As filed with the Securities and Exchange Commission on January 27, 2015.
Registration Nos. 2-99356
811-04367
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
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REGISTRATION STATEMENT
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UNDER
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THE SECURITIES ACT OF 1933
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x
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 219
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x
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and/or
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REGISTRATION STATEMENT
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UNDER
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THE INVESTMENT COMPANY ACT OF 1940
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x
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Amendment No. 221
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(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:
For Columbia Adaptive Alternatives Fund January 28, 2015
For Columbia Diversified Absolute Return Fund February 19, 2015
It is proposed that this filing will become effective (check appropriate box)
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Immediately upon filing pursuant to paragraph (b)
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On January 28, 2015 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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On (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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On (date) pursuant to paragraph (a)(2) of rule 485.
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If appropriate, check the following box:
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This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
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This Post-Effective Amendment relates solely to the Registrants Columbia Adaptive Alternatives Fund and Columbia Diversified Absolute Return Fund
series. Information contained in the Registrants Registration Statement relating to any other series of the Registrant is neither amended nor superseded hereby.
Prospectus
January 28, 2015
Columbia Adaptive Alternatives Fund
Class
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Ticker
Symbol
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Class
A Shares
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CLAAX
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Class
C Shares
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CLABX
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Class
I Shares
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CLIIX
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Class
R Shares
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CRRLX
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Class
R4 Shares
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CLFUX
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Class
R5 Shares
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CLIVX
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Class
W Shares
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CLAWX
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Class
Y Shares
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CLAYX
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Class
Z Shares
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CLAZX
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The Securities and Exchange Commission (SEC) and the Commodity Futures
Trading Commission (CFTC) have not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Columbia Adaptive
Alternatives Fund
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3
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3
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3
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4
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7
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16
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17
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17
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17
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18
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19
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19
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19
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22
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37
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42
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43
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44
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44
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46
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46
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46
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50
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57
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59
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62
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63
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63
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64
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68
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70
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75
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76
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79
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79
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80
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82
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Columbia Adaptive Alternatives
Fund
Investment Objective
Columbia Adaptive Alternatives Fund (the Fund)
seeks to provide shareholders with absolute (positive) returns over a complete market cycle.
Fees and Expenses of the Fund
This table describes the fees and expenses that you
may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and members of your immediate family invest, or agree to invest in the future, at least $50,000 in certain classes of shares of eligible funds
distributed by Columbia Management Investment Distributors, Inc. (the Distributor). More information about these and other discounts is available from your financial intermediary, and can be found in the
Choosing a
Share Class
section beginning on page 46 of the Fund’s prospectus and in Appendix S to the Statement of Additional Information (SAI) under
Sales Charge Waivers
beginning on page S-1.
Shareholder
Fees (fees paid directly from your investment)
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Class
A
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Class
C
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Classes
I,
R, R4, R5,
W, Y and Z
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Maximum
sales charge (load) imposed on purchases (as a % of offering price)
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5.75%
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None
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None
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Maximum
deferred sales charge (load) imposed on redemptions (as a % of the lower of the original purchase price or current net asset value)
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1.00%
(a)
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1.00%
(b)
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None
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Annual
Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
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Class
A
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Class
C
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Class
I
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Class
R
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Class
R4
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Class
R5
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Class
W
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Class
Y
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Class
Z
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Management
fees
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1.25%
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1.25%
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1.25%
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1.25%
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1.25%
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1.25%
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1.25%
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1.25%
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1.25%
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Distribution
and/or service (12b-1) fees
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0.25%
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1.00%
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0.00%
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0.50%
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0.00%
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0.00%
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0.25%
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0.00%
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0.00%
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Other
expenses
(c)
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0.36%
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0.36%
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0.16%
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0.36%
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0.36%
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0.21%
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0.36%
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0.16%
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0.36%
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Acquired
fund fees and expenses
(d)
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1.57%
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1.57%
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1.57%
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1.57%
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1.57%
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1.57%
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1.57%
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1.57%
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1.57%
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Total
annual Fund operating expenses
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3.43%
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4.18%
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2.98%
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3.68%
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3.18%
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3.03%
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3.43%
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2.98%
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3.18%
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Less:
Fee waivers and/or expense reimbursements
(e)
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(0.25%)
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(0.25%)
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(0.20%)
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(0.25%)
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(0.25%)
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(0.20%)
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(0.25%)
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(0.20%)
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(0.25%)
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Total
annual Fund operating expenses after fee waivers and/or reimbursements
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3.18%
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3.93%
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2.78%
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3.43%
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2.93%
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2.83%
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3.18%
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2.78%
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2.93%
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(a)
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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.
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(b)
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This
charge applies to redemptions within one year of purchase, with certain limited exceptions.
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(c)
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Other expenses are based on
estimated amounts for the Fund's current fiscal year.
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(d)
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Acquired fund fees and
expenses are based on estimated amounts for the Fund's current fiscal year.
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(e)
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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, and extraordinary
expenses) until September 30, 2016, 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, which includes, among others,
dividend and interest expense associated with securities sold short by the Fund and Blackstone Alternative Multi-Strategy Fund (an unaffiliated mutual fund indirectly invested in by the Fund), will not exceed the annual rates of 2.95% for Class A,
3.70% for Class C, 2.55% for Class I, 3.20% for Class R, 2.70% for Class R4, 2.60% for Class R5, 2.95% for Class W, 2.55% for Class Y and 2.70% for Class Z. The difference between these contractual caps and the
Total
annual Fund operating expenses after fee waivers and/or reimbursements
reported in the table amounts to 0.23%, which represents the Blackstone Fund’s dividend and interest expense associated with its securities sold short.
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Columbia Adaptive
Alternatives Fund
Summary of the Fund
(continued)
The following example is intended
to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example illustrates the hypothetical expenses that you would incur over the time periods indicated, and assumes that:
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you invest $10,000
in the applicable class of Fund shares for the periods indicated,
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your investment
has a 5% return each year, and
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the
Fund’s total annual operating expenses remain the same as shown in the
Annual Fund Operating Expenses
table above.
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Since the
waivers and/or reimbursements shown in the
Annual Fund Operating Expenses
table above expire as indicated in the preceding table, they are only reflected in the 1 year example and the first year of the 3 year
example. Although your actual costs may be higher or lower, based on the assumptions listed above, your costs (based on estimated Fund expenses) would be:
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1
year
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3
years
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Class
A
(whether or not shares are redeemed)
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$877
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$1,546
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Class
C
(assuming redemption of all shares at the end of the period)
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$495
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$1,247
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Class
C
(assuming no redemption of shares)
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$395
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$1,247
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Class
I
(whether or not shares are redeemed)
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$281
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$
903
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Class
R
(whether or not shares are redeemed)
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$346
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$1,103
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Class
R4
(whether or not shares are redeemed)
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$296
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$
957
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Class
R5
(whether or not shares are redeemed)
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$286
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$
917
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Class
W
(whether or not shares are redeemed)
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$321
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$1,030
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Class
Y
(whether or not shares are redeemed)
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$281
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$
903
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Class
Z
(whether or not shares are redeemed)
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$296
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$
957
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Portfolio Turnover
The Fund may pay transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. Because the Fund is newly organized, portfolio turnover information is not available as of the date of this prospectus.
Principal Investment Strategies
Under normal circumstances, the
Fund allocates its net assets among non-traditional or “alternative” investments and strategies (referred to as Alternative Investment Strategies, as further described below), as well as other strategies, instruments and assets,
including derivatives and cash. The Fund, through such investments, seeks absolute (positive) returns over a complete market cycle. For both stocks and bonds, a complete market cycle can be measured from market peak to peak or from market trough to
trough. The Fund’s performance is anticipated to have a low correlation to the performance of the broad equity and fixed income markets over such cycles.
The Fund’s investment manager, Columbia
Management Investment Advisers, LLC (Columbia Management or the Investment Manager) determines the Fund’s desired exposures to, and allocation strategy across, Alternative Investment Strategies and other available strategies, instruments and
assets.
In seeking
its desired exposures, the Fund anticipates investing substantially in affiliated and unaffiliated open- and closed-end funds, including exchange-traded funds (ETFs) (collectively, the Underlying Funds). Certain of the Underlying Funds may
themselves invest in various strategies, including strategies advised by hedge fund managers through open-end and closed-end funds, hedge funds, funds of hedge funds, funds traded publicly on foreign exchanges, funds that are Undertakings for
Collective Investment in Transferable Securities (UCITS funds), and listed private equity funds and funds of funds. The Fund expects to invest in, among other Underlying Funds, Columbia Inflation Protected Securities Fund and to gain exposure to
other Alternative Investment Strategies by investing in Columbia Intermediary Alternatives Fund (the Intermediary Fund), which will invest
Columbia Adaptive Alternatives
Fund
Summary of the
Fund
(continued)
substantially all of its assets in Blackstone Alternative
Multi-Strategy Fund (the Blackstone Fund), a mutual fund (and registered commodity pool) managed by Blackstone Alternative Investment Advisors LLC (Blackstone). It is currently expected that the Fund’s exposure to the Blackstone Fund will not
exceed 60% of the Fund’s net assets.
As
further described below, the Fund also has the flexibility to invest directly in any securities, instruments or other assets, including derivative instruments, unless otherwise noted below.
The Fund seeks exposure to
Alternative Investment Strategies, which are strategies that seek investment returns largely uncorrelated with the broad equity and fixed income/debt markets. The Fund’s investment in or allocation to such strategies may include, directly or
indirectly through Underlying Funds, exposure to activist, alternative beta, arbitrage, equity and/or credit long/short, event-driven, fundamental, global macro, managed futures, multi-strategy, opportunistic trading, quantitative, and relative
value strategies, among others. These particular Alternative Investment Strategies are described below.
Activist Strategies
seek exposure to companies that are the subject of a proxy contest or which activist investors are attempting to influence, in the expectation that new management or a change in business strategies will cause the price of the particular
company’s securities to increase.
Alternative Beta Strategies
seek exposure to market-based opportunities through a portfolio constructed of long/short securities positions, derivatives and other instruments in an attempt to isolate and capitalize upon certain market-based
inefficiencies, such as, for example, value and momentum. These alternative beta strategies typically have less correlation to traditional equity and fixed income markets.
Arbitrage Strategies
seek to identify and exploit pricing inefficiencies in certain securities, markets or countries.
Equity and/or Credit Long/Short Strategies
involve long positions in equity or fixed income securities that are expected to go up in value and short positions in equity or fixed income securities that are expected to decline in value in an attempt to profit from
the difference in performance of the long positions versus the short positions.
Event-driven Strategies
employ processes designed to identify opportunities relating to companies undergoing particular corporate transactions or structural transformations (e.g., mergers, acquisitions or reorganizations).
Fundamental Strategies
employ processes designed to identify attractive opportunities in securities of companies that are undervalued/overvalued or expected to experience high/low levels of growth, including bottom-up analysis of a
company’s financial statements.
Global Macro Strategies
focus on macroeconomic fundamentals in developing investment theses. Global macroeconomics deals with the performance, structure, behavior, and decision-making of the global economy as a whole, rather than individual
markets. Monetary policy shifts, fiscal policy shifts, gross domestic product growth or inflation all may be considered in developing a market view.
Managed Futures Strategies
seek to profit from movements in the global financial, commodity, and currency markets by investing in futures, options, and forward contracts.
Multi-Strategy Strategies
employ a wide variety of strategies, including some or substantially all of the strategies described above, based upon analysis of macroeconomic variables.
Opportunistic Trading Strategies
employ processes designed to identify short-term or long-term trading opportunities, including analyzing supply/demand imbalances.
Quantitative Strategies
employ quantitative techniques that seek gains from anticipated price movements, including models based on valuation, events, statistics, economic fundamentals, changes in economic environments, and changes in market
sentiment.
Relative Value Strategies
seek to identify and exploit differences in prices or rates between related financial instruments (e.g., stocks and bonds of the same issuer or issuers in the same or similar industry or sector) in an attempt to profit
from the convergence in value between the related securities.
These Alternative Investment Strategies, whether
implemented directly within the Fund’s portfolio by the Investment Manager or implemented indirectly through investments in Underlying Funds, employ the use of various securities, instruments and other assets, including derivative instruments.
Through its investment in the Alternative Investment Strategies and other available strategies, instruments and assets, the Fund will have investment exposure, directly or indirectly through the Underlying Funds,
Columbia Adaptive
Alternatives Fund
Summary of the Fund
(continued)
to a broad range of markets and asset classes economically tied to
U.S. and foreign markets, including, but not limited to, equity securities, fixed income securities, and derivative instruments (both exchange-traded and over-the-counter instruments), including commodity-linked investments. There is no limit on the
amount of exposure the Fund may have to any specific asset class, market sector, or instrument.
The derivative instruments in
which the Fund may invest directly or indirectly through Underlying Funds include futures; forward foreign currency contracts; forward interest rate agreements; structured notes; swaps; options; and warrants and rights. The Fund will not gain
investment exposure to the commodities markets directly, but may do so indirectly through investment in one or more Subsidiaries (as defined below) or Underlying Funds, including but not limited to Columbia Commodity Strategy Fund, a registered
commodity pool. The Fund may invest in derivatives for both hedging and non-hedging purposes, including, for example, seeking to enhance returns or as a substitute for a position in an underlying asset or index. The Fund may invest in derivatives to
manage the Fund’s overall risk exposure.
The Fund may invest directly in derivatives or
indirectly by investing in one or more offshore, wholly-owned subsidiaries (each, a Subsidiary, and, collectively, the Subsidiaries). Generally, Subsidiaries will invest primarily in commodity futures, but they may also invest in financial futures,
option and swap contracts, fixed income securities, pooled investment vehicles, including those that are not registered pursuant to the Investment Company Act of 1940, as amended (the 1940 Act), and other investments intended to serve as margin or
collateral for the Subsidiaries’ derivative positions.
Unlike the Fund (which is subject to limitations
under federal tax laws), Subsidiaries may invest without limitation in commodity-linked derivatives; however, the Fund, in combination with its Subsidiaries, will comply with the same 1940 Act asset coverage requirements with respect to the
Subsidiaries’ investments in commodity-linked derivatives that are applicable to the Fund’s direct transactions in derivatives.
The Fund may purchase or sell
securities on a when-issued, delayed delivery or forward commitment basis. Such securities may include mortgage-backed securities acquired or sold in the “to be announced” (TBA) market and those in a dollar roll transaction.
The equity securities in which the Fund may
invest directly or indirectly through Underlying Funds include those of issuers of any market capitalization located throughout the world (including the U.S. and emerging markets) across various investment styles (e.g., growth-, value-oriented
styles), which may include common stocks, preferred stocks, convertible securities, depositary receipts, listed private equity, and real estate investment trusts (REITs) and instruments of similar entities formed under the laws of non-U.S.
countries.
The fixed
income securities in which the Fund may invest directly or indirectly through Underlying Funds include debt securities of governments throughout the world (including the U.S. and emerging markets) as well as their agencies and instrumentalities and
government-sponsored enterprises, debt securities of non-governmental issuers (e.g., corporate issuers) throughout the world (including the U.S. and emerging markets), debt securities of any credit rating (including below investment grade debt
securities, commonly known as “high-yield” or “junk” bonds) or debt securities that are unrated, commercial and residential mortgage-backed securities, asset-backed securities (including those backed by consumer assets),
floating rate loans, bank loans, loan assignments and loan participations, bankruptcy or trade claims, exchange-traded notes, cash/cash equivalents, inflation-hedging assets, as well as sovereign and quasi-sovereign debt investments. There is no
limitation on the maturities or duration of the instruments in which the Fund may invest.
The Fund may directly or indirectly purchase
securities in private placements, repurchase agreements, securities or other instruments of distressed companies or issuers undergoing other special situations, including initial public offerings or major corporate events, such as business
consolidations or restructurings.
The
Fund may directly or indirectly take both long and short positions in all of its investments. The Fund as a whole, or any Underlying Fund, may at any time have either a net long exposure or a net short exposure to markets, and neither the Underlying
Funds nor the Fund’s portfolio as a whole will be managed to maintain any fixed net long or net short market exposure.
The Fund expects to have
significant investment leverage (market exposure in excess of the Fund’s assets) as a result of certain of its direct investments (e.g., derivatives) and/or its investments in Underlying Funds, which may themselves use leverage.
Columbia Adaptive Alternatives
Fund
Summary of the
Fund
(continued)
The Fund may hold a significant amount of cash,
money market instruments (which may include investments in one or more affiliated or unaffiliated money market funds or similar vehicles), other high-quality, short-term investments, or other liquid assets for investment purposes or to meet its
segregation obligations as a result of its investments in derivatives. In certain market conditions, the Fund may have no market positions (i.e., the Fund may hold only cash and cash equivalents) when the Investment Manager believes it is in the
best interests of the Fund.
The Fund’s
investment strategy may involve the frequent trading of portfolio securities.
The Fund is non-diversified, which means that it can
invest a greater percentage of its assets in the securities of fewer issuers than can a diversified fund.
Investment Process
The Investment Manager’s investment process
employs both quantitative and fundamental methodologies to make both strategic and tactical asset allocation decisions. This process seeks to allocate the Fund’s net assets to achieve desired investment exposures across the following distinct
sleeves:
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various
Alternative Investment Strategies employed by third-party hedge fund managers researched and selected by Blackstone, through investment in the Intermediary Fund, which invests in the Blackstone Fund (the Hedge Fund Manager Sleeve);
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an
Adaptive Alternatives Sleeve, designed and implemented by the Investment Manager’s Global Asset Allocation team, which uses proprietary models and quantitative and fundamental methods to identify distinct market environments and employs
various investment strategies that create a strategic risk allocation for each environment that is intended to generate attractive risk-adjusted returns in that environment; and
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■
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a Completion
Sleeve, which will use both quantitative and fundamental methodologies to gain exposure to Alternative Beta Strategies designed to isolate and capitalize upon certain market-based inefficiencies. When deemed appropriate by the Investment Manager,
the Completion Sleeve may also be managed using the Investment Manager’s Global Asset Allocation team’s methodology described above to identify distinct market environments and create a strategic risk allocation for each environment that
is intended to generate attractive risk-adjusted returns in that environment.
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The Fund’s strategic and tactical allocations
may change at any time.
Principal Risks
An investment in the Fund involves risk, including
specific risks relating to the investment in the Fund based on its investment process, as well as specific risks related to the Underlying Funds in which it invests, including among others, those described below. As such, the risks noted below apply
to the Fund and Underlying Funds or other investment vehicles. More information about Underlying Funds, including their principal risks, is available in their prospectuses.
There is no assurance that the Fund
will achieve its investment objective and you may lose money
. The value of the Fund’s holdings may decline, and the Fund’s net asset value (NAV) and share price may go down. (References in this section to “the Fund”
also include the Subsidiaries, which share the same risks as the Fund.)
Active Management Risk.
Due to its active management, the Fund could underperform its benchmark index and/or other funds with similar investment objectives.
Activist Strategies Risk.
The Fund may purchase securities of a company that is the subject of a proxy contest or which activist investors are attempting to influence, in the expectation that new management or a change in business strategies
will cause the price of the company’s securities to increase. If the proxy contest, or the new management, is not successful, the market price of the company’s securities will typically fall.
Allocation
Risk.
Because the Fund uses an asset allocation strategy in pursuit of its investment objective, there is a risk that the Fund's allocation among asset classes, investments, managers, strategies and/or investment
styles will cause the Fund's 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.
Alternative Strategies Investment Risk.
An investment in alternative investment strategies (Alternative Strategies), whether through direct investment or through one or more underlying funds, involves risks, which may be significant. Alternative
Strategies may include strategies, instruments or other assets, such as derivatives, that seek investment returns uncorrelated with
Columbia Adaptive
Alternatives Fund
Summary of the Fund
(continued)
the broad equity and fixed income/debt markets, as well as those
providing exposure to other markets (such as commodity markets), including but not limited to absolute (positive) return strategies. Alternative Strategies may fail to achieve their desired performance, market or other exposure, or their returns (or
lack thereof) may be more correlated with the broad equity and/or fixed income/debt markets than was anticipated, and the Fund may lose money.
To the extent that an underlying fund is charged a
performance (or incentive) fee (which would indirectly be borne by the Fund’s shareholders), such fees may create incentives for the underlying fund’s manager to make investments that are riskier or more speculative than in the absence
of these fees. Because these fees are often based on both realized as well as unrealized appreciation, the fee may be greater than if it were based only on realized gains. In addition, underlying fund managers may receive compensation for positive
relative performance of the underlying fund even if the underlying fund’s overall returns are negative.
Arbitrage Strategies Risk.
The Fund may purchase securities at prices only slightly below the anticipated value to be paid or exchanged for such securities in a merger, exchange offer or cash tender offer, and substantially above the prices at
which such securities traded immediately prior to announcement of the transaction. If there is a perception that the proposed transaction will not be consummated or will be delayed, the market price of the security may decline sharply, which would
result in a loss to the Fund.
Bankruptcy
Process Risk.
The Fund may purchase bankruptcy claims. There are a number of significant risks inherent in the bankruptcy process. The effect of a bankruptcy filing on a company may adversely and permanently affect
the company by causing it to lose its market position and key employees and otherwise become incapable of restoring itself as a viable business. Many events in a bankruptcy are the product of contested matters and adversarial proceedings and are
beyond the control of the creditors. The duration of a bankruptcy proceeding is difficult to predict and a creditor’s return on investment can be adversely affected by delays while the plan of reorganization is being negotiated, approved by
the creditors, confirmed by the bankruptcy court, and until it ultimately becomes effective. The administrative costs in connection with a bankruptcy proceeding are frequently high and are paid out of the debtor’s estate before any return to
creditors. Furthermore, bankruptcy law permits the classification of “substantially similar” claims in determining the classification of claims in a bankruptcy reorganization. Because the standard for classification is vague, there
exists the risk that the Fund’s influence with respect to the class of securities it owns can be impaired as a result of increases in the number and amount of claims in that class or by different classification and treatment of that class.
Finally, amounts previously paid to the Fund may be challenged as fraudulent conveyances or preferences as part of a bankruptcy proceeding.
Commodity Futures Trading Commission (CFTC) Regulatory
Risk.
The Fund does not qualify for an exemption from registration as a “commodity pool” under rules of the Commodity Exchange Act (the CEA). Accordingly, the Fund is a commodity pool under the CEA and
the Investment Manager is registered as a “commodity pool operator” under the CEA. The Fund is subject to dual regulation by the SEC and the CFTC. Compliance with the CFTC’s regulatory requirements could increase Fund expenses,
adversely affecting the Fund’s total return.
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. Exposure to commodities and commodities markets may subject the value of the Fund’s investments to greater volatility than other types of investments.
Commodities investments may also subject the Fund to counterparty risk and liquidity risk. The Fund may make commodity-related investments through, and may invest in one or more underlying funds that make commodity-related investments
through,
one or more wholly-owned subsidiaries organized outside the U.S. that are generally not subject to U.S. laws (including securities laws) and their protections.
Confidential Information Access Risk.
Portfolio managers may avoid the receipt of material, non-public information (Confidential Information) about the issuers of floating rate loans (including from the issuer itself) being considered for acquisition by the
Fund, or held in the Fund. A decision not to receive Confidential Information may disadvantage the Fund and could adversely affect the Fund’s performance.
Convertible Securities Risk.
Convertible securities are subject to the usual risks associated with debt securities, such as interest rate risk and credit risk. Convertible securities also react to changes in the value of the common stock into which
they convert, and are thus subject to market risk. The Fund may also be forced to convert a convertible security at an inopportune time, which may decrease the Fund’s return.
Columbia Adaptive Alternatives
Fund
Summary of the
Fund
(continued)
Counterparty Risk.
Counterparty risk is the risk that a counterparty to a financial instrument held by the Fund or by a special purpose or structured vehicle invested in by the Fund may become insolvent or otherwise fail to perform its obligations. As a result, the
Fund may obtain no or limited recovery of its investment, and any recovery may be significantly delayed.
Credit Risk.
