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C |
|
9.51%
8.52%
|
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class Z | 72.16% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class A Class C Class Z |
|
5.76%
12.78% 14.88% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class B | 8.74% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class B Class C |
|
8.17%
5.17% |
|
N/A | |||||||
AMT-Free CT Intermediate Muni Bond Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A | 15.95% | N/A | ||||||||
CHARLES SCHWAB & CO INC CUST ATTN MUTUAL FUNDS DEPT 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class A | 7.85% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class C | 18.48% | N/A | |||||||||
KELLY F SHACKELFORD PO BOX 672 NEW CANAAN CT 06840-0672 |
Class T | 12.74% | N/A | |||||||||
LPL FINANCIAL FBO CUSTOMER ACCOUNTS 9785 TOWNE CENTRE DR SAN DIEGO CA 92121-1968 |
Class C | 12.16% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class T | 17.07% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 3 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C |
|
12.14%
22.86% 34.81% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class Z | 94.22% | 78.33% |
Statement of Additional Information September 1, 2014 | Page 202 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 9.41% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class A Class B |
|
5.02%
77.14% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class A Class R4 |
|
5.13%
99.50% |
|
N/A | |||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class A | 35.81% | N/A | |||||||||
AMT-Free Intermediate Muni Bond Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C |
|
16.61%
6.53% 20.19% |
|
N/A | ||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY A/C FBO CUSTOMERS ATTN MUTUAL FUND DEPT 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class R5 | 57.97% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A Class B Class C |
|
5.76%
14.21% 11.72% |
|
N/A | |||||||
JOHN J ALMEIDA TR JOHN J ALMEIDA REVOCABLE TRUST U/A DATED MAY 15 1997 27 TOPMAST CT JAMESTOWN RI 02835-2227 |
Class T | 5.67% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class T Class A Class B Class C Class Z |
|
10.29%
15.60% 33.31% 23.90% 89.86% |
|
80.46% | |||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 8.50% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class C Class R4 |
|
5.87%
98.83% |
|
N/A | |||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class R5 | 41.66% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class A Class C |
|
6.18%
5.22% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 203 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
International Bond Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class C Class W |
|
67.14%
42.66% 94.16% |
|
N/A | ||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class C Class W |
|
8.16%
5.84% |
|
N/A | |||||||
EDWARD D JONES & CO FOR THE BENEFIT OF CUSTOMERS 12555 MANCHESTER RD SAINT LOUIS MO 63131-3729 |
Class A Class C |
|
6.32%
9.80% |
|
N/A | |||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A | 7.76% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE AGGRESSIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 40.92% | 34.39% | |||||||||
JPMCB NA CUST FOR COLUMBIA CAPITAL ALLOCATION MODERATE CONSERVATIVE PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 7.19% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA INCOME BUILDER FUND 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 50.05% | 42.06% | |||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DR E FL 3 JACKSONVILLE FL 32246-6484 |
Class Z Class A Class C |
|
95.49%
6.84% 28.26% |
|
N/A | |||||||
AMT-Free MA Intermediate Muni Bond Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C |
|
32.43%
99.29% 14.33% |
|
N/A | ||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A Class C |
|
26.60%
22.32% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 3 JACKSONVILLE FL 32246-6484 |
Class A Class C |
|
12.19%
28.66% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class T Class Z |
|
44.78%
95.57% |
|
81.66% |
Statement of Additional Information September 1, 2014 | Page 204 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class A Class C Class R4 |
|
8.74%
8.98% 96.01% |
|
N/A | |||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class A Class C |
|
12.16%
12.98% |
|
N/A | |||||||
AMT-Free NY Intermediate Muni Bond Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A | 40.48% | N/A | ||||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class R4 | 13.30% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A Class C |
|
6.81%
10.30% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 3 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C |
|
14.28%
26.81% 52.44% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class T Class Z |
|
23.71%
81.65% |
|
68.03% | |||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class A Class C |
|
8.65%
11.82% |
|
N/A | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R4 | 30.30% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class A Class B Class C Class R4 |
|
6.46%
5.34% 5.09% 56.40% |
|
N/A | |||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class A Class B Class C |
|
7.28%
65.25% 5.16% |
|
N/A | |||||||
NY Tax-Exempt Fund |
AMERICAN ENTERPRISE INV SVCS, INC ATTN: MFIS CUSTOMER 2003 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0020 |
Class B | 12.66% | N/A |
Statement of Additional Information September 1, 2014 | Page 205 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class C |
|
10.58%
6.24% |
|
N/A | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class R4 Class R5 |
|
100.00%
100.00% |
|
N/A | |||||||
COR CLEARING LLC 9300 UNDERWOOD AVE STE 400 OMAHA NE 68114-2685 |
Class B | 6.20% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class A Class B Class C |
|
5.16%
11.03% 11.75% |
|
N/A | |||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class A Class B Class C |
|
5.47%
41.36% 34.92% |
|
N/A | |||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class Z | 89.58% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class A Class C |
|
6.73%
8.67% |
|
N/A | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class C | 6.24% | N/A | |||||||||
RBC CAPITAL MARKETS, LLC MUTUAL FUND OMNIBUS PROCESSING OMNIBUS ATTN MUTUAL FUND OPS MANAGER 510 MARQUETTE AVE S MINNEAPOLIS MN 55402-1110 |
Class C | 5.75% | N/A | |||||||||
STIFEL NICOLAUS & CO INC EXCLUSIVE BENEFIT OF CUSTOMERS 501 N BROADWAY SAINT LOUIS MO 63102-2188 |
Class Z | 6.52% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class A | 5.16% | N/A | |||||||||
Strategic Income Fund |
ACTION FABRICATORS INC TTEE FBO ACTION FABRICATORS INC PSP 401K C/O FASCORE LLC 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 6.05% | N/A |
Statement of Additional Information September 1, 2014 | Page 206 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C |
|
35.28%
24.28% 21.42% |
|
N/A | |||||||
CAPITAL BANK & TRUST COMPANY TTE FB CONCRETE PROTECTION & RESTOR INC RE C/O FASCORE LLC 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 7.98% | N/A | |||||||||
CAPITAL BANK & TRUST COMPANY TTEE F NEW ENGLAND BUSINESS TR SEC 401K PL 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 10.63% | N/A | |||||||||
CHARLES SCHWAB & CO INC CUST A/C FOR THE EXCLUSIVE BENEFIT ATTENTION MUTUAL FUND 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class K Class R5 |
|
54.54%
23.07% |
|
N/A | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class W | 100.00% | N/A | |||||||||
DCGT AS TTEE AND/OR CUST FBO PRINCIPAL FINANCIAL GROUP QUALI FIED PRIN ADVTG OMNIBUS ATTN NPIO TRADE DESK 711 HIGH ST DES MOINES IA 50392-0001 |
Class R | 5.69% | N/A | |||||||||
FIIOC FBO RUSSELL G TRIPP DDS PROFIT SHARING PLAN 100 MAGELLAN WAY (KW1C) COVINGTON KY 41015-1987 |
Class R | 13.41% | N/A | |||||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class K Class B Class C |
|
40.99%
17.71% 9.58% |
|
N/A | |||||||
GREAT-WEST TRUST COMPANY LLC TTEE F EMPLOYEE BENEFITS CLIENTS 401K 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class Y | 98.31% | N/A | |||||||||
JACK SWAN FBO FIXNETIX INC 401 K PROFIT SHARING PLAN & TRUST 99 SUMMER ST STE 1520 BOSTON MA 02110-1201 |
Class R | 8.87% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF IT CUSTOMER 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 |
Class Z | 80.55% | 25.59% | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 2 JACKSONVILLE FL 32246-6484 |
Class A Class C |
|
6.05%
22.38% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 207 |
Fund/Share Class | Name and Address | Share Class |
Percentage
of Class |
Percentage
of Fund (if greater than 25%) |
||||||||
MERRILL LYNCH, PIERCE, FENNER & SMITH INC FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTENTION SERVICE TEAM 4800 DEER LAKE DRIVE EAST 3RD FLOOR JACKSONVILLE FL 32246-6484 |
Class B Class R4 |
|
20.27%
47.61% |
|
N/A | |||||||
MG TRUST COMPANY CUST. FBO CITY PLUMBING & ELECTRIC SUPPL 717 17TH ST STE 1300 DENVER CO 80202-3304 |
Class R5 | 10.85% | N/A | |||||||||
MID ATLANTIC TRUST COMPANY FBO REMCHO JOHANSEN & PURCELL 401 K PROFIT SHARING PLAN & TRUST 1251 WATERFRONT PL STE 525 PITTSBURGH PA 15222-4228 |
Class R5 | 5.40% | N/A | |||||||||
MID ATLANTIC TRUST COMPANY FBO THE NILES COMPANY INC 401 K PROFIT SHARING PLAN & TRUST 1251 WATERFRONT PL STE 525 PITTSBURGH PA 15222-4228 |
Class R | 9.50% | N/A | |||||||||
MORGAN STANLEY SMITH BARNEY HARBORSIDE FINANCIAL CENTER PLAZA 2, 3RD FLOOR JERSEY CITY NJ 07311 |
Class C | 6.36% | N/A | |||||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R4 | 25.60% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class C Class R4 Class R5 |
|
5.14%
17.49% 51.08% |
|
N/A | |||||||
STATE STREET CORPORATION FBO ADP ACCESS 1 LINCOLN ST BOSTON MA 02111-2901 |
Class R4 | 7.30% | N/A | |||||||||
UBS WM USA OMNI ACCOUNT M/F ATTN: DEPARTMENT MANAGER 1000 HARBOR BLVD WEEHAWKEN NJ 07086-6761 |
Class C | 7.05% | N/A |
Funds with Fiscal Year Ending December 31:
Except as otherwise indicated, the information below is as of March 31, 2014.
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage of
(if greater than 25%) |
||||||||
Real Estate Equity Fund |
AMERICAN ENTERPRISE INVESTMENT SVC 707 2ND AVE S MINNEAPOLIS MN 55402-2405 |
Class A Class B Class C Class W |
|
26.54%
27.47% 12.61% 84.92% |
|
N/A |
Statement of Additional Information September 1, 2014 | Page 208 |
Fund | Shareholder Name and Address | Share Class |
Percentage
of Class |
Percentage of
(if greater than 25%) |
||||||||
CAPITAL BANK & TRUST CO TTEE F PARK AVE MOTOR CORP 401K SVGS PL 8515 E ORCHARD RD # 2T2 GREENWOOD VLG CO 80111-5002 |
Class R | 12.77% | N/A | |||||||||
CHARLES SCHWAB & CO INC SPECIAL CUSTODY ACCT FBO CUSTOMERS ATTN MUTUAL FUNDS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151 |
Class K Class R5 Class Z |
|
32.01%
59.22% 18.70% |
|
N/A | |||||||
COLUMBIA MGMT INVESTMENT ADVSR LLC ATTN AKSHAY RAJPUT 50807 AMERIPRISE FINANCIAL CTR MINNEAPOLIS MN 55474-0508 |
Class K Class W |
|
34.38%
15.08% |
|
N/A | |||||||
FIRST CLEARING LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 |
Class K Class C |
|
33.61%
10.19% |
|
N/A | |||||||
FRONTIER TRUST COMPANY FBO GOLDEN GAMING INC 401 K PLAN 20 PO BOX 10758 FARGO ND 58106-0758 |
Class R | 10.95% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA INCOME BUILDER FUND 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 65.08% | N/A | |||||||||
JPMCB NA CUST FOR COLUMBIA LIFEGOAL GROWTH PORTFOLIO 14201 N DALLAS PKWY FL 13 DALLAS TX 75254-2916 |
Class I | 33.69% | N/A | |||||||||
MERRILL LYNCH PIERCE FENNER & SMITH FOR THE SOLE BENEFIT OF ITS CUSTOMERS 4800 DEER LAKE DRIVE EAST 3RD FL JACKSONVILLE FL 32246-6484 |
Class C Class R Class Z |
|
20.60%
30.94% 40.93% |
|
25.02% | |||||||
NATIONAL FINANCIAL SERVICES LLC FEBO CUSTOMERS MUTUAL FUNDS 200 LIBERTY STREET 1WFC NEW YORK NY 10281-1003 |
Class R4 | 99.51% | N/A | |||||||||
PERSHING LLC 1 PERSHING PLZ JERSEY CITY NJ 07399-0002 |
Class B | 8.37% | N/A | |||||||||
RAYMOND JAMES FBO OMNIBUS FOR MUTUAL FUNDS ATTN: COURTNEY WALLER 880 CARILLON PKWY ST PETERSBURG FL 33716-1100 |
Class C | 9.28% | N/A | |||||||||
TD AMERITRADE INC FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS PO BOX 2226 OMAHA NE 68103-2226 |
Class R5 | 25.73% | N/A | |||||||||
TD AMERITRADE TRUST COMPANY ATTN HOUSE PO BOX 17748 DENVER CO 80217-0748 |
Class R5 | 10.28% | N/A |
Statement of Additional Information September 1, 2014 | Page 209 |
American Enterprise Investment Services Inc., a Minnesota corporation, is a subsidiary of Ameriprise Financial, Inc.
Bank of America, N.A., a national banking association organized under the laws of the United States, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, a Delaware corporation, are subsidiaries of Bank of America Corporation.
Charles Schwab & Co., Inc., a California corporation, is a subsidiary of The Charles Schwab Corporation.
The Investment Manager, a Minnesota limited liability company, is a subsidiary of Ameriprise Financial, Inc. Other Columbia Funds managed by the Investment Manager may hold more than 25% of a Fund.
Statement of Additional Information September 1, 2014 | Page 210 |
INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In December 2005, without admitting or denying the allegations, American Express Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc. (Ameriprise Financial)) entered into settlement agreements with the SEC and Minnesota Department of Commerce (MDOC) related to market timing activities. As a result, AEFC was censured and ordered to cease and desist from committing or causing any violations of certain provisions of the Investment Advisers Act of 1940, the Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million and civil money penalties of $7 million. AEFC also agreed to retain an independent distribution consultant to assist in developing a plan for distribution of all disgorgement and civil penalties ordered by the SEC in accordance with various undertakings detailed at http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its affiliates have cooperated with the SEC and the MDOC in these legal proceedings, and have made regular reports to the Funds Board of Trustees.
Ameriprise Financial and certain of its affiliates have historically been involved in a number of legal, arbitration and regulatory proceedings, including routine litigation, class actions, and governmental actions, concerning matters arising in connection with the conduct of their business activities. Ameriprise Financial believes that the Funds are not currently the subject of, and that neither Ameriprise Financial nor any of its affiliates are the subject of, any pending legal, arbitration or regulatory proceedings that are likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary, 8-K filings with the Securities and Exchange Commission on legal and regulatory matters that relate to Ameriprise Financial and its affiliates. Copies of these filings may be obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity associated with them, will not result in increased fund redemptions, reduced sale of fund shares or other adverse consequences to the Funds. Further, although we believe proceedings are not likely to have a material adverse effect on the Funds or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Funds, these proceedings are subject to uncertainties and, as such, we are unable to estimate the possible loss or range of loss that may result. An adverse outcome in one or more of these proceedings could result in adverse judgments, settlements, fines, penalties or other relief that could have a material adverse effect on the consolidated financial condition or results of operations of Ameriprise Financial.
Statement of Additional Information September 1, 2014 | Page 211 |
DESCRIPTION OF RATINGS
The ratings of S&P, Moodys and Fitch represent their opinions as to quality. These ratings are not absolute standards of quality and are not recommendations to purchase, sell or hold a security. Issuers and issues are subject to risks that are not evaluated by the rating agencies.
S&Ps Debt Ratings
Long-Term Issue Credit Ratings
An obligation rated AAA has the highest rating assigned by S&P. The obligors capacity to meet its financial commitment on the obligation is extremely strong.
An obligation rated AA differs from the highest-rated obligations only to a small degree. The obligors capacity to meet its financial commitment on the obligation is very strong.
An obligation rated A is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligors capacity to meet its financial commitment on the obligation is still strong. An obligation rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
Obligations rated BB, B, CCC, CC, and C are regarded as having significant speculative characteristics. BB indicates the least degree of speculation and C the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
An obligation rated BB is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to the obligors inadequate capacity to meet its financial commitment on the obligation.
An obligation rated B is more vulnerable to nonpayment than obligations rated BB, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligors capacity or willingness to meet its financial commitment on the obligation.
An obligation rated CCC is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.
An obligation rated CC is currently highly vulnerable to nonpayment.
A C rating is assigned to obligations that are currently highly vulnerable to nonpayment, obligations that have payment arrearages allowed by the terms of the documents, or obligations of an issuer that is the subject of a bankruptcy petition or similar action which have not experienced a payment default. Among others, the C rating may be assigned to subordinated debt, preferred stock or other obligations on which cash payments have been suspended in accordance with the instruments terms or when preferred stock is the subject of a distressed exchange offer, whereby some or all of the issue is either repurchased for an amount of cash or replaced by other instruments having a total value that is less than par.
An obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the date due, unless S&P believes that such payments will be made within five business days, irrespective of any grace period. The D rating also will be used upon the filing of a bankruptcy petition or the taking of similar action if payments on an obligation are jeopardized. An obligations rating is lowered to D upon completion of a distressed exchange offer, whereby some or all of the issue is either repurchased for an amount of cash or replaced by other instruments having a total value that is less than par.
Short-Term Issue Credit Ratings
Short-term ratings are generally assigned to those obligations considered short-term in the relevant market. In the U.S., for example, that means obligations with an original maturity of no more than 365 days including commercial paper.
A short-term obligation rated A-1 is rated in the highest category by S&P. The obligors capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligors capacity to meet its financial commitment on these obligations is extremely strong.
Statement of Additional Information September 1, 2014 | A-1 |
A short-term obligation rated A-2 is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligors capacity to meet its financial commitment on the obligation is satisfactory.
A short-term obligation rated A-3 exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation.
A short-term obligation rated B is regarded as vulnerable and has significant speculative characteristics. The obligor currently has the capacity to meet its financial commitments; however, it faces major ongoing uncertainties which could lead to the obligors inadequate capacity to meet its financial commitments.
A short-term obligation rated C is currently vulnerable to nonpayment and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.
A short-term obligation rated D is in payment default. The D rating category is used when payments on an obligation are not made on the date due, unless S&P believes that such payments will be made within any stated grace period. However, any stated grace period longer than five business days will be treated as five business days. The D rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized.
Municipal Short-Term Note Ratings
SP-1 Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3 Speculative capacity to pay principal and interest.
Moodys Long-Term Debt Ratings
Global Long-Term Rating Scale
Aaa Obligations rated Aaa are judged to be of the highest quality, subject to the lowest level of credit risk.
Aa Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
A Obligations rated A are judged to be upper-medium grade and are subject to low credit risk.
Baa Obligations rated Baa are judged to be medium-grade and subject to moderate credit risk and as such may possess certain speculative characteristics.
Ba Obligations rated Ba are judged to be speculative and are subject to substantial credit risk.
B Obligations rated B are considered speculative and are subject to high credit risk.
Caa Obligations rated Caa are judged to be speculative of poor standing and are subject to very high credit risk.
Ca Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
C Obligations rated C are the lowest rated and are typically in default, with little prospect for recovery of principal or interest.
Global Short-Term Rating Scale
Issuers (or supporting institutions) rated Prime-1 (P-1) have a superior ability to repay short-term debt obligations.
Issuers (or supporting institutions) rated Prime-2 (P-2) have a strong ability to repay short-term debt obligations.
Issuers (or supporting institutions) rated Prime-3 (P-3) have an acceptable ability to repay short-term obligations.
Issuers (or supporting institutions) rated Not Prime (NP) do not fall within any of the Prime rating categories.
US Municipal Short-Term Debt and Demand Obligation Ratings
While the global short-term prime rating scale is applied to U.S. municipal tax-exempt commercial paper, these programs are typically backed by external letters of credit or liquidity facilities and their short-term prime ratings usually map to the long-term rating of the enhancing bank or financial institution and not to the municipalitys rating. Other short-term municipal obligations, which generally have different funding sources for repayment, are rated using two additional short-term rating scales (i.e., the MIG and VMIG scales discussed below).
Statement of Additional Information September 1, 2014 | A-2 |
The Municipal Investment Grade (MIG) scale is used to rate US municipal bond anticipation notes of up to three years maturity. Municipal notes rated on the MIG scale may be secured by either pledged revenues or proceeds of a take-out financing received prior to note maturity. MIG ratings expire at the maturity of the obligation, and the issuers long-term rating is only one consideration in assigning the MIG rating. MIG ratings are divided into three levelsMIG 1 through MIG 3while speculative grade short-term obligations are designated SG.
The MIG 1 designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support, or demonstrated broad-based access to the market for refinancing.
The MIG 2 designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group.
The MIG 3 designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well-established.
The SG designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.
In the case of variable rate demand obligations (VRDOs), a two-component rating is assigned: a long or short-term debt rating and a demand obligation rating. The first element represents Moodys evaluation of risk associated with scheduled principal and interest payments. The second element represents Moodys evaluation of risk associated with the ability to receive purchase price upon demand (demand feature). The second element uses a rating from a variation of the MIG scale called the Variable Municipal Investment Grade (VMIG) scale. The rating transitions on the VMIG scale, as shown in the diagram below, differ from those on the Prime scale to reflect the risk that external liquidity support generally will terminate if the issuers long-term rating drops below investment grade.
The VMIG 1 designation denotes superior credit quality. Excellent protection is afforded by the superior short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
The VMIG 2 designation denotes strong credit quality. Good protection is afforded by the strong short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
The VMIG 3 designation denotes acceptable credit quality. Adequate protection is afforded by the satisfactory short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand.
The SG designation denotes speculative-grade credit quality. Demand features rated in this category may be supported by a liquidity provider that does not have an investment grade short-term rating or may lack the structural and/or legal protections necessary to ensure the timely payment of purchase price upon demand.
Fitchs Ratings
Corporate Finance Obligations Long-Term Rating Scales
AAA: Highest credit quality.
AAA ratings denote the lowest expectation of credit risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
AA: Very high credit quality.
AA ratings denote expectations of very low credit risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
A: High credit quality.
A ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.
BBB: Good credit quality.
BBB ratings indicate that expectations of credit risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.
BB: Speculative.
BB ratings indicate an elevated vulnerability to credit risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial alternatives may be available to allow financial commitments to be met.
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B: Highly speculative.
B ratings indicate that material credit risk is present.
CCC: Substantial credit risk.
CCC ratings indicate that substantial credit risk is present.
CC: Very high levels of credit risk.
CC ratings indicate very high levels of credit risk.
C: Exceptionally high levels of credit risk.
C indicates exceptionally high levels of credit risk.
Defaulted obligations typically are not assigned RD or D ratings, but are instead rated in the B to C rating categories, depending upon their recovery prospects and other relevant characteristics.
Short-Term Ratings Assigned to Issuers or Obligations in Corporate, Public and Structured Finance
F1: Highest short-term credit quality.
Indicates the strongest intrinsic capacity for timely payment of financial commitments; may have an added + to denote any exceptionally strong credit feature.
F2: Good short-term credit quality.
Good intrinsic capacity for timely payment of financial commitments.
F3: Fair short-term credit quality.
The intrinsic capacity for timely payment of financial commitments is adequate.
B: Speculative short-term credit quality.