The value of loans or fixed-income securities may decline if the borrower or the issuer of the security defaults or otherwise becomes unable or unwilling, or is perceived to be unable or unwilling, to honor its
financial obligations, such as making payments to the Fund when due. Rating agencies assign credit ratings to certain loans and fixed-income securities to indicate their credit risk. Lower quality or unrated securities held by the Fund may present
increased credit risk as compared to higher-rated securities. Non-investment grade loans or fixed-income securities (commonly called “high-yield” or “junk”) are subject to greater price fluctuations and are more likely to
experience a default than investment grade loans or securities and therefore may expose the Fund to increased credit risk. If the Fund purchases unrated loans or securities, or if the ratings of loans or securities held by the Fund are lowered after
purchase, the Fund will depend on analysis of credit risk more heavily than usual. 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 that is adverse to the holders of the loan. Such actions may include 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 Fund’s performance. 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
Fund’s operating expenses and adversely affect its NAV. Loans that have a lower priority for repayment in an issuer’s capital structure may involve a higher degree of overall risk than more senior loans of the same borrower.
Depositary Receipts Risk.
Depositary receipts are receipts issued by a bank or trust company reflecting ownership of underlying securities issued by foreign companies. Some foreign securities are traded in the form of American Depositary
Receipts (ADRs). Depositary receipts involve risks similar to the risks associated with investments in foreign securities, including those of the particular country, which may be related to the particular political, regulatory, economic, social and
other conditions or events occurring in the country and fluctuations in its currency, as well as market risk tied to the underlying foreign company. In addition, ADR holders may have limited voting rights and may not have the same rights afforded
typical company stockholders in the event of a corporate action such as an acquisition, merger or rights offering and may experience difficulty in receiving company stockholder communications.
Derivatives Risk.
Losses involving derivative instruments may be substantial, because a relatively small movement in the price of an underlying security, 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 for the Fund. Derivative investments will typically increase the Fund’s exposure to principal risks to which it is otherwise exposed, and may
expose the Fund to additional risks, including correlation risk, counterparty risk, hedging risk, leverage risk and/or liquidity risk.
Derivatives Risk/Forward Foreign Currency Contracts
Risk.
These instruments are a type of derivative contract whereby the Fund may agree to buy or sell a country’s or region’s currency at a specific price on a specific date in the future. These
instruments may fall in value (sometimes dramatically) due to foreign market downswings or foreign currency value fluctuations, subjecting the Fund to foreign currency risk. The Fund may use these instruments to gain leveraged exposure to
currencies, which is a speculative investment practice. Investment in these instruments also subjects the Fund to counterparty risk and leverage risk. The Fund’s strategy of investing in these instruments may not be successful and the
Fund may experience significant losses as a result.
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. These transactions involve risks, including counterparty risk, hedging risk and interest rate risk.
Derivatives Risk/Futures Contracts Risk.
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 Fund’s NAV. Additionally, as a result of the low collateral deposits normally involved in futures
Columbia Adaptive
Alternatives Fund
Summary of the Fund
(continued)
trading, a relatively small price
movement in a futures contract may result in substantial losses for the Fund. Futures contracts may be illiquid. 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. Futures contracts executed on foreign exchanges may not provide the same protection as
U.S. exchanges. These transactions involve additional risks, including counterparty risk, hedging risk and pricing risk.
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. 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 Fund's losses are potentially unlimited. These transactions involve other risks, including counterparty risk and hedging risk.
Derivatives Risk/Structured Investments Risk.
Structured instruments include debt instruments that are collateralized by the underlying cash flows of a pool of financial assets or receivables.
Structured investments may be
less liquid than other debt securities (or illiquid), and the price of structured investments may be more volatile. In some cases, depending on its terms, a structured investment may provide that the principal and/or interest payments may be
adjusted below zero. Structured investments also may involve significant credit risk and risk of default by the counterparty. The Fund’s use of structured instruments may not work as intended. If structured investments are used to reduce the
duration of the Fund’s portfolio, this may limit the Fund’s return when having a longer duration would be beneficial (for instance, when interest rates decline).
Derivatives Risk/Swaps Risk.
The use of swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. Swaps could result in Fund 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 involving short exposures. 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, hedging risk, pricing risk and liquidity risk.
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. 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, as well being subject to liquidity risk.
Distressed Securities Risk.
The Fund may purchase distressed securities of business enterprises involved in workouts, liquidations, reorganizations, bankruptcies and similar situations. Since there is typically substantial uncertainty concerning
the outcome of transactions involving business enterprises in these situations, there is a high degree of risk of loss, including loss of the entire investment.
Emerging Market Securities Risk.
Securities issued by foreign governments or companies in emerging market countries, such as China,
Russia and certain countries in Eastern Europe, the Middle East,
Asia, Latin America or Africa, 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 and economic 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, and some have a higher risk of currency devaluations.
Event-Driven Trading Risk.
The Fund may seek to profit from the occurrence of specific corporate or other events. A delay in the timing of these events, or the failure of these events to occur at all, may have a significant negative effect on the
Fund’s performance.
Columbia Adaptive Alternatives
Fund
Summary of the
Fund
(continued)
Foreign Securities Risk.
Investments in or exposure to foreign securities involve certain risks not associated with investments in or exposure to securities of U.S. companies. Foreign securities subject the Fund to the risks associated with
investing in the particular country of an issuer, including the political, regulatory, economic, social, diplomatic and other conditions or events occurring in the country or region, as well as risks associated with less developed custody and
settlement practices. Foreign securities may be more volatile and less liquid than securities of U.S. companies, and are subject to the risks associated with potential imposition of economic and other sanctions against a particular foreign country,
its nationals or industries or businesses within the country. The performance of the Fund may be negatively impacted by fluctuations in a foreign currency’s 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.
Forward Commitments on Mortgage-backed Securities
(including Dollar Rolls) Risk.
When purchasing mortgage-backed securities in the “to be announced” (TBA) market (MBS TBAs), the seller agrees to deliver mortgage-backed securities for an agreed upon
price on an agreed upon date, but may make no guarantee as to the specific securities to be delivered. In lieu of taking delivery of mortgage-backed securities, the Fund could enter into dollar rolls, which 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 Fund’s 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). MBS TBAs and dollar rolls are subject to counterparty risk.
Frequent Trading Risk.
The portfolio managers may actively and frequently trade investments in the Fund's portfolio to carry out its investment strategies. Frequent trading of investments increases the possibility that the Fund, as relevant,
will realize taxable capital gains (including short-term capital gains, which are generally taxable to shareholders at higher rates than long-term capital gains for U.S. federal income tax purposes), which could reduce the Fund's after-tax return.
Frequent trading can also mean higher brokerage and other transaction costs, which could reduce the Fund's return. The trading costs and tax effects associated with portfolio turnover may adversely affect the Fund’s performance.
Hedging Transactions Risk.
The Fund may invest in securities and utilize financial instruments for a variety of hedging purposes. Hedging transactions may limit the opportunity for gain if the value of the portfolio position should increase.
There can be no assurance that the Fund will engage in hedging transactions at any given time, even under volatile market conditions, or that any hedging transactions the Fund engages in will be successful. Moreover, it may not be possible for the
Fund to enter into a hedging transaction at a price sufficient to protect its assets. The Fund may not anticipate a particular risk so as to hedge against it.
High-Yield Securities Risk.
Securities rated below investment grade (commonly called “high-yield” or “junk” bonds) and unrated securities of comparable quality expose the Fund to a greater risk of loss of principal and
income than a fund that invests solely or primarily in investment grade securities. In addition, these investments have greater price fluctuations, are less liquid 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 issuer’s capacity to pay interest and repay principal.
Highly Leveraged Transactions Risk.
The loans or other securities in which the Fund invests may include highly leveraged transactions whereby the borrower assumes large amounts of debt in order to have the financial resources to attempt to achieve its
business objectives. Loans or securities that are part of highly leveraged transactions involve a greater risk (including default and bankruptcy) than other investments.
Impairment of Collateral Risk.
The value of collateral, if any, securing a loan can decline, and may be insufficient to meet the borrower’s obligations or difficult or costly to liquidate. In addition, the Fund’s 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 (i.e., nominal interest rates minus the expected impact of inflation). In general, the price of such securities falls when real
interest rates rise, and rises when real interest rates fall. Interest payments on these securities will vary 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.
Columbia Adaptive
Alternatives Fund
Summary of the Fund
(continued)
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 tend to fall, and if interest rates fall, the values of
debt securities 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 will usually affect the value of the Fund's shares. In general, the longer the maturity or duration
of a debt security, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Similarly, a period of rising interest rates may
negatively impact the Fund’s performance. Actions by governments and central banking authorities can result in increases in interest rates. Such actions may negatively affect the value of fixed-income securities held by the Fund, resulting in
a negative impact on the Fund's performance and NAV. Securities with floating coupon rates are typically less sensitive to interest rate changes, but these securities may decline in value if their coupon rates do not rise as much as, or keep pace
with, yields on such types of securities. 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 Fund’s NAV.
Investing in Other Funds Risk.
The Fund’s 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 the
underlying funds in direct proportion to the Fund’s investment therein. In addition, investments in ETFs have unique characteristics, including, but not limited to, the expense structure and additional expenses associated with investing in
ETFs. The performance of the underlying funds could be adversely affected if other investors 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 underlying funds could result in decreased economies of scale and increased
operating expenses for such 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. Also, to the extent that the Fund is constrained/restricted from investing (or investing further) in a particular underlying fund for
one or more reasons (e.g., underlying fund capacity constraints or regulatory restrictions) or if the Fund chooses to sell its investment in an underlying fund because of poor investment performance or for other reasons, the Fund may have to invest
in another underlying fund(s), including less desirable funds – from a strategy or investment performance standpoint – which could have a negative impact on Fund performance. In addition, Fund performance could be negatively impacted if
an appropriate alternate underlying fund(s) does not present itself timely or at all.
Investing in Wholly-Owned Subsidiary Risk.
By investing in a Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. The Fund’s Principal Risks may also apply to a Subsidiary in which the Fund invests
(which are described in this prospectus). There can be no assurance that the investment objective of a Subsidiary will be achieved. Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and any Subsidiary in which
it invests, respectively, are organized, could result in the inability of the Fund and/or the Subsidiary to operate as described in this prospectus and the Fund’s SAI and could adversely affect the Fund and its shareholders.
Issuer
Risk.
An issuer in which the Fund invests or to which it has exposure may perform poorly, and the value of its securities may therefore decline, which would negatively affect the Fund’s 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 (or an underlying investment) increases its assets available for investment using borrowings (including using for investment purposes any collateral, such as cash, received with
respect to securities loaned), short sales, derivatives, or similar instruments or techniques. Because short sales involve borrowing securities and then selling them, the Fund’s short sales effectively leverage the Fund’s assets. The
Fund's assets that are used as collateral to secure the Fund's 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 Fund's overall returns. Leverage presents the opportunity for increased net income and capital gains, but may also exaggerate the Fund’s volatility and 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. Decreases in the number of financial institutions willing to make markets in the
Fund’s investments or in their capacity or willingness to transact may increase the Fund’s exposure to this risk. Changing
Columbia Adaptive Alternatives
Fund
Summary of the
Fund
(continued)
regulatory, market or other
conditions or environments (for example, the interest rate or credit environments) may also adversely affect the liquidity of the Fund's investments. The Fund may have to accept a lower selling price for the holding, sell other investments, or
forego another, more appealing investment opportunity. Floating rate loans generally are subject to legal or contractual restrictions on resale, may trade infrequently, and their value may be impaired when the Fund needs to liquidate such loans.
Loans or other assets may trade only in the over-the-counter market rather than on an organized exchange and may be more difficult to purchase or sell at a fair price, which may have a negative impact on the Fund’s performance. Price
volatility may be higher for illiquid investments as a result of, for example, the relatively less frequent pricing of such securities (as compared to liquid investments). Generally, the less liquid the market at the time the Fund sells a portfolio
investment, the greater the risk of loss or decline of value to the Fund. Price volatility, liquidity of the market and other factors can lead to an increase in Fund redemptions, which may negatively impact Fund performance and NAV, including, for
example, if the Fund is forced to sell securities in a down market.
Listed Private Equity Fund Investment Risk.
Private equity funds include financial institutions or vehicles whose principal business is to invest in and lend capital to privately held companies. The Fund is subject to the underlying risks that affect private
equity funds in which it invests, which may include increased liquidity risk, valuation risk, sector risk and credit risk. Limited or incomplete information about the companies in which private equity funds invest, and relatively concentrated
investment portfolios of private equity funds, may expose the Fund to greater volatility and risk of loss. Fund investment in private equity funds subjects Fund shareholders indirectly to the fees and expenses incurred by private equity
funds.
Macro Strategy Risk.
The profitability of any macro program depends primarily on the ability of its manager to predict derivative contract price movements to implement investment theses regarding macroeconomic trends. Price movements for
commodity interests are influenced by, among other things: changes in interest rates; governmental, agricultural, trade, fiscal, monetary and exchange control programs and policies; weather and climate conditions; natural disasters, such as
hurricanes; changing supply and demand relationships; changes in balances of payments and trade; U.S. and international rates of inflation and deflation; currency devaluations and revaluations; U.S. and international political and economic events;
and changes in philosophies and emotions of market participants. The manager’s trading methods may not take all of these factors into account.
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. An investment in the Fund could lose money over short or long periods.
Although equity securities generally tend to have greater price volatility than debt securities, under certain market conditions, debt securities may have comparable or greater price volatility.
Model and Technology Risk.
Investment strategies or programs that are fundamentally dependent on proprietary or licensed technology, such as, among other things, hardware, software, model-based strategies, data gathering systems, order execution,
and trade allocation systems, and/or risk management systems may not be successful on an ongoing basis or could contain errors, omissions, imperfections, or malfunctions. Any such errors, imperfections or limitations in a model could affect the
ability of the manager to implement strategies. Despite testing, monitoring and independent safeguards, these errors may result in, among other things, execution and allocation failures and failures to properly gather and organize data – all
of which may have a negative effect on the Fund.
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. The Fund will also be exposed to the investment risks of the money market fund. 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 its 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
market's assessment of the quality of underlying assets. Payment of principal and interest on some mortgage-backed securities (but not the market value of the securities themselves) may be guaranteed by the full faith and credit of a particular
U.S. Government agency, authority, enterprise or instrumentality, and some, but not all, are also insured or guaranteed by the U.S. Government. Mortgage-backed
Columbia Adaptive
Alternatives Fund
Summary of the Fund
(continued)
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 entail greater risk than obligations guaranteed by the U.S. Government. Mortgage- and other asset-backed securities
are subject to prepayment risk, which is the possibility that the underlying mortgage or other asset 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. Rising or high interest rates tend to extend the duration of mortgage- and other asset-backed securities, making their prices more volatile and more sensitive to changes in interest rates.
Multi-Strategy Risk.
The multi-strategy approach employed by the Fund involves special risks, which include the risk that investment decisions, at the Fund or the underlying fund level, may conflict with each other; for example, at any particular time, one manager may
be purchasing shares of an issuer whose shares are being sold by another manager. Consequently, the Fund could indirectly incur transaction costs without accomplishing any net investment result. Also, managers may use proprietary or licensed
investment strategies that are based on considerations and factors that are not fully disclosed to the Fund or other investors.
Non-Diversified Fund Risk.
The Fund is non-diversified, which generally means that it will invest a greater percentage of its total assets in the securities of fewer issuers than a “diversified” fund. This 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, the Fund's value will likely be more
volatile than the value of a more diversified fund.
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 (
i.e.
, the risk of losses attributable to changes in interest rates).
Prepayment and Extension Risk.
Prepayment and extension risk is the risk that a loan, bond or other security or investment might, in the case of prepayment risk, be called or otherwise converted, prepaid or redeemed before maturity and, in the case
of extension risk, the investment might not be called as expected, and 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. In the case of
mortgage- or asset-backed securities, as interest rates decrease or spreads narrow, the likelihood of prepayment increases. Conversely, extension risk is the risk that an unexpected rise in interest rates will extend the life of a mortgage- or
asset-backed security beyond the prepayment time. If the Fund’s investments are locked in at a lower interest rate for a longer period of time, the portfolio managers may be unable to capitalize on securities with higher interest rates or
wider spreads.
Quantitative
Model Risk.
Investments selected using quantitative methods may perform differently from the market as a whole. There can be no assurance that these methodologies will enable the Fund to achieve its
objective.
Real Estate-Related Investment
Risk.
Investments in real estate investment trusts (REITs) and in securities of other companies (wherever organized) principally engaged in the real estate industry subject the Fund to, among other things, risks
similar to those of direct investments in real estate and the real estate industry in general. These include 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 interests in a REIT may be affected by, among other factors, changes in the value of the
underlying properties owned by the REIT, 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.
Columbia Adaptive Alternatives
Fund
Summary of the
Fund
(continued)
Regulatory Risk — Alternative
Investments.
Legal, tax, and regulatory developments may adversely affect the Fund and its investments. The regulatory environment for the Fund and certain of its investments is evolving, and changes in the
regulation of investment funds, their managers, and their trading activities and capital markets, or a regulator’s disagreement with the Fund’s or other’s interpretation of the application of certain regulations, may adversely
affect the ability of the Fund to pursue its investment strategy, its ability to obtain leverage and financing, and the value of investments held by the Fund. There has been an increase in governmental, as well as self-regulatory, scrutiny of the
investment industry in general and the alternative investment industry in particular. It is impossible to predict what, if any, changes in regulations may occur, but any regulation that restricts the ability of the Fund or any underlying funds or
other investments to trade in securities or other instruments or the ability of the Fund or underlying funds to employ, or brokers and other counterparties to extend, credit in their trading (as well as other regulatory changes that result) could
have a material adverse impact on the Fund’s performance.
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 Fund's income and the value of your investment in the Fund to decline.
Rule 144A Securities Risk.
The Fund may invest significantly in privately placed “Rule 144A” securities that are determined to be liquid in accordance with procedures adopted by the Fund’s 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 Fund’s holdings of Rule 144A securities may increase the level of Fund illiquidity if eligible buyers become uninterested in buying them at a particular time. Issuers of Rule 144A
securities are required to furnish information to potential investors upon request. However, the required disclosure is much less extensive than that required of public companies and is not publicly available since it is not filed with the SEC.
Further, issuers of Rule 144A securities can require recipients of the information (such as the Fund) to agree contractually to keep the information confidential, which could also adversely affect the Fund’s ability to dispose of the
security.
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 or other asset) because the maximum sustainable loss on an instrument or other asset
purchased (held long) is limited to the amount paid for the instrument or other asset plus the transaction costs, whereas there is no maximum price of the shorted instrument or other asset when purchased in the open market. Therefore, in theory,
short positions have unlimited risk. The Fund’s 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 or other asset, this involves the risk of a potentially unlimited increase in the value of the underlying instrument or other
asset.
Small- and Mid-Cap Company
Securities Risk.
Investments in small- and mid-capitalization companies (small- and mid-cap companies) often involve greater risks than investments in larger, more established companies (larger companies) because
small- and mid-cap companies tend to have less predictable earnings and may lack the management experience, financial resources, product diversification and competitive strengths of larger companies. Securities of small- and mid-cap companies may be
less liquid and more volatile than the securities of larger companies.
Sovereign Debt Risk.
A sovereign debtor’s 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 debtor’s policy toward international lenders, and the political constraints to which a sovereign debtor may be
subject. 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 be exposed to heightened 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
Columbia Adaptive
Alternatives Fund
Summary of the Fund
(continued)
subject to significant and unpredictable fluctuations. Certain
“special situation” investments are investments in securities or other instruments that are determined to be illiquid or lacking a readily ascertainable fair value. Certain special situation investments prevent ownership interest therein
from being withdrawn until the special situation investment, or a portion thereof, is realized or deemed realized, which may negatively impact Fund performance. Investing in special situations may have a magnified effect on the performance of funds
with small amounts of assets.
Tax Risk.
The Fund intends to qualify for treatment as a regulated investment company under the Internal Revenue Code of 1986, as amended (the Code). In order to so qualify, the Fund must sufficiently diversify its assets
within the requirements of Subchapter M
of the Code. If the Blackstone Fund were to fail to qualify as a regulated investment company,
then, absent a cure of such failure,
the Fund would itself fail to qualify for treatment as a regulated investment company.
The tax treatment of certain investments and of the
income and gain therefrom under the qualifying income test applicable to regulated investment companies is uncertain. An adverse determination or future guidance by the Internal Revenue Service (the IRS) regarding such investments or the income and
gain from such investments might affect the Fund’s ability to qualify for treatment as a regulated investment company, including on a retroactive basis.
If the Fund were to fail to qualify as a regulated
investment company, or if it were ineligible to or otherwise were not to cure such failure, the Fund would be ineligible for the favorable tax treatment accorded to regulated investment companies for one or more years, which would adversely affect
the value of the Fund.
Trade Claims
Risk.
The Fund may also purchase trade claims against companies, including companies in bankruptcy or reorganization proceedings, which include claims of suppliers for goods delivered and not paid, claims for unpaid
services rendered, claims for contract rejection damages and claims related to litigation. An investment in trade claims is very speculative and carries a high degree of risk. Trade claims may be illiquid instruments that generally do not pay
interest and there can be no guarantee that the debtor will ever be able to satisfy the obligation on the trade claim. Trade claims are typically unsecured and may be subordinated to other unsecured obligations of a debtor, and generally are subject
to defenses of the debtor with respect to the underlying transaction giving rise to the trade claim. The markets in trade claims are not regulated by U.S. federal securities laws or the SEC.
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 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.
Valuation Risk.
The
sales price the Fund (or an underlying fund or other investment vehicle) could receive for any particular investment may differ from the Fund’s (or an underlying fund’s or other investment vehicle’s) valuation of the investment,
particularly for securities that trade in thin or volatile markets or that are valued using a fair value methodology that produces an estimate of the fair value of the security/instrument, which may prove to be inaccurate. Investors who purchase or
redeem Fund shares on days when the Fund is holding securities or other instruments (or holding shares of underlying funds or other investment vehicles that have fair-valued securities or other instruments in their portfolios) may receive fewer or
more shares or lower or higher redemption proceeds than they would have received if the Fund (or underlying fund or other investment vehicle) had not fair-valued the security or instrument or had used a different valuation methodology.
Performance Information
The Fund is new as of the date of this prospectus
and therefore performance information is not available.
When available, the Fund intends
to compare its performance to the performance of the Citigroup 1-Month U.S. Treasury Bill Index.
When available, updated performance information can
be obtained by calling toll-free 800.345.6611 or visiting columbiamanagement.com.
Columbia Adaptive Alternatives
Fund
Summary of the
Fund
(continued)
Fund Management
Investment Manager:
Columbia Management Investment Advisers, LLC
Portfolio
Manager
|
|
Title
|
|
Role
with Fund
|
|
Managed
Fund Since
|
Jeffrey
Knight, CFA
|
|
Senior
Portfolio Manager, Managing Director, Global Head of Investment Solutions and Co-Head of Global Asset Allocation
|
|
Co-lead
manager
|
|
January
2015
|
William
Landes, Ph.D.
|
|
Senior
Vice President and Deputy Head of Global Investment Solutions
|
|
Co-lead
manager
|
|
January
2015
|
Marc
Khalamayzer, CFA
|
|
Analyst,
Global Investment Solutions Team
|
|
Co-manager
|
|
January
2015
|
Purchase and Sale of
Fund Shares
You may purchase or redeem shares
of the Fund on any business day by contacting the Fund in the ways described below:
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
|
You may purchase shares
and receive redemption proceeds by electronic funds transfer, by check or by wire. If you maintain your account with a broker-dealer or other financial intermediary, you must contact that financial intermediary to buy, sell or exchange shares of the
Fund through your account with the intermediary.
The minimum initial investment amounts for the share
classes offered by the Fund are shown below:
Minimum
Initial Investment
Class
|
Category
of eligible account
|
For
accounts other than
systematic investment
plan accounts
|
For
systematic investment
plan accounts
|
Classes
A & C
|
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
|
There is no minimum additional investment for any
share class.
Tax Information
The Fund intends to distribute net investment income
and net realized capital gains, if any, to shareholders. These distributions are generally taxable to you as ordinary income or capital gains, unless you are investing through a tax-advantaged account, such as a 401(k) plan or an IRA. If you are
investing through a tax-advantaged account, you may be taxed upon withdrawals from that account.
Columbia Adaptive
Alternatives Fund
Summary of the Fund
(continued)
Payments to Broker-Dealers and Other Financial
Intermediaries
If you purchase the Fund
through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies — including Columbia Management Investment Advisers, LLC (the Investment Manager), Columbia Management Investment Distributors, Inc.
(the Distributor) and Columbia Management Investment Services Corp. (the Transfer Agent) — may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your financial advisor to recommend the Fund over another investment. Ask your financial advisor or visit your financial intermediary’s website for more information.
Columbia Adaptive Alternatives
Fund
More Information
About the Fund
Investment Objective
Columbia Adaptive Alternatives Fund (the Fund)
seeks to provide shareholders with absolute (positive) returns over a complete market cycle. The Fund’s investment objective is not a fundamental policy and may be changed by the Fund’s Board of Trustees without shareholder
approval. Because any investment involves risk, there is no assurance the Fund’s objective will be achieved.
Principal Investment Strategies
Under normal circumstances, the
Fund allocates its net assets among non-traditional or “alternative” investments and strategies (referred to as Alternative Investment Strategies, as further described below), as well as other strategies, instruments and assets,
including derivatives and cash. The Fund, through such investments, seeks absolute (positive) returns over a complete market cycle. For both stocks and bonds, a complete market cycle can be measured from market peak to peak or from market trough to
trough. The Fund’s performance is anticipated to have a low correlation to the performance of the broad equity and fixed income markets over such cycles.
The Fund’s investment manager, Columbia
Management Investment Advisers, LLC (Columbia Management or the Investment Manager) determines the Fund’s desired exposures to, and allocation strategy across, Alternative Investment Strategies and other available strategies, instruments and
assets.
In seeking
its desired exposures, the Fund anticipates investing substantially in affiliated and unaffiliated open- and closed-end funds, including exchange-traded funds (ETFs) (collectively, the Underlying Funds). Certain of the Underlying Funds may
themselves invest in various strategies, including strategies advised by hedge fund managers through open-end and closed-end funds, hedge funds, funds of hedge funds, funds traded publicly on foreign exchanges, funds that are Undertakings for
Collective Investment in Transferable Securities (UCITS funds), and listed private equity funds and funds of funds. The Fund expects to invest in, among other Underlying Funds, Columbia Inflation Protected Securities Fund and to gain exposure to
other Alternative Investment Strategies by investing in Columbia Intermediary Alternatives Fund (the Intermediary Fund), which will invest substantially all of its assets in Blackstone Alternative Multi-Strategy Fund (the Blackstone Fund), a mutual
fund (and registered commodity pool) managed by Blackstone Alternative Investment Advisors LLC (Blackstone). It is currently expected that the Fund’s exposure to the Blackstone Fund will not exceed 60% of the Fund’s net assets.
As further described below, the Fund also
has the flexibility to invest directly in any securities, instruments or other assets, including derivative instruments, unless otherwise noted below.
The Fund seeks exposure to
Alternative Investment Strategies, which are strategies that seek investment returns largely uncorrelated with the broad equity and fixed income/debt markets. The Fund’s investment in or allocation to such strategies may include, directly or
indirectly through Underlying Funds, exposure to activist, alternative beta, arbitrage, equity and/or credit long/short, event-driven, fundamental, global macro, managed futures, multi-strategy, opportunistic trading, quantitative, and relative
value strategies, among others. These particular Alternative Investment Strategies are described below.
Activist Strategies
seek exposure to companies that are the subject of a proxy contest or which activist investors are attempting to influence, in the expectation that new management or a change in business strategies will cause the price of the particular
company’s securities to increase.
Alternative Beta Strategies
seek exposure to market-based opportunities through a portfolio constructed of long/short securities positions, derivatives and other instruments in an attempt to isolate and capitalize upon certain market-based
inefficiencies, such as, for example, value and momentum. These alternative beta strategies typically have less correlation to traditional equity and fixed income markets.
Arbitrage Strategies
seek to identify and exploit pricing inefficiencies in certain securities, markets or countries.
Equity and/or Credit Long/Short Strategies
involve long positions in equity or fixed income securities that are expected to go up in value and short positions in equity or fixed income securities that are expected to decline in value in an attempt to profit from
the difference in performance of the long positions versus the short positions.
Event-driven Strategies
employ processes designed to identify opportunities relating to companies undergoing particular corporate transactions or structural transformations (e.g., mergers, acquisitions or reorganizations).
Columbia Adaptive
Alternatives Fund
More
Information About the Fund
(continued)
Fundamental Strategies
employ processes designed to identify attractive opportunities in securities of companies that are undervalued/overvalued or expected to experience high/low levels of growth, including bottom-up analysis of a
company’s financial statements.
Global Macro Strategies
focus on macroeconomic fundamentals in developing investment theses. Global macroeconomics deals with the performance, structure, behavior, and decision-making of the global economy as a whole, rather than individual
markets. Monetary policy shifts, fiscal policy shifts, gross domestic product growth or inflation all may be considered in developing a market view.
Managed Futures Strategies
seek to profit from movements in the global financial, commodity, and currency markets by investing in futures, options, and forward contracts.
Multi-Strategy Strategies
employ a wide variety of strategies, including some or substantially all of the strategies described above, based upon analysis of macroeconomic variables.
Opportunistic Trading Strategies
employ processes designed to identify short-term or long-term trading opportunities, including analyzing supply/demand imbalances.
Quantitative Strategies
employ quantitative techniques that seek gains from anticipated price movements, including models based on valuation, events, statistics, economic fundamentals, changes in economic environments, and changes in market
sentiment.
Relative Value Strategies
seek to identify and exploit differences in prices or rates between related financial instruments (e.g., stocks and bonds of the same issuer or issuers in the same or similar industry or sector) in an attempt to profit
from the convergence in value between the related securities.
These Alternative Investment Strategies, whether
implemented directly within the Fund’s portfolio by the Investment Manager or implemented indirectly through investments in Underlying Funds, employ the use of various securities, instruments and other assets, including derivative instruments.
Through its investment in the Alternative Investment Strategies and other available strategies, instruments and assets, the Fund will have investment exposure, directly or indirectly through the Underlying Funds, to a broad range of markets and
asset classes economically tied to U.S. and foreign markets, including, but not limited to, equity securities, fixed income securities, and derivative instruments (both exchange-traded and over-the-counter instruments), including commodity-linked
investments. There is no limit on the amount of exposure the Fund may have to any specific asset class, market sector, or instrument.
The derivative instruments in
which the Fund may invest directly or indirectly through Underlying Funds include futures (such as commodity-linked, currency, equity, fixed income, index, interest rate, and Treasury futures); forward foreign currency contracts; forward
interest rate agreements; structured notes; swaps (such as credit default swaps, total return swaps, interest rate swaps, and contracts for difference); options (including writing (selling) calls against positions in the portfolio (covered
calls) or writing (selling) puts); and warrants and rights. The Fund will not gain investment exposure to the commodities markets directly, but may do so indirectly through investment in one or more Subsidiaries (as defined below) or Underlying
Funds, including but not limited to Columbia Commodity Strategy Fund, a registered commodity pool. The Fund may invest in derivatives for both hedging and non-hedging purposes, including, for example, seeking to enhance returns or as a substitute
for a position in an underlying asset or index. The Fund may invest in derivatives to manage the Fund’s overall risk exposure.
The Fund may invest directly in derivatives or
indirectly by investing in one or more offshore, wholly-owned subsidiaries (each, a Subsidiary, and, collectively, the Subsidiaries) that are subject to the same fundamental investment restrictions, compliance policies and procedures as the
Fund, but which are not expected to offer or sell their shares to investors other than the Fund.
Generally, Subsidiaries will invest primarily in commodity futures,
but they may also invest in financial futures, option and swap contracts, fixed income securities, pooled investment vehicles, including those that are not registered pursuant to the Investment Company Act of 1940, as amended (the 1940 Act), and
other investments intended to serve as margin or collateral for the Subsidiaries’ derivative positions.
Unlike the Fund (which is subject to limitations
under federal tax laws), Subsidiaries may invest without limitation in commodity-linked derivatives; however, the Fund, in combination with its Subsidiaries, will comply with the same 1940 Act asset coverage requirements with respect to the
Subsidiaries’ investments in commodity-linked derivatives that are applicable to the Fund’s direct transactions in derivatives.
Columbia Adaptive Alternatives
Fund
More Information
About the Fund
(continued)
The Fund may purchase or sell
securities on a when-issued, delayed delivery or forward commitment basis. Such securities may include mortgage-backed securities acquired or sold in the “to be announced” (TBA) market and those in a dollar roll transaction.
The equity securities in which the Fund may
invest directly or indirectly through Underlying Funds include those of issuers of any market capitalization located throughout the world (including the U.S. and emerging markets) across various investment styles (e.g., growth-, value-oriented
styles), which may include common stocks, preferred stocks, convertible securities, depositary receipts, listed private equity, and real estate investment trusts (REITs) and instruments of similar entities formed under the laws of non-U.S.
countries.
The fixed
income securities in which the Fund may invest directly or indirectly through Underlying Funds include debt securities of governments throughout the world (including the U.S. and emerging markets) as well as their agencies and instrumentalities and
government-sponsored enterprises, debt securities of non-governmental issuers (e.g., corporate issuers) throughout the world (including the U.S. and emerging markets), debt securities of any credit rating (including below investment grade debt
securities, commonly known as “high-yield” or “junk” bonds) or debt securities that are unrated, commercial and residential mortgage-backed securities, asset-backed securities (including those backed by consumer assets),
floating rate loans, bank loans, loan assignments and loan participations, bankruptcy or trade claims, exchange-traded notes, cash/cash equivalents, inflation-hedging assets, as well as sovereign and quasi-sovereign debt investments. There is no
limitation on the maturities or duration of the instruments in which the Fund may invest. Duration measures the sensitivity of bond prices to changes in interest rates. The longer the duration of a bond, the more sensitive it will be to changes in
interest rates. For example, a three-year duration means a bond is expected to decrease in value by 3% if interest rates rise 1% and increase in value by 3% if interest rates fall 1%.
The Fund may directly or indirectly purchase
securities in private placements, repurchase agreements, securities or other instruments of distressed companies or issuers undergoing other special situations, including initial public offerings or major corporate events, such as business
consolidations or restructurings.
The
Fund may directly or indirectly take both long and short positions in all of its investments. When the Fund takes a short position, it typically sells a security or other asset that it has borrowed in anticipation of a decline in the price of the
asset. To close out a short position, the Fund buys back the same security or other asset in the market and returns it to the lender. If the price of the security or other asset falls sufficiently, the Fund will make money. If it instead increases
in price, the Fund will lose money. The Fund as a whole, or any Underlying Fund, may at any time have either a net long exposure or a net short exposure to markets, and neither the Underlying Funds nor the Fund’s portfolio as a whole will be
managed to maintain any fixed net long or net short market exposure.
The Fund expects to have
significant investment leverage (market exposure in excess of the Fund’s assets) as a result of certain of its direct investments (e.g., derivatives) and/or its investments in Underlying Funds, which may themselves use leverage. While
Underlying Funds may themselves use leverage, the Investment Manager anticipates that, excluding any leverage at the Underlying Fund level, the Fund’s net notional investment exposure will be approximately 200%-250% of the net assets of the
Fund in the market environment that the Investment Manager expects to be the most frequent, although leverage may be significantly higher or lower in other market environments or when the Investment Manager otherwise believes conditions so
warrant.
The Fund may hold a
significant amount of cash, money market instruments (which may include investments in one or more affiliated or unaffiliated money market funds or similar vehicles), other high-quality, short-term investments, or other liquid assets for investment
purposes or to meet its segregation obligations as a result of its investments in derivatives. In certain market conditions, the Fund may have no market positions (i.e., the Fund may hold only cash and cash equivalents) when the Investment Manager
believes it is in the best interests of the Fund.
The Fund’s investment strategy may involve the
frequent trading of portfolio securities.
The Fund is non-diversified, which means that it can
invest a greater percentage of its assets in the securities of fewer issuers than can a diversified fund.
Columbia Adaptive
Alternatives Fund
More
Information About the Fund
(continued)
Investment Process
The Investment Manager’s investment process
employs both quantitative and fundamental methodologies to make both strategic and tactical asset allocation decisions. This process seeks to allocate the Fund’s net assets to achieve desired investment exposures across the following distinct
sleeves:
■
|
various
Alternative Investment Strategies employed by third-party hedge fund managers researched and selected by Blackstone, through investment in the Intermediary Fund, which invests in the Blackstone Fund (the Hedge Fund Manager Sleeve);
|
■
|
an Adaptive
Alternatives Sleeve, designed and implemented by the Investment Manager’s Global Asset Allocation team, which uses proprietary models and quantitative and fundamental methods to identify distinct market environments and employs various
investment strategies that create a strategic risk allocation for each environment that is intended to generate attractive risk-adjusted returns in that environment; and
|
■
|
a Completion
Sleeve, which will use both quantitative and fundamental methodologies to gain exposure to Alternative Beta Strategies designed to isolate and capitalize upon certain market-based inefficiencies. When deemed appropriate by the Investment Manager,
the Completion Sleeve may also be managed using the Investment Manager’s Global Asset Allocation team’s methodology described above to identify distinct market environments and create a strategic risk allocation for each environment that
is intended to generate attractive risk-adjusted returns in that environment.
|
The Fund’s strategic and tactical allocations
may change at any time.
Principal Risks
An investment in the Fund involves risk, including
specific risks relating to the investment in the Fund based on its investment process, as well as specific risks related to the Underlying Funds in which it invests, including among others, those described below. As such, the risks noted below apply
to the Fund and Underlying Funds or other investment vehicles. More information about Underlying Funds, including their principal risks, is available in their prospectuses.
There is no assurance that the Fund
will achieve its investment objective and you may lose money
. The value of the Fund’s holdings may decline, and the Fund’s net asset value (NAV) and share price may go down. (References in this section to “the Fund”
also include the Subsidiaries, which share the same risks as the Fund.)
Active Management Risk.
The Fund is actively managed and its performance therefore will reflect, in part, the ability of the portfolio managers to make investment decisions that will achieve the Fund’s investment objective. Due to its
active management, the Fund could underperform its benchmark index and/or other funds with similar investment objectives and/or strategies.
Activist Strategies Risk.
The Fund may purchase securities of a company that is the subject of a proxy contest or which activist investors are attempting to influence, in the expectation that new management or a change in business strategies
will cause the price of the company’s securities to increase. If the proxy contest, or the new management, is not successful, the market price of the company’s securities will typically fall.
In addition, where an acquisition or restructuring
transaction or proxy fight is opposed by the subject company’s management, the transaction often becomes the subject of litigation. Such litigation involves substantial uncertainties and may impose substantial cost and expense on the
Fund.
Allocation Risk.
Because the Fund uses an asset allocation strategy in pursuit of its investment objective, there is a risk that the Fund's allocation among asset classes, investments, managers, strategies and/or investment styles will
cause the Fund's 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.
Alternative Strategies Investment Risk.
An investment in alternative investment strategies (Alternative Strategies), whether through direct investment or through one or more underlying funds, involves risks, which may be significant. Alternative
Strategies may include strategies, instruments or other assets, such as derivatives, that seek investment returns uncorrelated with the broad equity and fixed income/debt markets, as well as those providing exposure to other markets (such as
commodity markets), including but not limited to absolute (positive) return strategies. Alternative Strategies may fail to achieve their desired performance, market or other exposure, or their returns (or lack thereof) may be more correlated with
the broad equity and/or fixed income/debt markets than was anticipated, and the Fund may lose money.
Columbia Adaptive Alternatives
Fund
More Information
About the Fund
(continued)
To the extent that an underlying fund is charged a
performance (or incentive) fee (which would indirectly be borne by the Fund’s shareholders), such fees may create incentives for the underlying fund’s manager to make investments that are riskier or more speculative than in the absence
of these fees. Because these fees are often based on both realized as well as unrealized appreciation, the fee may be greater than if it were based only on realized gains. In addition, underlying fund managers may receive compensation for positive
relative performance of the underlying fund even if the underlying fund’s overall returns are negative.
Arbitrage Strategies Risk.
The Fund may purchase securities at prices only slightly below the anticipated value to be paid or exchanged for such securities in a merger, exchange offer or cash tender offer, and substantially above the prices at
which such securities traded immediately prior to announcement of the transaction. If there is a perception that the proposed transaction will not be consummated or will be delayed, the market price of the security may decline sharply, which would
result in a loss to the Fund. In addition, if the manager determines that the offer is likely to be increased, either by the original bidder or by another party, the Fund may purchase securities above the offer price; such purchases are subject to a
high degree of risk.
The consummation
of mergers and tender and exchange offers can be prevented or delayed by a variety of factors, including opposition by the management or shareholders of the target company, private litigation or litigation involving regulatory agencies, and approval
or non-action of regulatory agencies. The likelihood of occurrence of these and other factors, and their impact on an investment, can be very difficult to evaluate.
Bankruptcy Process Risk.
The Fund may purchase bankruptcy claims. There are a number of significant risks inherent in the bankruptcy process. The effect of a bankruptcy filing on a company may adversely and permanently affect the company by
causing it to lose its market position and key employees and otherwise become incapable of restoring itself as a viable business. Many events in a bankruptcy are the product of contested matters and adversarial proceedings and are beyond the control
of the creditors. The duration of a bankruptcy proceeding is difficult to predict and a creditor’s return on investment can be adversely affected by delays while the plan of reorganization is being negotiated, approved by the creditors,
confirmed by the bankruptcy court, and until it ultimately becomes effective. The administrative costs in connection with a bankruptcy proceeding are frequently high and are paid out of the debtor’s estate before any return to creditors.
Furthermore, bankruptcy law permits the classification of “substantially similar” claims in determining the classification of claims in a bankruptcy reorganization. Because the standard for classification is vague, there exists the risk
that the Fund’s influence with respect to the class of securities it owns can be impaired as a result of increases in the number and amount of claims in that class or by different classification and treatment of that class. Finally, amounts
previously paid to the Fund may be challenged as fraudulent conveyances or preferences as part of a bankruptcy proceeding.
Commodity Futures Trading Commission (CFTC) Regulatory
Risk.
The Fund does not qualify for an exemption from registration as a “commodity pool” under rules of the Commodity Exchange Act (the CEA). Accordingly, the Fund is a commodity pool under the CEA and
the Investment Manager is registered as a “commodity pool operator” under the CEA. The Fund is subject to dual regulation by the SEC and the CFTC. Compliance with the CFTC’s regulatory requirements could increase Fund expenses,
adversely affecting the Fund’s total return.
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 underlying fund’s 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 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. The Fund may make commodity-related investments through,
and may invest in one or more underlying funds that make commodity-related investments through,
one or more wholly-owned subsidiaries organized outside the U.S. that are generally not subject to U.S. laws (including securities laws) and their protections.
However, any such
subsidiary is wholly owned and controlled by the Fund and any underlying fund subsidiary is wholly-owned and controlled by the
Columbia Adaptive
Alternatives Fund
More
Information About the Fund
(continued)
underlying fund, making it unlikely that the subsidiary will take
action contrary to the interests of the Fund or the underlying fund and their shareholders. Further, any such subsidiaries will be subject to the laws of a foreign jurisdiction, and can be adversely affected by developments in that
jurisdiction.
Confidential Information Access
Risk.
Portfolio managers may 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 issuer’s floating rate loans to help potential investors assess the value of the loan. A 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 ability to assess the desirability of such consents, waivers or amendments may be compromised. For these and
other reasons, it is possible that the decision not to receive Confidential Information could adversely affect the Fund’s performance.
Convertible Securities Risk.
Convertible securities are subject to the usual risks associated with debt securities, such as interest rate risk (the risk of losses attributable to changes in interest rates) and credit risk (the risk that the issuer
of a debt security 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 (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 stock's 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 company's 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 Fund's 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 Fund’s share value to fluctuate.
Credit Risk.
The value of loans or fixed-income securities may decline if the borrower or the issuer of the security defaults or otherwise becomes unable or unwilling, or is perceived to be unable or unwilling, to honor its
financial obligations, such as making payments to the Fund when due. Various factors could affect the actual or perceived willingness or ability of the borrower or the issuer to make timely interest or principal payments, including changes in the
financial condition of the borrower or the issuer or in general economic conditions. Fixed-income securities backed by an issuer's taxing authority may be subject to legal limits on the issuer's power to increase taxes or otherwise to raise revenue,
or may be dependent on legislative appropriation or government aid. Certain fixed-income securities are backed only by revenues derived from a particular project or source, rather than by an issuer's taxing authority, and thus may have a greater
risk of default. Rating agencies assign credit ratings to certain loans and fixed-income securities to indicate their credit risk. Lower quality or unrated securities held by the Fund may present increased credit risk as compared to higher-rated
securities. Non-investment grade loans or fixed-income securities (commonly called “high-yield” or “junk”) are subject to greater price fluctuations and are more likely to experience a default than investment grade loans or
securities and therefore may expose the Fund to increased credit risk. If the Fund purchases unrated loans or fixed-income securities, or if the ratings of securities held by the Fund are lowered after purchase, the Fund will depend on analysis of
credit risk more heavily than usual. 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 that is adverse to the holders of the loan. Such actions may include 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 Fund’s performance. 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
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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 Fund’s operating expenses and adversely affect its NAV. Loans that have a lower priority for repayment in an
issuer’s capital structure may involve a higher degree of overall risk than more senior loans of the same borrower.
Depositary Receipts Risk.
Depositary receipts are receipts issued by a bank or trust company reflecting ownership of underlying securities issued by foreign companies. Some foreign securities are traded in the form of American Depositary
Receipts (ADRs). Depositary receipts involve risks similar to the risks associated with investments in foreign securities, including those of the particular country, which may be related to the particular political, regulatory, economic, social and
other conditions or events occurring in the country and fluctuations in its currency, as well as market risk tied to the underlying foreign company. In addition, ADR holders may have limited voting rights and may not have the same rights afforded
typical company stockholders in the event of a corporate action such as an acquisition, merger or rights offering and may experience difficulty in receiving company stockholder communications.
Derivatives Risk.
Derivatives are financial instruments whose value depends on, or is derived from, the value of other underlying assets. Losses involving derivative instruments may be substantial, because a relatively small movement in the price of an underlying
security, 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 for the Fund. Derivative
investments will typically increase the Fund’s exposure to principal risks to which it is otherwise exposed, and may expose the Fund to additional risks. Depending on the type and purpose of the Fund’s derivative investments, these risks
may include: correlation risk (there may be an imperfect correlation between the hedge and the opposite position, which is related to hedging risk), counterparty risk (the counterparty to the instrument may not perform or be able to perform in
accordance with the terms of the instrument), leverage risk (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 may offset gains), and/or 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 losses for the Fund.
Derivatives Risk/Commodity-Linked Futures
Contracts Risk.
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 Fund’s NAV. 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/Contracts for
Difference Risk.
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 or
other instruments. Often, one or both baskets will be an established securities index. The Fund’s 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. The Fund also may use actual long and short futures positions and achieve similar market
exposure by netting the payment obligations of the two contracts. If the short basket outperforms the long basket, the Fund will realize a loss – even in circumstances when the securities in both the long and short baskets appreciate in
value.
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 issuer’s failure to make timely payments of interest or principal, bankruptcy or restructuring. A credit default swap may be embedded within a
structured 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
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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, and may offset gains), pricing risk (the risk that swaps may be difficult to
value) and liquidity risk (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 losses for 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 these derivatives 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 country's or region’s currency at a specific price on a specific date in the future. These instruments may fall in value (sometimes dramatically) due to foreign
market downswings or foreign currency value fluctuations, subjecting the Fund to foreign currency risk (the risk that Fund performance may be negatively impacted by foreign currency strength or weakness relative to the U.S.
dollar, particularly if the Fund exposes a significant percentage of its assets in currencies other than the U.S. dollar). The effectiveness of any currency strategy by a Fund may be reduced by the Fund's 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. The
Fund may use these instruments to gain leveraged exposure to currencies, which is a speculative investment practice. Unanticipated changes in the currency markets could result in reduced performance for the Fund or losses. 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 will be unable to perform in accordance with the terms of the instrument) and leverage risk (i.e., the risk that losses from the derivative instrument may be greater than the amount invested in the derivative
instruments). The Fund’s strategy of investing in these instruments may not be successful and the Fund may experience significant losses as a result.
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 may offset gains) and interest rate risk (the risk of losses attributable to changes in
interest rates), each of which may result in significant losses for 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 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. 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 the Fund may incur 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 Fund’s 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 for the Fund. Investments in these instruments involve risks, including counterparty risk (the risk that the counterparty to the instrument may not perform or be
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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 may offset gains) and pricing risk (the risk that the instrument may be difficult to value), each of which may
result in significant losses for the Fund.
Derivatives Risk/Interest Rate Swaps Risk.