Minimal capacity for timely payment of financial commitments, plus heightened vulnerability to near term adverse changes in financial and economic conditions.
C: High short-term default risk.
Default is a real possibility.
RD: Restricted default.
Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other financial obligations. Typically applicable to entity ratings only.
D: Default.
Indicates a broad-based default event for an entity, or the default of a short-term obligation.
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DESCRIPTION OF STATE RISK FACTORS
The state tax-exempt and state municipal bond Funds invest primarily in municipal securities issued by a single state and political sub-divisions of that state. Each state tax-exempt and state municipal bond Fund will be particularly affected by political and economic conditions and developments in the state in which it invests. This exposure to factors affecting the states tax-exempt investments will be significantly greater than that of more geographically diversified funds, and may result in greater losses and volatility. Because of the relatively small number of issuers of tax-exempt securities in a given state, the Fund may invest a higher percentage of assets in a single issuer and, therefore, be more exposed to the risk of loss than a fund that invests more broadly. At times, the Fund and other accounts managed by the Investment Manager may own all or most of the debt of a particular issuer. This concentration of ownership may make it more difficult to sell, or to determine the fair value of, these investments. In addition, a Fund may focus on a segment of the tax-exempt debt market, such as revenue bonds for health care facilities, housing or airports. These investments may cause the value of a Funds shares to change more than the values of shares of funds that invest more diversely. The yields on the securities in which the Funds invest generally are dependent on a variety of factors, including among others, the financial condition of the issuer or other obligor, the revenue source from which the debt service is payable, general economic and monetary conditions, conditions in the relevant market, the size of a particular issue, the maturity of the obligation, and the rating of the issue. In addition to such factors, geographically concentrated securities will be particularly sensitive to local conditions, including political and economic changes, adverse conditions to an industry significant to the area, and other further developments within a particular locality. Because many tax-exempt bonds may be revenue or general obligations of local governments or authorities, ratings on tax-exempt bonds may be different from the ratings given to the general obligation bonds of a particular state.
Certain events may adversely affect investments within a particular sector in a state. Examples include litigation, legislation or court decisions, concerns about pending or contemplated litigation, legislation or court decisions, or lower demand for the services or products provided by a sector. Investing mostly in state-specific, tax-exempt investments makes the Funds more vulnerable to the relevant states economy and to factors affecting tax-exempt issuers in the state than would be true for more geographically diversified funds. These risks include, among others:
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the inability or perceived inability of a government authority to collect sufficient tax or other revenues to meet its payment obligations; |
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natural disasters and ecological or environmental concerns; |
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the introduction of constitutional or statutory limits on a tax-exempt issuers ability to raise revenues or increase taxes; |
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the inability of an issuer to pay interest on or to repay principal or securities in which the funds invest during recessionary periods; and |
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economic or demographic factors that may cause a decrease in tax or other revenues for a government authority or for private operators of publicly financed facilities. |
State Specific Information
The following discussion regarding certain economic, financial and legal matters pertaining to the states, U.S. territories and possessions referenced below, and their political subdivisions is drawn from the documents indicated below and does not purport to be a complete description or a complete listing of all relevant factors. More information about state specific risks may be available from other official state resources. The information has not been updated nor will it be updated during the year. The Funds have not independently verified any of the information contained in such documents and are not expressing any opinion regarding the completeness or materiality of such information. The information is subject to change at any time. Any such change may adversely affect the financial condition of the applicable state, U.S. territory or possession.
Estimates and projections, if any, contained in the following summaries should not be construed as statements of fact; such estimates and projections are based on assumptions that may be affected by numerous factors and there can be no assurance that such estimates and projections will be realized or achieved. Discussions regarding the financial condition of a particular state or U.S. territory or possession may not be relevant to Municipal Obligations issued by political subdivisions of that state or U.S. territory or possession. Moreover, the general economic conditions discussed may or may not affect issuers of the obligations of these states, U.S. territories or possessions.
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California
Unless otherwise noted, the following information has been obtained from the Official Statement, dated April 22, 2014, for the $750,000,000 State of California Various Purpose General Obligation Bonds (the California 2014 Bonds).
Current Economic Condition.
The State of California (California) has the largest economy among the 50 states and one of the largest and most diverse in the world and has major components in high technology, trade, entertainment, agriculture, manufacturing, government, tourism, construction, and services. The relative proportion of the various components of the California economy closely resembles the make-up of the national economy. The California economy is experiencing a gradual and broadening recovery. Continued growth in the high-technology sector, international trade, and tourism are being supplemented by better residential construction and real estate conditions.
California is the most populous state in the nation, nearly 50% larger than the second-ranked state according to the 2010 U.S. Census. The 2013 estimate of Californias population is 38.2 million, which is 12% of the total United States population. Personal income increased in 13 of the 15 quarters through the third quarter of 2013, with decreases only in the fourth quarter of 2011 and the first quarter of 2013. The decrease in early 2013 was partially due to the expiration of the federal payroll tax holiday. These numbers also reflect the revised methodology implemented by the U.S. Bureau of Economic Analysis for the national accounts. Although the reported levels of personal income have changed as a result of the revised methodology, these changes merely reflect more accurate statistics about the underlying state of the economy. As such, the changes will not have any impact on revenue.
In 2012, employment grew by 465,800, or by 38,800 jobs per month. (The unemployment statistics were revised back to 1990 using the new methodology mentioned above, and the revised statistics are higher from 1990 to the present.) As of February 2014, the private sector had surpassed the pre-recession peak in payroll employment, but the declines in the government sector meant that overall around 93% of total nonfarm payroll job losses have been recovered. The state unemployment rate reached a high of 12.4% in late 2010. The rate improved thereafter, falling to 8.0% in February 2014. In comparison, the national unemployment rate was 6.7% in February 2014.
Consumer spending in California rebounded in 2011 with growing vehicle sales playing a significant role. Taxable retail sales grew 9.1% in 2011 and 7.2% in 2012. New motor vehicle registrations in the first 10 months of 2013 were up over 11% from the same time period in 2012. The California economy is expected to continue making steady progress. Industry employment is forecast to expand 2.1% and 2.4% in 2013 and 2014, respectively, and 2.5% growth is projected for 2015. Personal income is projected to grow 2.2% in 2013, 5.7% in 2014, and 5.3% in 2015.
State Budget.
During the recent recession, which officially ended in 2009, California experienced the most significant economic downturn since the Great Depression of the 1930s. As a result, state tax revenues declined precipitously, resulting in large budget gaps and occasional cash shortfalls in the period from 2008 through 2011. The state enacted and maintained significant spending reductions in the past three budgets and voters in 2012 approved Proposition 30 providing increased revenues through the next several fiscal years. As of the 2014-15 Governors Budget, Californias budget is projected to remain balanced within the projection period ending in fiscal year 2017-18.
The Budget Act for fiscal year 2013-14, adopted by the California Legislature on June 27, 2013 (the 2013 Budget Act), provided for a multi-year General Fund plan that was balanced and projected a $1.1 billion reserve by the end of fiscal year 2013-14. The Governors Proposed Budget for fiscal year 2014-15, released on January 9, 2014 (the 2014-15 Governors Budget) now projects that California will end fiscal year 2013-14 with a reserve of $3.257 billion. The 2014-15 Governors Budget proposes a multi-year General Fund strategy that is structurally balanced, significantly pays down the unprecedented level of budgetary borrowings, debts, and deferrals that were accumulated in order to balance budgets largely over the past decade (wall of debt), and projects the wall of debt would be fully eliminated by the end of fiscal year 2017-18. Additionally, for the first time since fiscal year 2007-08, the budget includes a transfer into the Budget Stabilization Account (the so-called rainy day fund).
Despite the recent significant budgetary improvements, there remain a number of major risks and pressures that threaten Californias financial condition, including the need to repay billions of dollars of obligations which were deferred to balance budgets during the economic downturn. In addition, Californias revenues (particularly the personal income tax) can be volatile and correlate to overall economic conditions. There can be no assurances that California will not face fiscal stress and cash pressures again, or that other changes in the state or national economies will not materially adversely affect Californias financial condition.
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Real Estate and Housing.
After hitting a low of close to 200,000 units (seasonally-adjusted and annualized) in the middle of 2007, sales of existing single-family homes have rebounded to above 400,000 units annually. With limited inventories of homes for sale, existing home prices accelerated in the latter half of 2012. Home prices continued to climb in 2013 reaching levels not seen in more than five years. The median price of existing, single-family homes sold in December 2013 was $438,040, an increase of $100,980 from January 2013, and almost 20% higher than December 2012. However, this remains 26% below the pre-recession peak. California issued 83,000 residential building permits in 2013, 42.6% more than were issued in 2012 but still only 39% of the 213,000 permits issued in 2004. The number of California homes going into foreclosure dropped to an eight-year low in the fourth quarter of 2013 at 18,120. That was down 10.8% from the prior quarter, and down 52.6% from the fourth-quarter of 2012. Foreclosures peaked in the first-quarter of 2009 at 135,431. The declining rate of foreclosure was likely due in part to the new state foreclosure laws (the Homeowner Bill of Rights), which took effect at the beginning of calendar year 2013.
Long-Term Debt.
As of February 1, 2014, California had outstanding obligations payable principally from the states General Fund or from lease payments paid from the operating budget of the respective leases, which operating budgets are primarily, but not exclusively, derived from the General Fund, consisting of $75.2 billion principal amount of general obligation bonds and $10.2 billion of lease-revenue bonds. As of February 1, 2014, there was approximately $27.6 billion of authorized and unissued long-term voter-approved general obligation bonds payable principally from the General Fund and approximately $5.87 billion of authorized and unissued lease revenue bonds.
Certain California state agencies and authorities issue revenue obligations for which the General Fund has no liability. Revenue bonds represent obligations payable from state revenue-producing enterprises and projects, which are not payable from the General Fund, and conduit obligations payable only from revenues paid by local governments or private users of facilities financed by the revenue bonds. California has always paid when due the principal and interest on all its debts, including general obligation bonds, general obligation commercial paper notes, lease-revenue obligations and short term obligations, including revenue anticipate notes and revenue anticipation warrants.
Bond Ratings.
Three major credit rating agencies, Moodys Investors Service, Inc. (Moodys), Standard and Poors Ratings Services (S&P), and Fitch Ratings (Fitch), assigned ratings to the California 2014 Bonds, as follows: Moodys assigned a rating of A1, S&P assigned a rating of A, and Fitch assigned a rating of A. It is not possible to determine whether, or the extent to which, Moodys, S&P, or Fitch will change its respective rating in the future. In addition, ratings assigned to individual Municipal Obligations vary.
Connecticut
The following information has been obtained from the Annual Information Statement of the State of Connecticut, dated February 27, 2012, as supplemented on November 6, 2012.
Current Economic Condition.
The State of Connecticut (Connecticut) is a highly developed and urbanized state. It is situated directly between the financial centers of Boston and New York.
Connecticuts economic performance is measured by personal income, which has been among the highest in the nation, and gross state product (the market value of all final goods and services produced by labor and property located within Connecticut). Connecticuts nonagricultural employment reached a high in March 2008 with 1,712,700 persons employed, but began declining with the onset of the recession, falling to 1,593,000 jobs by January 2010.
After enjoying an extraordinary boom during the late 1990s, Connecticut, along with the rest of the Northeast, experienced an economic slowdown during the recent recession. The states unemployment rate climbed to a high of 9.0% in 2010, compared to the New England average of 8.7% and the national average of 9.6% for the same period. During the subsequent weak recovery, Connecticuts average unemployment rate fell to 8.9% for 2011, and for the first six months of 2012 has averaged 7.9%, compared to the New England average of 7.0% and the national average of 8.2% for the same period.
State Budget.
Connecticut finances most of its operations through its General Fund. However, certain state functions, such as Connecticuts transportation budget, are financed through other state funds. General Fund revenues are derived primarily from the collection of state taxes, including the personal income tax, the sales and use tax and the corporation business tax.
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Miscellaneous fees, receipts, transfers and unrestricted federal grants account for most of the other General Fund revenue. Connecticut expends money on a variety of programs and services. Significant elements of state expenditures include human services; education, libraries and museums; non-functional (debt service and miscellaneous expenditures including fringe benefits); health and hospitals; corrections; general government and judicial.
On June 12, 2012, the General Assembly passed legislation necessary to implement certain aspects of a revised budget for fiscal year 2012-13, which provides for midterm adjustments to the original budget for the biennium ending June 30, 2013 that was passed by the General Assembly on May 3, 2011. The originally adopted budget closed an estimated budget gap of $3.2 billion for fiscal year 2011-12 and $3.0 billion for fiscal year 2012-13 through proposed tax increases, expenditure cuts and expected savings from employee concessions, resulting in a surplus of $369.3 million for fiscal year 2011-12 and $634.8 million for fiscal year 2012-13.
In its report from November 2012, however, Connecticuts Office of the Treasurer indicated that the General Fund balance for fiscal year 2011-12 was estimated to have a deficit of $143.6 million. The midterm budget adjustments for fiscal year 2012-13, which include policy changes resulting in $75.4 million in additional revenue, are expected to result in a General Fund surplus of $3.1 million for fiscal year 2012-13.
State Debt.
Pursuant to various public and special acts Connecticut has authorized a variety of types of debt. These types fall generally into the following categories: direct general obligation debt, which is payable from Connecticuts General Fund; special tax obligation debt, which is payable from specified taxes and other funds which are maintained outside Connecticuts General Fund; and special obligation and revenue debt, which is payable from specified revenues or other funds which are maintained outside Connecticuts General Fund. In addition, Connecticut has a number of programs under which the state provides annual appropriation support for, or is contingently liable on, the debt of certain state quasi-public agencies and political subdivisions.
Statutory Debt Limit . Section 3-21 of the General Statutes provides that no bonds, notes or other evidences of indebtedness for borrowed money payable from General Fund tax receipts of Connecticut may be authorized by the General Assembly or issued unless they do not cause the aggregate amount of (1) the total amount of bonds, notes or other evidences of indebtedness payable from General Fund tax receipts authorized by the General Assembly but which have not been issued and (2) the total amount of such indebtedness which has been issued and remains outstanding, to exceed 1.6 times the total estimated General Fund tax receipts of Connecticut for the fiscal year in which any such authorization will become effective or in which such indebtedness is issued, as estimated for such fiscal year by the joint standing committee of the General Assembly having cognizance of finance, revenue and bonding. In computing the aggregate amount of indebtedness at any time, however, a significant number of exclusions apply.
Transportation Fund and Debt . In 1984, Connecticut adopted legislation establishing a transportation infrastructure program and authorizing special tax obligation (STO) bonds to finance the program. The infrastructure program is a continuous program for planning, construction and improvement of Connecticut highways and bridges, projects on the interstate highway system, alternate highway projects in the interstate highway substitution program, waterway facilities, mass transportation and transit facilities, aeronautic facilities (excluding Bradley International Airport), the highway safety program, maintenance garages and administrative facilities of the Department of Transportation, payment of Connecticuts share of the costs of the local bridge program established under the act, and payment of state contributions to the local bridge revolving fund established under the act. The infrastructure program is administered by the Department of Transportation.
The cost of the infrastructure program for state fiscal years 1985-2016, which will be met from federal, state and local funds, is estimated at $29.1 billion. Connecticuts share of such cost, estimated at $11.9 billion, is to be funded from transportation-related taxes, fees and revenues deposited in the Special Transportation Fund and from the proceeds of STO bonds.
Certain Pension and Retirement Systems.
State Employees Retirement Fund . Connecticut maintains a State Employees Retirement Fund with approximately 47,778 active members, 1,589 inactive (vested) members and 42,555 retired members and beneficiaries as of June 30, 2011. Payments into the fund are made from employee contributions, General and Special Transportation Fund appropriations and grant reimbursements from Federal and other funds.
As of June 30, 2012, the market value of the funds investment assets was estimated to be $8,468.5 million. Connecticut appropriated $721.5 million for fiscal year ending June 30, 2013, which together with anticipated grant reimbursements from federal and other funds will be sufficient to fully fund the employer contribution requirements for the fiscal year ending June 30, 2013 pursuant to the requirement determinations contained in the February 2012 interim actuarial valuation.
Teachers Retirement Fund . The Teachers Retirement Fund, administered by the Teachers Retirement Board, provides benefits for any teacher, principal, supervisor, superintendent or other eligible employee in the public school systems of
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Connecticut, with certain exceptions. While establishing salary schedules for teachers, municipalities do not provide contributions to the maintenance of the fund. As of June 30, 2011, there were 66,638 active and former employees with accrued and accruing benefits, 31,796 retired members and beneficiaries, and 268 members on disability allowance. Contributions to the fund are made by employees and by General Fund appropriations from Connecticut.
As of June 30, 2012, the market value of the funds investment assets was $13,473.7 million. Connecticut appropriated $787.6 million for the fiscal year ending June 30, 2013. Connecticut will have to appropriate $948.5 million and $984.1 million respectively for fiscal years ending June 30, 2014 and June 30, 2015 to fully fund the employer contribution requirements pursuant to the requirement determinations contained in the October 2012 actuarial valuation.
Bond Ratings.
Three major credit rating agencies, Moodys Investors Service, Inc. (Moodys), Standard and Poors Ratings Services (S&P) and Fitch Ratings (Fitch), assign ratings to the Connecticuts long-term general obligation bonds. As of February 2012, Connecticuts general obligation bonds were rated Aa3 by Moodys, AA by S&P and AA by Fitch. It is not possible to determine whether, or the extent to which, Moodys, S&P or Fitch will change such ratings in the future. Ratings assigned to individual Municipal Obligations vary.
Massachusetts
The following information has been obtained from The Commonwealth of Massachusetts Information Statement, dated January 8, 2013, as supplemented on January 15, 2013.
Current Economic Condition and Government Structure.
The ability of the Commonwealth of Massachusetts (Massachusetts) to meet its financial obligations is affected by the legislative policies and financial condition of Massachusetts, as well as by general social, environmental and economic conditions, many of which are not within the Commonwealths control.
Massachusetts has established a number of independent authorities and agencies, the budgets of which are not included in the Commonwealths annual budget. In fiscal 2012, Massachusetts had significant operational or financial relationships with certain of these authorities, such as the Massachusetts Convention Center Authority, the Massachusetts Development Finance Agency, the Massachusetts Department of Transportation (MassDOT) and the Massachusetts Water Pollution Abatement Trust. The Commonwealths contractual agreements with these authorities constitute general obligations of Massachusetts for which its full faith and credit are pledged. Massachusetts also guarantees the debt of two authorities, the Massachusetts State College Building Authority and the University of Massachusetts Building Authority. The ratings of these independent authorities are based on the guarantee of Massachusetts and generally can be expected to move in tandem with ratings on the Massachusetts general obligation debt.
In addition, a portion of Massachusetts sales tax receipts is dedicated through trust funds to the Massachusetts Bay Transportation Authority (MBTA) and the Massachusetts School Building Authority (MSBA). The amount dedicated to the MBTA is the amount raised by a 1% sales tax (not including meals), with an inflation-adjusted floor. A comparable amount, though without the floor, is dedicated to the MSBA beginning in fiscal 2010, with lesser amounts dedicated to the MSBA from fiscal 2005 through fiscal 2009. Massachusetts also holds $5.9 billion in debt and grant obligations for the school building assistance program administered by the MSBA that finances construction of schools for the Commonwealths cities and towns.
Population and Employment . Massachusetts has a population of about 6.5 million as of the 2010 Census, a little more than 2% of the total United States population. Preliminary reports indicate that the unemployment rate of Massachusetts dropped to 6.7% in December 2012, compared to a national unemployment rate of 7.8%.
Commonwealth Budget.
The budgeted operating funds of Massachusetts ended fiscal 2012 with an excess of revenues and other sources over expenditures and other uses of $88.9 million and aggregate ending fund balances in the budgeted operating funds of Massachusetts of approximately $1.99 billion. The budgeted operating funds of Massachusetts are projected to end fiscal 2013 with a deficiency of revenues and other sources over expenditures and other uses of $725.6 million and aggregate ending fund balances in the budgeted operating funds of Massachusetts of approximately $1.26 billion.
Growth of tax revenues is limited by law in Massachusetts to the average positive rate of growth in total wages and salaries in Massachusetts, as reported by the federal government, during the three calendar years immediately preceding the end of such fiscal year. The law also requires that allowable state tax revenues be reduced by the aggregate amount received by local governmental units from any newly authorized or increased local option taxes or excises. Any excess in state tax revenue collections for a given fiscal year over the prescribed limit, as determined by the State Auditor, must be applied as a credit
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against the then current personal income tax liability of all taxpayers in Massachusetts in proportion to the personal income tax liability of all taxpayers in Massachusetts for the immediately preceding tax year.
Legislation enacted in December 1989 imposes a limit on the amount of outstanding direct bonds of Massachusetts. The bond cap for fiscal 2013 will be $1.875 billion, plus $93 million in unused bond cap from fiscal 2012 which has been carried forward to support spending in fiscal 2013. The bond cap for fiscal 2014 is projected to be $2 billion, and the bond cap for fiscal 2015 through fiscal 2017 is projected to be $2.125 billion.
Massachusetts is also responsible for the payment of pension benefits for Commonwealth employees and for teachers of the cities, towns and regional school districts throughout Massachusetts. Massachusetts employees and teachers retirement systems are partially funded by employee contributions of regular compensation. In October 2012, Massachusetts issued a valuation, as of January 1, 2012, of its total pension obligation. The unfunded actuarial accrued liability was calculated to be $23.605 billion.
Local Considerations.
Massachusetts makes substantial payments to its cities, towns and regional school districts (local aid) to mitigate the impact of local property tax limits on local programs and services. Local aid payments to cities, towns and regional school districts take the form of both direct and indirect assistance. Direct local aid consists of general revenue sharing funds and specific program funds sent directly to local governments and regional school districts. For fiscal 2012, expenditures for direct local aid, exclusive of school building assistance, were $4.93 billion. For fiscal 2013, expenditures for direct local aid are projected to total $5.11 billion.
Transportation.
The Central Artery/Ted Williams Tunnel Project was substantially completed in January 2006 at a cost of nearly $15 billion. In 2007, the Transportation Finance Commission, established by state legislation in 2004, anticipated a funding gap of between $15 billion and $19 billion over the next 20 years, related to maintaining Massachusettss transportation system for that time period. On June 30, 2009, Massachusetts entered into a contract for financial assistance which provides for the payment to MassDOT of $100 million per fiscal year, commencing July 1, 2009 until June 30, 2039. Payments under the contract constitute general obligations of Massachusetts for which its full faith and credit are pledged.
On January 14, 2013, MassDOT released a detailed analysis of the infrastructure needs of the Commonwealths transportation system, including a 25-year long-term financial plan outlining investments that MassDOT believes necessary to improve economic development and quality of life across Massachusetts. The plan identifies a $1.02 billion average additional investment needed each year to maintain and stabilize the system that currently exists as well as to fund new transportation projects that would create a 21st-century transportation network. MassDOT estimates that the cost associated with the borrowing for this 25-year program will increase to $518 million by fiscal 2023 as more projects enter construction.
Bond Ratings.
Three major credit rating agencies, Moodys Investors Service, Inc. (Moodys), Standard and Poors Ratings Services (S&P) and Fitch Ratings (Fitch), assign ratings to Massachusetts long-term general obligation bonds. Massachusettss general obligation bonds have been assigned long-term ratings of Aa1 by Moodys Investors Service, Inc., AA+ by Standard & Poors Ratings Services and AA+ by Fitch. It is not possible to determine whether, or the extent to which, Moodys, S&P or Fitch will change such ratings in the future. Ratings assigned to individual Municipal Obligations vary.
New York
The following information has been obtained from the Annual Information Statement of the State of New York, dated May 11, 2012, as supplemented on August 10, 2012.
Current Economic Condition.
The State of New York (New York), which boasts the third-largest economy among the 50 states, continues to emerge from the effects of a nationwide recession. The most recent economic data indicate that the pace of New York employment growth remains healthy, and New Yorks Division of the Budget forecasts economic growth to be just above 3 percent by the latter half of 2013. However, New York is subject to many of the same downside risks that apply to the national economy, including slowing global growth and the European sovereign debt crisis. As the nations financial capital, New York is also especially sensitive to credit and equity market volatility, which pose a high degree of uncertainty for New Yorks fiscal condition and recovery outlook.
In its report from May 2012 (updated through August 2012), New Yorks Division of the Budget noted that tax receipts through June 2012 were 2.6 percent below levels in the prior fiscal year, which largely reflect the impact of tax-law changes
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and a large non-recurring audit recovery in the first quarter of 2012. After controlling for the impact of tax law changes, base tax revenue is expected to grow by 6.1 percent for 2013 and 5.6 percent for 2014.
However, weak and unsettled economic conditions around the world, together with a push for broader regulation of the financial environment, have the potential to negatively affect the profitability of New Yorks financial services industry, which is a major source of New York tax revenue. In particular, market volatility and increased regulation may result in lower bonuses on Wall Street in the future, which in turn may reduce a major segment of income subject to taxation and depress the level of economic activity generated by the spending of those earnings. Similarly, both financial sector income and taxable capital gains realization may be negatively affected if equity markets fail to grow as anticipated.
Population and Employment . New York ranks third among the 50 states in terms of population. According to the 2010 U.S. Census, New Yorks 2010 population was 19.4 million, an increase from 19 million in 2000.
As of May 2012, New Yorks Division of the Budget anticipated a state unemployment rate of 8.0 percent for 2012, compared with a national unemployment rate of 8.1 percent. As of August 2012, total state employment was projected to grow by 1.2 percent for 2012, with private sector employment growth of 1.8 percent.
State Budget.
New Yorks budget process is governed by the New York constitution, with additional details and actions prescribed by New York law and practices established over time . The New York constitution requires the Governor to submit a budget that is balanced on a cash basis in the General Fund, which receives the majority of New York taxes and all income not earmarked for a particular program or activity.
New York receives revenues from taxes, fees, charges for state-provided services, Federal grants, and other miscellaneous sources. General Fund receipts, including transfers from other funds, are estimated to total $58.9 billion in 2013. Tax receipts in the two fiscal years following 2014 are expected to grow consistently with the projected moderate growth in both the New York and national economies.
New York expends money on a variety of programs and services. Major categories of operating disbursements include healthcare and Medicaid, higher education (including subsidization of the State University of New York and City University of New York systems), criminal justice and public safety, school aid, transportation, and mental hygiene programs. General Fund spending is expected to total $59.2 billion in 2013, an increase of 4.8 percent over 2012 results. State spending is projected to grow at an average annual rate of 3.5 percent for fiscal years 2013 through 2016, driven by target growth rates for Medicaid and education spending, and including the effect of national health care reform on New York health care costs.
New York is also responsible for the payment of pension benefits for public employees. Recent market volatility and declines in the market value of many equity investments have negatively affected the assets held by New Yorks retirement systems. As a result, contribution rate increases are expected for fiscal years 2014 and 2015.
Based on the current economic outlook, as well as actual operating results through the first half of 2012, New Yorks Division of the Budget estimates that New York will end fiscal year 2013 with a General Fund balance of $1.5 billion, a decrease of $345 million from the estimate included in the enacted budget financial plan.
Implementation of New Yorks current financial plan is dependent on the states ability to market its bonds successfully. New York finances much of its capital spending from the General Fund, which it reimburses with proceeds from the sale of general obligation or other state-supported bonds. New Yorks inability to sell bonds at the levels or on the timetable expected may adversely affect the states overall cash position and capital funding plan. The success of projected public sales will be dependent on prevailing market conditions.
Local Considerations.
New Yorks fiscal demands may be affected by the fiscal condition of New York City, which relies in part on state aid to balance its budget and meet its cash requirements. In addition, certain localities outside New York City have experienced financial problems and have received state assistance during the last several state fiscal years . While a relatively infrequent practice, deficit financing has become more common in recent years.
Local assistance grants include payments to local governments, school districts, health care providers, and other local entities, as well as financial assistance to, or on behalf of, individuals, families, and nonprofit organizations . Expenditures in the form of aid to local governments for their general purposes (and to school districts and municipalities for specific purposes such as education and social services) are made from New Yorks General Fund. These payments are limited under the New York constitution to appropriations in force. Local assistance spending is estimated to comprise 65 percent of total operating funds spending for fiscal year 2013.
Statement of Additional Information September 1, 2014 | B-7 |
Debt Service.
New York pays debt service on all outstanding state-supported bonds . These include general obligation bonds, for which New York is constitutionally obligated to pay debt service, as well as bonds issued by New York public authorities. Public authorities refer to certain of New Yorks public benefit corporations such as the Empire State Development Corporation and the New York State Thruway Authority which are not subject to the constitutional restrictions on the incurrence of debt that apply to New York itself and may issue bonds and notes within the amounts and restrictions set forth in legislative authorization. New Yorks access to the public credit markets could be impaired and the market price of its outstanding debt may be materially and adversely affected if its public authorities were to default on their respective obligations .
Total debt service is projected to be $6.1 billion for 2013, of which $1.6 billion is expected to be paid from the General Fund for general obligations and service contract bonds, and $4.5 billion of which is expected to service other state-supported bonds.
The Debt Reform Act of 2000 restricts the issuance of state-supported debt to capital purposes only and limits such debt to a maximum term of 30 years. Under the Debt Reform Act, new state-supported debt issued since April 1, 2000 is limited to 4 percent of state personal income, while new debt service costs are limited to 5 percent of all Funds receipts .
Impact of Hurricane Sandy.
In October 2012, a powerful storm known as Hurricane Sandy struck portions of the Northeast, causing severe and widespread damage along the Atlantic seaboard. While preliminary estimates assess the damage at roughly $50 billion, the full economic impact of Hurricane Sandy may not be known for some time. New York was particularly hard hit by Hurricane Sandy, and it is possible that the damage caused by the storm, together with the related costs of long-term rebuilding efforts, will adversely affect the credit quality of New York municipal securities.
Bond Ratings.
As of February 2013, New Yorks general obligation bonds were rated Aa2 by Moodys Investors Service, Inc. (Moodys), AA by Standard & Poors Ratings Services (S&P), and AA by Fitch Ratings (Fitch). It is not possible to determine whether, or the extent to which, Moodys, S&P or Fitch will change such ratings in the future. Ratings assigned to individual Municipal Obligations may vary.
Statement of Additional Information September 1, 2014 | B-8 |
Proxy Voting Policy
Columbia Management Investment Advisers, LLC
Proxy Voting Guidelines
Effective January 1, 2012
Set forth on the following pages are guidelines adopted and used by Columbia Management Investment Advisers, LLC (the Adviser, We, Us or Our) in voting proxies (the Guidelines). The Guidelines are organized by issue and present certain factors that may be considered in making proxy voting determinations. The Adviser may, in exercising its fiduciary discretion, determine to vote any proxy in a manner contrary to these Guidelines.
Statement of Additional Information September 1, 2014 | C-1 |
Directors, Boards, Committees
Elect Directors
In a routine election of directors, the Adviser generally votes FOR the slate nominated by the nominating committee of independent directors, who are in the best position to know what qualifications are needed for each director to contribute to an effective board. The Adviser generally will WITHHOLD support from a nominee who fails to meet one or more of the following criteria:
Independence A nominee who is deemed an affiliate of the company by virtue of a material business, familial or other relationship with the company but is otherwise not an employee.
Attendance A nominee who failed to attend at least 75% of the boards meetings.
Over Boarding A nominee who serves on more than four other public company boards or an employee director nominee who serves on more than two other public company boards.
Committee Membership A nominee who has been assigned to the audit, compensation, nominating, or governance committee if that nominee is not independent of management, or if the nominee does not meet the specific independence and experience requirements for audit committees or the independence requirements for compensation committees.
Audit Committee Chair A nominee who serves as audit committee chair where the committee failed to put forth shareholder proposals for ratification of auditors.
Board Independence A nominee of a company whose board as proposed to be constituted would have more than one-third of its members from management.
Interlocking Directorship A nominee who is an executive officer of another company on whose board one of the companys executive officers sits.
Poor Governance A nominee involved with options backdating, financial restatements or material weakness in controls, approving egregious compensation, or who has consistently disregarded the interests of shareholders.
The Adviser will vote on a CASE-BY-CASE basis on any director nominee who meets the aforementioned criteria but whose candidacy has otherwise been identified by the third party research provider as needing further consideration for any reason not identified above.
In the case of contested elections, the Adviser will vote on a CASE-BY-CASE basis, taking into consideration the above criteria and other factors such as the background of the proxy contest, the performance of the company, current board and management, and qualifications of nominees on both slates.
Shareholder Nominations for Director
The Adviser will vote on a CASE-BY-CASE basis for shareholder-nominated candidates for director, taking into account various factors including, but not limited to: company performance, the circumstances compelling the nomination by the shareholder, composition of the incumbent board, and the criteria listed above the Adviser uses to evaluate nominees.
Shareholder Nominations for Director Special Criteria
The Adviser generally votes in accordance with recommendations made by its third party research provider, which are typically based on the view that board nominating committees are responsible for establishing and implementing policies regarding the composition of the board and are therefore in the best position to make determinations with respect to special nominating criteria.
Director Independence and Committees
The Adviser generally will vote FOR proposals that require all members of a boards key committees (audit, compensation, nominating or governance) be independent from management.
Independent Board Chair / Lead Director
The Adviser generally will vote FOR proposals supporting an independent board chair or lead director and FOR the separation of the board chair and CEO roles, as independent board leaders foster the effectiveness of the independent directors and ensure appropriate oversight of management.
Statement of Additional Information September 1, 2014 | C-2 |
Removal of Directors
The Adviser generally will vote FOR proposals that amend governing documents to grant or restore shareholder ability to remove directors with cause, and AGAINST proposals that provide directors may be removed only by supermajority vote. The Adviser will vote on a CASE-BY-CASE basis on proposals calling for removal of specific directors.
Board Vacancies
The Adviser generally votes in accordance with recommendations made by its third party research provider in the case of vacancies filled by continuing directors, taking into account factors including whether the proposal is in connection with a proxy contest or takeover situation.
Cumulative Voting
In the absence of proxy access rights or majority voting, the Adviser generally will vote FOR the restoration or provision for cumulative voting and AGAINST its elimination.
Majority Voting
The Adviser generally will vote FOR amendments to governing documents that provide that nominees standing for election to the board must receive a majority of votes cast in order to be elected to the board.
Number of Directors
The Adviser generally will vote FOR amendments to governing documents that provide directors the authority to adjust the size of the board to adapt to needs that may arise.
Term Limits
The Adviser generally will vote AGAINST proposals seeking to establish a limit on director terms or mandatory retirement.
General Corporate Governance
Right to Call a Special Meeting
The Adviser generally votes in accordance with recommendations made by its third party research provider, which typically recommends votes FOR adoption, considering factors such as proposed ownership threshold, company size, and shareholder ownership, but will not support proposals allowing for investors with less than 10% ownership to call a special meeting.
Eliminate or Restrict Right to Call Special Meeting
The Adviser will generally vote AGAINST proposals to eliminate the right of shareholders to call special meetings.
Lead Independent Director Right to Call Special Meeting
The Adviser will generally vote FOR governance document amendments or other proposals which give the lead independent director the authority to call special meetings of the independent directors at any time.
Adjourn Meeting
The Adviser will vote on a CASE-BY-CASE basis on adjournment proposals and generally in the same direction as the primary proposal (i.e., if supporting the primary proposal, favor adjournment; if not supporting the primary proposal, oppose adjournment).
Other Business
The Adviser generally will vote AGAINST proposals seeking to give management the authority to conduct or vote on other business at shareholder meetings on the grounds that shareholders not present at the meeting would be unfairly excluded from such deliberations.
Eliminate or Restrict Action by Written Consent
The Adviser will generally vote AGAINST proposals to eliminate the right of shareholders to act by written consent since it may be appropriate to take such action in some instances.
Statement of Additional Information September 1, 2014 | C-3 |
Vote Unmarked Proxies
The Adviser generally will vote FOR proposals prohibiting voting of unmarked proxies in favor of management.
Proxy Contest Advance Notice
The Adviser generally will vote AGAINST proposals to amend governing documents that require advance notice for shareholder proposals or director nominees beyond notice that allows for sufficient time for company response, SEC review, and analysis by other shareholders.
Minimum Stock Ownership
The Adviser will vote on a CASE-BY-CASE basis on proposals regarding minimum stock ownership levels.
Director and Officer Indemnification
The Adviser will generally vote FOR the provision of a maximum dollar amount that can be obtained through the course of legal action from a director or officer who acts in good faith and does not benefit from a transaction.
Confidential Voting
The Adviser generally will vote FOR actions that ensure all proxies, ballots, and voting tabulations which identify shareholders be kept confidential, except where disclosure is mandated by law. The Adviser supports the proposal to minimize pressure on shareholders, particularly employee shareholders.
Miscellaneous Governing Document Amendments
The Adviser generally will vote FOR bylaw or charter changes that are of a housekeeping nature (e.g., updates or corrections).
Change Company Name
The Adviser will generally vote FOR routine business matters such as changing the companys name.
Approve Minutes
The Adviser will generally vote FOR routine procedural matters such as approving the minutes of a prior meeting.
Change Date/Time/Location of Annual Meeting
The Adviser will vote in accordance with the recommendation of the third-party research provider on proposals to change the date, time or location of the companys annual meeting of shareholders.
Approve Annual, Financial and Statutory Reports
The Adviser generally will vote FOR proposals to approve the annual reports and accounts, financial and statutory reports, provided companies required to comply with U.S. securities laws have included the certifications required by the Sarbanes Oxley Act of 2002.
Compensation
Approve or Amend Omnibus Equity Compensation Plan
The Adviser generally votes in accordance with recommendations made by its third party research provider, which typically recommends votes FOR adoption or amendments to omnibus (general) equity compensation plans for employees or non-employee directors if they are reasonable and consistent with industry and country standards, and AGAINST compensation plans that substantially dilute ownership interest in a company, provide participants with excessive awards, or have objectionable structural features.
Approve or Amend Stock Option Plan
The Adviser generally votes in accordance with recommendations made by its third party research provider, which are typically based on factors including cost, size, and pattern of grants in comparison to peer groups, history of repricing, and grants to senior executives and non-employee directors.
Statement of Additional Information September 1, 2014 | C-4 |
Approve or Amend Employee Stock Purchase Plan
The Adviser generally votes in accordance with recommendations made by its third party research provider, which are typically based on factors including the plans cost to shareholders, whether those costs are in line with the companys peers plans, and whether the plan requires shareholder approval within five years.
Approve or Amend Performance-Based 162(m) Compensation Plan
The Adviser generally votes in accordance with recommendations made by its third party research provider, which are typically based on factors that consider the goal of the plan and in particular the linkage between potential payments to senior executives and the attainment of preset performance-based metrics.
Approve or Amend Restricted Stock Plan
The Adviser generally votes in accordance with recommendations made by its third party research provider, which considers such factors as the balance of all equity grants and awards, the term and other restrictions in place for restricted stock.
Stock Option Repricing or Exchanges
The Adviser generally votes in accordance with recommendations made by its third party research provider on matters relating to the repricing of stock options, which are typically based on factors such as whether the amending terms lead to a reduction in shareholder rights, allow the plan to be amended without shareholder approval, or change the terms to the detriment of employee incentives such as excluding a certain class or group of employees. The Adviser generally will vote FOR proposals to put stock option repricings to a shareholder vote.
Performance-Based Stock Options
The Adviser will vote on a CASE-BY-CASE basis regarding proposals urging that stock options be performance-based rather than tied to the vagaries of the stock market.
Ban Future Stock Option Grants
The Adviser generally will vote AGAINST proposals seeking to ban or eliminate stock options in equity compensation plans as such an action would preclude the company from offering a balanced compensation program.
Require Stock Retention Period
The Adviser generally will vote FOR proposals requiring senior executives to hold stock obtained by way of a stock option plan for a minimum of three years.
Require Approval of Extraordinary Benefits
The Adviser generally will vote FOR proposals specifying that companies disclose any extraordinary benefits paid or payable to current or retired senior executives and generally will vote AGAINST proposals requiring shareholder approval of any such extraordinary benefits.
Pay for Performance
The Adviser will vote on a CASE-BY-CASE basis regarding proposals seeking to align executive compensation with shareholders interests.
Say on Pay
The Adviser generally votes in accordance with recommendations made by its third party research provider, taking into consideration the companys pay for performance results and certain elements of the Compensation Discussion and Analysis disclosure.
Executive Severance Agreements
The Adviser generally votes in accordance with recommendations made by its third party research provider on these proposals regarding approval of specific executive severance arrangements in the event of change in control of a company or due to other circumstances.
Statement of Additional Information September 1, 2014 | C-5 |
Approve or Amend Deferred Compensation Plans for Directors
The Adviser generally will vote FOR approval or amendments to deferred compensation plans for non-employee directors, so that they may defer compensation earned until retirement.
Set Director Compensation
The Adviser generally will vote AGAINST proposals that seek to limit director compensation or mandate that compensation be paid solely in shares of stock.
Director Retirement Plans
The Adviser will generally vote AGAINST the adoption or amendment of director retirement plans on the basis that directors should be appropriately compensated while serving and should not view service on a board as a long-term continuing relationship with a company.
Business Entity and Capitalization
Common or Preferred Stock Increase in Authorized Shares or Classes
The Adviser will vote on a CASE-BY-CASE basis regarding proposals to increase authorized shares of common stock or to add a class of common stock, taking into consideration the companys capital goals that may include stock splits, stock dividends, or financing for acquisitions or general operations. With respect to proposals seeking to increase authorized shares of preferred stock, to add a class of preferred stock, to authorize the directors to set the terms of the preferred stock or to amend the number of votes per share of preferred stock, the Adviser will vote on a CASE-BY-CASE basis on the grounds that such actions may be connected to a shareholder rights plan that the Adviser also will consider on a CASE-BY-CASE basis.
Common or Preferred Stock Decrease in Authorized Shares or Classes
The Adviser generally will vote FOR proposals seeking to decrease authorized shares of common or preferred stock or the elimination of a class of common or preferred stock.
Common Stock Change in Par Value
The Adviser generally will vote FOR proposals to change the par value of the common stock, provided that the changes do not cause a diminution in shareholder rights.
Authorize Share Repurchase Program
The Adviser generally will vote FOR proposals to institute or renew open market share repurchase plans in which all shareholders may participate on equal terms.
Stock Splits
The Adviser generally will vote FOR stock split proposals on the grounds that they intended to encourage stock ownership of a company.
Private Placements, Conversion of Securities, Issuance of Warrants or Convertible Debentures
The Adviser will generally vote FOR the issuance of shares for private placements, the conversion of securities from one class to another, and the issuance of warrants or convertible debentures on the grounds that such issuances may be necessary and beneficial for the financial health of the company and may be a low cost source of equity capital. The Adviser will generally vote AGAINST any such issuance or related action if the proposal would in any way result in new equity holders having superior voting rights, would result in warrants or debentures, when exercised, holding in excess of 20 percent of the currently outstanding voting rights, or if the proposal would in any way diminish the rights of existing shareholders.
Issuance of Equity or Equity-Linked Securities without Subscription Rights (Preemptive Rights)
The Adviser generally will vote FOR proposals that seek shareholder approval of the issuance of equity, convertible bonds or other equity-linked debt instruments, or to issue shares to satisfy the exercise of such securities that are free of subscription (preemptive) rights on the grounds that companies must retain the ability to issue such securities for purposes of raising capital. The Adviser generally will vote AGAINST any proposal where dilution exceeds 20 percent of the companys outstanding capital.
Statement of Additional Information September 1, 2014 | C-6 |
Recapitalization
The Adviser generally will vote FOR recapitalization plans that combine two or more classes of stock into one class, or that authorize the company to issue new common or preferred stock for such plans. The Adviser generally will vote AGAINST recapitalization plans that would result in the diminution of rights for existing shareholders.
Merger Agreement
The Adviser will vote on a CASE-BY-CASE basis on proposals seeking approval of a merger or merger agreement and all proposals related to such primary proposals, taking into consideration the particular facts and circumstances of the proposed merger and its potential benefits to existing shareholders.
Going Private
The Adviser will vote on a CASE-BY-CASE basis on proposals that allow listed companies to de-list and terminate registration of their common stock, taking into consideration the cash-out value to shareholders, and weighing the value in continuing as a publicly traded entity.
Reincorporation
The Adviser will vote on a CASE-BY-CASE basis on reincorporation proposals, taking into consideration whether financial benefits (e.g., reduced fees or taxes) likely to accrue to the company as a result of a reincorporation or other change of domicile outweigh any accompanying material diminution of shareholder rights. The Adviser will generally vote AGAINST the proposal unless the long-term business reasons for doing so are valid. The Adviser will generally vote FOR proposals to consider reincorporating in the United States if a company left the country for the purpose of avoiding taxes.
Bundled Proposals
The Adviser generally votes in accordance with recommendations made by its third party research provider on bundled or otherwise conditioned proposals, which are determined depending on the overall economic effects to shareholders.
Defense Mechanisms
Shareholder Rights Plan (Poison Pill)
The Adviser will vote on a CASE-BY-CASE basis regarding management proposals seeking ratification of a shareholder rights plan, including a net operating loss (NOL) shareholder rights plan, or stockholder proposals seeking modification or elimination of any existing shareholder rights plan.
Supermajority Voting
The Adviser generally will vote FOR the elimination or material diminution of provisions in company governing documents that require the affirmative vote of a supermajority of shareholders for approval of certain actions, and generally will vote AGAINST the adoption of any supermajority voting clause.
Control Share Acquisition Provisions
The Adviser generally will vote FOR proposals to opt out of control share acquisition statutes and will generally vote AGAINST proposals seeking approval of control share acquisition provisions in company governing documents on the grounds that such provisions may harm long-term share value by effectively entrenching management. The ability to buy shares should not be constrained by requirements to secure approval of the purchase from other shareholders.
Anti-Greenmail
The Adviser generally will vote FOR proposals to adopt anti-greenmail governing document amendments or to otherwise restrict a companys ability to make greenmail payments.
Classification of Board of Directors
The Adviser generally will vote FOR proposals to declassify a board and AGAINST proposals to classify a board, absent special circumstances that would indicate that shareholder interests are better served by voting to the contrary.
Statement of Additional Information September 1, 2014 | C-7 |
Auditors
Ratify or Appoint Auditors
The Adviser generally votes in accordance with recommendations made by its third party research provider, which typically recommends votes FOR ratification or appointment except in situations where there are questions about the relative qualification of the auditors, conflicts of interest, auditor involvement in significant financial restatements, option backdating, material weaknesses in controls, or situations where independence has been compromised.