Interest rate swaps can be based on various measures of interest rates, including the London Interbank Offered Rate (commonly known as LIBOR), swap rates, treasury rates and other foreign interest rates. A swap
agreement can increase or decrease the volatility of the Fund's investments and its NAV. 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 and correlation risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset, and may offset gains, including because of a lack of correlation between the swaps and the portfolio of bonds that
the swaps are designed to hedge or replace), pricing risk (swaps may be difficult to value), liquidity risk (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 losses for 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. 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 Fund's 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, and may offset gains), each of which may result in significant losses for the Fund.
Derivatives Risk/Structured Investments Risk.
Structured instruments include debt instruments that are collateralized by the underlying cash flows of a pool of financial assets or receivables.
Structured investments may be
less liquid than other debt securities (or illiquid), and the price of structured investments may be more volatile. In some cases, depending on its terms, a structured investment may provide that the principal and/or interest payments may be
adjusted below zero. Structured investments also may involve significant credit risk and risk of default by the counterparty. The Fund’s use of structured instruments may not work as intended. If structured investments are used to reduce the
duration of the Fund’s portfolio, this may limit the Fund’s return when having a longer duration would be beneficial (for instance, when interest rates decline).
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 Fund 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 Fund’s 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, and may offset gains), pricing risk (swaps may be difficult to value) and liquidity risk (it may not be possible to liquidate a swap position at an advantageous time or price), each of which
may result in significant losses for 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 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 Fund losses if the underlying
asset or reference does
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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 (creating leverage risk in that the Fund’s 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, and may offset gains), pricing risk (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), which may result in significant losses for 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 losses for the Fund.
Distressed Securities Risk.
The Fund may purchase distressed securities of business enterprises involved in workouts, liquidations, reorganizations, bankruptcies and similar situations. Since there is typically substantial uncertainty concerning
the outcome of transactions involving business enterprises in these situations, there is a high degree of risk of loss, including loss of the entire investment.
In bankruptcy, there can be considerable delay in
reaching accord on a restructuring plan acceptable to a bankrupt company’s lenders, bondholders and other creditors and then obtaining the approval of the bankruptcy court. Such delays could result in substantial losses to the investments in
such company’s securities or obligations. Moreover, there is no assurance that a plan favorable to the class of securities held by the Fund will be adopted or that the subject company might not eventually be liquidated rather than
reorganized.
In liquidations (both in and out
of bankruptcy) and other forms of corporate reorganization, there exists the risk that the reorganization either will be unsuccessful, will be delayed or will result in a distribution of cash or a new security, the value of which will be less than
the purchase price of the security in respect of which such distribution is received. It may be difficult to obtain accurate information concerning a company in financial distress, with the result that the analysis and valuation are especially
difficult. The market for securities of such companies tends to be illiquid and sales may be possible only at substantial discounts.
Emerging Market Securities Risk.
Securities issued by foreign governments or companies in emerging market countries, such as China,
Russia and certain countries in Eastern Europe, the Middle East,
Asia, Latin America or Africa, 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.
Event-Driven Trading Risk.
The Fund may seek to profit from the occurrence of specific corporate or other events. A delay in the timing of these events, or the failure of these events to occur at all, may have a significant negative effect on the
Fund’s performance.
Event-driven
investing requires the relevant manager to make predictions about (i) the likelihood that an event will occur and (ii) the impact such event will have on the value of a company’s securities. If the event fails to occur or it does not have the
effect foreseen, losses can result. For example, the adoption of new business strategies, a meaningful change in management or the sale
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of a division or other significant assets by a company may not be
valued as highly by the market as the manager had anticipated, resulting in losses. In addition, a company may announce a plan of restructuring which promises to enhance value and fail to implement it, resulting in losses to investors.
Foreign Securities Risk.
Investments in or exposure to foreign securities involve certain risks not associated with investments in or exposure to securities of U.S. companies. For example, foreign markets can be extremely volatile. The
performance of the Fund may be negatively impacted by fluctuations in a foreign currency’s strength or weakness relative to the U.S. dollar. Foreign securities may also be less liquid than securities of U.S. companies 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 potentially confiscatory withholding or other taxes on the Fund’s income, capital gains or proceeds from the
disposition of foreign securities, which could reduce the Fund’s return 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
foreign companies; the impact of economic, political, social, diplomatic or other conditions or events; possible seizure, expropriation or nationalization of a company or its assets or the assets of a particular investor or category of investors;
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; the imposition of economic and other sanctions
against a particular foreign country, its nationals or industries or businesses within the country; and the generally 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 country’s 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.
Forward Commitments on Mortgage-backed Securities
(including Dollar Rolls) Risk.
When purchasing mortgage-backed securities in the “to be announced” (TBA) market (MBS TBAs), the seller agrees to deliver mortgage-backed securities for an agreed upon
price on an agreed upon date, but may make no guarantee as to the specific securities to be delivered. In lieu of taking delivery of mortgage-backed securities, the Fund could enter into dollar rolls, which 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 Fund’s 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). MBS TBAs and dollar rolls are subject to counterparty risk.
Frequent Trading Risk.
The portfolio managers may actively and frequently trade investments in the Fund's portfolio to carry out its investment strategies. Frequent trading of investments increases the possibility that the Fund, as relevant,
will realize taxable capital gains (including short-term capital gains, which are generally taxable to shareholders at higher rates than long-term capital gains for U.S. federal income tax purposes), which could reduce the Fund's after-tax return.
Frequent trading can also mean higher brokerage and other transaction costs, which could reduce the Fund's return. The trading costs and tax effects associated with portfolio turnover may adversely affect the Fund’s performance.
Hedging Transactions Risk.
The Fund may invest in securities and utilize financial instruments for a variety of hedging purposes. Hedging transactions may limit the opportunity for gain if the value of the portfolio position should increase.
There can be no assurance that the Fund will engage in hedging transactions at any given time, even under volatile market conditions, or that any hedging transactions the Fund engages in will be successful. Moreover, it may not be possible for the
Fund to enter into a hedging transaction at a price sufficient to protect its assets. The Fund may not anticipate a particular risk so as to hedge against it.
Hedging against a decline in the value of a
portfolio position does not eliminate fluctuations in the values of portfolio positions or prevent losses if the values of such positions decline, but establishes other positions designed to gain from those same developments, thus moderating the
decline in the portfolio positions’ value. Such hedging transactions also limit the opportunity for gain if the value of the portfolio position should increase. Moreover, it may not be possible for the Fund to hedge against an
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exchange rate, interest rate or security price fluctuation that is
so generally anticipated that the Fund is not able to enter into a hedging transaction at a price sufficient to protect its assets from the decline in value of the portfolio positions anticipated as a result of such fluctuations.
The Fund is not required to attempt to hedge
portfolio positions and, for various reasons, may determine not to do so. Furthermore, the Fund may not anticipate a particular risk so as to hedge against it. While the Fund may enter into hedging transactions to seek to reduce risk, such
transactions may result in a poorer overall performance for the Fund than if the Fund had not engaged in any such hedging transaction. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and
price movements in the portfolio position being hedged may vary. For a variety of reasons, the Fund may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. Such imperfect correlation
may prevent the Fund from achieving the intended hedge or expose the Fund to risk of loss. The successful utilization of hedging and risk management transactions requires skills complementary to those needed in the selection of the Fund’s
portfolio holdings. Moreover, it should be noted that a portfolio will always be exposed to certain risks that cannot be hedged, such as credit risk (relating both to particular securities and counterparties), liquidity risk and widening risk.
High-Yield Securities Risk.
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 experience greater price fluctuations in response 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 are generally more
likely to experience a default than higher-rated securities. High-yield securities are considered to be predominantly speculative with respect to the issuer’s 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. High-yield 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.
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
Fund’s 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 Fund’s 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 achieve its business objectives. Such business objectives may include but are not limited to: management’s 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.
Impairment of Collateral Risk.
The value of collateral, if any, securing a loan can decline, and may be insufficient to meet the borrower’s obligations or difficult or costly to liquidate. In addition, the Fund’s 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.
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 tend to fall, and if interest rates fall, the values of
debt securities 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 will usually affect the
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value of the Fund's shares. In
general, the longer the maturity or duration of a debt security, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk.
Similarly, a period of rising interest rates may negatively impact the Fund’s performance. Actions by governments and central banking authorities can result in increases in interest rates. Such actions may negatively affect the value of
fixed-income securities held by the Fund, resulting in a negative impact on the Fund's performance and NAV. Securities with floating coupon rates are typically less sensitive to interest rate changes, but these securities may decline in value if
their coupon rates do not rise as much as, or keep pace with, yields on such types of securities. 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 Fund’s NAV.
Investing in Other Funds Risk.
The Fund’s 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 the
underlying funds in direct proportion to the Fund’s investment therein. In addition, investments in ETFs have unique characteristics, including, but not limited to, the expense structure and additional expenses associated with investing in
ETFs. The performance of the underlying funds could be adversely affected if other investors 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 underlying funds 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 underlying funds. This risk may be particularly important when one investor owns a substantial portion of the underlying funds.
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. Also, to the extent that the Fund is constrained/restricted from investing (or investing further) in a particular underlying fund for one or more reasons (e.g.,
underlying fund capacity constraints or regulatory restrictions) or if the Fund chooses to sell its investment in an underlying fund because of poor investment performance or for other reasons, the Fund may have to invest in one or more other
underlying funds, including less desirable funds – from a strategy or investment performance standpoint – which could have a negative impact on Fund performance. In addition, Fund performance could be negatively impacted if one or more
appropriate alternate underlying funds are not identified or available for investment timely or at all.
Investing in Wholly-Owned Subsidiary Risk.
By investing in a Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. The Fund’s Principal Risks may also apply to a Subsidiary in which the Fund invests
(which are described in this prospectus). There can be no assurance that the investment objective of a Subsidiary will be achieved. No Subsidiary is registered under the 1940 Act and, except as otherwise noted in this prospectus, no Subsidiary is
subject to the investor protections of the 1940 Act. However, the Fund wholly owns and controls any Subsidiary in which it invests, and the Fund and any Subsidiary in which it invests are managed by Columbia Management, making it unlikely that a
Subsidiary will take action contrary to the interests of the Fund and its shareholders. The Fund’s Board has oversight responsibility for the investment activities of the Fund, including its investment in any Subsidiary, and the Fund’s
role as sole shareholder of the Subsidiary. In managing a Subsidiary’s investment portfolio, Columbia Management, or the Subsidiary’s subadviser (if any), will manage the Subsidiary’s portfolio in accordance with the Fund’s
investment policies and restrictions. Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and any Subsidiary in which it invests, respectively, are organized, could result in the inability of the Fund and/or the
Subsidiary to operate as described in this prospectus and the 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 any Subsidiary. If Cayman Islands law is changed and a Subsidiary is required to pay Cayman Island taxes, the investment returns of the Fund would likely decrease.
Issuer Risk.
An
issuer in which the Fund invests or to which it has exposure may perform poorly, and the value of its securities may therefore decline, which would negatively affect the Fund’s 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.
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Leverage Risk.
Leverage occurs when the Fund (or an underlying investment) increases its assets available for investment using borrowings (including using for investment purposes any collateral, such as cash, received with
respect to securities loaned), short sales, derivatives, or similar instruments or techniques. Because short sales involve borrowing securities and then selling them, the Fund’s short sales effectively leverage the Fund’s assets. The
Fund's assets that are used as collateral to secure the Fund's 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 Fund's overall returns. Leverage presents the opportunity for increased net income and capital gains, but may also exaggerate the Fund’s volatility and 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. Decreases in the number of financial institutions willing to make markets in the
Fund’s investments or in their capacity or willingness to transact may increase the Fund’s exposure to this risk. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may
also adversely affect the liquidity of the Fund's investments. The Fund may have to accept a lower selling price for the holding, sell other investments, or forego another, more appealing investment opportunity. Floating rate loans generally are
subject to legal or contractual restrictions on resale. Floating rate loans also may trade infrequently on the secondary market. The value of the loan to the Fund may be impaired in the event that the Fund needs to liquidate such loans. The
inability to purchase or sell floating rate loans and other debt securities at a fair price may have a negative impact on the Fund’s performance. Securities or other assets in which the Fund invests may be traded in the over-the-counter market
rather than on an organized exchange and therefore may be more difficult to purchase or sell at a fair price. Judgment plays a larger role in valuing these investments as compared to valuing more liquid investments. Price volatility may be higher
for illiquid investments as a result of, for example, the relatively less frequent pricing of such securities (as compared to liquid investments). Generally, the less liquid the market at the time the Fund sells a portfolio investment, the greater
the risk of loss or decline of value to the Fund. Price volatility, liquidity of the market and other factors can lead to an increase in Fund redemptions, which may negatively impact Fund performance and NAV, including, for example, if the Fund is
forced to sell securities in a down market.
Listed Private Equity Fund Investment Risk.
Private equity funds include financial institutions or vehicles whose principal business is to invest in and lend capital to privately held companies. The Fund is subject to the underlying risks that affect private
equity funds in which it invests, which may include increased liquidity risk, valuation risk, sector risk and credit risk. Limited or incomplete information about the companies in which private equity funds invest, and relatively concentrated
investment portfolios of private equity funds, may expose the Fund to greater volatility and risk of loss. Fund investment in private equity funds subjects Fund shareholders indirectly to the fees and expenses incurred by private equity
funds.
Macro Strategy Risk.
The profitability of any macro program depends primarily on the ability of its manager to predict derivative contract price movements to implement investment theses regarding macroeconomic trends. Price movements for
commodity interests are influenced by, among other things: changes in interest rates; governmental, agricultural, trade, fiscal, monetary and exchange control programs and policies; weather and climate conditions; natural disasters, such as
hurricanes; changing supply and demand relationships; changes in balances of payments and trade; U.S. and international rates of inflation and deflation; currency devaluations and revaluations; U.S. and international political and economic events;
and changes in philosophies and emotions of market participants. The manager’s trading methods may not take all of these factors into account.
The global macro programs to which the Fund’s
investments are exposed typically use derivative financial instruments that are actively traded using a variety of strategies and investment techniques that involve significant risks. The derivative financial instruments traded include commodities,
currencies, futures, options and forward contracts and other derivative instruments that have inherent leverage and price volatility that result in greater risk than instruments used by typical mutual funds, and the systematic programs used to trade
them may rely on proprietary investment strategies that are not fully disclosed, which may in turn result in risks that are not anticipated.
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 actual
or perceived factors affecting an issuer (e.g., an unfavorable earnings report), the industry or sector in which it operates, or the market as a whole, which may reduce the value of an investment in the Fund. Accordingly, an investment in the Fund
could lose money over short or long periods. The market values of the securities the Fund holds can be affected by changes or perceived changes in U.S. or foreign economies and financial markets, and the liquidity of these securities, among other
factors. Although
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equity securities generally tend to have greater price volatility
than debt securities, under certain market conditions, debt securities may have comparable or greater price volatility. In addition, stock prices may be sensitive to rising interest rates, as the cost of capital rises and borrowing costs
increase.
Model and Technology Risk.
Investment strategies or programs that are fundamentally dependent on proprietary or licensed technology, such as, among other things, hardware, software, model-based strategies, data gathering systems, order execution,
and trade allocation systems, and/or risk management systems may not be successful on an ongoing basis or could contain errors, omissions, imperfections, or malfunctions. Any such errors, imperfections or limitations in a model could affect the
ability of the manager to implement strategies. Despite testing, monitoring and independent safeguards, these errors may result in, among other things, execution and allocation failures and failures to properly gather and organize data — all
of which may have a negative effect on the Fund.
Such errors are often extremely difficult to detect
and some may go undetected for long periods of time and some may never be detected. The adverse impact caused by these errors can compound over time. A manager (and/or the licensor of the models or technology) may detect certain errors that it
chooses, in its sole discretion, not to address or fix. By necessity, models make simplifying assumptions that limit their efficacy. Models that appear to explain prior market data can fail to predict future market events. Moreover, an increasing
number of market participants may rely on models that are similar to those used by a manager (or an affiliate of a manager), which may result in a substantial number of market participants taking the same action with respect to an investment. Should
one or more of these other market participants begin to divest themselves of one or more portfolio investments, the Fund could suffer losses.
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, along with the fees and expenses of any other funds in which the Fund may invest, are expected to equal or exceed 0.01% of the Fund’s 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 Fund’s 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
market's 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. Other types of asset-backed securities typically represent interests in, or are backed by, pools of receivables such as credit, automobile, student and home equity loans.
Mortgage- and other asset-backed securities can have a fixed or an adjustable rate. Mortgage- and other asset-backed securities are subject to prepayment risk, which is the possibility that the underlying mortgage or other asset 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- and other
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 mortgage- and other asset-backed securities, making them more volatile and more sensitive to
changes in interest rates. 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
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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.
Multi-Strategy Risk.
The multi-strategy approach employed by the Fund involves special risks, which include the risk that investment decisions, at the Fund or the underlying fund level, may conflict with each other; for example, at any particular time, one manager may
be purchasing shares of an issuer whose shares are being sold by another manager. Consequently, the Fund could indirectly incur transaction costs without accomplishing any net investment result. Also, managers may use proprietary or licensed
investment strategies that are based on considerations and factors that are not fully disclosed to the Fund or other investors.
Moreover, consistent with the
Fund’s investment objectives, these proprietary or licensed investment strategies, which may include quantitative mathematical models or systems, may be changed or refined over time. A manager (or the licensor of the strategies used by the
manager) may make certain changes to the strategies the manager has previously used, may not use such strategies at all (or the manager’s license may be revoked), or may use additional strategies, where such changes or discretionary decisions,
and the reasons for such changes or decisions, are also not disclosed to the Fund or other investors. These strategies may involve risks under some market conditions that are not anticipated by the Investment Manager or the Fund.
Non-Diversified Fund Risk.
The Fund is non-diversified, which generally means that it will invest a greater percentage of its total assets in the securities of fewer issuers than a “diversified” fund. This 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, the Fund's value will likely be more
volatile than the value of a more diversified fund.
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 (
i.e.
, the risk of losses attributable to changes in interest rates).
Prepayment and Extension Risk.
Prepayment risk is the risk that a loan, bond or other security or investment might be called or otherwise converted, prepaid or redeemed before maturity, and extension risk is the risk that the investment might not be
called as expected. In the case of prepayment risk, 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, in the case of extension risk, as interest rates rise or spreads widen, the likelihood of prepayment decreases and the maturity of the
investment may extend the life of the investment beyond the prepayment time. If the Fund's investments are locked in at a lower interest rate for a longer period of time, the portfolio managers may be unable to capitalize on securities with higher
interest rates or wider spreads.
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 manager’s
quantitative analyses or models, or in the data on which they are based, could adversely affect the portfolio manager’s effective use of such analyses or models, which in turn could adversely affect the Fund’s performance. It is not
possible or practicable for a manager to factor all relevant, available data into quantitative model forecasts and/or trading decisions. Quantitative managers will use their discretion to determine what data to gather with respect to an investment
strategy and what data the models will take into account to produce forecasts that may have an impact on ultimate trading decisions. Shareholders should be aware that there is no guarantee that a quantitative manager will use any specific data or
type of data in making trading decisions on behalf of the Fund, nor is there any guarantee that the data actually utilized in generating forecasts or making trading decisions on behalf of the Fund will be the most accurate data available or free
from errors. There can be no assurance that these methodologies will enable the Fund to achieve its objective.
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Real Estate-Related Investment Risk.
Investments in real estate investment trusts (REITs) and in securities of other companies (wherever organized) principally engaged in the real estate industry subject the Fund to, among other things, risks similar to
those of direct investments in real estate and the real estate industry in general. These include 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 interests in a REIT may be affected by, among other factors, changes in the value of the
underlying properties owned by the REIT, 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.
Regulatory Risk — Alternative
Investments.
Legal, tax, and regulatory developments may adversely affect the Fund and its investments. The regulatory environment for the Fund and certain of its investments is evolving, and changes in the
regulation of investment funds, their managers, and their trading activities and capital markets, or a regulator’s disagreement with the Fund’s or other’s interpretation of the application of certain regulations, may adversely
affect the ability of the Fund to pursue its investment strategy, its ability to obtain leverage and financing, and the value of investments held by the Fund. There has been an increase in governmental, as well as self-regulatory, scrutiny of the
investment industry in general and the alternative investment industry in particular. It is impossible to predict what, if any, changes in regulations may occur, but any regulation that restricts the ability of the Fund or any underlying funds or
other investments to trade in securities or other instruments or the ability of the Fund or underlying funds to employ, or brokers and other counterparties to extend, credit in their trading (as well as other regulatory changes that result) could
have a material adverse impact on the Fund’s performance.
Shareholders should understand that the Fund’s
business is dynamic and is expected to change over time. Therefore, the Fund and its underlying investments may be subject to new or additional regulatory constraints in the future. Such regulations may have a significant impact on shareholders or
the operations of the Fund, including, without limitation, restricting the types of investments the Fund may make, preventing the Fund from exercising its voting rights with regard to certain financial instruments, requiring the Fund to disclose the
identity of its investors or otherwise. To the extent the Fund or its underlying investments are subject to such regulation, such regulations may have a detrimental effect on one or more shareholders. Prospective investors are encouraged to consult
their own advisors regarding an investment in the Fund.
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 Fund's income and the value of your investment in the Fund to decline.
Rule 144A Securities Risk.
The Fund may invest significantly in privately placed “Rule 144A” securities that are determined to be liquid in accordance with procedures adopted by the Fund’s 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 Fund’s 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 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. Issuers of Rule 144A securities are required to furnish information to potential investors upon request. However, the required disclosure
is much less extensive than that required of public companies and is not publicly available since it is not filed with the SEC. Further, issuers of Rule 144A securities can require recipients of the information (such as the Fund) to agree
contractually to keep the information confidential, which could also adversely affect the Fund’s ability to dispose of the security.
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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 or other asset) because the maximum sustainable loss on an instrument or
other asset purchased (held long) is limited to the amount paid for the instrument or other asset plus the transaction costs, whereas there is no maximum price of the shorted instrument or other asset when purchased in the open market. Therefore, in
theory, short positions have unlimited risk. The Fund’s 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 or other asset, this involves the risk of a potentially unlimited increase in the value of the underlying instrument or other
asset.
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 losses to the Fund. 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 debtor’s 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 debtor’s 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 debtholders. 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 be exposed to heightened 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. Initial public
offerings 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 initial public offerings, 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 initial public offering are available to the Fund. The investment performance of the Fund during periods when it is unable to invest significantly or at all in initial
public offerings may be lower than during periods when the Fund is able to do so. Securities purchased in initial public offerings which are sold within 12 months of purchase may result in increased short-term capital gains, which will be taxable to
the Fund’s shareholders as ordinary income. Certain “special situation” investments are investments in securities or other instruments that are determined to be illiquid or lacking a readily ascertainable fair value. Certain
special situation investments prevent ownership interest therein from being withdrawn until the special situation investment, or a portion thereof, is realized or deemed realized, which may negatively impact Fund performance. Investing in special
situations may have a magnified effect on the performance of funds with small amounts of assets.
Tax Risk.
To qualify
as a regulated investment company, the Fund must meet certain requirements regarding the diversification of its assets and the source of its income. The Fund expects to invest a substantial portion of its assets in shares of the Intermediary Fund.
The Intermediary Fund, in turn, expects to invest substantially all of its assets in shares of the Blackstone Fund. Each such fund intends to be treated as a regulated investment company. If the Blackstone Fund were to fail to meet the
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qualification requirements applicable to regulated investment
companies and did not cure such failure, then the Intermediary Fund and in turn the Fund would each fail to satisfy its diversification requirement and would fail to qualify for treatment as a regulated investment company.
To satisfy the qualifying income
test and be eligible for treatment as a regulated investment company, the Fund must derive at least 90% of its gross income for each taxable year from sources treated as “qualifying income” under the Code. The Fund intends to operate in
such a manner that it will satisfy the 90% gross income requirement. The tax treatment of the income and gain from certain of the Fund’s investments is uncertain; an adverse determination or future guidance might affect whether the Fund has
met the qualifying income test, including on a retroactive basis.
If the Fund were to fail to qualify as a regulated
investment company, and were ineligible to or otherwise were not to cure such failure, the Fund would be ineligible for the favorable tax treatment accorded to it as such for one or more years, which would adversely affect the value of the
Fund.
Trade Claims Risk.