Prohibit or Limit Auditors Non-Audit Services
The Adviser generally votes in accordance with recommendations made by its third party research provider, which typically recommends votes AGAINST these proposals since it may be necessary or appropriate for auditors to provide a service related to the business of a company and that service will not compromise the auditors independence. In addition, Sarbanes-Oxley legislation spells out the types of services that need pre-approval or would compromise independence.
Indemnification of External Auditor
The Adviser will generally vote AGAINST proposals to indemnify external auditors on the grounds that indemnification agreements may limit pursuit of legitimate legal recourse against the audit firm.
Indemnification of Internal Auditor
The Adviser will generally vote FOR the indemnification of internal auditors, unless the costs associated with the approval are not disclosed.
Social and Environmental
Disclose Social Agenda
The Adviser generally will ABSTAIN from voting on proposals that seek disclosure, often in the form of a report, on items such as military contracts or sales, environmental or conservation initiatives, business relationships with foreign countries, or animal welfare for the following reasons: a) our clients are likely to have different views of what is a socially responsible policy, b) whether social responsibility issues other than those mandated by law should be the subject of corporate policy, or c) because the impact of such disclosure on share value can rarely be anticipated with any degree of confidence.
Socially Responsible Investing
The Adviser generally will ABSTAIN from voting on proposals that seek to have a company take a position on social or environmental issues, for the reasons cited under Disclose Social Agenda above.
Prohibit or Disclose Contributions and Lobbying Expenses
The Adviser generally votes in accordance with recommendations made by its third party research provider, which typically considers the proposal in the context of the companys current disclosures, Federal and state laws, and whether the proposal is in shareholders best interests.
Disclose Prior Government Service
The Adviser generally will ABSTAIN from voting on proposals seeking the company to furnish a list of high-ranking employees who served in any governmental capacity over the last five years.
Change in Operations or Products Manufactured or Sold
The Adviser generally will ABSTAIN from voting on proposals seeking to change the way a company operates (e.g., protect human rights, sexual orientation, stop selling tobacco products, move manufacturing operations to another country, etc.).
Executive Compensation Report
The Adviser generally will vote AGAINST proposals seeking companies to issue a report on linkages between executive compensation and financial, environmental and social performance on the grounds that executive compensation is a business matter for the companys board to consider.
Statement of Additional Information September 1, 2014 | C-8 |
Pay Equity
The Adviser will generally vote AGAINST proposals seeking a cap on the total pay and other compensation of its executive officers to no more than a specified multiple of the pay of the average employee of the company.
Foreign Issues
Foreign Issues- Directors, Boards, Committees
Approve Discharge of Management (Supervisory) Board
The Adviser generally votes in accordance with recommendations made by its third party research provider, which typically recommends votes FOR approval of the board, based on factors including whether there is an unresolved investigation or whether the board has participated in wrongdoing. This is a standard request in Germany and discharge is generally granted unless a shareholder states a specific reason for withholding discharge and intends to take legal action.
Announce Vacancies on Management (Supervisory) Board
The Adviser generally will vote FOR proposals requesting shareholder approval to announce vacancies on the board, as is required under Dutch law.
Approve Director Fees
The Adviser generally votes in accordance with recommendations made by its third party research provider on proposals seeking approval of director fees.
Foreign Issues- General Corporate Governance
Digitalization of Certificates
The Adviser generally will vote FOR proposals seeking shareholder approval to amend a companys articles of incorporation to eliminate references to share certificates and beneficial owners, and to make other related changes to bring the articles in line with recent regulatory changes for Japanese companies.
Authorize Filing of Required Documents and Other Formalities
The Adviser generally will vote FOR proposals requesting shareholders authorize the holder of a copy of the minutes of the general assembly to accomplish any formalities required by law, as is required in France.
Propose Publications Media
The Adviser generally will vote FOR proposals requesting shareholders approve the designation of a newspaper as the medium to publish the companys meeting notice, as is common in Chile and other countries.
Clarify Articles of Association or Incorporation
The Adviser generally will vote FOR proposals seeking shareholder approval of routine housekeeping of the companys articles, including clarifying items and deleting obsolete items.
Update Articles of Association or Incorporation with Proxy Results
The Adviser generally will vote FOR proposals requesting shareholders approve changes to the companys articles of association or incorporation to reflect the results of a proxy vote by shareholders, which is a routine proposal in certain countrys proxies.
Conform Articles of Association or Incorporation to Law or Stock Exchange
The Adviser generally will vote FOR proposals requesting shareholder approval to amend the articles of association or incorporation to conform to new requirements in local or national law or rules established by a stock exchange on which its stock is listed.
Statement of Additional Information September 1, 2014 | C-9 |
Authorize Board to Ratify and Execute Approved Resolutions
The Adviser generally will vote FOR proposals requesting shareholder approval to authorize the board to ratify and execute any resolutions approved at the meeting.
Prepare and Approve List of Shareholders
The Adviser generally votes FOR proposals requesting shareholder approval for the preparation and approval of the list of shareholders entitled to vote at the meeting, which is a routine formality in European countries.
Authorize Company to Engage in Transactions with Related Parties
The Adviser generally will vote FOR proposals requesting shareholder approval for the company, its subsidiaries, and target associated companies to enter into certain transactions with persons who are considered interested parties as defined in Chapter 9A of the Listing Manual of the Stock Exchange of Singapore (SES), as the SES related-party transaction rules are fairly comprehensive and provide shareholders with substantial protection against insider trading abuses.
Amend Articles to Lower Quorum Requirement for Special Business
The Adviser generally will vote on a CASE-BY-CASE basis on proposals seeking to amend the articles to lower the quorum requirement to one-third for special business resolutions at a shareholder meeting, which is common when certain material transactions such as mergers or acquisitions are to be considered by shareholders.
Change Date/Location of Annual Meeting
The Adviser will vote in accordance with the recommendation of the third-party research provider on proposals to change the date, time or location of the companys annual meeting of shareholders.
Elect Chairman of the Meeting
The Adviser generally will vote FOR proposals requesting shareholder approval to elect the chairman of the meeting, which is a routine meeting formality in certain European countries.
Authorize New Product Lines
The Adviser generally will vote FOR proposals requesting shareholder approval to amend the companys articles to allow the company to expand into new lines of business.
Approve Financial Statements, Directors Reports and Auditors Reports
The Adviser generally will vote FOR proposals that request shareholder approval of the financial statements, directors reports, and auditors reports.
Foreign Issues- Compensation
Approve Retirement Bonuses for Directors/Statutory Auditors
The Adviser generally will ABSTAIN from voting on proposals requesting shareholder approval for the payment of retirement bonuses to retiring directors and/or statutory auditors, which is a standard request in Japan, because information to justify the proposal is typically insufficient.
Approve Payment to Deceased Directors/Statutory Auditors Family
The Adviser generally will ABSTAIN from voting on proposals requesting shareholder approval for the payment of a retirement bonus to the family of a deceased director or statutory auditor, which is a standard request in Japan, because information to justify the proposal is typically insufficient.
Foreign Issues- Business Entity, Capitalization
Set or Approve the Dividend
The Adviser generally will vote FOR proposals requesting shareholders approve the dividend rate set by management.
Statement of Additional Information September 1, 2014 | C-10 |
Approve Allocation of Income and Dividends
The Adviser generally will vote FOR proposals requesting shareholders approve a boards allocation of income for the current fiscal year, as well as the dividend rate.
Approve Scrip (Stock) Dividend Alternative
The Adviser generally will vote FOR proposals requesting shareholders authorize dividend payments in the form of either cash or shares at the discretion of each shareholder, provided the options are financially equal. The Adviser generally will vote AGAINST proposals that do not allow for a cash option unless management demonstrates that the cash option is harmful to shareholder value.
Authorize Issuance of Equity or Equity-Linked Securities
The Adviser generally will vote FOR proposals requesting shareholder approval to permit the board to authorize the company to issue convertible bonds or other equity-linked debt instruments or to issue shares to satisfy the exercise of such securities.
Authorize Issuance of Bonds
The Adviser generally will vote FOR proposals requesting shareholder approval granting the authority to the board to issue bonds or subordinated bonds.
Authorize Capitalization of Reserves for Bonus Issue or Increase in Par Value
The Adviser generally will vote FOR proposals requesting shareholder approval to increase authorized stock by capitalizing various reserves or retained earnings, which allows shareholders to receive either new shares or a boost in the par value of their shares at no cost.
Increase Issued Capital for Rights Issue
The Adviser generally will vote FOR proposals requesting shareholder approval to increase to issued capital in order to offer a rights issue to current registered shareholders, which provides shareholders the option of purchasing additional shares of the companys stock, often at a discount to market value, and the company will use the proceeds from the issue to provide additional financing.
Board Authority to Repurchase Shares
The Adviser generally will vote FOR proposals requesting that a board be given the authority to repurchase shares of the company on the open market, with such authority continuing until the next annual meeting.
Authorize Reissuance of Repurchased Shares
The Adviser generally will vote FOR proposals requesting shareholder approval to reissue shares of the companys stock that had been repurchased by the company at an earlier date.
Approve Payment of Corporate Income Tax
The Adviser generally will vote FOR proposals seeking approval for the use by a company of its reserves in order to pay corporate taxes, which is common practice in Europe.
Cancel Pre-Approved Capital Issuance Authority
The Adviser generally will vote FOR proposals requesting shareholders cancel a previously approved authority to issue capital, which may be necessary in Denmark as companies there do not have authorized but unissued capital that they may issue as needed like their counterparts in other countries.
Allotment of Unissued Shares
The Adviser generally will vote FOR proposals requesting that shareholders give the board the authority to allot or issue unissued shares.
Statement of Additional Information September 1, 2014 | C-11 |
Authority to Allot Shares for Cash
The Adviser generally will vote FOR proposals requesting that shareholders give the board the ability to allot a set number of authorized but unissued shares for the purpose of employee share schemes and to allot equity securities for cash to persons other than existing shareholders up to a limited aggregate nominal amount (a percentage of the issued share capital of the company).
Foreign Issues- Defense Mechanisms
Authorize Board to Use All Outstanding Capital
The Adviser will vote on a CASE-BY-CASE basis on proposals requesting shareholders authorize the board, for one year, to use all outstanding capital authorizations in the event that a hostile public tender or exchange offer is made for the company, which is a common anti-takeover measure in France similar to the way U.S. companies use preferred stock.
Foreign Issues- Auditors
Approve Special Auditors Report
The Adviser generally will vote FOR proposals that present shareholders of French companies, as required by French law, with a special auditors report that confirms the presence or absence of any outstanding related party transactions. At a minimum, such transactions (with directors or similar parties) must be previously authorized by the board. This part of the French commercial code provides shareholders with a mechanism to ensure an annual review of any outstanding related party transactions.
Appoint Statutory Auditor
The Adviser generally will vote FOR proposals requesting shareholder approval to appoint the internal statutory auditor, designated as independent internal auditor as required by the revised Japanese Commercial Code.
Foreign Issues- Social and Environmental
Authorize Company to Make EU Political Organization Donations
The Adviser generally will ABSTAIN from voting on proposals that seek authorization for the company to make EU political organization donations and to incur EU political expenditures.
Statement of Additional Information September 1, 2014 | C-12 |
Series of CFST, CFST I and CFST II
Below are the series of CFST, CFST I and CFST II. In prospectuses dated prior to June 25, 2014, series of CFST and CFST I are referred to as Legacy Columbia Funds and series of CFST II are referred to as Legacy RiverSource Funds.
Columbia Funds Series Trust
Columbia California Intermediate Municipal Bond Fund
Columbia Capital Allocation Moderate Aggressive Portfolio
Columbia Capital Allocation Moderate Conservative Portfolio
Columbia Convertible Securities Fund
Columbia Georgia Intermediate Municipal Bond Fund
Columbia International Value Fund
Columbia Large Cap Enhanced Core Fund
Columbia Large Cap Index Fund
Columbia LifeGoal ® Growth Portfolio
Columbia Marsico 21st Century Fund
Columbia Marsico Focused Equities Fund
Columbia Marsico Global Fund
Columbia Marsico Growth Fund
Columbia Marsico International Opportunities Fund
Columbia Maryland Intermediate Municipal Bond Fund
Columbia Masters International Equity Portfolio
Columbia Mid Cap Index Fund
Columbia Mid Cap Value Fund
Columbia Multi-Advisor International Equity Fund
Columbia North Carolina Intermediate Municipal Bond Fund
Columbia Overseas Value Fund
Columbia Select Large Cap Equity Fund
Columbia Short Term Bond Fund
Columbia Short Term Municipal Bond Fund
Columbia Small Cap Index Fund
Columbia Small Cap Value Fund II
Columbia South Carolina Intermediate Municipal Bond Fund
Columbia Virginia Intermediate Municipal Bond Fund
Columbia Funds Series Trust I
Active Portfolios ® Multi-Manager Alternative Strategies Fund
Active Portfolios ® Multi-Manager Core Plus Bond Fund
Active Portfolios ® Multi-Manager Growth Fund
Active Portfolios ® Multi-Manager Small Cap Equity Fund
CMG Ultra Short Term Bond Fund
Columbia Balanced Fund
Columbia Bond Fund
Columbia California Tax-Exempt Fund
Columbia Connecticut Intermediate Municipal Bond Fund
Columbia Contrarian Core Fund
Columbia Corporate Income Fund
Columbia Diversified Real Return Fund
Columbia Dividend Income Fund
Columbia Emerging Markets Fund
Columbia Global Dividend Opportunity Fund
Columbia Global Energy and Natural Resources Fund
Columbia Global Inflation-Linked Bond Plus Fund
Columbia Greater China Fund
Columbia High Yield Municipal Fund
Columbia Intermediate Bond Fund
Columbia Intermediate Municipal Bond Fund
Columbia International Bond Fund
Columbia Large Cap Growth Fund
Columbia Massachusetts Intermediate Municipal Bond Fund
Columbia Mid Cap Growth Fund
Columbia New York Intermediate Municipal Bond Fund
Columbia New York Tax-Exempt Fund
Columbia Oregon Intermediate Municipal Bond Fund
Columbia Pacific/Asia Fund
Columbia Real Estate Equity Fund
Columbia Risk Allocation Fund
Columbia Select Large Cap Growth Fund
Columbia Small Cap Core Fund
Columbia Small Cap Growth Fund I
Columbia Small Cap Value Fund I
Columbia Strategic Income Fund
Columbia Tax-Exempt Fund
Columbia Technology Fund
Columbia U.S. Treasury Index Fund
Columbia Value and Restructuring Fund
Columbia Funds Series Trust II
Active Portfolios Multi-Manager Value Fund
Columbia Absolute Return Currency and Income Fund
Columbia Absolute Return Enhanced Multi-Strategy Fund
Columbia Absolute Return Multi-Strategy Fund
Columbia Absolute Return Emerging Markets Macro Fund
Columbia AMT-Free Tax-Exempt Bond Fund
Columbia Asia Pacific ex-Japan Fund
Columbia Capital Allocation Aggressive Portfolio
Columbia Capital Allocation Conservative Portfolio
Columbia Capital Allocation Moderate Portfolio
Columbia Commodity Strategy Fund
Columbia Diversified Equity Income Fund
Columbia Dividend Opportunity Fund
Columbia Emerging Markets Bond Fund
Columbia Equity Value Fund
Columbia European Equity Fund
Columbia Flexible Capital Income Fund
Columbia Floating Rate Fund
Columbia Global Bond Fund
Columbia Global Equity Fund
Columbia Global Opportunities Fund
Columbia Global Infrastructure Fund
Columbia High Yield Bond Fund
Statement of Additional Information September 1, 2014 | D-1 |
Columbia Income Builder Fund
Columbia Income Opportunities Fund
Columbia Inflation Protected Securities Fund
Columbia Large Core Quantitative Fund
Columbia Large Growth Quantitative Fund
Columbia Large Value Quantitative Fund
Columbia Limited Duration Credit Fund
Columbia Marsico Flexible Capital Fund
Columbia Mid Cap Value Opportunity Fund
Columbia Minnesota Tax-Exempt Fund
Columbia Money Market Fund
Columbia Multi-Advisor Small Cap Value Fund
Columbia Select Large-Cap Value Fund
Columbia Select Smaller-Cap Value Fund
Columbia Seligman Communications and Information Fund
Columbia Seligman Global Technology Fund
Columbia Short-Term Cash Fund
Columbia U.S. Government Mortgage Fund
Statement of Additional Information September 1, 2014 | D-2 |
MORE INFORMATION ABOUT CHOOSING A SHARE CLASS
Class Y Changes to Share Class Eligibility
Effective June 25, 2014, Class Y shares of the Funds are available to any retirement plan that maintains a plan-level or omnibus account with the Fund (through the Transfer Agent).
Prior to June 25, 2014, Class Y shares of a Fund were available only to (i) omnibus retirement plans with plan assets of at least $10 million as of the date of funding the Fund account (without a minimum initial investment amount) and (ii) omnibus retirement plans with plan assets of less than $10 million as of the date of funding the Fund account, provided that such plans invest $500,000 or more in Class Y shares of the Fund. Effective June 25, 2014, these size and minimum initial investment requirements have been removed.
Prior to November 8, 2012, Class Y shares were offered only to certain former shareholders of series of the former Columbia Funds Institutional Trust (together, Former CFIT Shareholders). Former CFIT Shareholders who opened and funded a Class Y account with a Fund as of the close of business on November 7, 2012 may continue to make additional purchases of Class Y shares even if they do not satisfy the current eligibility requirements but may not establish new Class Y shares accounts and will not be eligible to exchange Class Y shares of a Fund into Class Y shares of other Funds. Former CFIT Shareholders may exchange Class Y shares of a Fund for Class Z shares of the same Fund or Class Z shares of another Fund, subject to applicable minimum investments.
Changes to Share Class Names
Effective October 25, 2012, Class R4 shares were renamed Class K shares. Effective October 31, 2012, Class R3 shares were renamed Class R4 shares. Prior to September 3, 2010, any Class R shares of a series of CFST II were known as Class R2 shares.
Front-End Sales Charge Reductions Accounts Eligible for Aggregation
The following accounts are eligible for account value aggregation for purposes of the right of accumulation and letters of intent as described in the prospectuses offering share classes subject to a front-end sales charge:
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Individual or joint accounts; |
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Roth and traditional Individual Retirement Accounts (IRAs), Simplified Employee Pension accounts (SEPs), Savings Investment Match Plans for Employees of Small Employers accounts (SIMPLEs) and Tax Sheltered Custodial Accounts (TSCAs); |
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Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors (UTMA) accounts for which you, your spouse, or your domestic partner is parent or guardian of the minor child; |
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Revocable trust accounts for which you or an immediate family member, individually, is the beneficial owner/grantor; |
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Accounts held in the name of your, your spouses, or your domestic partners sole proprietorship or single owner limited liability company or S corporation; |
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Qualified retirement plan assets, provided that you are the sole owner of the business sponsoring the plan, are the sole participant (other than a spouse) in the plan, and have no intention of adding participants to the plan; and |
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Investments in wrap accounts; |
provided that each of the accounts identified above is invested in Class A, Class B, Class C, Class E, Class F, Class T, Class W and/or Class Z shares of the Funds.
The following accounts are not eligible for account value aggregation:
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Accounts of pension and retirement plans with multiple participants, such as 401(k) plans (which are combined to reduce the sales charge for the entire pension or retirement plan and therefore are not used to reduce the sales charge for your individual accounts); |
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Accounts invested in Class I, Class K, Class R, Class R4, Class R5 and/or Class Y shares of the Funds; |
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Investments in 529 plans, donor advised funds, variable annuities, variable life insurance products, or managed separate accounts; |
Statement of Additional Information September 1, 2014 | S-1 |
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Charitable and irrevocable trust accounts; |
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Accounts holding shares of money market Funds that used the Columbia brand before May 1, 2010; and |
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Direct purchases of Columbia Money Market Fund shares. (Shares of Columbia Money Market Fund acquired by exchange from other Funds may be combined for letter of intent purposes.) |
Sales Charge Waivers
Front-End Sales Charge Waivers
The following categories of investors may buy Class A, Class E and Class T shares of the funds at net asset value, without payment of any front-end sales charge that would otherwise apply:
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Current or retired fund Board members, officers or employees of the funds or Columbia Management or its affiliates 1 ; |
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Current or retired Ameriprise Financial Services, Inc. financial advisors and employees of such financial advisors 1 ; |
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Registered representatives and other employees of affiliated or unaffiliated selling agents (and their immediate family members and related trusts or other entities owned by the foregoing) having a selling agreement with the Distributor 1 ; |
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Registered broker-dealer firms that have entered into a dealer agreement with the Distributor may buy Class A shares without paying a front-end sales charge for their investment account only; |
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Portfolio managers employed by subadvisers of the funds 1 ; |
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Partners and employees of outside legal counsel to the funds or the funds directors or trustees who regularly provide advice and services to the funds, or to their directors or trustees; |
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Direct rollovers (i.e., rollovers of fund shares and not reinvestments of redemption proceeds) from qualified employee benefit plans, provided that the rollover involves a transfer to Class A shares in the same fund; |
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Employees of Bank of America, its affiliates and subsidiaries; |
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Employees or partners of Columbia Wanger Asset Management, LLC and Marsico Capital Management, LLC (or their successors); |
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(For Class T shares only) Shareholders who (i) bought Galaxy fund Retail A shares at net asset value and received Class T shares in exchange for those shares during the Galaxy/Liberty fund reorganization; and (ii) continue to maintain the account in which the Retail A shares were originally bought; and Boston 1784 fund shareholders on the date that those funds were reorganized into Galaxy funds; |
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Separate accounts established and maintained by an insurance company which are exempt from registration under Section 3(c)(11); |
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At the funds discretion, front-end sales charges may be waived for shares issued in plans of reorganization, such as mergers, asset acquisitions and exchange offers, to which the fund is a party; and |
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In the Distributors discretion, on (i) purchases (including exchanges) of Class A shares in accounts of selling agents that have entered into agreements with the Distributor to offer fund shares to self-directed investment brokerage accounts that may or may not charge a transaction fee to customers and (ii) exchanges of Class Z shares of a fund for Class A shares of the fund. |
The following categories of investors may buy Class A shares of any eligible series of CFST II at net asset value, without payment of any front-end sales charge that would otherwise apply:
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Participants of eligible employee benefit plans including 403(b) plans for which Ameriprise Financial Services, Inc. (Ameriprise Financial Services) serves as broker-dealer, and the school district or group received a written proposal from Ameriprise Financial Services between November 1, 2007 and December 31, 2008 (each a Qualifying 403(b) Plan). In order for participants in one of these 403(b) plans to receive this waiver, at least one participant account of the 403(b) plan must have been funded at Ameriprise Financial Services prior to December 31, 2009. This waiver may be discontinued for any Qualifying 403(b) Plan, in the sole discretion of the Distributor, after December 31, 2009. |
Purchases of Class A, Class E and Class T shares may be made at net asset value if they are made as follows:
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With dividend or capital gain distributions from a fund or from the same class of another fund 2 ; |
Statement of Additional Information September 1, 2014 | S-2 |
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Through or under a wrap fee product or other investment product sponsored by a selling agent that charges an account management fee or other managed agency/asset allocation accounts or programs involving fee-based compensation arrangements that have or that clear trades through a selling agent that has a selling agreement with the Distributor; |
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Through state sponsored college savings plans established under Section 529 of the Internal Revenue Code; |
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Through banks, trust companies and thrift institutions, acting as fiduciaries; and |
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Through employee benefit plans created under section 401(a), 401(k), 457 and 403(b), and qualified deferred compensation plans, that have a plan level or omnibus account maintained with the fund or the Transfer Agent and transacts directly with the fund or the Transfer Agent through a third party administrator or third party recordkeeper; and |
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Including their spouses or domestic partners, children or step-children, parents, step-parents or legal guardians, and their spouses or domestic partners parents, step-parents, or legal guardians. |
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The ability to invest dividend and capital gain distributions from one Fund to another Fund may not be available to accounts held at all Selling Agents. |
Investors can also buy Class A shares without paying a sales charge if the purchase is made from the proceeds of a sale from any Columbia Fund Class A, B, C or T shares of another fund in the Columbia Funds Complex (other than Columbia Money Market Fund) within 90 days, up to the amount of the sales proceeds. In addition, shareholders of the money market fund series of BofA Funds Series Trust, which were formerly referred to as the Columbia Money Market Funds (the Former Columbia Money Market Funds), can also buy Class A shares of the Columbia Funds without paying a sales charge if the purchase is made from the proceeds of a sale of shares from a Former Columbia Money Market Fund within 90 days, up to the amount of the sales proceeds, provided that the proceeds are from the sale of shares of a Former Columbia Money Market Fund purchased on or before April 30, 2010. To be eligible for these reinstatement privileges the purchase must be made into an account for the same owner, but does not need to be into the same fund from which the shares were sold. The Transfer Agent, Distributor or their agents must receive a written reinstatement request within 90 days after the shares are sold and the purchase of Class A shares through this reinstatement privilege will be made at the NAV of such shares next calculated after the request is received in good order.