The Fund may also purchase trade claims against companies, including companies in bankruptcy or reorganization proceedings, which include claims of suppliers for goods delivered and not paid, claims for unpaid services
rendered, claims for contract rejection damages and claims related to litigation. An investment in trade claims is very speculative and carries a high degree of risk. Trade claims may be illiquid instruments that generally do not pay interest and
there can be no guarantee that the debtor will ever be able to satisfy the obligation on the trade claim. Trade claims are typically unsecured and may be subordinated to other unsecured obligations of a debtor, and generally are subject to defenses
of the debtor with respect to the underlying transaction giving rise to the trade claim. The markets in trade claims are not regulated by U.S. federal securities laws or the SEC.
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.
Valuation Risk.
The
sales price the Fund (or an underlying fund or other investment vehicle) could receive for any particular investment may differ from the Fund’s (or an underlying fund’s or other investment vehicle’s) valuation of the investment,
particularly for securities that trade in thin or volatile markets or that are valued using a fair value methodology that produces an estimate of the fair value of the security/instrument, which may prove to be inaccurate. Investors who purchase or
redeem Fund shares on days when the Fund is holding securities or other instruments (or holding shares of underlying funds or other investment vehicles that have fair-valued securities or other instruments in their portfolios) may receive fewer or
more shares or lower or higher redemption proceeds than they would have received if the Fund (or underlying fund or other investment vehicle) had not fair-valued the security or instrument or had used a different valuation methodology. The value of
foreign securities, certain fixed income securities and currencies, as applicable, may be materially affected by events after the close of the market on which they are valued, but before the Fund determines its net asset value.
Additional Investment Strategies and Policies
This section describes certain investment strategies
and policies that the Fund may utilize in pursuit of its investment objective and some additional factors and risks involved with investing in the Fund.
Investment Guidelines
As a general matter, and except as
specifically described in the discussion of the Fund's principal investment strategies in this prospectus or as otherwise required by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief, whenever an investment
policy or limitation states a percentage of the Fund's assets that may be invested in any security or other asset or sets forth a policy regarding an investment standard, compliance with that percentage limitation or standard will be determined
solely at the time of the Fund's investment in the security or asset.
Columbia Adaptive
Alternatives Fund
More
Information About the Fund
(continued)
Holding Other Kinds of Investments
The Fund may hold investments that are not part of
its principal investment strategies. These investments and their risks are described below and/or in the SAI. The Fund may choose not to invest in certain securities described in this prospectus and in the SAI, although it has the ability to do so.
Information on the Fund’s holdings can be found in the Fund’s shareholder reports or by visiting columbiamanagement.com.
Transactions in Derivatives
The Fund may enter into derivative transactions or
otherwise have exposure to derivative transactions through underlying investments. Derivatives are financial contracts whose values are, for example, based on (or “derived” from) traditional securities (such as a stock or bond), assets
(such as a commodity like gold or a foreign currency), reference rates (such as the London Interbank Offered Rate (commonly known as LIBOR)) or market indices (such as the Standard & Poor's (S&P) 500
®
Index). The use of derivatives is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities
transactions. Derivatives involve special risks and may result in losses or may limit the Fund's potential gain from favorable market movements. Derivative strategies often involve leverage, which may exaggerate a loss, potentially causing the Fund
to lose more money than it would have lost had it invested in the underlying security or other asset directly. The values of derivatives may move in unexpected ways, especially in unusual market conditions, and may result in increased volatility in
the value of the derivative and/or the Fund’s shares, among other consequences. The use of derivatives may also increase the amount of taxes payable by shareholders holding shares in a taxable account. Other risks arise from the Fund's
potential inability to terminate or to sell derivative positions. A liquid secondary market may not always exist for the Fund's derivative positions at times when the Fund might wish to terminate or to sell such positions. Over-the-counter
instruments (investments not traded on an exchange) may be illiquid, and transactions in derivatives traded in the over-the-counter market are subject to the risk that the other party will not meet its obligations. The use of derivatives also
involves the risks of mispricing or improper valuation and that changes in the value of the derivative may not correlate perfectly with the underlying security, asset, reference rate or index. The Fund also may not be able to find a suitable
derivative transaction counterparty, and thus may be unable to engage in derivative transactions when it is deemed favorable to do so, or at all. U.S. federal legislation has been enacted that provides for new clearing, margin, reporting and
registration requirements for participants in the derivatives market. These changes could restrict and/or impose significant costs or other burdens upon the Fund’s participation in derivatives transactions. For more information on the risks of
derivative investments and strategies, see the SAI.
Conflicts of Interest — The Blackstone Fund
Blackstone and subadvisers to the
Blackstone Fund will have conflicts of interest which could interfere with their management of the Blackstone Fund. For example, Blackstone or a Blackstone Fund subadviser (or its affiliates) may manage other investment funds or have other clients
that may be similar to, or overlap with, the investment objective and strategy of the Blackstone Fund, creating potential conflicts of interest in investment decisions regarding investments that may be appropriate for the Blackstone Fund and
Blackstone’s or Blackstone Fund subadvisers’ other clients. These conflicts of interest may be exacerbated to the extent that Blackstone’s or Blackstone Fund subadvisers’ other clients pay them higher fees or
performance-based fees. In addition, the activities in which Blackstone or Blackstone Fund subadvisers and their affiliates are involved may limit or preclude the flexibility that the Blackstone Fund may otherwise have to participate in certain
investments. The advisers to any funds that the Blackstone Fund may invest in may have similar, or other, conflicts of interest.
Investing in Affiliated Funds
The Investment Manager or an affiliate serves as
investment adviser to mutual funds using the Columbia brand (Columbia Funds), including those that are structured as “fund-of-funds”, and provides asset-allocation services to (i) shareholders by investing in shares of other Columbia
Funds, which may include the Fund (collectively referred to in this section as Underlying Funds), and (ii) discretionary managed accounts (collectively referred to as affiliated products) that invest exclusively in Underlying Funds. These
affiliated products, individually or collectively, may own a significant percentage of the outstanding shares of one or more Underlying Funds, and the Investment Manager seeks to balance potential conflicts of interest between the affiliated
products and the Underlying Funds in which they invest. The affiliated products’ investment in the Underlying Funds may have the effect of creating economies of scale, possibly resulting in lower expense ratios for the Underlying Funds,
because the affiliated products may own substantial portions of the shares of Underlying Funds. However, redemption of Underlying
Columbia Adaptive Alternatives
Fund
More Information
About the Fund
(continued)
Fund shares by one or more affiliated products could cause the
expense ratio of an Underlying Fund to increase, as its fixed costs would be spread over a smaller asset base. Because of large positions of certain affiliated products, the Underlying Funds may experience relatively large inflows and outflows of
cash due to affiliated products’ purchases and sales of Underlying Fund shares. Although the Investment Manager or its affiliate may seek to minimize the impact of these transactions where possible, for example, by structuring them over a
reasonable period of time or through other measures, Underlying Funds may experience increased expenses as they buy and sell portfolio securities to manage the cash flow effect related to these transactions. Further, when the Investment Manager or
its affiliate structures transactions over a reasonable period of time in order to manage the potential impact of the buy and sell decisions for the affiliated products, those affiliated products, including funds-of-funds, may pay more or less (for
purchase activity), or receive more or less (for redemption activity), for shares of the Underlying Funds than if the transactions were executed in one transaction. In addition, substantial redemptions by affiliated products within a short period of
time could require the Underlying Fund to liquidate positions more rapidly than would otherwise be desirable, which may have the effect of reducing or eliminating potential gain or causing it to realize a loss. Substantial redemptions may also
adversely affect the ability of the Underlying Fund to implement its investment strategy. The Investment Manager or its affiliate also has an economic conflict of interest in determining the allocation of affiliated products’ assets among the
Underlying Funds, as it earns different fees from the various Underlying Funds.
Investing in Money Market Funds
The Fund may invest cash in, or hold as collateral
for certain investments, shares of registered or unregistered money market funds, including funds advised by the Investment Manager or its affiliates. These funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or
any other government agency. The Fund and its shareholders indirectly bear a portion of the expenses of any money market fund or other fund in which the Fund may invest.
Lending of Portfolio Securities
The Fund may lend portfolio securities to
broker-dealers or other financial intermediaries on a fully collateralized basis in order to earn additional income. The Fund may lose money from securities lending if, for example, it is delayed in or prevented from selling the collateral after the
loan is made or recovering the securities loaned or if it incurs losses on the reinvestment of cash collateral.
The Fund currently does not participate in the
securities lending program but the Board of Trustees (the Board) may determine to renew participation in the future. For more information on lending of portfolio securities and the risks involved, see the Fund’s SAI and its annual and
semiannual reports to shareholders.
Investing
Defensively
The Fund may from time to time
take temporary defensive investment positions that may be inconsistent with the Fund’s 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.
The Fund
may not achieve its investment objective while it is investing defensively. Investing defensively 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. See also
Investing in Money Market Funds
above for more information.
Other Strategic and Investment Measures
The Fund may also from time to time take temporary
portfolio positions that may or may not be consistent with the Fund’s 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 exposures to a sector, country or region where the Investment
Manager believes such positioning is appropriate. The Fund may take such portfolio positions for as long a period as deemed necessary. While the Fund is so positioned, derivatives could comprise a substantial portion of the Fund’s investments
and the Fund may not achieve its investment objective. Investing in this manner may adversely
Columbia Adaptive
Alternatives Fund
More
Information About the Fund
(continued)
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. For information on the risks of investing in derivatives, see
Transactions
in Derivatives
above.
Portfolio Holdings
Disclosure
The Board has adopted policies and
procedures that govern the timing and circumstances of disclosure to shareholders and third parties of information regarding the securities owned by the Fund. A description of these policies and procedures is included in the SAI. Fund policy
generally permits the disclosure of portfolio holdings information on the Fund's website (columbiamanagement.com) only after a certain amount of time has passed, as described in the SAI.
Purchases and sales of portfolio securities can take
place at any time, so the portfolio holdings information available on the Fund's website may not always be current.
Portfolio Holdings Versus the
Benchmarks
The Fund does
not limit its investments to the securities within its benchmark(s), and it is anticipated that the Fund's holdings will diverge significantly from those of its benchmark(s). In addition, the Fund may invest in securities outside any industry and
geographic sectors represented in its benchmark(s). The Fund's weightings in individual securities, and in industry and geographic sectors, may also vary considerably from those of its benchmark(s). In addition, the value of the Fund’s
investments may be significantly more volatile than the value of the securities or assets comprising the Fund’s benchmark. The Fund may be exposed to greater risk of loss than a direct investment in the securities or
assets comprising the Fund’s benchmark.
Mailings to Households
In order to reduce shareholder expenses, the Fund
may, if prior consent has been provided, mail only one copy of the Fund’s prospectus and each annual and semiannual report to those addresses shared by two or more accounts. If you wish to receive separate copies of these documents, call
800.345.6611 or, if your shares are held through a financial intermediary, contact your intermediary directly.
Cash Flows
The timing and magnitude of cash inflows from
investors buying Fund shares could prevent the Fund from always being fully invested. Conversely, the timing and magnitude of cash outflows to shareholders redeeming Fund shares could require the Fund to sell portfolio securities at less than
opportune times or to hold ready reserves of uninvested cash in amounts larger than might otherwise be the case to meet shareholder redemptions. Either situation could adversely impact the Fund’s performance.
Understanding Annual Fund Operating Expenses
The Fund’s annual operating expenses,
presented in the
Annual Fund Operating Expenses
table in the
Fees and Expenses of the Fund
section of this prospectus, generally are based on estimated expenses for the
Fund’s current fiscal period and are expressed as a percentage (expense ratio) of the Fund’s average net assets. The expense ratios reflect current fee arrangements. In general, the Fund’s expense ratios will increase as its net
assets decrease, such that the Fund’s actual expense ratios may be higher than the expense ratios presented in the
Annual Fund Operating Expenses
table.
Columbia Adaptive Alternatives
Fund
More Information
About the Fund
(continued)
Other Expenses
“Other expenses”
consist of the fees the Fund pays to its administrator, custodian, transfer agent, auditors, lawyers and trustees, costs relating to compliance and miscellaneous expenses. Generally, these expenses are the same for each share class and are allocated
on a pro rata basis across all share classes. Transfer agent fees and certain shareholder servicing fees, however, are class specific. They differ by share class because the shareholder services provided to each share class may be different.
Accordingly, the differences in “other expenses” among share classes are primarily the result of the different transfer agent and shareholder servicing fees applicable to each share class. For more information on these fees, see
Choosing a Share Class — Selling Agent Compensation.
Expense Reimbursement Arrangements
The Investment Manager and certain
of its affiliates have contractually agreed to waive fees and/or reimburse expenses (excluding certain fees and expenses described below) through September 30, 2016, unless sooner terminated at the sole discretion of the Fund's Board, so that
the Fund’s net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Fund’s custodian, do not exceed the annual rates of:
Columbia
Adaptive Alternatives Fund
|
Class
A
|
2.95%
|
Class
C
|
3.70%
|
Class
I
|
2.55%
|
Class
R
|
3.20%
|
Class
R4
|
2.70%
|
Class
R5
|
2.60%
|
Class
W
|
2.95%
|
Class
Y
|
2.55%
|
Class
Z
|
2.70%
|
Under the agreement, the
following fees and expenses are excluded from the Fund’s operating expenses when calculating the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes), transaction
costs and brokerage commissions, costs related to any securities lending program, dividend expenses associated with securities sold short by the Fund and Blackstone Alternative Multi-Strategy Fund (an unaffiliated mutual fund indirectly
invested in by the Fund), inverse floater program fees and expenses, transaction charges and interest on borrowed money, interest, extraordinary expenses and any other expenses the exclusion of which is specifically approved by the Board. This
agreement may be modified or amended only with approval from all parties.
Obtaining Recent Net Asset Value Per Share
The price you pay or receive when you buy, sell or
exchange shares is the Fund's next determined net asset value (or NAV) per share for a given share class. The Fund calculates the NAV per share for each class of shares of the Fund at the end of each business day. For additional information on how
the Fund calculates its NAV, see
Buying, Selling and Exchanging Shares
—
Share Price Determination
below.
You may obtain the current NAV of Fund shares at no
cost by calling 800.345.6611 or by sending an e-mail to serviceinquiries@columbiamanagement.com.
Columbia Adaptive
Alternatives Fund
More
Information About the Fund
(continued)
Primary Service Providers
The Investment Manager, which also serves as the
Fund’s administrator (the Administrator), the Distributor and the Transfer Agent are all affiliates of Ameriprise Financial, Inc. (Ameriprise Financial). They and their affiliates currently provide key services, including investment advisory,
administration, distribution, shareholder servicing and transfer agency services, to the Fund and various other funds, including the Columbia Funds, and are paid for providing these services. These service relationships are described below.
The Investment Manager
Columbia Management Investment Advisers, LLC is
located at 225 Franklin Street, Boston, MA 02110 and serves as investment adviser to the Columbia Funds. The Investment Manager is a registered investment adviser and a wholly-owned subsidiary of Ameriprise Financial. The Investment Manager’s
management experience covers all major asset classes, including equity securities, fixed-income securities and money market instruments. In addition to serving as an investment adviser to traditional mutual funds, exchange-traded funds and
closed-end funds, the Investment Manager acts as an investment adviser for itself, its affiliates, individuals, corporations, retirement plans, private investment companies and financial intermediaries.
Subject to oversight by the Board, the Investment
Manager manages the day-to-day operations of the Fund, determining what securities and other investments the Fund should buy or sell and executing portfolio transactions. The Investment Manager may use the research and other capabilities of its
affiliates and third parties in managing the Fund’s investments.
The SEC has issued an order that permits the
Investment Manager, subject to the approval of the Board, to appoint an unaffiliated subadviser or to change the terms of a subadvisory agreement for the Fund without first obtaining shareholder approval. The order permits the Fund to add or to
change unaffiliated subadvisers or to change the fees paid to subadvisers from time to time without the expense and delays associated with obtaining shareholder approval of the change. The Investment Manager and its affiliates may have other
relationships, including significant financial relationships, with current or potential subadvisers or their affiliates, which may create certain conflicts of interest. When making recommendations to the Board to appoint or to change a subadviser,
or to change the terms of a subadvisory agreement, the Investment Manager does not consider any other relationship it or its affiliates may have with a subadviser, and the Investment Manager discloses to the Board the nature of any material
relationships it has with a subadviser or its affiliates. At present, the Investment Manager has not engaged any investment subadviser for the Fund.
With respect to the Fund, the
Fund’s Board has approved a subadvisory agreement between the Investment Manager and Threadneedle International Limited (Threadneedle), an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Ameriprise Financial. At
present, Threadneedle is not providing services to the Fund pursuant to the subadvisory agreement. A discussion regarding the basis for the Board approving the adoption of the subadvisory agreement with Threadneedle will be available in the
Fund’s annual report to shareholders for the fiscal period ended May 31, 2015.
The Fund pays the Investment Manager a fee for its
investment advisory services. The fee is calculated as a percentage of the average daily net assets of the Fund and is paid monthly. The fee is 1.25% of the Fund’s average daily net assets on all assets, including assets invested in affiliated
pooled investment vehicles (including mutual funds and exchange-traded funds); however, with respect to Fund assets invested in the affiliated underlying funds, the Investment Manager will waive the net management fees (investment advisory and
administrative services fees, less reimbursements/waivers) of the affiliated underlying funds. A discussion regarding the basis for the Board approving the adoption of the investment management services agreement will be available in the Fund's
annual report to shareholders for the fiscal period ended May 31, 2015.
Portfolio Managers
Information about the portfolio
managers primarily responsible for overseeing the Fund’s and the Subsidiary's investments is shown below. The SAI provides additional information about the portfolio managers, including information relating to compensation, other accounts
managed by the portfolio managers and ownership by the portfolio managers of Fund shares.
Portfolio
Manager
|
|
Title
|
|
Role
with Fund
|
|
Managed
Fund Since
|
Jeffrey
Knight, CFA
|
|
Senior
Portfolio Manager, Managing Director, Global Head of Investment Solutions and Co-Head of Global Asset Allocation
|
|
Co-lead
manager
|
|
January
2015
|
Columbia Adaptive Alternatives
Fund
More Information
About the Fund
(continued)
Portfolio
Manager
|
|
Title
|
|
Role
with Fund
|
|
Managed
Fund Since
|
William
Landes, Ph.D.
|
|
Senior
Vice President and Deputy Head of Global Investment Solutions
|
|
Co-lead
manager
|
|
January
2015
|
Marc
Khalamayzer, CFA
|
|
Analyst,
Global Investment Solutions Team
|
|
Co-manager
|
|
January
2015
|
Mr. Knight
joined the Investment Manager in February 2013 as Head of Global Asset Allocation. Prior to joining the Investment Manager, Mr. Knight was at Putnam Investments from 1993 to 2013, most recently as head of global asset allocation.
Mr. Knight began his investment career in 1987 and earned a B.A. from Colgate University and an M.B.A. from Tuck School of Business.
Dr. Landes
joined
the Investment Manager in June 2014 as Deputy Head of Global Investment Solutions. Prior to joining the Investment Manager, Dr. Landes was chief investment officer of the multi-asset business for Gottex Fund Management from 2008 to 2014. Dr.
Landes began his investment career in 1985 and earned a B.S. from the University of Findlay and a Ph.D. from the University of Cincinnati.
Mr. Khalamayzer
joined the Investment Manager in July 2014 as an analyst for the Global Investment Solutions Team. Prior to joining the Investment Manager, Mr. Khalamayzer was a director at Gottex Fund Management Sarl from 2008 to 2014. Mr. Khalamayzer began
his investment career in 2006 and earned an M.S. and a B.S. from Bentley University.
The Administrator
Columbia Management Investment Advisers, LLC is
responsible for overseeing the administrative operations of the Fund, including the general supervision of the Fund’s operations, the coordination of the Fund’s service providers and the provision of related clerical and administrative
services. The Fund pays the Administrator a fee (plus certain out-of-pocket expenses) for the administrative services it provides to the Fund.
The Distributor
Shares of the Fund are distributed by Columbia
Management Investment Distributors, Inc., which is located at 225 Franklin Street, Boston, MA 02110. The Distributor is a registered broker-dealer and an indirect, wholly-owned subsidiary of Ameriprise Financial. The Distributor and its affiliates
may pay commissions, distribution and service fees and/or other compensation to entities, including Ameriprise Financial affiliates, for selling shares and providing services to investors.
The Transfer Agent
Columbia Management Investment Services Corp. is a
registered transfer agent and wholly-owned subsidiary of Ameriprise Financial. The Transfer Agent is located at 225 Franklin Street, Boston, MA 02110, and its responsibilities include processing purchases, redemptions and exchanges of Fund shares,
calculating and paying distributions, maintaining shareholder records, preparing account statements and providing customer service. The Transfer Agent has engaged DST Systems, Inc., including its affiliate, Boston Financial Data Services, to provide
various shareholder services. In addition, the Transfer Agent enters into agreements with various financial intermediaries through which you may hold Fund shares, pursuant to which the Transfer Agent pays these financial intermediaries for providing
certain shareholder services. The Fund generally pays the Transfer Agent a per account fee, pays a fee based on the assets invested through omnibus accounts and reimburses the Transfer Agent for certain out-of-pocket expenses.
Other Roles and Relationships of Ameriprise Financial and its
Affiliates — Certain Conflicts of Interest
The Investment Manager, Distributor and Transfer
Agent, all affiliates of Ameriprise Financial, provide various services to the Fund and other Columbia Funds for which they are compensated. Ameriprise Financial and its other affiliates may also provide other services to these funds and be
compensated for them.
The Investment Manager
and its affiliates may provide investment advisory and other services to other clients and customers substantially similar to those provided to the Columbia Funds. These activities, and other financial services activities of Ameriprise Financial and
its affiliates, may present actual and potential conflicts of interest and introduce certain investment constraints.
Columbia Adaptive
Alternatives Fund
More
Information About the Fund
(continued)
Ameriprise Financial is a major financial services
company, engaged in a broad range of financial activities beyond the mutual fund-related activities of the Investment Manager, including, among others, insurance, broker-dealer (sales and trading), asset management, banking and other financial
activities. These additional activities may involve multiple advisory, financial, insurance and other interests in securities and other instruments, and in companies that issue securities and other instruments, that may be bought, sold or held by
the Columbia Funds.
Conflicts of interest and
limitations that could affect a Columbia Fund may arise from, for example, the following:
■
|
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.
|
The Investment Manager and Ameriprise Financial have
adopted various policies and procedures that are intended to identify, monitor and address conflicts of interest. However, there is no assurance that these policies, procedures and disclosures will be effective.
Additional information about Ameriprise Financial
and the types of conflicts of interest and other matters referenced above are set forth in the
Investment Management and Other Services — Other Roles and Relationships of Ameriprise Financial and its Affiliates
— Certain Conflicts of Interest
section of the SAI. Investors in the Columbia Funds should carefully review these disclosures and consult with their financial advisor if they have any questions.
Certain Legal Matters
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 Fund is 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 Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Information regarding certain pending and settled legal proceedings may be found in the Fund’s
shareholder reports and in the SAI. Additionally, Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary, 8-K filings with the SEC 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 sec.gov.
About the Fund’s Wholly-Owned
Subsidiary
The Fund may invest in one or more
wholly-owned subsidiaries (for purposes of this section, referred to collectively as the Subsidiary). The Subsidiary is an exempted company organized under the laws of the Cayman Islands. The Fund will invest in the Subsidiary in order to gain
exposure to certain asset classes within the diversification and other limitations of Subchapter M of the U.S. Internal Revenue Code of 1986, as amended, applicable to “regulated investment companies.” The Fund must invest no more
than 25% of its total assets in the Subsidiary as of the end of each quarter of its taxable year.
The Subsidiary is overseen by its own board of
directors. However, the Fund’s Board oversees investment activities of the Subsidiary generally as if the Subsidiary’s investments were held directly by the Fund. The Investment Manager is responsible for the Subsidiary’s
day-to-day business pursuant to a separate investment management services agreement between the Subsidiary and the Investment Manager. Under this agreement, the Investment Manager provides the Subsidiary with the same
Columbia Adaptive Alternatives
Fund
More Information
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(continued)
type of management services, under the same terms, as are provided
to the Fund. The Subsidiary has entered into separate contracts for the provision of administrative and custody services with the same service providers who provide these services to the Fund. The Subsidiary will bear the fees and expenses incurred
in connection with the advisory, administrative and custody services that it receives. The Fund expects that the expenses borne by the Subsidiary will not be material in relation to the value of the Fund’s assets.