Restrictions may apply to certain accounts and certain transactions. The funds may change or cancel these terms at any time. Any change or cancellation applies only to future purchases. Unless you provide your financial advisor with information in writing about all of the factors that may count toward a waiver of the sales charge, there can be no assurance that you will receive all of the waivers for which you may be eligible. You should request that your financial advisor provide this information to the funds when placing your purchase order. For more information about the sales charge reductions and waivers described here, as well as additional categories of eligible investors, please see the applicable prospectus.
Contingent Deferred Sales Charge Waivers (Class A, Class B, Class C, Class E, Class F and Class T Shares)
For purposes of calculating a CDSC, the start of the holding period is generally the first day of the month in which your purchase was made. However, for purposes of calculating the CDSC on Class B shares of series of CFST II purchased on or before the close of business on September 3, 2010, the start of the holding period is the date your purchase was made.
Shareholders wont pay a CDSC on redemption of Class A, Class C and Class T shares:
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In the event of the shareholders death; |
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For which no sales commission or transaction fee was paid to an authorized selling agent at the time of purchase; |
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Purchased through reinvestment of dividend and capital gain distributions; |
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In an account that has been closed because it falls below the minimum account balance; |
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That result from required minimum distributions taken from retirement accounts upon the shareholders attainment of age 70 1 / 2 ; |
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That result from returns of excess contributions made to retirement plans or individual retirement accounts, so long as the selling agent returns the applicable portion of any commission paid by the Distributor; |
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Of Class A shares of a fund initially purchased by an employee benefit plan; |
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Other than Class A shares of a fund initially purchased by an employee benefit plan that are not connected with a plan level termination; |
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In connection with the funds Small Account Policy (as described in the applicable prospectus); and |
Statement of Additional Information September 1, 2014 | S-3 |
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At a funds discretion, issued in connection with plans of reorganization, including but not limited to mergers, asset acquisitions and exchange offers, to which the fund is a party. |
Shareholders wont pay a CDSC on redemption of Class B or Class F shares:
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In the event of the shareholders death; and |
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That result from required minimum distributions taken from retirement accounts upon the shareholders attainment of age 70 1 / 2 . |
Shareholders wont pay a CDSC on the following categories of redemptions of Class B or Class F shares purchased prior to September 7, 2010:
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Shares redeemed by health savings accounts sponsored by third party platforms, including those sponsored by Bank of America affiliates.* |
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Shares redeemed for medical payments that exceed 7.5% of income.* |
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Shares redeemed to pay for insurance by an individual who has separated from employment and who has received unemployment compensation under a federal or state program for at least twelve weeks.* |
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Redemptions of shares pursuant to a Systematic Withdrawal Plan (SWP) established with the Transfer Agent, to the extent that the sales do not exceed, on an annual basis, 12% of the accounts value as long as distributions are reinvested. Otherwise, a CDSC will be charged on SWP sales until this requirement is met. |
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For shares purchased prior to September 7, 2010, CDSCs may be waived on sales after the sole shareholder on an individual account or a joint tenant on a joint tenant account becomes disabled (as defined by Section 72(m)(7) of the Code). To be eligible for such a waiver: (i) the disability must arise after the account is opened and (ii) a letter from a physician must be signed under penalty of perjury stating the nature of the disability. If the account is transferred to a new registration and then shares are sold, the applicable CDSC will be charged.* |
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Shares redeemed in connection with loans from qualified retirement plans to shareholders.* |
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CDSCs may be waived on shares (except for Class B shares) sold by certain group retirement plans held in omnibus accounts. However, CDSCs may not be waived for Class C shares if the waiver would occur as a result of a plan-level termination. |
Below are additional categories of CDSC waivers for Class B and Class F shares of a series of CFST or CFST I purchased prior to September 7, 2010:
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Shares redeemed in connection with distributions from qualified retirement plans, government (Section 457) plans, individual retirement accounts or custodial accounts under Section 403(b)(7) of the Code following normal retirement or the attainment of 59 1 / 2 .** |
* | Fund investors and Selling Agents must inform the Fund or the Transfer Agent in writing that the Fund investor qualifies for the particular sales charge waiver and provide proof thereof. |
** | For direct trades on non-prototype retirement accounts where the date of birth of the Fund shareholder is not maintained, the shareholder or Selling Agent must inform the Fund or the Transfer Agent in writing that the Fund investor qualifies for the particular sales charge waiver and provide proof thereof. |
Shareholders wont pay a CDSC on the following categories of redemptions of Class B shares of a series of CFST II:
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Redemptions of Class B shares of a series of CFST II held in investment-only accounts (i.e., accounts for which Ameriprise Trust Company does not act as the custodian) at Ameriprise Financial Services on behalf of a trust for an employee benefit plan. |
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Redemptions of Class B shares of a series of CFST II held in individual retirement accounts or certain qualified plans, on or prior to June 12, 2009, such as Keogh plans, tax-sheltered custodial accounts or corporate pension plans where Ameriprise Trust Company is acting as custodian, provided that the shareholder is (i) at least 59 1 / 2 years old and taking a retirement distribution (if the sale is part of a transfer to an individual retirement account or qualified plan, or a custodian-to-custodian transfer, the CDSC will not be waived* or (ii) selling under an approved substantially equal periodic payment arrangement. |
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Class B shares of a series of CFST II held in individual retirement accounts and certain qualified plans where an Ameriprise Financial affiliate acts as selling agent that were purchased prior to September 7, 2010 and sold under an approved substantially equal periodic payment arrangement (applies to retirement accounts when a shareholder sets up |
Statement of Additional Information September 1, 2014 | S-4 |
an arrangement with the IRS). The Distributor, in its discretion, may grant a waiver to accounts held directly with the Transfer Agent or held at other selling agents under similar circumstances.** |
* | You must notify the Fund or the Transfer Agent prior to redeeming shares of the applicability of the CDSC waiver, but final decision of the applicability of the CDSC waiver is contingent on approval of the Fund or the Transfer Agent. |
** | Fund investors and selling and/or servicing agents must inform the Fund or the Transfer Agent in writing that the Fund investor qualifies for the particular sales charge waiver and provide proof thereof. |
Restrictions may apply to certain accounts and certain transactions. The Distributor may, in its sole discretion, authorize the waiver of the CDSC for additional classes of investors. The fund may change or cancel these terms at any time. Any change or cancellation applies only to future purchases. For more information about the sales charge reductions and waivers described here, as well as additional categories of eligible redemptions, please see the prospectuses.
Minimum Initial Investment in Class Z Shares
Class Z shares are available only to certain eligible investors, which are subject to different minimum initial investment requirements described in the prospectuses, as supplemented. In addition to the categories of Class Z investors described in the prospectuses, as supplemented, the minimum initial investment in Class Z shares is as follows:
There is no minimum initial investment in Class Z shares for any health savings account sponsored by a third party platform, including those sponsored by affiliates of Bank of America.
The minimum initial investment in Class Z shares for the following eligible investors is $1,000:
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Any persons employed as of April 30, 2010 by the Previous Adviser, Previous Distributor or Previous Transfer Agent and immediate family members of any of the foregoing who share the same address and any employee of the Investment Manager, Distributor or Transfer Agent and immediate family members of any of the foregoing who share the same address and are eligible to make new and subsequent purchases in Class Z shares through an individual retirement account. If you maintain your account with a financial intermediary, you must contact that financial intermediary each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
The minimum initial investment in Class Z shares for the following categories of eligible investors is $2,000:
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Any client of Bank of America or one of its subsidiaries buying shares through an asset management company, trust, fiduciary, retirement plan administration or similar arrangement with Bank of America or the subsidiary. |
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Any employee (or family member of an employee) of Bank of America or one of its subsidiaries. |
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Any investor buying shares through a Columbia Management state tuition plan organized under Section 529 of the Internal Revenue Code. |
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Any trustee or director (or family member of a trustee or director) of a fund distributed by the Distributor. |
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Any persons employed as of April 30, 2010 by the Previous Adviser, Previous Distributor or Previous Transfer Agent and immediate family members of any of the foregoing who share the same address and any employee of the Investment Manager, Distributor or Transfer Agent and immediate family members of any of the foregoing who share the same address and are eligible to make new and subsequent purchases in Class Z shares through a non-retirement account. If you maintain your account with a financial intermediary, you must contact that financial intermediary each time you seek to purchase shares to notify them that you qualify for Class Z shares. |
As described in the prospectuses offering Class Z shares, any shareholder (as well as any family member of a shareholder or person listed on an account registration for any account of the shareholder) of another fund distributed by the Distributor who holds Class Z shares is eligible to purchase Class Z shares subject to a minimum initial investment of $2,000. If the account in which the shareholder holds Class Z shares is not eligible to purchase additional Class Z shares, the shareholder may purchase Class Z shares in an account maintained directly with the Transfer Agent, subject to the $2,000 minimum for such direct account.
Class B Shares Conversion to Class A Shares
Class B shares purchased in a series of CFST or CFST I at any time and series of CFST II on or after June 13, 2009 automatically convert to Class A shares after youve owned the shares for eight years, except for Class B shares of Columbia Short Term Municipal Bond Fund, which do not convert to Class A shares. Class B shares originally purchased in a series of CFST II (other than a former Seligman Fund) on or prior to June 12, 2009 will convert to Class A shares after eight and one half years of ownership. Class B shares originally purchased in a former Seligman Fund on or prior to June 12, 2009 will convert to Class A shares in the month prior to the ninth year of ownership. The conversion feature allows you to benefit from the lower operating costs of Class A shares, which can help increase your total returns from an investment in the fund.
Statement of Additional Information September 1, 2014 | S-5 |
The following rules apply to the conversion of Class B shares to Class A shares:
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Class B shares are converted on or about the 15th day of the month that they become eligible for conversion. For purposes of determining the month when your Class B shares are eligible for conversion, the start of the holding period is the first day of the month in which your purchase was made. |
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Any shares you received from reinvested distributions on these shares generally will convert to Class A shares at the same time. |
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Youll receive the same dollar value of Class A shares as the Class B shares that were converted. Class B shares that you received from an exchange of Class B shares of another fund will convert based on the day you bought the original shares. |
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No sales charge or other charges apply, and conversions are free from U.S. federal income tax. |
Class F Shares Conversion to Class E Shares*
The following rules apply to the conversion of Class F shares to Class E shares:
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Class F shares are converted on or about the 15th day of the month that they become eligible for conversion. For purposes of determining the month when your Class F shares are eligible for conversion, the start of the holding period is the first day of the month in which your purchase was made. |
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Any shares you received from reinvested distributions on these shares generally will convert to Class E shares at the same time. |
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Youll receive the same dollar value of Class E shares as the Class F shares that were converted. Class F shares that you received from an exchange of Class F shares of another Fund will convert based on the day you bought the original shares. |
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No sales charge or other charges apply, and conversions are free from U.S. federal income tax. |
* | The Funds no longer accept investments from new or existing investors in Class E or Class F shares, except by existing Class E and/or Class F shareholders who opened and funded their account prior to September 22, 2006 that may continue to invest in Class E and/or Class F shares. See the prospectus offering Class E and Class F shares of Large Cap Growth Fund for details. |
Class A Shares of Active Portfolio Funds
The Active Portfolio Funds offer only Class A shares that are available only to certain eligible investors through certain wrap fee programs sponsored and/or managed by Ameriprise Financial or its affiliates. Class A shares of Active Portfolio Funds are not subject to any front-end sales charge or contingent deferred sales charge.
Additional Information About Class R Eligibility
Class R shares are available only to eligible health savings accounts sponsored by third party platforms, including those sponsored by Ameriprise Financial affiliates, eligible retirement plans and, at the discretion of the distributor, other types of retirement accounts held through platforms maintained by selling agents approved by the distributor. Eligible retirement plans include any retirement plan other than individual 403(b) plans. Class R shares are generally not available for investment through retail nonretirement accounts, traditional and Roth IRAs, Coverdell Education Savings Accounts, SEPs, SAR-SEPs, Simple IRAs or 529 tuition programs. Contact the transfer agent or your retirement plan or health savings account administrator for more information about investing in Class R shares.
Additional Information About Class R4 Eligibility
Class R4 shares are available only to (i) omnibus retirement plans, (ii) trust companies or similar institutions, (iii) broker-dealers, banks, trust companies and similar institutions that clear Fund share transactions for their client or customer investment advisory or similar accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the transfer agent with respect to Class R4 eligibility apart from selling, servicing or similar agreements, (iv) 501(c)(3) charitable organizations, (v) 529 plans and (vi) health savings accounts.
Additional Information About Class Z Closing
Omnibus retirement plans that opened and, subject to certain exceptions, funded a Class Z account with a Fund as of the close of business on March 28, 2013, and continuously hold Class Z shares in such account after March 28, 2013, may generally continue to make additional purchases of Class Z shares, open new Class Z accounts and add new participants. The distributor may, in its sole discretion, delay the funding requirement described above to allow an omnibus retirement plan that opened a Class Z account (the initial Class Z account) with a Fund as of the close of business on March 28, 2013 to make
Statement of Additional Information September 1, 2014 | S-6 |
additional purchases of Class Z shares, open new Class Z accounts and add new participants after March 28, 2013 so long as the initial Class Z account is funded by July 2, 2013.
New Minimum Initial Investment Amount for Class R5
A minimum initial investment of $100,000 applies to purchases of Class R5 shares of a Fund for accounts of any registered investment adviser that clears Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that have been granted specific written authorization from the transfer agent with respect to Class R5 eligibility apart from selling, servicing or similar agreements. There is no minimum initial investment in Class R5 shares for omnibus retirement plans.
Additional Eligible Investors
The Distributor, in its sole discretion, may accept investments in any share class of a Fund from investors other than those listed above and the Funds prospectus(es).
Additional Information About Minimum Initial Investments
The Distributor, in its sole discretion, may also waive minimum initial investment requirements, including without limitation the requirement for omnibus retirement plans with plan assets of less than $10 million to invest $500,000 or more in Class Y shares of a Fund. Minimum investment and related requirements may be modified at any time, with or without prior notice.
Additional Information about Systematic Withdrawal Plans
Systematic Withdrawal Plans allow you to schedule regular redemptions from your account any day of the month on a monthly, quarterly or semi-annual basis. Currently, Systematic Withdrawal Plans are generally available for Class A, B, C, R4, R5, T, W, Y and Z share accounts. Contact the Transfer Agent or your financial advisor to set up the plan.
To set up the plan, your account balance must meet the class minimum initial investment amount. All dividend and capital gain distributions must be reinvested to set up the plan. A Systematic Withdrawal Plan cannot be set up on an account that already has a Systematic Investment Plan established. If you set up the plan after youve opened your account, we may require your signature to be Medallion Signature Guaranteed, as described below.
You can choose to receive your withdrawals via check or direct deposit into your bank account. The Fund will deduct any applicable CDSC from the withdrawals before sending the balance to you. You can cancel the plan by giving the Fund 30 days notice in writing or by calling the Transfer Agent at 800.422.3737. Its important to remember that if you withdraw more than your investment in the Fund is earning, youll eventually withdraw your entire investment.
Fund Reorganizations
Class A shares may be issued without any initial sales charge in connection with the acquisition of cash and securities owned by other investment companies. Any CDSC will be waived in connection with the redemption of shares of the fund if the fund is combined with another fund or in connection with a similar reorganization transaction.
Rejection of Purchases
Each fund and the distributor of the funds reserve the right to reject any offer to purchase shares, in their sole discretion.
Medallion Signature Guarantees
The Transfer Agent may require a Medallion Signature Guarantee for your signature in order to process certain transactions. A Medallion Signature Guarantee helps assure that a signature is genuine and not a forgery. A Medallion Signature Guarantee must be provided by an eligible guarantor institution including, but not limited to, the following: bank, credit union, savings association, broker or dealer, that participates in the Securities Transfer Association Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) or the New York Stock Exchange Medallion Signature Program (MSP). Notarization by a notary public is not an acceptable signature guarantee. The Transfer Agent reserves the right to reject a signature guarantee and to request additional documentation for any transaction.
A Medallion Signature Guarantee is required if: (i) the transaction amount is over $100,000; (ii) you want your check made payable to someone other than yourself; (iii) your address has changed within the last 30 days; (iv) you want the check mailed to an address other than the address of record; (v) you want proceeds to be sent according to existing bank account instructions not coded for outgoing ACH or wire, or to a bank account not on file; (vi) you are the beneficiary of the account and the account owner is deceased (other documentation may be required); or (vii) you are transferring to an account for which you are not the sole owner.
Statement of Additional Information September 1, 2014 | S-7 |
Dividend Diversification
Generally, you may automatically invest distributions made by another Fund into the same class of shares (and in some cases certain other classes of shares) of a Fund at no additional sales charge. A sales charge may apply when you invest distributions made with respect to shares that were not subject to a sales charge at the time of your initial purchase. Call the Transfer Agent at 800.345.6611 for details. The ability to invest distributions from one Fund to another Fund may not be available to accounts held at all selling agents.