In managing the Subsidiary’s
investment portfolio, and in adhering to the Fund’s compliance policies and procedures, the Investment Manager will treat the assets of the Subsidiary generally as if the assets were held directly by the Fund. The Investment Manager will also
treat the assets of the Subsidiary generally as if the assets were held directly by the Fund with respect to its adherence to the Fund’s investment policies and restrictions.
Please refer to the SAI for additional information
about the organization and management of the Subsidiary.
Columbia Adaptive
Alternatives Fund
The Funds
The Columbia Funds (referred to as the Funds)
generally share the same policies and procedures for investor services, as described below. Each Fund is a series of Columbia Funds Series Trust (CFST), Columbia Funds Series Trust I (CFST I) or Columbia Funds Series Trust II (CFST II), and certain
features of distribution and/or service plans may differ among these trusts. The Fund offered by this prospectus is a series of CFST I.
Funds Contact Information
Additional information about the Funds can be
obtained at columbiamanagement.com,* by calling toll-free 800.345.6611, or by writing (regular mail) to Columbia Management Investment Services Corp., P.O. Box 8081, Boston, MA 02266-8081 or (express mail) Columbia Management Investment Services
Corp., c/o Boston Financial, 30 Dan Road, Suite 8081, Canton, MA 02021-2809.
*
|
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.
|
Selling and/or Servicing Agents
The terms “selling
agent” and “servicing agent” (collectively, selling agents) refer to the financial intermediaries that are authorized to sell shares of the Funds. Selling agents 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 advisers, third party administrators and other financial intermediaries, including Ameriprise Financial and its affiliates.
Omnibus Accounts
The term “omnibus
account” refers to a selling agent’s account with the Fund (through the Transfer Agent) that represents the combined holdings of, and transactions in, Fund shares of one or more clients of the selling agent (beneficial shareholders).
Omnibus accounts are held in the name of the selling agents and not in the name of the beneficial shareholders invested in the Fund through omnibus accounts.
Retirement Plans and Omnibus Retirement
Plans
The term
“retirement plan” refers to retirement plans created under sections 401(a), 401(k), 457 and 403(b) of the Internal Revenue Code of 1986, as amended (the Code), non-qualified deferred compensation plans governed by section 409A of the
Code and similar plans, but does not refer to individual retirement plans. The term “omnibus retirement plan” refers to a retirement plan that has a plan-level or omnibus account with the Transfer Agent.
Summary of Share Class Features
Each share class has its own investment eligibility
criteria, cost structure and other features. You may not be eligible for every share class. If you purchase shares of a Fund through a retirement plan or other product or program offered by your selling agent, not all share classes of the Fund may
be made available to you. When deciding which class of shares to buy, you should consider, among other things:
■
|
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.
|
Each investor's personal situation is different and
you may wish to discuss with your selling agent which share classes are available to you and which share class is appropriate for you.
Columbia Adaptive Alternatives
Fund
Choosing a Share
Class
(continued)
The following summarizes the primary features of
Class A, Class B, Class C, Class I, Class K, Class R, Class R4, Class R5, Class T, Class W, Class Y and Class Z shares.
Not all Funds offer every class of shares. The Fund
offers the class(es) of shares set forth on the cover of this prospectus and may offer other share classes through a separate prospectus. Although certain share classes are generally closed to new or existing investors, information relating to these
share classes is included in the table below because certain qualifying purchase orders are permitted, as described below.
Share Class Features
Share
Class
|
Eligible
Investors
(a)
;
Minimum Initial Investments
(b)
;
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
Minimum Initial Investment:
$2,000 for most
investors
|
5.75%
maximum, declining to 0.00% on investments of $1 million or more
None for Columbia Money Market Fund and certain other Funds
(e)
|
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months after purchase charged as follows:
• 1.00% CDSC if redeemed within 12 months after purchase
and
• 0.50% CDSC if redeemed more than 12, but less than 18, months after purchase
(e)
|
Distribution
and Service
Fees:
up to 0.25%
|
Class
B
|
Eligibility:
Closed to new investors
(f)
Conversion Features:
Converts to Class A shares
generally eight years after purchase
(g)
|
None
|
5.00%
maximum, gradually declining to 0.00% after six years
(g)
|
Distribution
Fee:
0.75%
Service Fee:
0.25%
|
Class
C
|
Eligibility:
Available to the general public for investment
Minimum Initial Investment:
$2,000 for most investors
Purchase Order Limit:
$999,999
(h)
; none for omnibus retirement plans
|
None
|
1.00%
on certain investments redeemed within one year of purchase
|
Distribution
Fee:
0.75%
Service Fee:
0.25%
|
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%
|
Columbia Adaptive
Alternatives Fund
Choosing a Share Class
(continued)
Share
Class
|
Eligible
Investors
(a)
;
Minimum Initial Investments
(b)
;
and Conversion Features
|
Front-End
Sales Charges
(c)
|
Contingent
Deferred
Sales Charges
(CDSCs)
(c)
|
Maximum
Distribution
and/or Service Fees
(d)
|
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%
Series of CFST II:
distribution and service fee of 0.50%, of which the service fee may
be up to 0.25%
|
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)
Minimum Initial Investment:
None for omnibus retirement plans; $100,000 for combined underlying
accounts of eligible registered investment advisers
|
None
|
None
|
None
|
Columbia Adaptive Alternatives
Fund
Choosing a Share
Class
(continued)
Share
Class
|
Eligible
Investors
(a)
;
Minimum Initial Investments
(b)
;
and Conversion Features
|
Front-End
Sales Charges
(c)
|
Contingent
Deferred
Sales Charges
(CDSCs)
(c)
|
Maximum
Distribution
and/or Service Fees
(d)
|
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 after purchase, charged as follows:
• 1.00% CDSC if redeemed within 12 months after purchase
and
• 0.50% CDSC if redeemed more than 12, but less than 18, months after purchase
|
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
Minimum Initial Investment:
$500
|
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)
Minimum Initial Investment:
See
Eligibility
above
|
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.
|
Columbia Adaptive
Alternatives Fund
Choosing a Share Class
(continued)
(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 AMT-Free Intermediate Muni Bond Fund, Columbia High Yield Municipal 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:
|
•
Class B Shares
. The Funds no longer accept investments from new or existing investors in Class B shares, except through reinvestment of dividend and/or capital gain distributions by existing Class B
shareholders, or a permitted exchange.
•
Class K Shares
. Shareholders who opened and funded a Class K account with a Fund as of the close of business on December 31, 2010 may continue to make additional purchases of such share class, and existing
Class K accounts may continue to allow new investors or participants to be established in their Fund account.
•
Class R5 Shares
. Shareholders with Class R5 accounts funded before November 8, 2012 who do not satisfy the current eligibility criteria for Class R5 shares may not establish new Class R5 accounts but may
continue to make additional purchases of Class R5 shares in existing accounts. In addition, investment advisory programs and similar programs that opened a Class R5 account as of May 1, 2010 and continuously hold Class R5 shares in such account
after such date, may generally not only continue to make additional purchases of Class R5 shares but also open new Class R5 accounts for such pre-existing programs and add new shareholders in the program.
•
Class T Shares.
Shareholders
with Class T accounts who received, and have continuously held, Class T shares in connection with the merger of certain Galaxy funds into
certain Funds that were then named Liberty funds may continue to make additional purchases of such share class.
•
Class Y Shares
. Shareholders with Class Y accounts funded before November 8, 2012 who do not satisfy the current eligibility criteria for Class Y shares may not establish new accounts for such share class but
may continue to make additional purchases of Class Y shares in existing accounts.
•
Class Z Shares
. Effective March 29, 2013, selling agents that clear Fund share transactions 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 omnibus retirement plans are no longer permitted to establish new Class Z accounts, subject to certain exceptions. Omnibus retirement plans that
opened and, subject to exceptions, funded a Class Z account as of close of business on March 28, 2013 and continuously hold Class Z shares in such account after such date, may generally continue to make additional purchases of Class Z shares, open
new Class Z accounts and add new participants. In certain circumstances and in the sole discretion of the Distributor, omnibus retirement plans affiliated with a grandfathered plan may also open new Class Z accounts. Accounts of selling agents
(other than omnibus retirement plans) that clear Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms are not permitted to establish new Class Z accounts or make
additional purchases of Class Z shares (other than through reinvestment of distributions).
(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.
|
(h)
|
If you are eligible to invest
in Class A shares without a front-end sales charge you should discuss your options with your Selling Agent. For more information, see
Choosing a Share Class – Reductions/Waivers of Sales Charges.
|
Sales Charges and
Commissions
Sales charges, commissions and
distribution and service fees (discussed in a separate sub-section below) compensate selling agents (typically your financial advisor) for selling shares to you and for maintaining and servicing the shares held in your account with them. These
charges, commissions and fees are intended to provide incentives for selling agents to provide such services. Depending on which share class you choose you will pay these charges either at the outset as a front-end sales charge, at the time you sell
your shares as a CDSC
and/or over time in the form of increased ongoing fees.
Whether the ultimate cost is
higher for one class over another depends on the amount you invest, how long you hold your shares and whether you are eligible for reduced or waived sales charges. The differential between classes also will vary depending on the actual investment
return for any given investment period. You are responsible for choosing the share class most appropriate for you after taking into account your share class eligibility and the value of accounts that you are eligible to include for the right
Columbia Adaptive Alternatives
Fund
Choosing a Share
Class
(continued)
of accumulation, which may reduce or eliminate otherwise applicable
sales charges. See
Choosing as Share Class
– Reductions/Waivers of Sales Charges
. We encourage you to consult with a financial advisor who can help you with your
investment decisions.
Class A Shares — Front-End
Sales Charge
You'll pay a front-end sales
charge when you buy Class A shares (other than shares of Columbia Money Market Fund and certain other Funds), resulting in a smaller dollar amount being invested in a Fund than the purchase price you pay, unless you qualify for a waiver of the
sales charge or you buy the shares through reinvested distributions. For more information, see
Choosing a Share Class — Reductions/Waivers of Sales Charges.
The Distributor receives the sales charge and
re-allows (or pays) a portion of the sales charge to the selling agent through which you purchased the shares. The Distributor retains the balance of the sales charge. The Distributor retains the full sales charge you pay when you purchase shares of
the Fund directly from the Fund (through the Transfer Agent, rather than through a selling agent). Sales charges vary depending on the amount of your purchase.
Front-End Sales Charge Calculation
The table below presents the
front-end sales charge as a percentage of both the offering price and the net amount invested.
■
|
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.
|
The dollar amount of the sales
charge is the difference between the offering price of the shares you buy (based on the applicable sales charge for the Fund) and the NAV of those shares. To determine the front-end sales charge you will pay when you buy your shares, the Fund will
add the amount of your investment to the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund) and base the sales charge on the aggregate amount. See
Choosing a Share Class — Reductions/Waivers of Sales Charges
for a discussion of account value aggregation. There is no initial sales charge on reinvested dividend or capital gain distributions.
The front-end sales charge you'll pay on Class A
shares:
■
|
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).
|
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
|
Equity
Funds,
Columbia Absolute Return Emerging Markets Macro Fund,
Columbia Absolute Return Enhanced Multi-Strategy Fund,
Columbia Adaptive Alternatives Fund,
Columbia Adaptive Risk Allocation Fund,
Columbia Commodity Strategy
Fund,
Columbia Diversified Absolute Return Fund
and Funds-of-Funds (equity)*
|
$
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%
|
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 Adaptive
Alternatives Fund
Choosing a Share Class
(continued)
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
AMT-Free Intermediate Muni Bond Fund, each of the AMT-Free State-Specific Intermediate Muni Bond Funds and Columbia Intermediate Bond Fund
|
$
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 Class A shares of a Fund in amounts not subject to initial sales charges, see
Class A Shares — Commissions
below.
|
Class A Shares — CDSC
In some cases, you'll pay a CDSC if you sell Class A
shares that you purchased without an initial sales charge.
■
|
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 after purchase,
|
Columbia Adaptive Alternatives
Fund
Choosing a Share
Class
(continued)
which is
charged as follows: 1.00% CDSC if shares are redeemed within 12 months after 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 18 months after purchase as described in this paragraph.
Contingent Deferred Sales Charge
A contingent deferred sales
charge or CDSC is a sales charge applied at the time you sell your shares, unlike a front-end sales charge that is applied at the time of purchase. A CDSC varies based on the length of time that you have held your shares. A CDSC is applied to the
NAV at the time of your purchase or sale, whichever is lower, and will not be applied to any shares you receive through reinvested distributions or any amount that represents appreciation in the value of your 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.
When you place an order to sell
shares of a class that has a CDSC, the Fund will first redeem any shares that aren't subject to a CDSC, followed by those you have held the longest. This means that if a CDSC is imposed, you cannot designate the individual shares being redeemed for
U.S. federal income tax purposes. You should consult your tax advisor about the tax consequences of investing in the Fund. In certain circumstances, the CDSC may not apply. See
Choosing a Share Class —
Reductions/Waivers of Sales Charges
for details.
Class A Shares — Commissions
The Distributor may pay your selling agent an
up-front commission when you buy Class A shares. The Distributor generally funds the commission through the applicable sales charge paid by you. For more information, see
Class A Shares — Front-End Sales Charge
— Breakpoint Schedule.
The Distributor may also pay your
selling agent a cumulative commission when you buy Class A shares in amounts not subject to initial sales charges, according to the following schedule:
Class
A 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%
|
*
|
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.
|
Class B Shares — Sales Charges
The Funds no longer accept new investments in Class
B shares, except for certain limited transactions as described in more detail under
Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors — Class B Shares (Closed).
You don't pay a front-end sales charge when you buy
Class B shares, but you may pay a CDSC when you sell Class B shares.
Columbia Adaptive
Alternatives Fund
Choosing a Share Class
(continued)
Class B Shares — CDSC
You'll pay a CDSC if you sell Class B shares unless
you qualify for a waiver of the CDSC or the shares you're selling were bought through reinvested distributions. See
Choosing a Share Class — Reductions/Waivers of Sales Charges
for details. The CDSC you
pay on Class B shares depends on how long you've held your shares and generally declines each year until there is no sales charge, as follows:
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 AMT-Free Intermediate Muni Bond Fund, the AMT-Free State-specific Intermediate Muni Bond Funds, Columbia Intermediate Bond Fund and Columbia Short Term Bond Fund
|
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.
|
Class B shares of Columbia Short Term Municipal Bond
Fund are not subject to a CDSC.
Class B Shares —
Commissions
The Distributor paid an up-front
commission directly to your selling agent when you bought the Class B shares (a portion of this commission may have been paid to your financial advisor).
This up-front commission, which varies across the
Funds, was up to 4.00% of the net asset value per share of Funds with a maximum CDSC of 5.00% and of Class B shares of Columbia Short Term Municipal Bond Fund and up to 2.75% of the net asset value per share of Funds with a maximum CDSC of 3.00%.
The Distributor continues to seek to recover this commission through distribution fees it receives under the Fund's distribution plan and any applicable CDSC paid when you sell your shares. For more information, see
Choosing a Share Class — Distribution and Service Fees.
Columbia Adaptive Alternatives
Fund
Choosing a Share
Class
(continued)
Class B Shares — Conversion to Class A Shares
Class B shares of the Funds automatically convert to
Class A shares at different times depending upon the Fund. In general, Class B shares convert to Class A shares after eight years. For details and related information about how the Funds' Class B shares convert to Class A shares, see Appendix S to
the SAI. Class B shares of Columbia Short Term Municipal Bond Fund do not convert to Class A shares.
Class C Shares — Front-End Sales Charge
You don't pay a front-end sales
charge when you buy Class C shares. Although Class C shares do not have a front-end sales charge, over time Class C shares can incur distribution and/or service fees that are equal to or more than the front-end sales charge and distribution and/or
service fees you would pay for Class A shares. Thus, although the full amount of your purchase of Class C shares is invested in a Fund, any positive investment return on this money may be partially or fully offset by the expected higher annual
expenses of Class C shares. If you are eligible to invest in Class A shares without a front-end sales charge you should discuss your options with your Selling Agent. For more information, see
Choosing a Share
Class
– Reductions/Waivers of Sales Charges.
Class C Shares — CDSC
You'll pay a CDSC of 1.00% if you redeem Class C
shares within 12 months of buying them unless you qualify for a waiver of the CDSC or the shares you're selling were purchased through reinvested distributions. For more information, see
Choosing a Share Class
— Reductions/Waivers of Sales Charges
. Redemptions of Class C shares are not subject to a CDSC if redeemed after 12 months.
Class C Shares — Commissions
Although there is no front-end sales charge when you
buy Class C shares, the Distributor pays an up-front commission directly to your selling agent of up to 1.00% of the NAV per share when you buy Class C shares (a portion of this commission may be paid to your financial advisor). The Distributor
seeks to recover this commission through distribution fees it receives under the Fund's distribution and/or service plan and any applicable CDSC applied when you sell your shares. For more information, see
Choosing a
Share Class — Distribution and Service Fees.
Class R Shares — Sales Charges and Commissions
You don't pay a front-end sales charge when you buy
Class R shares or a CDSC when you sell Class R shares. The Distributor pays an up-front commission directly to your selling agent when you buy Class R shares (a portion of this commission may be paid to your financial advisor), according to the
following schedule:
Class
R Shares — Commission Schedule (Paid by the Distributor to Selling Agents)
|
Purchase
Amount
|
Commission
Level
(as a % of net asset
value per share)
|
$0
– $49,999,999
|
0.50%
|
$50
million or more
|
0.25%
|
The Distributor seeks to
recover this commission through distribution fees it receives under the Fund's distribution plan. For more information, see
Choosing a Share Class — Distribution and Service Fees.
Class T Shares — Front-End Sales Charge
You'll pay a front-end sales charge when you buy
Class T shares, resulting in a smaller dollar amount being invested in a Fund than the purchase price you pay, unless you qualify for a waiver of the sales charge or you buy the shares through reinvested distributions. For more information, see
Choosing a Share Class — Reductions/Waivers of Sales Charges.
The front-end sales charge you'll pay on Class T
shares:
■
|
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).
|
Columbia Adaptive
Alternatives Fund
Choosing a Share Class
(continued)
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.
|
Class T Shares — CDSC
In some cases, you'll pay a CDSC if you sell Class T
shares that you bought without an initial sales charge.
■
|
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 after purchase, which is charged as
follows: 1.00% CDSC if shares are redeemed within 12 months after 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 — Commissions
The Distributor may pay your selling agent an
up-front commission when you buy Class T shares (a portion of this commission may, in turn, be paid to your financial advisor). For more information, see
Class T Shares — Front-End Sales Charge —
Breakpoint Schedule, Amount retained by or paid to selling agents as a % of the offering price.
The Distributor may also pay your selling agent a
cumulative commission when you buy $1 million or more of Class T shares, according to the following schedule:
Columbia Adaptive Alternatives
Fund
Choosing a Share
Class
(continued)
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%
|
Reductions/Waivers of Sales
Charges
Front-End Sales Charge Reductions
There are two ways in which you may be able to
reduce the front-end sales charge that you may pay when you buy Class A shares or Class T shares of a Fund. These types of sales charge reductions are also referred to as breakpoint discounts.
First, through the right of accumulation (ROA), you
may combine the value of eligible accounts maintained by you and members of your immediate family to reach a breakpoint discount level and apply a lower sales charge to your purchase. To calculate the combined value of your Fund accounts in the
particular class of shares, the Fund will use the current public offering price per share. For purposes of obtaining a breakpoint discount through ROA, you may aggregate your or your immediate family members' ownership of different classes of
shares, except for Class I, Class K, Class R, Class R4, Class R5 and Class Y shares of the Funds and direct purchases of Columbia Money Market Fund shares, which may not be aggregated. Shares of Columbia Money Market Fund acquired by exchange from
other Funds may be combined for ROA purposes.
Second, by making a statement of
intent to purchase additional shares (commonly referred to as a letter of intent (LOI)), you may pay a lower sales charge on all purchases (including existing ROA purchases) of Class A shares or Class T shares made within 13 months after the date of
your LOI. Your LOI must state the aggregate amount of purchases you intend to make in that 13-month period, which must be at least $50,000 (or $100,000 for Funds with breakpoint discounts beginning at $100,000). The required form of LOI may vary by
selling agent, so please contact them directly for more information. Five percent of the purchase commitment amount will be placed in escrow. At the end of the 13-month period, the shares will be released from escrow, provided that you have invested
the commitment amount. If you do not invest the commitment amount by the end of the 13 months, the remaining amount of the unpaid sales charge will be redeemed from the escrowed shares and the remaining balance released from escrow. To calculate the
total value of the purchases you've made under an LOI, the Fund will use the historic cost (i.e., dollars invested) of the shares held in each eligible account. For purposes of making an LOI to purchase additional shares, you may aggregate your
ownership of different classes of shares, except for Class I, Class K, Class R, Class R4, Class R5 and Class Y shares of the Funds and direct purchases of Columbia Money Market Fund shares, which may not be aggregated. Shares of Columbia Money
Market Fund acquired by exchange from other Funds may be combined for LOI purposes.
You must request the reduced sales charge (whether
through ROA or an LOI) when you buy shares. If you do not complete and file an LOI, or do not request the reduced sales charge at the time of purchase, you will not be eligible for the reduced sales charge. To obtain a breakpoint discount, you must
notify your selling agent in writing at the time you buy your shares of each eligible account maintained by you and members of your immediate family, including accounts maintained through different selling agents. You and your selling agent are
responsible for ensuring that you receive discounts for which you are eligible. The Fund is not responsible for a selling agent's failure to apply the eligible discount to your account. You may be asked by your selling agent for account statements
or other records to verify your discount eligibility, including, when applicable, records for accounts opened with a different selling agent and records of accounts established by members of your immediate family.
Columbia Adaptive
Alternatives Fund
Choosing a Share Class
(continued)
Your “Immediate Family” and
Account Value Aggregation
For purposes of obtaining a
breakpoint discount for Class A shares or Class T shares the value of your account will be deemed to include the value of all applicable shares in eligible Fund accounts that are held by you and your “immediate family,” which includes
your spouse, domestic partner, parent, step-parent, legal guardian, child under 21, step-child under 21, father-in-law and mother-in-law, provided that you and your immediate family members share the same mailing address. Any Fund accounts linked
together for account value aggregation purposes as of the close of business on September 3, 2010 will be permitted to remain linked together. Group plan accounts are valued at the plan level.
Eligible Accounts
The following accounts are eligible for account
value aggregation as described above, provided that they are invested in Class A, Class B, Class C, Class E, Class F, Class T, Class W or Class Z shares of a Fund: individual or joint accounts; 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); Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act
(UTMA) accounts for which you, your spouse, or your domestic partner is parent or guardian of the minor child; revocable trust accounts for which you or an immediate family member, individually, is the beneficial owner/grantor; accounts held in the
name of your, your spouse’s, or your domestic partner’s sole proprietorship or single owner limited liability company or S corporation; 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 investments in wrap accounts.
The following accounts are
not eligible
for account value aggregation as described above: 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); investments in 529 plans, donor advised funds, variable annuities, variable insurance products or managed separate accounts; charitable
and irrevocable trust accounts; accounts holding shares of money market funds that used the Columbia brand before May 1, 2010; and accounts invested in Class I, Class K, Class R, Class R4, Class R5 or Class Y shares of a Fund.
Front-End Sales Charge Waivers
The Distributor may waive front-end sales charges on
purchases of Class A and Class T shares of the Funds by certain categories of investors, including Board members, certain employees of selling agents, Fund portfolio managers and certain retirement and employee benefit plans. The Distributor may
waive front-end sales charges 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. For a more complete description of categories of investors who may purchase Class A and Class T shares of the Funds at
NAV, without payment of any front-end sales charge that would otherwise apply, see Appendix S to the SAI. In addition, certain types of purchases of Class A and Class T shares may be made at NAV. For a description of these eligible transactions, see
Appendix S to the SAI.
CDSC Waivers
You may be able to avoid an otherwise applicable
CDSC when you sell Class A, Class B, Class C or Class T shares of the Fund. This could happen because of the way in which you originally invested in the Fund, because of your relationship with the Funds or for other reasons. For example, the CDSC
will be waived on redemptions of shares in the event of the shareholder's death; that result from required minimum distributions taken from retirement accounts when the shareholder reaches age 70½; in connection with the Fund's Small Account
Policy (which is described in
Buying, Selling and Exchanging Shares — Transaction Rules and Policies
); and by certain other investors and in certain other types of transactions. For a more complete
description of the available waivers of the CDSC on redemptions of Class A, Class B, Class C or Class T shares, see Appendix S to the SAI.
Columbia Adaptive Alternatives
Fund
Choosing a Share
Class
(continued)
Repurchases
Investors can also buy Class A shares without paying
a sales charge if the purchase is made from the proceeds of a redemption of any Class A, Class B, Class C or Class T shares of a Fund (other than Columbia Money Market Fund) within 90 days, up to the amount of the redemption proceeds. Any CDSC paid
upon redemption of your Class A, Class B, Class C or Class T shares of a Fund will not be reimbursed.
To be eligible for the reinstatement privilege, 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 from you or your
selling agent within 90 days after the shares are redeemed 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 form.” The
repurchased shares will be deemed to have the original purchase date for purposes of applying the CDSC (if any) to subsequent redemptions. Systematic withdrawals and purchases are excluded from this policy.
Restrictions and Changes in Terms and Conditions
Restrictions may apply to certain accounts and
certain transactions. The Funds may change or cancel these terms and conditions at any time. Unless you provide your selling agent with information in writing about all of the factors that may count toward a waiver of a 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 selling agent provide this information to the Fund when placing your purchase order. Please see Appendix S of the SAI for more information
about the sales charge reductions and waivers.
Distribution and Service Fees
The Board has approved, and the Funds have adopted,
distribution and/or shareholder service plans which set the distribution and/or service fees that are periodically deducted from the Funds’ assets. These fees are calculated daily, may vary by share class and are intended to compensate the
Distributor and/or eligible selling agents for selling Fund shares and directly or indirectly providing services to shareholders. Because the fees are paid out of the Fund's assets on an ongoing basis, they will increase the cost of your investment
over time.
The table below shows the maximum
annual distribution and/or service fees (as an annual % of average daily net assets) and the combined amount of such fees applicable to each share class:
|
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
|
Columbia Adaptive
Alternatives Fund
Choosing a Share Class
(continued)
(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
AMT-Free Oregon Intermediate Muni Bond Fund, Columbia Balanced Fund, Columbia Contrarian Core Fund, Columbia Dividend Income Fund, Columbia Global Technology Growth Fund, Columbia Intermediate Bond Fund, Columbia Large Cap Growth Fund, Columbia Mid
Cap Growth Fund, Columbia Real Estate Equity Fund, Columbia Small Cap Core Fund, Columbia Small Cap Growth Fund I
|
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
Adaptive Alternatives Fund, Columbia Adaptive Risk Allocation 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 Bond Fund, Columbia California Tax-Exempt Fund, Columbia Corporate Income Fund, Columbia Diversified Absolute Return 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 New York Tax-Exempt Fund, Columbia Pacific/Asia Fund, Columbia Select Large Cap Growth Fund, Columbia Small Cap Value Fund I,
Columbia Strategic Income Fund, Columbia U.S. Treasury Index Fund, Columbia Value and Restructuring Fund
|
—
|
0.25%
|
0.25%
|
Columbia
AMT-Free Intermediate Muni Bond Fund, Columbia High Yield Municipal 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 AMT-Free Intermediate Muni Bond Fund, Columbia High Yield Municipal 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 a portion of the distribution fee it receives from Class B shares of Columbia Short Term Bond Fund so that the distribution fee does not exceed 0.30% annually. This arrangement 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: 0.45% for 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 AMT-Free Oregon Intermediate Muni Bond Fund, Columbia California Tax-Exempt Fund and Columbia New York Tax-Exempt
Fund; 0.60% for Columbia Corporate Income Fund and Columbia Short Term Bond Fund; 0.65% for Columbia High Yield Municipal Fund and Columbia Tax-Exempt Fund; and 0.70% for Columbia U.S. Treasury Index Fund. These arrangements may be modified or
terminated by the Distributor at any time.
|
Columbia Adaptive Alternatives
Fund
Choosing a Share
Class
(continued)
(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 0.25% for equity Funds and 0.15%
for fixed-income Funds. See
Class T Shareholder Service Fees
below for more information.
|
The distribution and/or service fees for Class A,
Class B, Class C, Class R and Class W shares, as applicable, may be subject to the requirements of Rule 12b-1 under the Investment Company Act of 1940, as amended (the 1940 Act). The Distributor may retain these fees otherwise payable to selling
agents if the amounts due are below an amount determined by the Distributor in its sole discretion.
Series of CFST II.
For Class A, Class B and Class W shares, the Distributor begins to pay these fees immediately after purchase. For Class C shares, the Distributor pays these fees in advance for the first 12 months. Selling agents also
receive distribution fees up to 0.75% of the average daily net assets of Class C shares sold and held through them, which the Distributor begins to pay 12 months after purchase. For Class B shares and for the first 12 months following the sale of
Class C shares, the Distributor retains the distribution fee of up to 0.75% in order to finance the payment of sales commissions to selling agents and to pay for other distribution related expenses. Selling agents may compensate their financial
advisors with the shareholder service and distribution fees paid to them by the Distributor. The maximum fee for services under the distribution and/or shareholder servicing plan for series of CFST II is the lesser of the amount of reimbursable
expenses and the fee rates in the table above. If a share class of a series of CFST II has no reimbursable distribution or shareholder servicing expenses, it will suspend the payment of any such fee.
Series of CFST and CFST I.
For Class R shares and, with the exception noted in the next sentence, Class A shares, the Distributor begins to pay these fees immediately after purchase. For Class B shares, Class A shares (if purchased as part of a
purchase of shares of $1 million or more) and, with the exception noted in the next sentence, Class C shares, the Distributor begins to pay these fees 12 months after purchase (for Class B share, and for the first 12 months following the sale of
Class C shares, the Distributor retains the distribution fee of up to 0.75% in order to finance the payment of sales commissions to selling agents and to pay for other distribution related expenses). For Class C shares, selling agents may opt to
decline payment of sales commission and, instead, may receive these fees immediately after purchase. Selling agents may compensate their financial advisors with the shareholder service and distribution fees paid to them by the
Distributor.
If you maintain shares of
the Fund directly with the Fund, without working directly with a financial advisor or other selling agent, distribution and service fees may be retained by the Distributor as payment or reimbursement for incurring certain distribution and
shareholder service related expenses.
Over
time, these distribution and/or 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 agents for as long as
the distribution plan and/or shareholder servicing plans continue in effect, which is expected to be indefinitely. 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.
Class K Plan Administration Services Fee
Class K shares pay an annual plan administration
services fee for the provision of various administrative, recordkeeping, communication and educational services, including services such as implementation and conversion services, account set-up and maintenance, reconciliation and account
recordkeeping and administration to various plan types, including 529 plans, retirement plans and health savings accounts. The fee for Class K shares is equal on an annual basis to 0.25% of average daily net assets attributable to the class.
Class T Shareholder Services 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 Fund's average daily net
assets attributable to Class T shares (comprised of up to 0.25% for
Columbia Adaptive
Alternatives Fund
Choosing a Share Class
(continued)
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 Fund's average daily net assets attributable to Class T shares (comprised 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 0.25% 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 agents to the extent necessary to prevent net investment income from falling below 0% on a daily basis.
Selling Agent Compensation
The Distributor, the Investment Manager and their
affiliates make payments, from their own resources, to selling agents, including other Ameriprise Financial affiliates, for marketing/sales support services relating to the Funds (Marketing Support Payments). Such payments are generally based upon
one or more of the following factors: average net assets of the Funds sold by the Distributor attributable to that selling agent; gross sales of the Funds distributed by the Distributor attributable to that selling agent; reimbursement of ticket
charges (fees that a selling agent 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, Marketing Support Payments to any one
selling agent are generally between 0.05% and 0.50% on an annual basis for payments based on average net assets of the Fund 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 Funds attributable to the selling agent. The Distributor, the Investment Manager and their affiliates may make payments in larger amounts or on a basis other than those described above when dealing with certain selling agents,
including certain affiliates of Bank of America Corporation (Bank of America). Such increased payments may enable such selling agents to offset credits that they may provide to customers. The Distributor, the Investment Manager and their affiliates
do not make Marketing Support Payments with respect to Class Y shares; provided, however, that such payments are made to Bank of America with respect to Class Y shares of Columbia Bond Fund, Columbia Global Dividend Opportunity Fund, Columbia Income
Opportunities Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Growth Fund, Columbia Mid Cap Value Fund, Columbia Multi-Advisor International Equity Fund, Columbia Short Term Bond Fund, Columbia Small Cap Growth Fund I and Columbia
Small Cap Value Fund I.
In addition, the
Transfer Agent has certain arrangements in place to compensate selling agents, including other Ameriprise Financial affiliates, that hold Fund shares through omnibus accounts, including omnibus retirement plans, for services that they provide to
beneficial shareholders (Shareholder Services). Shareholder Services may include sub-accounting, sub-transfer agency, participant recordkeeping, shareholder or participant reporting, shareholder or participant transaction processing, maintenance of
shareholder records, preparation of account statements and provision of customer service. Payments for Shareholder Services vary by selling agent but generally are not expected, with certain limited exceptions, to exceed 0.40% of the average
aggregate value of the Fund’s shares. Generally, each Fund (other than the Columbia Acorn Funds) pays a percentage of the average aggregate value of shares maintained in omnibus accounts: 0.20% for all share classes other than Class I, K, R5
and Y shares; 0.05% for Class K and R5 shares; and 0% for Class I and Y shares. The amounts in excess of that reimbursed by the Fund are borne by the Distributor, the Investment Manager and/or their affiliates. The Transfer Agent does not pay
selling agents for Shareholder Services and the Fund does not pay the Transfer Agent for any Shareholder Services provided by selling agents, with respect to Class Y shares.
In addition to the payments described above, the
Distributor, the Investment Manager and their affiliates may make other payments or allow promotional incentives to broker-dealers to the extent permitted by SEC and Financial Industry Regulatory Authority (FINRA) rules and by other applicable laws
and regulations.
Amounts paid by the
Distributor, the Investment Manager and their affiliates are paid out of their own resources and do not increase the amount paid by you or the Fund. You can find further details in the SAI about the payments made by the Distributor, the Investment
Manager and their affiliates, as well as a list of the selling agents, including Ameriprise Financial affiliates, to which the Distributor and the Investment Manager have agreed to make Marketing Support Payments and pay Shareholder Services
fees.
Your selling agent may charge you fees
and commissions in addition to those described in this prospectus. You should consult with your selling agent 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 advisors may have a financial incentive for recommending the Fund or a particular share class over others.
Columbia Adaptive Alternatives
Fund
Buying, Selling
and Exchanging Shares
Share Price Determination
The price you pay or receive when you buy, sell or
exchange shares is the Fund's next determined net asset value (or NAV) per share for a given share class. The Fund calculates the NAV per share for each class of shares of the Fund at the end of each business day.
NAV Calculation
Each of the Fund's share classes
calculates its NAV as follows:
NAV
=
(Value of assets of the share class) – (Liabilities of the share class)
Number of outstanding shares of the class
Business Days
A business day is any day that
the New York Stock Exchange (NYSE) is open. A business day ends at the close of regular trading on the NYSE, usually at 4:00 p.m. Eastern time. If the NYSE closes early, the business day ends as of the time the NYSE closes. On holidays and other
days when the NYSE is closed, the Fund's NAV is not calculated and the Fund does not accept buy or sell orders. However, the value of the Fund's assets may still be affected on such days to the extent that the Fund holds foreign securities that
trade on days that foreign securities markets are open.
Equity securities are valued primarily on the basis
of market quotations reported on stock exchanges and other securities markets around the world. If an equity security is listed on a national exchange, the security is valued at the closing price or, if the closing price is not readily available,
the mean of the closing bid and asked prices. Certain equity securities, debt securities and other assets are valued differently. For instance, bank loans trading in the secondary market are valued primarily on the basis of indicative bids,
fixed-income investments maturing in 60 days or less are valued primarily using the amortized cost method and those maturing in excess of 60 days are valued at the readily available market price, if available. Investments in other open-end funds are
valued at their NAVs. Both market quotations and indicative bids are obtained from outside pricing services approved and monitored pursuant to a policy approved by the Fund's Board. For a money market fund, the Fund's investments are valued at
amortized cost, which approximates market value.
If a market price isn't readily available or is
deemed not to reflect market value, the Fund will determine the price of the security held by the Fund based on a determination of the security's fair value pursuant to a policy approved by the Fund's Board. In addition, the Fund may use fair
valuation to price securities that trade on a foreign exchange when a significant event has occurred after the foreign exchange closes but before the time at which the Fund's share price is calculated. Foreign exchanges typically close before the
time at which Fund share prices are calculated, and may be closed altogether on some days when the Fund is open. Such significant events affecting a foreign security may include, but are not limited to: (1) corporate actions, earnings announcements,
litigation or other events impacting a single issuer; (2) governmental action that affects securities in one sector or country; (3) natural disasters or armed conflicts affecting a country or region; or (4) significant domestic or foreign market
fluctuations. The Fund uses various criteria, including an evaluation of U.S. market moves after the close of foreign markets, in determining whether a foreign security's market price is readily available and reflective of market value and, if not,
the fair value of the security. To the extent the Fund has significant holdings of small cap stocks, high yield bonds, floating rate loans, or tax-exempt, foreign or other securities that may trade infrequently, fair valuation may be used more
frequently than for other funds.
Fair
valuation may have the effect of reducing stale pricing arbitrage opportunities presented by the pricing of Fund shares. However, when the Fund uses fair valuation to price securities, it may value those securities higher or lower than another fund
would have priced the security. Also, the use of fair valuation may cause the Fund's performance to diverge to a greater degree from the performance of various benchmarks used to compare the Fund's performance because benchmarks generally do not
use
Columbia Adaptive
Alternatives Fund
Buying, Selling and Exchanging Shares
(continued)
fair valuation techniques. Because of the judgment involved in fair
valuation decisions, there can be no assurance that the value ascribed to a particular security is accurate. The Fund has retained one or more independent fair valuation pricing services to assist in the fair valuation process for foreign
securities.
Transaction Rules and Policies
The Fund, the Distributor or the Transfer Agent may
refuse any order to buy or exchange shares. If this happens, the Fund will return any money it received, but no interest will be paid on that money.
Order Processing
Orders to buy, sell or exchange Fund shares are
processed on business days. Depending upon the class of shares, orders can be made by mail, by telephone or online. Orders received in “good form” by the Transfer Agent or your selling agent before the end of a business day are priced at
the NAV per share of the Fund's applicable share class on that day. Orders received after the end of a business day will receive the next business day's NAV per share. When a written order to buy, sell or exchange shares is sent to the Transfer
Agent, the share price used to fill the order is the next price calculated by the Fund after the Transfer Agent receives the order at its transaction processing center in Canton, Massachusetts, not the P.O. Box provided for regular mail delivery.
The market value of the Fund's investments may change between the time you submit your order and the time the Fund next calculates its NAV per share. The business day that applies to your order is also called the trade date.
“Good Form”
An order is in “good form” if the
Transfer Agent or your selling agent has all of the information and documentation it deems necessary to effect your order. For example, when you sell shares by letter of instruction, “good form” means that your letter has (i) complete
instructions and the signatures of all account owners, (ii) a Medallion Signature Guarantee for amounts greater than $100,000 and other transactions, as described below, and (iii) any other required documents completed and attached. For the
documents required for sales by corporations, agents, fiduciaries, surviving joint owners and other legal entities, call 800.345.6611.
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 Automated Clearing House (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 changing legal ownership of your account.
Customer Identification Program
Federal law requires the Fund to obtain and record
specific personal information to verify your identity when you open an account. This information may include your name, address, date of birth (for individuals) and taxpayer or other government issued identification (e.g., social security number
(SSN) or other taxpayer identification number (TIN)). If you fail to provide the requested information, the Fund may need to delay the date of your purchase or may be unable to open your account, which may result in a return of your investment
monies. In addition, if the Fund is unable to verify your identity after your account is open, the Fund reserves the right to close your account or take other steps as deemed reasonable. The Fund will not be liable for any loss resulting from any
purchase delay, application rejection or account closure due to a failure to provide proper identifying information.
Columbia Adaptive Alternatives
Fund
Buying, Selling
and Exchanging Shares
(continued)
Small Account Policy — Class A, Class B, Class C, Class T
and Class Z Share Accounts Below the Minimum Account Balance
The Funds generally will automatically sell your
shares if the value of your Fund account (treating each account of the Fund you own separately from any other account of the Fund you may own) falls below the applicable Minimum Account Balance. The Minimum Account Balance varies among Funds, share
classes and types of accounts, as follows:
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
|
If your shares are sold,
the Transfer Agent will remit the sale proceeds to you. Any otherwise applicable CDSC will not be imposed on such an automatic sale of your shares. The Transfer Agent will send you written notification in advance of any automatic sale, which will
provide details on how you may avoid such an automatic sale. Generally, you may avoid such an automatic sale by raising your account balance, consolidating your accounts through an exchange of shares of another Fund in which you hold shares, or
setting up a Systematic Investment Plan. For more information, contact the Transfer Agent or your selling agent. The Transfer Agent's contact information (toll-free number and mailing addresses) as well as the Funds' website address can be found at
the beginning of the section
Choosing a Share Class
.
The Fund also may sell your Fund shares if your
selling agent tells us to sell your shares pursuant to arrangements made with you, and under certain other circumstances allowed under the 1940 Act.
Small Account Policy — Class A, Class B, Class C, Class T
and Class Z Share Accounts Minimum Balance Fee
If the value of your Fund account (treating each
account of the Fund you own separately from any other account of the Fund you may own) falls below the minimum initial investment requirement applicable to you for any reason, including as a result of market decline, your account generally will be
subject to a $20 annual fee. This fee will be assessed through the automatic sale of Fund shares in your account. Any otherwise applicable CDSC will not be imposed on such an automatic sale of your shares. The Transfer Agent will reduce the expenses
paid by the Fund by any amounts it collects from the assessment of this fee. For Funds that do not have transfer agency expenses against which to offset the amount collected through assessment of this fee, the fee will be paid directly to the Fund.
The Transfer Agent will send you written notification in advance of assessing any fee, which will provide details on how you can avoid the imposition of such fee. Generally, you may avoid the imposition of such fee by raising your Fund account
balance, consolidating your Fund accounts through an exchange of shares of another Fund in which you hold shares, or setting up a Systematic Investment Plan that invests at least monthly. For more information, contact the Transfer Agent or your
selling agent. The Transfer Agent's contact information (toll-free number and mailing address(es)) as well as the Funds' website address can be found at the beginning of the section
Choosing a Share
Class
.
The Funds reserve the right to
lower the account size trigger point for the minimum balance fee in any year or for any class of shares when we believe it is appropriate to do so in light of declines in the market value of Fund shares, sales loads applicable to a particular class
of shares, or for other reasons.
Exceptions to the Small
Account Policy (Accounts Below Minimum Account Balance and Minimum Balance Fee)
The automatic sale of Fund shares of accounts under
$250 and the annual minimum balance fee described above do not apply to shareholders of Class I, Class K, Class R, Class R4, Class R5, Class W and Class Y shares; shareholders holding their shares through broker-dealer networked accounts; wrap fee
and omnibus accounts; accounts with active Systematic Investment Plans; certain qualified retirement plans; and health savings accounts. The automatic sale of Fund shares of accounts under the applicable Minimum Account Balance does not apply to
individual retirement plans.
Columbia Adaptive
Alternatives Fund
Buying, Selling and Exchanging Shares
(continued)
Small Account Policy — Broker-Dealer and Wrap Fee
Accounts
The Funds may automatically redeem,
at any time, broker-dealer networked accounts and wrap fee accounts that have account balances of $20 or less or have less than one share.
Information Sharing Agreements
As required by Rule 22c-2 under the 1940 Act, the
Funds or certain of their service providers will enter into information sharing agreements with selling agents, including participating life insurance companies and selling agents that sponsor or offer retirement plans through which shares of the
Funds are made available for purchase. Pursuant to Rule 22c-2, selling agents are required, upon request, to: (i) provide shareholder account and transaction information and (ii) execute instructions from the Fund to restrict or prohibit further
purchases of Fund shares by shareholders who have been identified by the Fund as having engaged in transactions that violate the Fund's excessive trading policies and procedures.
Excessive Trading Practices Policy of Non-Money Market
Funds
Right to Reject or Restrict Share
Transaction Orders —
The Fund is intended for investors with long-term investment purposes and is not intended as a vehicle for frequent trading activity (market timing) that is excessive. Investors should
transact in Fund shares primarily for investment purposes. The Board has adopted excessive trading policies and procedures that are designed to deter excessive trading by investors (the Excessive Trading Policies and Procedures).
The Fund discourages and does not accommodate excessive trading.
The Fund reserves the right to reject, without any
prior notice, any purchase or exchange order for any reason, and will not be liable for any loss resulting from rejected orders. For example, the Fund may in its sole discretion restrict or reject a purchase or exchange order even if the transaction
is not subject to the specific limitation described below if the Fund or its agents determine that accepting the order could interfere with efficient management of the Fund's portfolio or is otherwise contrary to the Fund's best interests. The
Excessive Trading Policies and Procedures apply equally to purchase or exchange transactions communicated directly to the Transfer Agent and to those received by selling agents.
Specific Buying and Exchanging Limitations
— If a Fund detects that an investor has made two “material round trips” in any 28-day period, it will generally reject the investor's future purchase orders, including exchange purchase orders,
involving any Fund.
For these purposes,
a “round trip” is a purchase or exchange into the Fund followed by a sale or exchange out of the Fund, or a sale or exchange out of the Fund followed by a purchase or exchange into the Fund. A “material” round trip is one
that is deemed by the Fund to be material in terms of its amount or its potential detrimental impact on the Fund. Independent of this limit, the Fund may, in its sole discretion, reject future buy orders by any person, group or account that appears
to have engaged in any type of excessive trading activity.
These limits generally do not apply to automated
transactions or transactions by registered investment companies in a “fund-of-funds” structure. These limits do not apply to payroll deduction contributions by retirement plan participants, transactions initiated by a retirement plan
sponsor or certain other retirement plan transactions consisting of rollover transactions, loan repayments and disbursements, and required minimum distribution redemptions. They may be modified or rescinded for accounts held by certain retirement
plans to conform to plan limits, for considerations relating to the Employee Retirement Income Security Act of 1974 or regulations of the Department of Labor, and for certain asset allocation or wrap programs. Accounts known to be under common
ownership or control generally will be counted together, but accounts maintained or managed by a common intermediary generally will not be considered to be under common ownership or control. The Fund retains the right to modify these restrictions at
any time without prior notice to shareholders. In addition, the Fund may, in its sole discretion, reinstate trading privileges that have been revoked under the Fund's Excessive Trading Policies and Procedures.
Limitations on the Ability to Detect and Prevent
Excessive Trading Practices —
The Fund takes various steps designed to detect and prevent excessive trading, including daily review of available shareholder transaction information. However, the Fund receives
buy, sell or exchange orders through selling agents, and cannot always know of or reasonably detect excessive trading that may be facilitated by selling agents or by the use of the omnibus account arrangements they offer. Omnibus account
arrangements are common forms of holding shares of mutual funds, particularly among certain selling agents such as broker-dealers, retirement plans and variable insurance products. These arrangements often permit selling agents to aggregate their
clients' transactions and accounts, and in these circumstances, the identity of the shareholders is often not known to the Fund.
Columbia Adaptive Alternatives
Fund
Buying, Selling
and Exchanging Shares
(continued)
Some selling agents apply their own restrictions or
policies to underlying investor accounts, which may be more or less restrictive than those described here. This may impact the Fund's ability to curtail excessive trading, even where it is identified. For these and other reasons, it is possible that
excessive trading may occur despite the Fund's efforts to detect and prevent it.
Although these restrictions and policies involve
judgments that are inherently subjective and may involve some selectivity in their application, the Fund seeks to act in a manner that it believes is consistent with the best interests of shareholders in making any such judgments.
Risks of Excessive Trading —
Excessive trading creates certain risks to the Fund's long-term shareholders and may create the following adverse effects:
■
|
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.
|
To the extent that the Fund invests significantly in
foreign securities traded on markets that close before the Fund's valuation time, it may be particularly susceptible to dilution as a result of excessive trading. Because events may occur after the close of foreign markets and before the Fund's
valuation time that influence the value of foreign securities, investors may seek to trade Fund shares in an effort to benefit from their understanding of the value of foreign securities as of the Fund's valuation time. This is often referred to as
price arbitrage. The Fund has adopted procedures designed to adjust closing market prices of foreign securities under certain circumstances to reflect what the Fund believes to be the fair value of those securities as of its valuation time. To the
extent the adjustments don't work fully, investors engaging in price arbitrage may cause dilution in the value of the Fund's shares held by other shareholders.