SAI910_00_012_(09/14)
Statement of Additional Information September 1, 2014 | S-8 |
PART C. OTHER INFORMATION
Item 28. | Exhibits |
(a)(1) | Second Amended and Restated Agreement and Declaration of Trust, dated August 10, 2005, is incorporated by reference to Post-Effective Amendment No. 40 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (a)(1)), filed on September 16, 2005. | |
(a)(2) | Amendment No. 1 to Second Amended and Restated Agreement and Declaration of Trust, effective September 19, 2005, is incorporated by reference to Post-Effective Amendment No. 40 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (a)(2)), filed on September 16, 2005 . | |
(b) | Amended and Restated By-laws of Registrant are incorporated by reference to Post-Effective Amendment No. 46 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (b)), filed on March 24, 2006. | |
(c) | Not applicable. | |
(d)(1) | Investment Management Services Agreement by and between Columbia Management Investment Advisers, LLC and Registrant, dated as of May 1, 2010 (the Multi-Fund Investment Management Services Agreement), is incorporated by reference to Post-Effective Amendment No. 105 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(1)), filed on May 28, 2010. | |
(d)(2)(i) | Investment Management Services Agreement by and between Columbia Management Investment Advisers, LLC and Registrant, dated as of May 1, 2010 (for CMG Ultra Short-Term Bond Fund), is incorporated by reference to Post-Effective Amendment No. 105 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(2)), filed on May 28, 2010. | |
(d)(2)(ii) |
Amendment No. 1 to the Multi-Fund Investment Management Services Agreement by and between Columbia Management Investment Advisers, LLC and Registrant, dated as of February 28, 2011, is incorporated by reference to Post-Effective
Amendment No. 2 to Registration Statement No. 333-170367 of the Registrant on Form N-14
(Exhibit (6)(c)), filed on July 22, 2011. |
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(d)(2)(iii) |
Amendment No. 2 to the Multi-Fund Investment Management Services Agreement by and between Columbia Management Investment Advisers, LLC and Registrant, dated as of March 14, 2012, is incorporated by reference to Post-Effective
Amendment No. 143 to Registration Statement No. 2-99356 of the Registrant on Form N-1A
(Exhibit (d)(2)(iii)), filed on March 14, 2012. |
|
(d)(2)(iv) |
Amendment No. 3 to the Multi-Fund Investment Management Services Agreement by and between Columbia Management Investment Advisers, LLC and Registrant, dated as of June 18, 2012, is incorporated by reference to Post-Effective
Amendment No. 153 to Registration Statement No. 2-99356 of the Registrant on Form N-1A
(Exhibit (d)(2)(iv)), filed on June 15, 2012. |
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(d)(2)(v) | Restated Schedule A to the Multi-Fund Investment Management Services Agreement, effective March 10, 2014, is incorporated by reference to Post-Effective Amendment No. 190 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(2)(v)), filed on March 10, 2014. | |
(d)(3) | Subadvisory Agreement between Columbia Management Investment Advisers, LLC and AQR Capital Management, LLC dated March 7, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(3)), filed on May 30, 2014. | |
(d)(3)(1) | Addendum dated March 7, 2012 to the Subadvisory Agreement dated March 7, 2012 between Columbia Management Investment Advisers, LLC and AQR Capital Management, LLC on behalf of Active Portfolios Multi-Manager Alternatives Strategies Fund, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(3)(1)), filed on May 30, 2014. | |
(d)(4) | Subadvisory Agreement between Columbia Management Investment Advisers, LLC and Dalton, |
Greiner, Hartman, Maher & Co., LLC dated March 7, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(4)), filed on May 30, 2014. | ||
(d)(5) |
Subadvisory Agreement between Columbia Management Investment Advisers, LLC and EAM Investors, LLC dated March 7, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement
No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(5)), filed on May 30, 2014. |
|
(d)(6) | Subadvisory Agreement between Columbia Management Investment Advisers, LLC and Federated Investment Management Company dated March 7, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(6)), filed on May 30, 2014 . | |
(d)(7) | Subadvisory Agreement between Columbia Management Investment Advisers, LLC and TCW Investment Management Company dated February 6, 2013, last amended January 24, 2014, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(7)), filed on May 30, 2014. | |
(d)(7)(1) | Addendum Authorization to Enter Into Over-The-Counter And/Or Exchange Traded Derivatives between Columbia Management Investment Advisers, LLC and TCW Investment Management Company dated March 7, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(7)(1)), filed on May 30, 2014. | |
(d)(8) | Subadvisory Agreement among Columbia Management Investment Advisers, LLC and Wasatch Advisors, Inc. dated March 7, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(8)), filed on May 30, 2014. | |
(d)(9) | Subadvisory Agreement between Columbia Management Investment Advisers, LLC and Water Island Capital, LLC dated March 7, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(9)), filed on May 30, 2014. | |
(d)(10) | Delegation Agreement dated March 7, 2012 between Dalton, Greiner, Hartman, Maher & Co. LLC, and Real Estate Management Services Group, LLC, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(10)), filed on May 30, 2014 . | |
(d)(11) | Subadvisory Agreement between Columbia Management Investment Advisers, LLC and Conestoga Capital Advisors, LLC dated June 11, 2014, is filed herewith as Exhibit (d)(11) to Post-Effective Amendment No. 205 to Registration Statement No. 2-99356 of the Registrant on Form N-1A. | |
(d)(12) | Subadvisory Agreement between Columbia Management Investment Advisers, LLC and Loomis, Sayles and Company, L.P. dated December 4, 2013, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(12)), filed on May 30, 2014. | |
(d)(13) | Investment Management Services Agreement between Columbia Management Investment Advisers, LLC and ASGM Offshore Fund, Ltd., a subsidiary of Active Portfolios Multi-Manager Alternative Strategies Fund, dated March 12, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(13)), filed on May 30, 2014. | |
(d)(14) | Investment Management Services Agreement between Columbia Management Investment Advisers, |
LLC and ASMF Offshore Fund, Ltd., a subsidiary of Active Portfolios Multi-Manager Alternative Strategies Fund, dated March 12, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(14)), filed on May 30, 2014. | ||
(e)(1) | Distribution Agreement by and between Registrant and Columbia Management Investment Distributors, Inc., dated as of September 7, 2010, is incorporated by reference to Post-Effective Amendment No. 111 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (e)), filed on September 27, 2010. | |
(e)(2) | Restated Schedule I, dated as of June 23, 2014, to Distribution Agreement by and between the Registrant and Columbia Management Investment Distributors, Inc., dated as of September 7, 2010, is incorporated by reference to Post-Effective Amendment No. 57 to Registration Statement No. 33-14954 of Columbia Funds Variable Insurance Trust on Form N-1A (Exhibit (e)(1)(i)), filed on June 23, 2014. | |
(e)(3) | Form of mutual fund sales agreement, incorporated herein by reference to Post-Effective Amendment No. 63 to Registration Statement No. 2-72174 of RiverSource Bond Series, Inc. on Form N-1A (Exhibit (e)(2)), filed on July 9, 2010. | |
(f) | Form of Deferred Compensation Agreement, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (f)), filed on May 30, 2014 . | |
(g)(1) | Second Amended and Restated Master Global Custody Agreement between certain Funds and JP Morgan Chase Bank, N.A., dated March 7, 2011, is incorporated by reference to Post-Effective Amendment No. 124 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (g)(2)), filed on April 29, 2011. | |
(g)(2) | Addendum to Master Global Custody Agreement (related to Active Portfolios Multi-Manager Alternative Strategies Fund, Active Portfolios Multi-Manager Core Plus Bond Fund, Active Portfolios-Multi-Manager Small Cap Equity Fund and Columbia Active Portfolios Select Large Cap Growth Fund, now known as Active Portfolios-Multi-Manager Growth Fund), dated March 9, 2012, Addendum to Master Global Custody Agreement (related to Columbia Risk Allocation Fund), dated June 11, 2012, and Addendum to Master Global Custody Agreement (related to Columbia Diversified Real Return Fund and Columbia Global Inflation Linked-Bond Fund), dated February 25, 2014, are incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (g)(2)), filed on May 30, 2014 . | |
(h)(1)(i) |
Administrative Services Agreement by and between Registrant, the other parties listed on Schedule A and Columbia Management Investment Advisers, LLC, dated as of May 1, 2010 with Schedule A dated May 1, 2010, is incorporated by
reference to Post-Effective Amendment No. 105 toRegistration Statement No. 2-99356 of the Registrant on
Form N-1A (Exhibit (h)(1)), filed on May 28, 2010 . |
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(h)(1)(ii) |
Amendment No. 1 to Administrative Services Agreement by and among Registrant, the other parties listed on Schedule A and Columbia Management Investment Advisers, LLC, dated as of February 28, 2011, is incorporated by reference to
Post-Effective Amendment No. 139 to Registration Statement No. 2-99356 of the Registrant on Form N-1A
(Exhibit (h)(1)(i)), filed on January 27, 2012 . |
|
(h)(1)(iii) | Amendment No. 2 to Administrative Services Agreement by and among Registrant, the other parties listed on Schedule A thereto and Columbia Management Investment Advisers, LLC, dated as of March 14, 2012, is incorporated by reference to Post-Effective Amendment No. 143 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (h)(1)(iii)), filed on March 14, 2012. | |
(h)(1)(iv) |
Amendment No. 3 to Administrative Services Agreement by and among Registrant, the other parties listed on Schedule A thereto and Columbia Management Investment Advisers, LLC, dated as of June 18, 2012, is incorporated by reference
to Post-Effective Amendment No. 153 to Registration Statement No. 2-99356 of the Registrant on Form N-1A
(Exhibit (h)(1)(iv)), filed on June 15, 2012 . |
|
(h)(1)(v) | Amendment No. 4 to Administrative Services Agreement by and among Registrant, the other parties |
listed on Schedule A thereto and Columbia Management Investment Advisers, LLC, dated as of April 10, 2013, is incorporated by reference to Post-Effective Amendment No. 173 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (h)(1)(v)), filed on April 30, 2013. | ||
(h)(1)(vi) | Restated Schedule A and Schedule B, effective June 23, 2014, to Administrative Services Agreement, by and between Registrant, the other parties listed on Schedule A, and Columbia Management Investment Advisers, LLC, dated as of May 1, 2010, is incorporated by reference to Post-Effective Amendment No. 57 to Registration Statement No. 33-14954 of Columbia Funds Variable Insurance Trust on Form N-1A (Exhibit (h)(i)(viii)), filed on June 23, 2014. | |
(h)(2)(i) | Amended and Restated Transfer and Dividend Disbursing Agent Agreement by and between the Registrant and Columbia Management Investment Services Corp., dated as of May 24, 2011 with Schedule A dated as of May 24, 2011, is incorporated by reference to Post-Effective Amendment No. 2 to Registration Statement No. 333-170426 of the Registrant on Form N-14 (Exhibit (13)(d)(ii)), filed on July 22, 2011. | |
(h)(2)(ii) | Restated Schedule A, effective March 10, 2014 and Schedule B, effective July 1, 2013, to Amended and Restated Transfer and Dividend Disbursing Agent Agreement by and between the Registrant and Columbia Management Investment Services Corp., dated as of May 24, 2011, are incorporated by reference to Post-Effective Amendment No. 190 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (h)(2)(iii)), filed on March 10, 2014. | |
(h)(3) | Form of Indemnification Agreement is incorporated by reference to Post-Effective Amendment No. 46 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (h)(6)), filed on March 24, 2006. | |
(h)(4) |
Amended and Restated Plan Administration Services Agreement, dated as of September 7, 2010, amended and restated November 1, 2012, by and among the Registrant, Columbia Funds Series Trust and Columbia Management Investment Services
Corp, is incorporated by reference to Post-Effective Amendment No. 165 to Registration Statement
No. 2-99356 of the Registrant on Form N-1A (Exhibit (h)(13)), filed on November 7, 2012. |
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(h)(5)(i) | Amended and Restated Fee Waiver and Expense Cap Agreement by and among Registrant, Columbia Management Investment Advisers, LLC, Columbia Management Investment Distributors, Inc. and Columbia Management Investment Services Corp., dated June 1, 2011, is incorporated by reference to Post-Effective Amendment No. 2 to Registration Statement No. 333-170426 of the Registrant on Form N-14 (Exhibit (13)(r)(3)), filed on July 22, 2011. | |
(h)(5)(ii) | Restated Schedule A, effective June 23, 2014, to Amended and Restated Fee Waiver and Expense Cap Agreement by and among Registrant, Columbia Management Investment Advisers, LLC, Columbia Management Investment Distributors, Inc. and Columbia Management Investment Services Corp., is incorporated by reference to Post-Effective Amendment No. 57 to Registration Statement No. 033-14954 of Columbia Funds Variable Insurance Trust on Form N-1A (Exhibit (h)(4)(ii)), filed on June 23, 2014. | |
(h)(6) | Administrative Services Agreement between Columbia Management Investment Advisers, LLC and, ASGM Offshore Fund, Ltd., a subsidiary of Active Portfolios Multi-Manager Alternative Strategies Fund, dated March 14, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (h)(6)), filed on May 30, 2014. | |
(h)(7) | Administrative Services Agreement between Columbia Management Investment Advisers, LLC and, ASMF Offshore Fund, Ltd., a subsidiary of Active Portfolios Multi-Manager Alternative Strategies Fund, dated March 14, 2012, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (h)(7)), filed on May 30, 2014. | |
(h)(8) | Agreement and Plan of Reorganization, dated October 9, 2012, is incorporated by reference to Post-Effective Amendment No. 175 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (h)(8)), filed on May 30, 2013. |
(h)(9)
|
Agreement and Plan of Reorganization, dated December 20, 2010, is incorporated by reference to Post-Effective Amendment No. 15 to Registration Statement No. 333-146374 of Columbia Funds Variable Series Trust II on Form N-1A (Exhibit (h)(9)), filed on April 29, 2011. | |
(i)(1) | Opinion of Counsel of Ropes & Gray LLP is incorporated by reference to Post-Effective Amendment No. 40 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (i)), filed on September 16, 2005. | |
(i)(2) | Opinion of Counsel of Ropes & Gray LLP is incorporated by reference to Post-Effective Amendment No. 68 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (i)(2)), filed on January 16, 2008. | |
(i)(3) | Opinion of Counsel of Ropes & Gray LLP is incorporated by reference to Post-Effective Amendment No. 81 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (i)(3)), filed on November 25, 2008 . | |
(i)(4) | Opinion of Counsel of Ropes & Gray LLP is incorporated by reference to Post-Effective Amendment No. 95 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (i)(4)), filed on November 20, 2009. | |
(i)(5) | Opinion of Counsel of Ropes & Gray LLP is incorporated by reference to Post-Effective Amendment No. 143 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (i)(5)), filed on March 14, 2012. | |
(i)(6) | Opinion of Counsel of Ropes & Gray LLP, with respect to Columbia Risk Allocation Fund, is incorporated by reference to Post-Effective Amendment No. 153 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (I)(6)), filed on June 15, 2012. | |
(i)(7) | Opinion of Counsel of Ropes & Gray LLP, with respect to Columbia Diversified Real Return Fund and Columbia Global Inflation-Linked Plus Bond Fund, is incorporated by reference to Post-Effective Amendment No. 190 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (i)(7)), filed on March 10, 2014. | |
(j)(1) | Consent of Morningstar, Inc., is incorporated by reference to Post-Effective Amendment No. 21 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (11)(b)), filed on August 30, 1996. | |
(j)(2) | Consent of PricewaterhouseCoopers LLP, is filed herewith as Exhibit (j)(2) to Post-Effective Amendment No. 205 to Registration Statement No. 2-99356 of the Registrant on Form N-1A. | |
(k) | Omitted Financial Statements: Not Applicable. | |
(l) | Initial Capital Agreement: Not Applicable. | |
(m)(1) | Amended and Restated Distribution Plan, is incorporated by reference to Post-Effective Amendment No. 190 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (m)(1)), filed on March 10, 2014. | |
(m)(2) | Amended and Restated Shareholder Servicing Plan, as of March 10, 2014, for certain Fund share classes of the Registrant, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (m)(2)), filed on May 30, 2014. | |
(m)(3) | Amended and Restated Shareholder Services Plan for Registrants Class T shares is incorporated by reference to Post-Effective Amendment No. 113 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (m)(3)), filed on November 24, 2010. | |
(m)(4) | Shareholder Servicing Plan Implementation Agreement for certain Fund share classes of the Registrant between the Registrant, Columbia Funds Series Trust, Columbia Funds Series Trust II and Columbia Management Investment Distributors, Inc., is incorporated by reference to Post-Effective Amendment No. 113 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (m)(4)), filed on November 24, 2010. |
(m)(5) | Shareholder Servicing Plan Implementation Agreement for Registrants Class T shares between the Registrant and Columbia Management Investment Distributors, Inc. , is incorporated by reference to Post-Effective Amendment No. 113 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (m)(5)), filed on November 24, 2010. | |
(m)(6) | Restated Schedule I to Shareholder Servicing Plan Implementation Agreement is incorporated by reference to Post-Effective Amendment No. 143 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (m)(6)), filed on March 14, 2012. | |
(n) | Amended and Restated Rule 18f-3 Multi-Class Plan is incorporated by reference to Post-Effective Amendment No. 165 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (n)), filed on November 7, 2012 . | |
(o) | Reserved. | |
(p)(1) | Columbia Funds Family Code of Ethics effective April 14, 2014, is incorporated by reference to Post-Effective Amendment No. 196 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (p)(1)), filed on May 30, 2014. | |
(p)(2) | Code of Ethics of Columbia Management Investment Advisers, LLC and Columbia Management Investment Distributors, Inc., dated May 1, 2014, is incorporated by reference to Post-Effective Amendment No. 39 to Registration Statement No. 333-146374 of Columbia Funds Variable Series Trust II on Form N-1A (Exhibit (p)(2)), filed on May 15, 2014. | |
(p)(3) | Code of Ethics of AQR Capital Management, LLC (a subadviser of Active Portfolios Multi-Manager Alternative Strategies Fund), effective September 13, 2012, is incorporated by reference to Post-Effective Amendment No. 169 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (p)(3)), filed on December 21, 2012. | |
(p)(4) | Code of Ethics of Dalton, Greiner, Hartman, Maher & Co., LLC (a subadviser of Active Portfolios Multi-Manager Small Cap Equity Fund), dated April 16, 2010, is incorporated by reference to Post-Effective Amendment No. 143 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (p)(4)), filed on March 14, 2012. | |
(p)(5) | Code of Ethics and Standards of Business Conduct of EAM Investors, LLC (a subadviser of Active Portfolios Multi-Manager Small Cap Equity Fund), effective October 19, 2012, is incorporated by reference to Post-Effective Amendment No. 187 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (p)(5)), filed on December 23, 2013. | |
(p)(6) | Code of Ethics for Access Persons of Federated Investment Management Company (a subadviser of Active Portfolios Multi-Manager Core Plus Bond Fund), effective September 30, 2012, is incorporated by reference to Post-Effective Amendment No. 187 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (p)(6)), filed on December 23, 2013. | |
(p)(7) | Code of Ethics of TCW Investment Management Company (a subadviser of Active Portfolios Multi-Manager Core Plus Bond Fund), as of December 20, 2013, is incorporated by reference to Post-Effective Amendment No. 39 to Registration Statement No. 333-146374 of Columbia Funds Variable Series Trust II on Form N-1A (Exhibit (p)(25)), filed on May 15, 2014. | |
(p)(8) | Code of Ethics of Wasatch Advisors, Inc. (a subadviser of Active Portfolios Multi-Manager Alternative Strategies Fund), effective August 22, 2012, is incorporated by reference to Post-Effective Amendment No. 187 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (p)(9)), filed on December 23, 2013. | |
(p)(9) | Code of Ethics of Water Island Capital, LLC (a subadviser of Active Portfolios Multi-Manager Alternative Strategies Fund), effective May 15, 2012, is incorporated by reference to Post-Effective Amendment No. 169 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (p)(11)), filed on December 21, 2012. |
(p)(10) | Code of Ethics of Real Estate Management Services Group, LLC. (provides advisory services as delegated by Dalton, Greiner, Hartman, Maher & Co., LLC, a subadviser of Active Portfolios Multi-Manager Small Cap Equity Fund), is incorporated by reference to Post-Effective Amendment No. 143 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (p)(12)), filed on March 14, 2012. | |
(p)(11) | Code of Ethics of Conestoga Capital Advisors, LLC (a subadviser of Active Portfolios Multi-Manager Small Cap Equity Fund), effective July 1, 2013, is incorporated by reference to Post-Effective Amendment No. 187 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (p)(12)), filed on December 23, 2013. | |
(p)(12) | Code of Ethics of Loomis, Sayles and Company, L.P. (subadviser of Active Portfolios Multi-Manager Growth Fund), effective January 14, 2000, as amended October 16, 2013, is incorporated by reference to Post-Effective Amendment No. 39 to Registration Statement No. 333-146374 of Columbia Funds Variable Series Trust II on Form N-1A (Exhibit (p)(16)), filed on May 15, 2014. | |
(q)(1) | Power of Attorney for Douglas A. Hacker, Janet Langford Kelly, William E. Mayer, Charles R. Nelson, John J. Neuhauser, Patrick J. Simpson and Anne-Lee Verville, dated May 1, 2010, is incorporated by reference to Post-Effective Amendment No. 105 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(1)), filed on May 28, 2010. | |
(q)(2) | Power of Attorney for Joseph F. DiMaria, dated May 1, 2010, is incorporated by reference to Post-Effective Amendment No. 105 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(2)), filed on May 28, 2010. | |
(q)(3) | Power of Attorney for Michael G. Clarke, dated May 1, 2010, is incorporated by reference to Post-Effective Amendment No. 105 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(3)), filed on May 28, 2010. | |
(q)(4) | Power of Attorney for J. Kevin Connaughton, dated May 1, 2010, is incorporated by reference to Post-Effective Amendment No. 105 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(4)), filed on May 28, 2010. | |
(q)(5) | Power of Attorney for David M. Moffett, dated May 1, 2011, is incorporated by reference to Post-Effective Amendment No. 125 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(6)), filed on May 19, 2011. | |
(q)(6) | Power of Attorney for Nancy T. Lukitsh, dated August 24, 2011, is incorporated by reference to Post-Effective Amendment No. 128 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(7)), filed on August 31, 2011. | |
(q)(7) | Power of Attorney for William F. Truscott, dated March 9, 2012, is incorporated by reference to Post-Effective Amendment No. 143 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(7)), filed on March 14, 2012. |
Item 29. | Persons Controlled by or under Common Control with Registrant |
Columbia Management Investment Advisers, LLC (the investment manager or Columbia Management), as sponsor of the Columbia funds, may make initial capital investments in Columbia funds (seed accounts). Columbia Management also serves as investment manager of certain Columbia funds-of-funds that invest primarily in shares of affiliated funds (the underlying funds). Columbia Management does not make initial capital investments or invest in underlying funds for the purpose of exercising control. However, since these ownership interests may be significant, in excess of 25%, such that Columbia Management may be deemed to control certain Columbia funds, procedures have been put in place to assure that public shareholders determine the outcome of all actions taken at shareholder meetings. Specifically, Columbia Management (which votes proxies for the seed accounts) and the
Boards of Trustees of the affiliated funds-of-funds (which votes proxies for the affiliated funds-of-funds) vote on each proposal in the same proportion as the vote of the direct public shareholders vote; provided, however, that if there are no direct public shareholders of an underlying fund or if direct public shareholders represent only a minority interest in an underlying fund, the Fund may cast votes in accordance with instructions from the independent members of the Board.
Item 30. | Indemnification |
Article Five of the Bylaws of Registrant provides that Registrant shall indemnify each of its trustees and officers (including persons who serve at Registrants request as directors, officers or trustees of another organization in which Registrant has any interest as a shareholder, creditor or otherwise) who are not employees or officers of any investment adviser to Registrant or any affiliated person thereof and its chief compliance officer, regardless of whether such person is an employee or officer of any investment adviser to Registrant or any affiliated person thereof, and may indemnify each of its trustees and officers (including persons who serve at Registrants request as directors, officers or trustees of another organization in which Registrant has any interest as a shareholder, creditor or otherwise) (i.e., those who are employees or officers of any investment adviser to Registrant or any affiliated person thereof) (Covered Persons) under specified circumstances, all as more fully set forth in the Registrants Bylaws, which have been filed as an exhibit to this registration statement.
Section 17(h) of the Investment
Company Act of 1940 (1940 Act) provides that no instrument pursuant to which Registrant is organized or administered shall contain any provision which protects or purports to protect any trustee or officer of Registrant against any
liability to Registrant or its shareholders to which he or she would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office. In accordance
with
Section 17(h) of the 1940 Act, no Covered Person is indemnified under the Bylaws against any liability to Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of the Covered Persons office.
Pursuant to the Distribution Agreement, Columbia Management Distributors, Inc. agrees to indemnify the Registrant, its officers and trustees against claims, demands, liabilities and expenses under specified circumstances, all as more fully set forth in the Registrants Distribution Agreement, which has been filed as an exhibit to the registration statement. The Registrant may be party to other contracts that include indemnification provisions for the benefit of the Registrants trustees and officers.
The trustees and officers of the Registrant and the personnel of the Registrants investment adviser and principal underwriter are insured under an errors and omissions liability insurance policy. Registrants investment adviser, Columbia Management Investment Advisers, LLC, maintains investment advisory professional liability insurance to insure it, for the benefit of Registrant and its non-interested trustees, against loss arising out of any effort, omission, or breach of any duty owed to Registrant or any series of Registrant by Columbia Management Investment Advisers, LLC.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant by the Registrant pursuant to the Registrants organizational instruments or otherwise, the Registrant is aware that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and, therefore, is unenforceable.
Item 31. | Business and Other Connections of Investment Adviser |
To the knowledge of the Registrant, none of the directors or officers of Columbia Management Investment Advisers, LLC (the Investment Manager), the Registrants investment adviser, except as set forth below, are or have been, at any time during the Registrants past two fiscal years, engaged in any other business, profession, vocation or employment of a substantial nature.
(a) | The Investment Manager, a wholly-owned subsidiary of Ameriprise Financial, Inc. performs investment advisory services for the Registrant and certain other clients. Information regarding the business of the Investment Manager and certain of its officers is set forth in the Prospectuses and Statements of Additional Information of the Registrants portfolios and is incorporated herein by reference. Information about the business of the Investment Manager and the directors and principal executive officers of the Investment Manager is also included in the Form ADV filed by the Investment Manager (formerly, RiverSource Investments, LLC) with the SEC pursuant to the Investment Advisers Act of 1940 (File No. 801-25943), which is incorporated herein by reference. In addition to their position with the Investment Manager, certain directors and officers of the Investment Manager also hold various positions with, and engage in business for, Ameriprise Financial, Inc. or its other subsidiaries. |
(b) | AQR Capital Management, LLC performs investment management services for the Registrant and certain other clients. Information regarding the business of AQR Capital Management, LLC and certain of its officers is set forth in the Prospectuses and Statement of Additional Information of the Registrants portfolio(s) subadvised by AQR Capital Management, LLC and is incorporated herein by reference. Information about the business of AQR Capital Management, LLC and the directors and principal executive officers of AQR Capital Management, LLC is also included in the Form ADV filed by AQR Capital Management, LLC with the SEC pursuant to the Investment Advisers Act of 1940 (File No. 801-55543), which is incorporated herein by reference. |
(c) | Dalton, Greiner, Hartman, Maher & Co., LLC performs investment management services for the Registrant and certain other clients. Information regarding the business of Dalton, Greiner, Hartman, Maher & Co., LLC and certain of its officers is set forth in the Prospectuses and Statement of Additional Information of the Registrants portfolio(s) subadvised by Dalton, Greiner, Hartman, Maher & Co., LLC and is incorporated herein by reference. Information about the business of Dalton, Greiner, Hartman, Maher & Co., LLC and the directors and principal executive officers of Dalton, Greiner, Hartman, Maher & Co., LLC is also included in the Form ADV filed by Dalton, Greiner, Hartman, Maher & Co., LLC with the SEC pursuant to the Investment Advisers Act of 1940 (File No. 801-62895), which is incorporated herein by reference. |
(d) | EAM Investors, LLC performs investment management services for the Registrant and certain other clients. Information regarding the business of EAM Investors, LLC and certain of its officers is set forth in the Prospectuses and Statement of Additional Information of the Registrants portfolio(s) subadvised by EAM Investors, LLC and is incorporated herein by reference. Information about the business of EAM Investors, LLC and the directors and principal executive officers of EAM Investors, LLC is also included in the Form ADV filed by EAM Investors, LLC with the SEC pursuant to the Investment Advisers Act of 1940 (File No. 801-70305), which is incorporated herein by reference. |
(e) | Federated Investment Management Company performs investment management services for the Registrant and certain other clients. Information regarding the business of Federated Investment Management Company and certain of its officers is set forth in the Prospectuses and Statement of Additional Information of the Registrants portfolio(s) subadvised by Federated Investment Management Company and is incorporated herein by reference. Information about the business of Federated Investment Management Company and the directors and principal executive officers of Federated Investment Management Company is also included in the Form ADV filed by Federated Investment Management Company with the SEC pursuant to the Investment Advisers Act of 1940 (File No. 801-34612), which is incorporated herein by reference. |
(f) | TCW Investment Management Company performs investment management services for the Registrant and certain other clients. Information regarding the business of TCW Investment Management Company and certain of its officers is set forth in the Prospectuses and Statement of Additional Information of the Registrants portfolio(s) subadvised by TCW Investment Management Company and is incorporated herein by reference. Information about the business of TCW Investment Management Company and the directors and principal executive officers of TCW Investment Management Company is also included in the Form ADV filed by TCW Investment Management Company with the SEC pursuant to the Investment Advisers Act of 1940 (File No. 801-29075), which is incorporated herein by reference. |
(g) | Wasatch Advisors, Inc. performs investment management services for the Registrant and certain other clients. Information regarding the business of Wasatch Advisors, Inc. and certain of its officers is set forth in the Prospectuses and Statement of Additional Information of the Registrants portfolio(s) subadvised by Wasatch Advisors, Inc. and is incorporated herein by reference. Information about the business of Wasatch Advisors, Inc. and the directors and principal executive officers of Wasatch Advisors, Inc. is also included in the Form ADV filed by Wasatch Advisors, Inc. with the SEC pursuant to the Investment Advisers Act of 1940 (File No. 801-11095), which is incorporated herein by reference. |
(h) | Water Island Capital, LLC performs investment management services for the Registrant and certain other clients. Information regarding the business of Water Island Capital, LLC and certain of its officers is set forth in the Prospectuses and Statement of Additional Information of the Registrants portfolio(s) subadvised by Water Island Capital, LLC and is incorporated herein by reference. Information about the business of Water Island Capital, LLC and the directors and principal executive officers of Water Island Capital, LLC is also included in the Form ADV filed by Water Island Capital, LLC with the SEC pursuant to the Investment Advisers Act of 1940 (File No. 801-57341), which is incorporated herein by reference. |
(i) | Conestoga Capital Advisors, LLC performs investment management services for the Registrant and certain other clients. Information regarding the business of Conestoga Capital Advisors, LLC and certain of its officers is set forth in the Prospectuses and Statement of Additional Information of the Registrants portfolio(s) subadvised by Conestoga Capital Advisors, LLC and is incorporated herein by reference. Information about the business of Conestoga Capital Advisors, LLC and the directors and principal executive officers of Conestoga Capital Advisors, LLC is also included in the Form ADV filed by Conestoga Capital Advisors, LLC with the SEC pursuant to the Investment Advisers Act of 1940 (File No. 801-60133), which is incorporated herein by reference. |
(j) | Loomis, Sayles and Company, L.P. performs investment management services for the Registrant and certain other clients. Information regarding the business of Loomis, Sayles and Company, L.P. and certain of its officers is set forth in the Prospectuses and Statement of Additional Information of the Registrants portfolio(s) subadvised by Loomis, Sayles and Company, L.P. and is incorporated herein by reference. Information about the business of Loomis, Sayles and Company, L.P. and the directors and principal executive officers of Loomis, Sayles and Company, L.P. is also included in the Form ADV filed by Loomis, Sayles and Company, L.P. with the SEC pursuant to the Investment Advisers Act of 1940 (File No. 801-170), which is incorporated herein by reference. |
Item 32. | Principal Underwriter |
(a) | Columbia Management Investment Distributors, Inc. acts as principal underwriter for the following investment companies, including the Registrant: |
Columbia Acorn Trust; Columbia Funds Series Trust; Columbia Funds Series Trust I; Columbia Funds Series Trust II; Columbia Funds Variable Series Trust II; Columbia Funds Variable Insurance Trust; Columbia Funds Variable Insurance Trust I; and Wanger Advisors Trust.
(b) | As to each director, principal officer or partner of Columbia Management Investment Distributors, Inc. |
Name and Principal Business Address* |
Position and Offices with Principal Underwriter |
Positions and Offices with Registrant |
||
William F. Truscott |
Chief Executive Officer | Board Member, Senior Vice President |
Amy Unckless | President | None | ||
Jeffrey F. Peters | Managing Director and Head of Global Institutional Distribution | None | ||
Dave K. Stewart | Chief Financial Officer | None | ||
Scott R. Plummer | Senior Vice President, Chief Legal Officer, Head of Global Asset Management Legal and Assistant Secretary | Senior Vice President and Chief Legal Officer | ||
Stephen O. Buff | Vice President, Chief Compliance Officer | None | ||
Hector DeMarchena | Vice President Institutional Asset Management Product Administration and Assistant Secretary | None | ||
Joe Feloney | Vice President National Sales Manager U.S. Trust/Private Wealth Management | None | ||
Leslie Moon | Vice President Mutual Fund Technology | None | ||
Brian Walsh | Vice President, Strategic Relations | None | ||
Gary Rawdon | Vice President Sales Governance and Administration | None | ||
Thomas R. Moore | Secretary | None | ||
Michael E. DeFao | Vice President and Assistant Secretary | Vice President and Assistant Secretary | ||
Paul B. Goucher | Vice President and Assistant Secretary | Vice President and Assistant Secretary | ||
Tara W. Tilbury | Vice President and Assistant Secretary | Assistant Secretary | ||
Nancy W. LeDonne | Vice President and Assistant Secretary | None | ||
Ryan C. Larrenaga | Vice President and Assistant Secretary | Assistant Secretary | ||
Joseph L. DAlessandro | Vice President and Assistant Secretary | Assistant Secretary | ||
Christopher O. Petersen | Vice President and Assistant Secretary | Vice President and Secretary | ||
Eric T. Brandt | Vice President and Assistant Secretary | None | ||
Ken Murphy | Anti-Money Laundering Officer | None |
Kevin Wasp | Ombudsman | None | ||
Lee Faria | Conflicts Officer | None |
* | The principal business address of Columbia Management Investment Distributors, Inc. is 225 Franklin Street, Boston MA 02110. |
(c) | Not applicable. |
Item 33. | Location of Accounts and Records |
Person maintaining physical possession of accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the Rules thereunder include:
| Registrant, 225 Franklin Street, Boston, MA, 02110; |
| Registrants investment adviser and administrator, Columbia Management Investment Advisers, LLC, 225 Franklin Street, Boston, MA, 02110; |
| Registrants subadviser, AQR Capital Management, LLC, Two Greenwich Plaza, 3rd Floor, Greenwich, CT 06830; |
| Registrants subadviser, Conestoga Capital Advisors, LLC, 550 East Swedesford Road, Suite 120, Wayne, PA 19087; |
| Registrants subadviser, Dalton, Greiner, Hartman, Maher & Co., 565 Fifth Avenue, Suite 2101, New York, NY 10017; |
| Registrants subadviser, EAM Investors, LLC, 2533 South Coast Highway 101, Suite 240, Cardiff-by-the-Sea, CA 92007; |
| Registrants subadviser, Eaton Vance Management, Two International Place, Boston, MA 02110; |
| Registrants subadviser, Federated Investment Management Company, Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779; |
| Registrants subadviser, Loomis Sayles, One Financial Center, Boston, MA 02111; |
| Registrants subadviser, TCW Investment Management Company, 865 South Figueroa Street, Suite 1800, Los Angeles, CA 90017; |
| Registrants subadviser, Wasatch Advisors, Inc., 150 Social Hall Avenue, 4th Floor, Salt Lake City, UT 84111; |
| Registrants subadviser, Water Island Capital, LLC, 41 Madison Avenue, 42nd floor, New York, NY 10010; |
| Registrants provider of advisory service as delegated by DGHM, Real Estate Management Services Group, LLC, 1100 Fifth Avenue South, Suite 305, Naples, FL 34102; |
| Registrants former subadviser, Nordea Investment Management North America, Inc., 437 Madison Avenue, New York, NY 10022; |
| Registrants former subadviser, RS Investment Management Co. LLC, 388 Market Street, Suite 1700, San Francisco, CA 94111; |
| Registrants principal underwriter, Columbia Management Investment Distributors, Inc., 225 Franklin Street, Boston, MA, 02110; |
| Registrants transfer agent, Columbia Management Investment Services Corp., 225 Franklin Street, Boston, MA, 02110; and |
| Registrants custodian, JP Morgan Chase Bank, N.A., 1 Chase Manhattan Plaza 19 th Floor, New York, NY 10005; and |
| Registrants former custodian, State Street Bank and Trust Company, State Street Financial Center, One Lincoln Street, Boston, MA 02111. |
In addition, Iron Mountain Records Management is an off-site storage facility housing historical records that are no longer required to be maintained on-site. Records stored at this facility include various trading and accounting records, as well as other miscellaneous records. The address for Iron Mountain Records Management is 920 & 950 Apollo Road, Eagan, MN 55121.
Item 34. | Management Services |
Not Applicable.
Item 35. | Undertakings |
Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, COLUMBIA FUNDS SERIES TRUST I, certifies that it meets all the requirements for effectiveness of this Amendment to its Registration Statement under Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Boston, and The Commonwealth of Massachusetts on the 28th day of August, 2014.
COLUMBIA FUNDS SERIES TRUST I | ||
By: |
/s/ J. Kevin Connaughton |
|
J. Kevin Connaughton | ||
President |
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities indicated on the 28th day of August, 2014.
Signature | Capacity | Signature | Capacity | |||
/s/ J. Kevin Connaughton |
President (Principal Executive Officer) |
/s/ David M. Moffett* |
Trustee | |||
J. Kevin Connaughton | David M. Moffett | |||||
/s/ Michael G. Clarke |
Chief Financial Officer (Principal Financial Officer) |
/s/ Charles R. Nelson* |
Trustee | |||
Michael G. Clarke | Charles R. Nelson | |||||
/s/ Joseph F. DiMaria |
Chief Accounting Officer (Principal Accounting Officer) |
/s/ John J. Neuhauser* |
Trustee | |||
Joseph F. DiMaria | John J. Neuhauser | |||||
/s/ Douglas A. Hacker* |
Chair of the Board |
/s/ Patrick J. Simpson* |
Trustee | |||
Douglas A. Hacker | Patrick J. Simpson | |||||
/s/ Janet Langford Kelly* |
Trustee |
/s/ William F. Truscott* |
Trustee | |||
Janet Langford Kelly | William F. Truscott | |||||
/s/ Nancy T. Lukitsh* |
Trustee |
/s/ Anne-Lee Verville* |
Trustee | |||
Nancy T. Lukitsh | Anne-Lee Verville | |||||
/s/ William E. Mayer* |
Trustee | |||||
William E. Mayer |
* | By: |
/s/ Ryan C. Larrenaga |
||||
Name: | Ryan C. Larrenaga** | |||||
Attorney-in-fact |
||||||
** | Executed by Ryan C. Larrenaga on behalf of William F. Truscott pursuant to a Power of Attorney dated March 9, 2012, and incorporated by reference to Post-Effective Amendment No. 143 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(7)), filed with the Commission on March 14, 2012, on behalf of Nancy T. Lukitsh pursuant to a Power of Attorney dated August 24, 2011, and incorporated by reference to Post-Effective Amendment No. 128 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(7)), filed with the Commission on August 31, 2011, on behalf of David M. Moffett pursuant to a Power of Attorney dated May 1, 2011 and incorporated by reference to Post-Effective Amendment No. 125 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(6)), filed with the Commission on May 19, 2011 and on behalf of each of the other Trustees pursuant to a Power of Attorney dated May 1, 2010 and incorporated by reference to Post-Effective Amendment No. 105 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (q)(i)), filed with the Commission on May 28, 2010. |
EXHIBIT INDEX
Exhibit No. | Description | |
(d)(11) | Subadvisory Agreement between Columbia Management Investment Advisers, LLC and Conestoga Capital Advisors, LLC dated June 11, 2014 | |
(j)(2) | Consent of PricewaterhouseCoopers LLP |
Document Number: 337712
SUBADVISORY AGREEMENT
Agreement made as of the 11 th day of June, 2014 by and between Columbia Management Investment Advisers, LLC, a Minnesota limited liability company (Investment Manager), and Conestoga Capital Advisors, LLC, a Delaware limited liability company (Subadviser).
WHEREAS, the Fund listed in Schedule A is a series of an investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act).
WHEREAS, Investment Manager entered into an Investment Management Services Agreement (the Advisory Agreement) with the Fund pursuant to which Investment Manager provides investment advisory services to the Fund.
WHEREAS, Investment Manager and the Fund each desire to retain Subadviser to provide investment advisory services to the Fund, and Subadviser is willing to render such investment advisory services.
WHEREAS, the effective date of this Agreement is July 1, 2014.
NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
1. | Subadvisers Duties . |
(a) | Portfolio Management . Subject to supervision by Investment Manager and the Funds Board of Directors/Trustees (the Board), Subadviser shall manage the investment operations and the composition of that portion of the assets of the Fund which is allocated to Subadviser from time to time by Investment Manager (which portion may include any or all of the Funds assets), including the purchase, retention, and disposition thereof, in accordance with the Funds investment objectives, policies, and restrictions, and subject to the following understandings: |
(i) | Investment Decisions . Subadviser shall determine from time to time what investments and securities will be purchased, retained, or sold with respect to that portion of the Fund allocated to it by Investment Manager, and what portion of such assets will be invested or held uninvested as cash. Subadviser is prohibited from consulting with any other subadviser of the Fund concerning transactions of the Fund in securities or other assets, other than for purposes of complying with the conditions of Rule 12d3-1(a) or (b) of the 1940 Act. Subadviser will not be responsible for voting proxies issued by companies held in the Fund although Investment Manager may consult with Subadviser from time to time regarding the voting of proxies of securities owned by the Fund. Subadviser will not be responsible for filing claims in class action settlements related to securities currently or previously held by that portion of the Fund allocated to it by Investment Manager. |
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(ii) | Investment Limits . In the performance of its duties and obligations under this Agreement, Subadviser shall act in conformity with applicable limits and requirements, as amended from time to time, as set forth in the (a) Funds Prospectus and Statement of Additional Information (SAI); (b) instructions and directions of Investment Manager and of the Board; and (c) requirements of the 1940 Act, the Internal Revenue Code of 1986, as amended (the Code), as applicable to the Fund, and all other applicable federal and state laws and regulations. Investment Manager agrees to give Subadviser prompt written notice if Investment Manager believes any recommendations, advice or investments to be in violation of (a), (b) or (c) above. Notwithstanding the foregoing, Subadviser shall not be responsible for compliance with any limits or requirements set forth in an amendment or supplement to the Funds Prospectus or SAI unless and until Subadviser has been provided with a copy of such amendment or supplement as well as a description of an changes to any limits or requirements set forth therein. |
(iii) | Portfolio Transactions . |
(A) | Trading . With respect to the securities and other investments to be purchased or sold for the Fund, Subadviser shall place orders with or through such persons, brokers, dealers, or futures commission merchants (including, but not limited to, broker-dealers that are affiliated with Investment Manager or Subadviser) selected by Subadviser; provided, however, that such orders shall be consistent with Subadvisers brokerage policy; conform with federal securities laws; and be consistent with seeking best execution. The Subadviser may consider the research, investment information, and other services provided by, and the financial responsibility of, brokers, dealers, or futures commission merchants who may effect, or be a party to, any such transaction or other transactions to which Subadvisers other clients may be a party in accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended. To the extent permitted by law, and consistent with its obligation to seek best execution, Subadviser may execute transactions or pay a broker-dealer a commission, spread or markup in excess of that which another broker-dealer might have charged for executing a transaction provided that Subadviser determines, in good faith, that the execution is appropriate or the commission, spread or markup is reasonable in relation to the value of the brokerage and/or research services provided, viewed in terms of either that particular transaction or Subadvisers overall responsibilities with respect to the Fund and other clients for which it acts as subadviser. Notwithstanding anything herein to the contrary, to the extent Subadviser is directed by Investment Manager to use a particular broker or brokers to borrow securities to cover securities sold short, Subadviser shall have no responsibility for setting the rate charged to borrow a security or otherwise ensuring that the rate charged by such broker to borrow a security is favorable. |
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(B) | Aggregation of Trades . Subadviser, to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities or futures contracts to be sold or purchased for the Fund as well as other clients of Subadviser in order to seek best execution. In such event, allocation of the securities or futures contracts so purchased or sold, as well as the expenses incurred in the transaction, will be made by Subadviser in the manner Subadviser considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to such other clients. |
(C) | Subadviser will not arrange purchases or sales of securities between the Fund and other accounts advised by Subadviser or its affiliates unless (a) such purchases or sales are in accordance with applicable law (including Rule 17a-7 of the 1940 Act) and the Funds policies and procedures as provided in writing to Subadviser along with any amendments, and (b) Subadviser determines the purchase or sale is in the best interests of the Fund. |
(iv) | Records and Reports . Subadviser (a) shall maintain such books and records for such time periods as are required of an SEC-registered investment adviser to an investment company registered under the 1940 Act, (b) shall render to the Board such periodic and special reports as the Board (or a Committee thereof) or Investment Manager may reasonably request in writing, and (c) shall meet with any persons at the request of Investment Manager or the Board for the purpose of reviewing Subadvisers performance under this Agreement at reasonable times and upon reasonable advance notice. |
(v) | Transaction Reports. Subadviser shall provide Investment Manager a daily trade file with information relating to all transactions concerning the allocated portion of the Funds assets for which Subadviser is responsible and shall provide Investment Manager with such other information regarding the Fund upon Investment Managers reasonable request. Subadviser shall affirm or send a trade file of these transactions as instruction to the Custodian of the Fund. |
(b) |
Compliance Program and Ongoing Certification(s). As reasonably requested, Subadviser shall timely provide to Investment Manager (i) information and commentary for the Funds annual and semi-annual reports, in a format approved by Investment Manager, and shall (a) certify that, to the best of its knowledge, such information and commentary does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the information and |
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commentary not misleading, in a format reasonably requested by Investment Manager, as it may be amended from time to time, and (b) provide (i) additional certifications related to Subadvisers management of the Fund in order to support the Funds filings on Form N-CSR and Form N-Q, and the Funds Principal Executive Officers and Principal Financial Officers certifications under Rule 30a-2 of the 1940 Act, thereon; in a format reasonably requested by Investment Manager, as it may be amended from time to time, (ii) a quarterly sub-certification with respect to compliance matters related to Subadviser and Subadvisers management of the Fund, in a format reasonably requested by Investment Manager, as it may be amended from time to time; (iii) an annual certification from Subadvisers Chief Compliance Officer, appointed under Rule 206(4)-7 of the Investment Advisers Act of 1940 (the Advisers Act), or his or her designee with respect to the design and operation of Subadvisers compliance program, in a format reasonably requested by Investment Manager, as it may be amended from time to time; and (iv) from time to time Subadviser shall provide such certifications to assist Investment Manager in fulfilling Investment Managers obligations under Rule 38a-1 of the 1940 Act, as are reasonably requested by the Fund or Investment Manager. In addition, Subadviser will, from time to time, provide a written assessment of its compliance program in conformity with current industry standards that is reasonably acceptable to Investment Manager to enable the Fund to fulfill its obligations under Rule 38a-1 of the 1940 Act. |
(c) | Maintenance of Records . Subadviser shall timely furnish to Investment Manager all information relating to Subadvisers services hereunder which Subadviser is required by law or regulation to keep and which are needed by Investment Manager to maintain the books and records of the Fund required under the 1940 Act. Subadviser agrees that all records which it maintains for the Fund are the property of the Fund and Subadviser will surrender promptly to the Fund any of such records upon the Funds request; provided, however, that Subadviser may retain a copy of such records. Subadviser further agrees to preserve for the periods prescribed under the 1940 Act any such records as are required to be maintained by it pursuant to paragraph 1(a) hereof. |
(d) | Insurance and Code of Ethics . Subadviser will provide the Fund with reasonable evidence that, with respect to its activities on behalf of the Fund, Subadviser is maintaining (i) adequate errors and omissions insurance and (ii) an appropriate Code of Ethics and related reporting procedures. Investment Manager agrees and acknowledges that Subadviser has informed it of the terms and limits of Subadvisers current errors and omissions insurance and Investment Manager has determined that such insurance is adequate pursuant to this paragraph. |
(e) |
Confidentiality . Each of the parties hereto agrees that it shall exercise the same standard of care that it uses to protect its own confidential and proprietary information (Confidential Information), but no less than reasonable care, to protect the Confidential Information of the other party. As used herein, |
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Confidential Information, includes, but is not limited, to Fund Portfolio Information, which refers to confidential and proprietary information with regard to the portfolio holdings and characteristics of the portion of the Fund allocated to Subadviser, that Subadviser manages under the terms of this Agreement. Each party hereby agrees to restrict access to the other partys Confidential Information to its employees who will use it only for the purpose of providing services under this Agreement. The foregoing shall not prevent a party from disclosing Confidential Information (1) that is publicly known or becomes publicly known through no unauthorized act; (2) that is rightfully received from a third party without obligation of confidentiality; (3)(a) that, in the case of Investment Managers Confidential Information, is approved in writing by Investment Manager for disclosure, (3)(b) that, in the case of Subadvisers Confidential Information, is approved in writing by Subadviser for disclosure; (4) that is required to be disclosed in the course of a regulatory examination or that is required to be disclosed pursuant to a requirement of a governmental or regulatory agency or law, so long as the non-disclosing party provides (to the extent permitted under applicable law) the disclosing party (i.e., the party whose Confidential Information would be disclosed) with prompt written notice of such requirement prior to any such disclosure; however, Subadviser is not required to provide such notice if information is provided on an aggregate basis without specific attribution to the Fund; (5) to affiliates that have a reason to know such information; (6) to the custodian of the Fund; (7) to brokers and dealers that are counterparties for trades for the Fund; (8) to futures commission merchants executing or clearing transactions in connection with the Fund, if applicable; and (9) to third party service providers to Subadviser subject to confidentiality agreements or duties. Notwithstanding the foregoing, to the extent Fund Portfolio Information is similar to investments for other clients of Subadviser, Subadviser may disclose such investments without direct reference to the Fund. Investment Manager agrees that Subadviser may identify Investment Manager or the Fund by name in Subadvisers current client list. Such list may be used with third parties. |
(f) | Cooperation . As reasonably requested by Investment Manager or the Board and in accordance with the scope of Subadvisers obligations and responsibilities contained in this Agreement, Subadviser will cooperate with, and provide assistance to, Investment Manager or the Fund as needed in order for Investment Manager and the Fund to comply with applicable laws, rules and regulations, including, but not limited to, compliance with the Sarbanes-Oxley Act and the rules and regulations promulgated by the SEC thereunder. |
2. |
Investment Managers Duties . Investment Manager shall continue to have responsibility for all other services to be provided to the Fund pursuant to the Advisory Agreement and shall oversee and review Subadvisers performance of its duties under this Agreement. Investment Manager shall also retain direct portfolio management responsibility with respect to any assets of the Fund which are not allocated by it to the portfolio management of Subadviser as provided in paragraph 1(a) hereof or to any other subadviser. Investment Manager will periodically provide to Subadviser a list of the affiliates of Investment Manager or the Fund to which investment restrictions apply, and |
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will specifically identify in writing (a) all publicly traded companies that issue securities in which the Fund may not invest, together with ticker symbols for all such companies, and (b) any affiliated brokers and any restrictions that apply to the use of those brokers by Subadviser. Neither Subadviser nor any of its directors, officers, partners, principals, employees or agents shall have responsibility whatsoever for, and shall incur no liability on account of (i) diversification, selection or establishment of such investment objectives, policies and restrictions of the Fund, (ii) advice on, or management of, any assets for the Fund other than the assets for which Investment Manager has delegated investment discretion to Subadviser, (iii) filing of any tax or information returns or forms, withholding or paying any taxes, or seeking any exemption or refund, (iv) registration of the Fund with any government or agency, (v) administration of the plans and trusts investing in the Fund, or (vi) overall Fund compliance with requirements of the 1940 Act and Subchapter M of the Code, relating to percentage limitations applicable to the Funds assets that would require knowledge of the Funds holdings other than the assets subject to this Agreement. |
3. | Documents Provided to Subadviser . Investment Manager has delivered or will deliver to Subadviser current copies and supplements thereto of each of the Prospectus and SAI pertaining to the Fund, and will promptly deliver to it all future amendments and supplements, if any. |
4. | Compensation of Subadviser . For the services provided and the expenses assumed pursuant to this Agreement, Investment Manager will pay to Subadviser, effective from the date of this Agreement, a fee which shall be accrued daily and paid monthly, on or before the last business day of the next succeeding calendar month, at the annual rates as a percentage of the Funds average daily net assets or the average daily net assets of the portion of the Funds assets that is managed by Subadviser, as applicable, set forth in the attached Schedule A which Schedule can be modified from time to time upon mutual agreement of the parties to reflect changes in annual rates, subject to appropriate approvals required by the 1940 Act, if any. If this Agreement becomes effective or terminates before the end of any month, the fee for the period from the effective date to the end of the month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion that such portion of the month bears to the full month in which such effectiveness or termination occurs. During the term of this Agreement, Subadviser will pay all expenses incurred by it in connection with its activities under this Agreement other than costs in connection with the purchase or sale of securities and other assets (including brokerage commissions, if any) for the Fund. |
5. |
Expenses . Subadviser shall bear all expenses incurred by it and its staff with respect to all activities in connection with the performance of Subadvisers services under this Agreement, including but not limited to salaries, overhead and travel. Subadviser agrees to pay to Investment Manager the cost of generating a prospectus supplement, which includes preparation, filing, printing, and distribution (including mailing) of the supplement, if the Subadviser makes any changes that are not made at the request of Investment Manager and/or the Board and that require immediate disclosure in the |
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prospectus or any required regulatory documents that may be caused by changes to its structure or ownership, to investment personnel, to investment style or management, or otherwise (Changes), and at the time of notification to the Fund or Investment Manager by the Subadviser of such Changes, the Fund is not generating a supplement for other purposes or the Fund or the Investment Manager does not wish to add such Changes to a pending supplement. In the event two or more subadvisers, if applicable, each require a supplement simultaneously, the expense (other than the costs of printing and mailing) of a combined supplement will be shared pro rata with such other subadviser(s) based upon the number of pages required by each such subadviser, and each such subadviser shall pay its pro rata share of printing and mailing costs and expenses based upon the number of supplements required to be printed and mailed. All other expenses not specifically assumed by Subadviser hereunder or by Investment Manager under the Advisory Agreement are borne by the applicable Fund.
In the event that there is a proposed change in control of Subadviser that would act to terminate this Agreement, if a vote of shareholders to approve continuation of this Agreement is at that time deemed by counsel to the Fund to be required by the 1940 Act or any rule or regulation thereunder, Subadviser agrees to assume all reasonable costs associated with soliciting shareholders of the appropriate Fund(s), to approve continuation of this Agreement. Such expenses include the reasonable costs of preparation, filing and mailing of a proxy statement, and of soliciting proxies. Such costs and expenses borne by Subadviser shall be limited to a maximum of 25% of the Subadvisers trailing twelve months compensation as described in Schedule A.
In the event that such proposed change in control of Subadviser shall occur and the Fund is operating under an exemptive order issued by the SEC to Investment Manager with respect to the appointment of subadvisers absent shareholder approval, Subadviser agrees to assume all reasonable costs and expenses (including the costs of preparation, mailing and filing) associated with the preparation of an information statement, required by the exemptive order containing all information that would be included in a proxy statement. Such costs and expenses borne by Subadviser shall be limited to a maximum of 25% of the Subadvisers trailing twelve months compensation as described in Schedule A.
6. | Representations of Subadviser . Subadviser represents and warrants as follows: |
(a) |
Subadviser (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement; (iii) has appointed a Chief Compliance Officer under Rule 206(4)-7 of the Advisers Act; (iv) has adopted written policies and procedures that are reasonably designed to prevent violations of the Advisers Act from occurring, detect violations that have occurred, correct promptly any violations that have occurred, and will provide prompt notice of any material violations relating to the Fund to Investment Manager; (v) has met and will seek to continue to meet, in all material respects, for so long as this Agreement remains |
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in effect, any other applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency necessary to be met in order to perform the services contemplated by this Agreement; (vi) has the authority to enter into and perform the services contemplated by this Agreement; and (vii) will promptly notify Investment Manager (1) of the occurrence of any event that would disqualify Subadviser from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act, (2) in the event the Securities and Exchange Commission (the SEC) or other governmental authority has: censured Subadviser; placed limitations upon the activities, functions or operations of Subadviser; or has commenced proceedings or an investigation that may result in any of these actions, (3) upon having a reasonable basis for believing that the Fund has ceased to qualify or might not qualify as a regulated investment company under Subchapter M of the Code and (4) of any material fact known to Subadviser respecting or relating to Subadviser that is not contained in the Funds Prospectus, and is required to be stated therein or necessary to make the statements therein not misleading, or of any statement relating to Subadviser contained therein that becomes untrue in any material respect. |
(b) | Subadviser has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the 1940 Act and will provide Investment Manager with a copy of the code of ethics. Within 60 days of the end of the last calendar quarter of each year that this Agreement is in effect, a duly authorized officer of Subadviser shall certify to Investment Manager that there has been no material violation of Subadvisers code of ethics or, if such a violation has occurred, that appropriate action was taken in response to such violation. To the extent Subadviser has approved any material changes to its code of ethics, such revised code together with an explanation of such amendments shall be promptly (but in no event later than 60 days) provided to Investment Manager. |
(c) |
Subadviser has provided Investment Manager with a copy of a document intended to address the disclosures specified in Form ADV Part 2A, and promptly will furnish a copy of any amendments to such document to Investment
Manager (at least annually). Investment Manager acknowledges that, under Rule 204-3 under the Advisers Act, as amended, to the extent Subadvisers only clients are registered investment companies, Subadviser is not required to file a Form ADV,
Part 2A, with the SEC. |
(d) | Subadviser will promptly notify Investment Manager of any changes in the controlling shareholder, in the key personnel who are either the portfolio manager(s) responsible for the Fund or the Chief Executive Officer of Subadviser, or if there is otherwise an actual change in control or management of Subadviser. |
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7. | Representations of Investment Manager . Investment Manager represents and warrants as follows: |
(a) | Investment Manager (i) is registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement; (iii) has appointed a Chief Compliance Officer under Rule 206(4)-7 of the Advisers Act; (iv) has adopted written policies and procedures that are reasonably designed to prevent violations of the Advisers Act from occurring, detect violations that have occurred, correct promptly any violations that have occurred, and will provide prompt notice of any material violations relating to the Fund to the Subadviser; (v) has met and will seek to continue to meet, in all material respects, for so long as this Agreement remains in effect, any other applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency necessary to be met in order to perform the services contemplated by this Agreement; (vi) has the authority to enter into and perform the services contemplated by this Agreement; and (vii) will promptly notify Subadviser (1) of the occurrence of any event that would disqualify Investment Manager from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise, (2) in the event the SEC or other governmental authority has: censured Investment Manager; placed limitations upon its activities, functions or operations; or has commenced proceedings or an investigation that may result in any of these actions or (3) upon having a reasonable basis for believing that the Fund has ceased to qualify or might not qualify as a regulated investment company under Subchapter M of the Code. |
(b) | Investment Manager agrees that neither it nor any of its affiliates will in any way refer directly or indirectly to its relationship with Subadviser, or any of its affiliates in offering, marketing, or other promotional materials without the prior written consent of Subadviser; provided that Investment Manager shall not be required to obtain Subadvisers prior written consent to make factual statements regarding the fact that Subadviser serves as subadviser to the Fund, in responding to requests for information, in required disclosures or in responding to regulatory inquiries. |
(c) | The Fund is and will continue to be the owner of all assets for which Investment Manager delegates investment discretion to Subadviser from time to time, and there are and will continue to be no restrictions on the pledge, hypothecation, transfer, sale or public distribution of such assets. |
(d) | Investment Manager is establishing and will be maintaining the Funds account with Subadviser solely for the purpose of investing the relevant assets and not with a view to obtaining information regarding portfolio holdings or investment decisions in order to effect securities transactions based upon such information or to provide such information to another party, and that Investment Manager and its employees, officers and directors shall not use account holdings information for any of the foregoing purposes. |
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(e) | The Board has approved the appointment of Subadviser pursuant to this Agreement. |
8. | Liability and Indemnification . |
(a) |
Except as may otherwise be provided by the 1940 Act or any other federal securities law, Subadviser, any of its affiliates and any of the officers, partners, employees, consultants, or agents thereof shall not be liable for any losses, claims, damages, liabilities, or litigation (including legal and other expenses) incurred or suffered by the Fund, Investment Manager, or any affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act) or controlling persons thereof (as described in Section 15 of the Securities Act of 1933, as amended (the 1933 Act) ) (collectively, Fund and Investment Manager Indemnitees) arising out of this Agreement, except that nothing in this Agreement shall operate or purport to operate in any way to exculpate, waive, or limit the liability of Subadviser for, and Subadviser shall indemnify and hold harmless the Fund and Investment Manager Indemnitees against any and all losses, claims, damages, liabilities, or litigation (including reasonable legal and other expenses) to which any of the Fund and Investment Manager Indemnitees may become subject under the 1933 Act, the 1940 Act, the Advisers Act, or under any other statute, at common law, or otherwise arising out of or based on (i) any willful misconduct, bad faith, reckless disregard, or gross negligence of Subadviser in the performance of any of its duties or obligations hereunder; (ii) any untrue statement of a material fact regarding Subadviser contained in the Prospectus and SAI, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Fund or the omission to state therein a material fact regarding Subadviser known to Subadviser which was required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon written information furnished to Investment Manager or the Fund by Subadviser Indemnitees (as defined below) for use therein; provided, however, that Subadviser has had a reasonable opportunity to review information regarding Subadviser contained in the Prospectus and SAI, proxy materials, reports, advertisements, sales literature or other materials pertaining to the Fund as set forth in section 11; or (iii) any material violation of federal or state statutes or regulations by Subadviser in the performance of any of its duties or obligations hereunder. It is further understood and agreed that Subadviser may rely upon information furnished to it by Investment Manager that it reasonably believes to be accurate and reliable. Subadviser shall be liable for any loss incurred by the Fund, the Investment Manager or their respective affiliates to the extent such losses arise out of any act or omission directly attributable to Subadviser which results, directly or indirectly, in an error in the net asset value of the Fund. The federal securities laws impose liabilities in certain circumstances on persons who act in good faith, and therefore nothing herein shall in any way constitute a waiver or limitation of any rights which Investment Manager may have under any securities laws. Neither Subadviser nor any Subadviser Indemnitees (as defined below) shall be liable for any loss or |
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damage arising or resulting from the acts or omissions of the custodian of the Fund, any broker, financial institution or any other third party with or through whom Subadviser arranges or enters into a transaction in respect of the Fund, except to the extent that Subadviser or its affiliate instructed such broker, financial institution or third party to take such action or omission. Investment Manager understands and acknowledges that Subadviser does not warrant that the portion of the assets of the Fund managed by Subadviser will achieve any particular rate of return or that its performance will match any benchmark index or other standard or objective. |
(b) | Except as may otherwise be provided by the 1940 Act or any other federal securities law, Investment Manager and the Fund shall not be liable for any losses, claims, damages, liabilities, or litigation (including legal and other expenses) incurred or suffered by Subadviser or any of its affiliated persons thereof (within the meaning of Section 2(a)(3) of the 1940 Act) or controlling persons (as described in Section 15 of the 1933 Act) (collectively, Subadviser Indemnitees) arising out of this Agreement, except that nothing in this Agreement shall operate or purport to operate in any way to exculpate, waive, or limit the liability of Investment Manager for, and Investment Manager shall indemnify and hold harmless Subadviser Indemnitees against any and all losses, claims, damages, liabilities, or litigation (including reasonable legal and other expenses) to which any of Subadviser Indemnitees may become subject under the 1933 Act, the 1940 Act, the Advisers Act, or under any other statute, at common law, or otherwise arising out of or based on (i) any willful misconduct, bad faith, reckless disregard, or gross negligence of Investment Manager in the performance of any of its duties or obligations hereunder; (ii) any untrue statement of a material fact contained in the Prospectus and SAI, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Fund or the omission to state therein a material fact known to Investment Manager which was required to be stated therein or necessary to make the statements therein not misleading, unless such statement or omission concerned Subadviser and was made in reliance upon written information furnished to Investment Manager or the Fund by a Subadviser Indemnitee for use therein; or (iii) any material violation of federal or state statutes or regulations by Investment Manager in the performance of any of its duties or obligations hereunder. |
(c) |
After receipt by Investment Manager or Subadviser, its affiliates, or any officer, director, employee, or agent of any of the foregoing, entitled to indemnification as stated in (a) or (b) above (Indemnified Party) of notice of the commencement of any action, if a claim in respect thereof is to be made against any person obligated to provide indemnification under this section (Indemnifying Party), such Indemnified Party shall notify the Indemnifying Party in writing of the commencement thereof as soon as practicable after the summons or other first written notification giving information of the nature of the claim that has been served upon the Indemnified Party; provided that the failure to so notify the Indemnifying Party will not relieve the Indemnifying Party from any liability |
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under this section, except to the extent that the omission results in damages to the Indemnifying Party caused solely as a result of the failure to give such notice. The Indemnifying Party, upon the request of the Indemnified Party, shall retain counsel satisfactory to the Indemnified Party to represent the Indemnified Party in the proceeding, and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (1) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel, or (2) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation by both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party from and against any loss or liability by reason of such settlement or judgment. |
9. | Duration and Termination . |
(a) | Unless sooner terminated as provided herein, this Agreement shall continue for two years from the date written above. Thereafter, if not terminated, this Agreement shall continue automatically for successive periods of 12 months each, provided that such continuance is specifically approved at least annually (i) by a vote of a majority of the Board members who are not parties to this Agreement or interested persons (as defined in the 1940 Act) of any such party, and (ii) by the Board or by a vote of the holders of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund. |
(b) | Notwithstanding the foregoing, this Agreement may be terminated at any time, without the payment of any penalty, by the Board or by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund on 60 days written notice to Subadviser. This Agreement may also be terminated, without the payment of any penalty, by Investment Manager (i) upon 60 days written notice to Subadviser; (ii) upon material breach by Subadviser of any representations and warranties set forth in this Agreement, if such breach has not been cured within 20 days after written notice of such breach; or (iii) immediately if, in the reasonable judgment of Investment Manager, Subadviser becomes unable to discharge its duties and obligations under this Agreement, including circumstances such as the insolvency of Subadviser or other circumstances that could adversely affect the Fund. Subadviser may terminate this Agreement at any time, without payment of any penalty, (1) upon 60 days written notice to Investment Manager; or (2) upon material breach by Investment Manager of any representations and warranties set forth in the Agreement, if such breach has not been cured within 20 days after written notice of such breach. This Agreement shall terminate automatically in the event of its assignment (as defined in the 1940 Act) or upon the termination of the Advisory Agreement. |
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(c) | In the event of termination of the Agreement, those paragraphs of the Agreement which govern conduct of the parties future interactions with respect to Subadviser having provided investment management services to the Fund(s) for the duration of the Agreement, including, but not limited to, paragraphs 1(a)(iv)(a), 1(e), 1(f), 8(a), 8(b), 8(c), 9(c), 15, 17 and 18 shall survive such termination of the Agreement. |
10. | Subadvisers Services Are Not Exclusive . Nothing in this Agreement shall limit or restrict the right of Subadviser or any of its partners, officers, or employees to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any business, whether of a similar or a dissimilar nature, or limit or restrict Subadvisers right to engage in any other business or to render services of any kind to any other mutual fund, corporation, firm, individual, or association. Subadviser acts as adviser to other clients and may, subject to compliance with its fiduciary obligations, give advice, and take action, with respect to any of those which may differ from the advice given, or the timing or nature of action taken, with respect to the Fund. Subject to its fiduciary obligation to the Fund, Subadviser shall have no obligation to purchase or sell for the Fund, or to recommend for purchase or sale by the Fund, any security which Subadviser, its principals, affiliates or employees may purchase or sell for themselves or for any other clients. |
11. | References to Subadviser . Subject to Section 7(b), Subadviser hereby grants to Investment Manager during the term of this Agreement, the right and license to use Subadvisers name and registered and unregistered trademarks, service marks and logos on Investment Managers web site(s) and in other materials solely for the purposes of disclosing and promoting the relationship between the parties as described herein. In accordance with the exercise of the license rights granted in the preceding sentence, Investment Manager agrees to furnish to Subadviser at its principal office all prospectuses, SAIs, proxy statements, reports to shareholders, sales literature, or other material prepared for distribution to sales personnel, shareholders of the Fund or the public, that refer to Subadviser prior to the use thereof, and not to use such material if Subadviser reasonably objects in writing five (5) business days (or such other time as may be mutually agreed upon) after receipt thereof. Such materials may be furnished to Subadviser hereunder by first-class or overnight mail, electronic or facsimile transmission, or hand delivery. |
12. | Notices . Any notice under this Agreement must be given in writing as provided below or to another address as either party may designate in writing to the other. |
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Subadviser:
Robert M. Mitchell
Managing Partner
Conestoga Capital Advisors, LLC
259 N. Radnor-Chester Road, Radnor Court Suite 120
Radnor, PA 19087
Tel: (484) 654-1380
Fax: (610) 225-0533
with a copy to:
Duane R. DOrazio
Managing Partner
Conestoga Capital Advisors, LLC
259 N. Radnor-Chester Road, Radnor Court Suite 120
Radnor, PA 19087
Tel: (484) 654-1380
Fax: (610) 225-0533
Investment Manager:
Paul Mikelson
Vice President, Subadvised Strategies
435 Ameriprise Financial Center
Routing H13/435
Minneapolis, MN 55474
Tel: (612) 671-4452
Fax: (612) 671-0618
with a copy to:
Christopher O. Petersen
Vice President and Chief Counsel
Ameriprise Financial
50606 Ameriprise Financial Center
Minneapolis, MN 55474
Tel: (612) 671-4321
Fax: (612) 671-2680
13. | Amendments . This Agreement may be amended by mutual consent, subject to approval by the Board and the Funds shareholders to the extent required by the 1940 Act. |
14. | Assignment . No assignment of this Agreement shall be made by Investment Manager or Subadviser without the prior written consent of the Fund, and, if required by law, the Funds shareholders, and Investment Manager or Subadviser (as applicable). Notwithstanding the foregoing, no assignment shall be deemed to result from any changes in the directors, officers, or employees of Investment Manager or Subadviser except as may be provided to the contrary in the 1940 Act or the rules and regulations thereunder. |
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15. | Governing Law . This Agreement, and, in the event of termination of the Agreement, those paragraphs that survive such termination of the Agreement under paragraph 9(c), shall be governed by the laws of the commonwealth of Massachusetts, without giving effect to the conflicts of laws principles thereof, or any applicable provisions of the 1940 Act. To the extent that the laws of the commonwealth of Massachusetts, or any of the provision of this Agreement, conflict with applicable provisions of the 1940 Act, the latter shall control. |
16. | Entire Agreement . This Agreement embodies the entire agreement and understanding among the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof. |
17. | Severability . Should any part of this Agreement be held invalid by a court decision, statute, rule, or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement and, in the event of termination of the Agreement, those paragraphs that survive such termination of the Agreement under paragraph 9(c), shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. |
18. | Interpretation . Any questions of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision in the 1940 Act and to interpretation thereof, if any, by the federal courts or, in the absence of any controlling decision of any such court, by rules, regulations, or orders of the SEC validly issued pursuant to the 1940 Act. Where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is altered by a rule, regulation, or order of the SEC, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation, or order. |
19. | Headings . The headings in this Agreement are intended solely as a convenience and are not intended to modify any other provision herein. |
20. | Authorization . Each of the parties represents and warrants that the execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action by such party and when so executed and delivered, this Agreement will be the valid and binding obligation of such party in accordance with its terms. |
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written.
Columbia Management Investment Advisers , LLC |
Conestoga Capital Advisors, LLC |
By: |
/s/ Colin Moore |
By: |
/s/ Robert M. Mitchell |
|||||
Signature | Signature | |||||||
Name: |
Colin Moore |
Name: |
Robert M. Mitchell |
|||||
Printed | Printed | |||||||
Title: |
Global Chief Investment Officer | Title: | Managing Partner |
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SUBADVISORY AGREEMENT
SCHEDULE A
Compensation pursuant to Paragraph 4 of Subadvisory Agreement shall be calculated in accordance with the following schedule:
[REDACTED DATA]
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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our reports dated June 20, 2014, relating to the financial statements and financial highlights, which appear in the April 30, 2014 Annual Reports to Shareholders of Columbia Bond Fund, Columbia Corporate Income Fund, Columbia Intermediate Bond Fund, Columbia Small Cap Value Fund I and Columbia U.S. Treasury Index Fund (five of the funds constituting Columbia Funds Series Trust I), which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings Financial Highlights and Independent Registered Public Accounting Firm in such Registration Statement.
/s/ PricewaterhouseCoopers LLP |
Minneapolis, Minnesota |
August 27, 2014 |