Similarly, to the extent that the Fund invests
significantly in thinly traded high-yield bonds (junk bonds) or equity securities of small-capitalization companies, because these securities are often traded infrequently, investors may seek to trade Fund shares in an effort to benefit from their
understanding of the value of these securities. This is also a type of price arbitrage. Any such frequent trading strategies may interfere with efficient management of the Fund's portfolio to a greater degree than would be the case for mutual funds
that invest in highly liquid securities, in part because the Fund may have difficulty selling those portfolio securities at advantageous times or prices to satisfy large and/or frequent sell orders. Any successful price arbitrage may also cause
dilution in the value of Fund shares held by other shareholders.
Excessive Trading Practices Policy of Columbia Money Market
Fund
A money market fund is designed to offer
investors a liquid cash option that they may buy and sell as often as they wish. Accordingly, the Board has not adopted policies and procedures designed to discourage excessive or short-term trading of Columbia Money Market Fund shares. However,
since frequent purchases and sales of Columbia Money Market Fund shares could in certain instances harm shareholders in various ways, including reducing the returns to long-term shareholders by increasing costs (such as spreads paid to dealers who
trade money market instruments with Columbia Money Market Fund) and disrupting portfolio management strategies, Columbia Money Market Fund reserves the right, but has no obligation, to reject any purchase or exchange transaction at any time. Except
as expressly described in this prospectus (such as minimum purchase amounts), Columbia Money Market Fund has no limits on purchase or exchange transactions. In addition, Columbia Money Market Fund reserves the right to impose or modify restrictions
on purchases, exchanges or trading of Fund shares at any time.
Columbia Adaptive
Alternatives Fund
Buying, Selling and Exchanging Shares
(continued)
Opening an Account and Placing Orders
We encourage you to consult with a financial advisor
who can help you with your investment decisions and who can help you open an account. Once you have an account, you can buy, sell or exchange shares by contacting your financial advisor who will send your order to the Transfer Agent or your selling
agent. As described below, once you have an account you can also communicate your orders directly to the Transfer Agent by mail, by telephone or online.
The Funds are generally available directly and
through broker-dealers, banks and other selling agents or institutions, and through certain qualified and non-qualified plans, wrap fee products or other investment products sponsored by selling agents. You may exchange or sell shares through your
selling agent. If you maintain your account directly with your selling agent, you must contact that agent to process your transaction.
Not all selling agents offer the Funds and certain
selling agents that offer the Funds may not offer all Funds on all investment platforms or programs.
Please consult with your financial advisor to determine the availability of the Funds. If you set up an account at
a selling agent that does not have, and is unable to obtain, a selling agreement with the Distributor, you will not be able to transfer Fund holdings to that account. In that event, you must either maintain your Fund holdings with your current
selling agent, find another selling agent with a selling agreement, or sell your Fund shares, paying any applicable CDSC. Please be aware that transactions in taxable accounts are taxable events and may result in income tax liability.
Selling agents that offer the Funds may charge you
additional fees for the services they provide and they may have different policies that are not described in this prospectus.
Some policy differences may include different minimum investment amounts, exchange
privileges, Fund choices and cutoff times for investments. Additionally, recordkeeping, transaction processing and payments of distributions relating to your account may be performed by the selling agents through which your shares of the Fund are
held. Since the Fund (and its service providers) may not have a record of your account transactions, you should always contact the financial advisor employed by the selling agent through which you purchased or at which you maintain your shares of
the Fund to make changes to your account or to give instructions concerning your account, or to obtain information about your account. The Fund and its service providers, including the Distributor and the Transfer Agent, are not responsible for the
failure of these selling agents to carry out their obligations to its customers.
The Fund may engage selling agents to receive
purchase, exchange and sell orders on its behalf. Accounts established directly with the Fund will be serviced by the Transfer Agent. The Funds, the Transfer Agent and the Distributor do not provide investment advice.
Accounts Established Directly with the Fund
You or the financial advisor through which you buy
shares may establish an account with the Fund. To do so, complete a Fund account application with your financial advisor or investment professional, and mail the account application to the Transfer Agent. Account applications may be obtained at
columbiamanagement.com or may be requested by calling 800.345.6611. Make your check payable to the Fund. You will be assessed a $15 fee for any checks rejected by your financial institution due to insufficient funds or other reasons. The Funds do
not accept cash, credit card convenience checks, money orders, traveler's checks, starter checks, third or fourth party checks, or other cash equivalents.
Mail your check and completed application to the
Transfer Agent at its address that can be found at the beginning of the section
Choosing a Share Class.
You may also use these addresses to request an exchange or redemption of Fund shares. When a written
order to buy, sell or exchange shares is sent to the Transfer Agent, the share price used to fill the order is the next price calculated by the Fund after the Transfer Agent receives the order at its transaction processing center in Canton,
Massachusetts, not the P.O. Box provided for regular mail delivery.
You will be sent a statement confirming your
purchase and any subsequent transactions in your account. You will also be sent quarterly and annual statements detailing your transactions in the Fund and the other Funds you own under the same account number. Duplicate quarterly account statements
for the current year and duplicate annual statements for the most recent prior calendar year will be sent to you free of charge. Copies of year-end statements for prior years are available for a fee. Please contact the Transfer Agent for more
information.
Columbia Adaptive Alternatives
Fund
Buying, Selling
and Exchanging Shares
(continued)
Written Transactions
Once you have an account, you can communicate
written buy, sell or exchange orders to the Transfer Agent at its address that can be found at the beginning of the section
Choosing a Share Class
. When a written order to buy, sell or exchange shares is sent
to the Transfer Agent, the share price used to fill the order is the next price calculated by the Fund after the Transfer Agent receives the order at its transaction processing center in Canton, Massachusetts, not the P.O. Box provided for regular
mail delivery.
Include in your letter: your
name; the name of the Fund(s); your account number; the class of shares to be exchanged or sold; your SSN or other TIN; the dollar amount or number of shares you want to exchange or sell; specific instructions regarding delivery of redemption
proceeds or exchange destination; signature(s) of registered account owner(s); and any special documents the Transfer Agent may require in order to process your order.
Corporate, trust or partnership accounts may need to
send additional documents. Payment will be mailed to the address of record and made payable to the names listed on the account, unless your request specifies differently and is signed by all owners.
Telephone Transactions
For Class A, Class B, Class C, Class R, Class T,
Class Y and Class Z shares, once you have an account, you may place orders to buy, sell or exchange shares by telephone. To place orders by telephone, call 800.422.3737. Have your account number and SSN or TIN available when calling.
You can sell Fund shares via the telephone, by
electronic funds transfer or by check to the address of record, up to and including an aggregate of $100,000 of shares per day, per Fund account, if you qualify for telephone orders. Wire redemptions requested via the telephone are subject to a
maximum of $3 million of shares per day, per Fund. You can buy up to and including $100,000 of shares per day, per Fund account through your bank account as an Automated Clearing House (ACH) transaction via the telephone if you qualify for telephone
orders.
Telephone orders may not be as secure
as written orders. The Fund will take reasonable steps to confirm that telephone instructions are genuine. For example, we require proof of your identification before we will act on instructions received by telephone and may record telephone
conversations. However, the Fund and its agents will not be responsible for any losses, costs or expenses resulting from an unauthorized telephone instruction when reasonable steps have been taken to confirm that telephone instructions are genuine.
Telephone orders may be difficult to complete during periods of significant economic or market change or business interruption.
Online Transactions
For Class A, Class B, Class C, Class R, Class T,
Class Y and Class Z shares, once you have an account, you may contact the Transfer Agent at 800.345.6611 for more information on account trading restrictions and the special sign-up procedures required for online transactions. The Transfer Agent has
procedures in place to authenticate electronic orders you deliver through the internet. You will be required to accept the terms of an online agreement and to establish and utilize a password in order to access online account services. You can sell
up to and including an aggregate of $100,000 of shares per day, per Fund account through the internet if you qualify for internet orders.
Wire Transactions
You may buy (or redeem) Class A, Class B
(redemptions only), Class C, Class T, Class W (redemptions only), Class Y and Class Z shares of a Fund by wiring money from (or to) your bank account to (or from) your Fund account by calling the Transfer Agent at 800.422.3737. You must set up this
feature prior to your request unless you are submitting your request in writing with a Medallion Signature Guarantee. The Transfer Agent charges a fee for shares sold by Fedwire. The Transfer Agent may waive the fee for certain accounts. In the case
of a redemption, the receiving bank may charge an additional fee. The minimum amount that can be redeemed by wire is $500. The maximum amount that can be redeemed over the telephone is $3 million per day, per Fund account.
Columbia Adaptive
Alternatives Fund
Buying, Selling and Exchanging Shares
(continued)
Electronic Funds Transfer
You may buy (or redeem) Class A, Class B
(redemptions only), Class C, Class T, Class Y and Class Z shares of a Fund by electronically transferring money from (or to) your bank account to (or from) your Fund account by calling the Transfer Agent at 800.422.3737. An electronic funds transfer
may take up to three business days to settle and be considered in “good form.” You must set up this feature by contacting the Transfer Agent prior to your request to obtain any necessary forms.
Important:
Payments
sent by an electronic fund transfer, a bank authorization, or check that are not guaranteed may take up to 10 or more days to clear. If you request a redemption before the purchase funds clear, this may cause your redemption request to fail to
process if the requested amount includes unguaranteed funds. If you purchased your shares by check or from your bank account as an ACH transaction, the Fund may hold the redemption proceeds when you sell those shares for a period of time after the
trade date of the purchase.
Buying Shares
Eligible Investors
Class A and Class C Shares
Class A and Class C shares are
available to the general public for investment. Once you have opened an account, you can buy Class A and Class C shares in a lump sum, through our Systematic Investment Plan, by dividend diversification, by wire or by electronic funds transfer. As
described in this prospectus, Class A shares but not Class C shares are generally subject to a front-end sales charge, which reduces the dollar amount invested in a Fund. However, Class C shares are generally subject to higher fees than Class A
shares, which will reduce any returns on Class C shares relative to Class A shares. You may be eligible to purchase Class A shares without a front-end sales charge if the value of your Columbia Fund shares held in eligible accounts reaches
$1,000,000. If you are eligible to invest in Class A shares without a front-end sales charge you should discuss your options with your selling agent. For more information, see
Choosing a Share Class
– Reductions/Waivers of Sales Charges
. A purchase order for Class C shares is limited to $999,999. Your selling agent may impose additional limits on investments in Class C shares.
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 transacts 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 these classes of shares.
Class B Shares (Closed)
The Funds no longer accept investments from new or
existing investors in Class B shares, except for certain limited transactions involving existing investors in Class B shares as described in more detail below.
Additional Class B shares will be issued only to
existing investors in Class B shares and only through the following two types of transactions (Qualifying Transactions):
■
|
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.
|
Any initial purchase orders for the Fund's Class B
shares will be rejected (other than through a Qualifying Transaction that is an exchange transaction).
Unless contrary instructions are received in advance
by the Fund, any purchase orders (except those submitted by a selling agent through the National Securities Clearing Corporation (NSCC) as described in more detail below) that are orders for additional Class B shares of the Fund received from
existing investors in Class B shares, including orders made through an active systematic investment plan, will automatically be invested in Class A shares of the Fund, without regard to the normal minimum initial investment requirement for Class A
shares, but subject to the front-end sales charge that generally applies to Class A shares. See
Choosing a Share Class — Sales Charges and Commissions — Class A Shares — Front-End Sales Charge
for
Columbia Adaptive Alternatives
Fund
Buying, Selling
and Exchanging Shares
(continued)
additional information. Your selling agent may have different
policies not described here, including a policy to reject purchase orders for a Fund's Class B shares or to automatically invest the purchase amount in Columbia Money Market Fund. Please consult your selling agent to understand its policy.
Additional purchase orders for a Fund's Class B
shares by an existing Class B shareholder, submitted by such shareholder's selling agent through the NSCC, will be rejected due to operational limitations of the NSCC. Investors should consult their selling agent if they wish to invest in the Fund
by purchasing a share class of the Fund other than Class B shares.
Dividend and/or capital gain distributions from
Class B shares of a Fund will not be automatically invested in Class B shares of another Fund. Unless contrary instructions are received in advance of the date of declaration, such dividend and/or capital gain distributions from Class B shares of a
Fund will be reinvested in Class B shares of the same Fund that is making the distribution.
Class I Shares
Class I shares are available only to the Funds
(i.e., fund-of-funds investments).
Class K Shares
(Closed)
Class K shares are closed to new
investors and new accounts, subject to certain limited exceptions described below.
Shareholders who opened and funded a Class K account
with the Fund as of the close of business on December 31, 2010 (including accounts once funded that subsequently reached a zero balance) may continue to make additional purchases of Class K shares. Plans may continue to make additional purchases of
Fund shares and add new participants, and new plans sponsored by the same or an affiliated sponsor may invest in the Fund (and add new participants) if an initial plan so sponsored invested in the Fund as of December 31, 2010 (or had approved the
Fund as an investment option as of December 31, 2010 and funded its initial account with the Fund prior to March 31, 2011) and holds Fund shares at the plan level.
An order to purchase Class K shares received by the
Fund or the Transfer Agent after the close of business on December 31, 2010 (other than as described above) from a new investor or a new account that is not eligible to purchase shares will be refused by the Fund and the Transfer Agent and any money
that the Fund or the Transfer Agent received with the order will be returned to the investor or the selling agent, as appropriate, without interest.
Class K shares are designed for qualified employee
benefit plans, trust companies or similar institutions, charitable organizations that meet the definition in Section 501(c)(3) of the Code, non-qualified deferred compensation plans whose participants are included in a qualified employee benefit
plan described above, state sponsored college savings plans established under Section 529 of the Code, and health savings accounts created pursuant to public law 108-173. Class K shares may be purchased, sold or exchanged only through the
Distributor or an authorized selling agent.
Prior to October 25, 2012, Class K shares were named
Class R4 shares.
Class R Shares
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, in the sole 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.
Class R4 Shares
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.
Prior to October 31, 2012, Class R4 shares were
named Class R3 shares.
Columbia Adaptive
Alternatives Fund
Buying, Selling and Exchanging Shares
(continued)
Class R5 Shares
Class R5 shares are 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. Prior to November 8, 2012, Class R5 shares were closed to new investors and new accounts, subject to certain
exceptions. Existing shareholders who do not satisfy the new eligibility requirements for investment in Class R5 may not establish new Class R5 accounts but may continue to make additional purchases of Class R5 shares in accounts opened and funded
prior to November 8, 2012; provided, however, that investment advisory programs and similar programs that opened a Class R5 account as of May 1, 2010, and continuously hold Class R5 shares in such account after such date, may generally not only
continue to make additional purchases of Class R5 shares but also open new Class R5 accounts for such pre-existing programs and add new shareholders in the program.
Class T Shares
Class T shares are available only to investors who
received (and who have continuously held) Class T shares in connection with the merger of certain Galaxy funds into certain Funds that were then named Liberty funds.
Class W Shares
Class W shares are available only to investors
purchasing through authorized investment programs managed by investment professionals, including discretionary managed account programs. Class W shares may be purchased, sold or exchanged only through the Distributor or an authorized selling agent.
Shares originally purchased in a discretionary managed account may continue to be held in Class W outside of a discretionary managed account, but no additional Class W purchases may be made and no exchanges to Class W shares of another Fund may be
made outside of a discretionary managed account.
Class Y
Shares
Class Y shares, except as noted below,
are available only to retirement plans that maintain plan-level or omnibus accounts with the Fund (through the Transfer Agent).
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.
Class Z Shares
Class Z shares are available only to the categories
of eligible investors described below under
Class Z Shares Minimum Initial Investments
.
Selling agents that clear Fund share transactions through designated selling agents and
their mutual fund trading platforms that were given specific written notice from the Transfer Agent of the termination, effective March 29, 2013, of their eligibility for new purchases of Class Z shares and omnibus retirement plans are not permitted
to establish new Class Z accounts, subject to certain exceptions described below.
Omnibus retirement plans that opened and, subject to
certain exceptions, funded a Class Z account with the Fund as of the close of business on March 28, 2013, and have continuously held Class Z shares in such account after such date, may generally continue to make additional purchases of Class Z
shares, open new Class Z accounts and add new participants. In addition, an omnibus retirement plan affiliated with a grandfathered plan may, in the sole discretion of the Distributor, open new Class Z accounts in a Fund if the affiliated plan
opened a Class Z account on or before March 28, 2013. If an omnibus retirement plan invested in Class Z shares changes recordkeepers after March 28, 2013, any new accounts established for that plan may not be established in Class Z shares, but such
a plan may establish new accounts in a different share class for which the plan is eligible. The Distributor may, in its sole discretion, delay the funding requirement described above for omnibus retirement plans to allow an omnibus retirement plan
that opened a Class Z account (the initial Class Z account) with the Fund as of the close of business on March 28, 2013 to make additional purchases of Class Z shares, open new Class Z accounts and add new participants so long as the initial Class Z
account was funded by July 2, 2013.
Columbia Adaptive Alternatives
Fund
Buying, Selling
and Exchanging Shares
(continued)
Accounts of selling agents (other than omnibus
retirement plans, which are discussed above) that clear Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that received specific written notice from the Transfer
Agent of the termination, effective March 29, 2013, of their eligibility for new purchases of Class Z shares will not be permitted to establish new Class Z accounts or make additional purchases of Class Z shares (other than through reinvestment of
distributions). Such accounts may, at their holder’s option, exchange Class Z shares of a Fund, without the payment of a sales charge, for Class A shares of the same Fund.
Additional Eligible Investors
In addition, the Distributor, in its sole
discretion, may accept investments in any share class from investors other than those listed in this prospectus.
Minimum Initial Investments
The table below shows the Fund's minimum initial
investment requirements, which may vary by Fund, class and type of account.
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.
|
The minimum initial investment requirements may be
waived for accounts that are managed by an investment professional, for accounts held in approved discretionary or non-discretionary wrap programs, or for accounts that are a part of an employer-sponsored retirement plan. The Distributor, in its
sole discretion, may also waive minimum initial investment requirements for other account types.
Minimum investment and related requirements may be
modified at any time, with or without prior notice. If your account is closed and then re-opened with a systematic investment plan, your account must meet the then-current applicable minimum initial investment.
Class Z Shares Minimum Initial Investments
There is no minimum initial investment in Class Z
shares for the following categories of eligible investors:
Columbia Adaptive
Alternatives Fund
Buying, Selling and Exchanging Shares
(continued)
■
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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.
|
■
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Any health savings
account sponsored by a third party platform.
|
■
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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.
|
The minimum initial investment in Class Z shares for
the following categories of eligible investors is $1,000:
■
|
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.
|
■
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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.
|
The minimum initial investment in Class Z shares for
the following categories of eligible investors is $2,000:
■
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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.
|
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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).
|
■
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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.
|
■
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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.
|
■
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Certain other
investors as set forth in more detail in the SAI.
|
Systematic Investment Plan
The Systematic Investment Plan allows you to
schedule regular purchases via automatic transfers from your bank account to the Fund on a monthly, quarterly or semiannual basis. Contact the Transfer Agent or your selling agent to set up the plan. Systematic Investment Plans may not be available
for all share classes.
Columbia Adaptive Alternatives
Fund
Buying, Selling
and Exchanging Shares
(continued)
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.
Other Purchase Rules You Should Know
■
|
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.
|
■
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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.
|
Selling Shares
When you sell your shares, the Fund is effectively
buying them back from you. This is called a redemption. The payment will be sent within seven days after your request is received in “good form.” When you sell shares, the amount you receive may be more or less than the amount you
invested.
Your sale price will be the next NAV
calculated after your request is received in “good form,” minus any applicable CDSC.
Systematic Withdrawal Plan
The Systematic Withdrawal Plan allows you to
schedule regular redemptions from your account any business day on a monthly, quarterly or semiannual basis. Currently, Systematic Withdrawal Plans are generally available for Class A, Class B, Class C, Class R4, Class R5, Class T, Class W, Class Y
and Class 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. 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 you've opened your account, we may require your signature to be Medallion Signature Guaranteed.
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. It’s important to remember that if you withdraw more than your investment in the Fund is earning, you'll eventually withdraw your entire investment.
Check Redemption Service (for Columbia Money Market Fund)
Class A and Class Z shares of Columbia Money Market
Fund offer check writing privileges. If you have $2,000 in Columbia Money Market Fund, you may request checks which may be drawn against your account. The amount of any check drawn against your Columbia Money Market Fund must be at least $100. You
can elect this service on your initial application or thereafter. Call 800.345.6611 for the appropriate forms to establish this service. If you own Class A shares that were originally purchased in another Fund at NAV because of the size of the
purchase, and then exchanged into Columbia Money Market Fund, check redemptions may be subject to a CDSC. A $15 charge will be assessed for any stop payment order requested by you or any overdraft in connection with checks written against your
Columbia Money Market Fund account. Note that a Medallion Signature Guarantee may be required if this service is established after the account is opened.
Columbia Adaptive
Alternatives Fund
Buying, Selling and Exchanging Shares
(continued)
In-Kind Redemptions
The Fund reserves the right to honor redemption
orders with in-kind distributions of portfolio securities instead of cash. In the event the Fund distributes portfolio securities in-kind, you may incur brokerage and transaction costs associated with converting the portfolio securities you receive
into cash. Also, the portfolio securities you receive may increase or decrease in value before you convert them into cash. For U.S. federal income tax purposes redemptions paid in securities are generally treated the same as redemptions paid in
cash.
Other Redemption Rules You Should Know
■
|
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.
|
Exchanging Shares
You can generally sell shares of your Fund to buy
shares of another Fund, in what is called an exchange. You should read the prospectus of, and make sure you understand the investment objective, principal investment strategies, risks, fees and expenses of, the Fund into which you are
exchanging.
You may be subject to a sales
charge if you exchange from Columbia Money Market Fund or any other Fund that does not charge a front-end sales charge into a non-money market Fund.
If you hold your Fund shares through certain selling agents,
including Ameriprise Financial Services, Inc., you may have limited exchangeability among the Funds.
Please contact your selling agent for more information.
You can generally make exchanges between like share
classes of any Fund and, subject to eligibility requirements, other share classes of any Fund. Some exceptions apply. Although the Funds allow certain exchanges from one share class to another share class with higher expenses, you should consider
the expenses of each class before making such an exchange.
Systematic Exchanges
You may buy Class A, Class C, Class T, Class W,
Class Y and/or Class Z shares of a Fund by exchanging each month from another Fund for shares of the same class of the Fund at no additional cost, subject to the following exchange amount minimums: $50 each month for individual retirement accounts
(i.e. tax qualified accounts); and $100 each month for non-retirement accounts. Contact the Transfer Agent or your selling agent to set up the plan. If you set up your plan to exchange more than $100,000 each month, you must obtain a Medallion
Signature Guarantee.
Columbia Adaptive Alternatives
Fund
Buying, Selling
and Exchanging Shares
(continued)
Exchanges will continue as long as your balance is
sufficient to complete the systematic monthly transfers, subject to the Funds' Small Account Policy described above in
Buying, Selling and Exchanging Shares — Transaction Rules and Policies.
You may
terminate the program or change the amount you would like to exchange (subject to the $50 and $100 minimum requirements noted immediately above) by calling the Transfer Agent at 800.345.6611. 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.
Other Exchange Rules You Should Know
■
|
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.
|
Columbia Adaptive
Alternatives Fund
Buying, Selling and Exchanging Shares
(continued)
Same-Fund Exchange Privilege
Certain shareholders of a Fund may be or become
eligible to invest in other classes of shares of the same Fund. Upon a determination of such eligibility, such shareholders may be eligible to exchange their shares for shares of the other share class, if offered. Such exchanges include exchanges of
shares of one class for shares of another share class with higher expenses. Before making such an exchange, you should consider the expenses of each class. Investors should contact their selling agents to learn more about the details of the exchange
privilege.
Note the following rules relating
to same-Fund exchanges:
■
|
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.
|
Columbia Adaptive Alternatives
Fund
Distributions to Shareholders
A mutual fund can make money two ways:
■
|
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).
|
Distributions
Mutual funds make payments of
fund earnings to shareholders, distributing them among all shareholders of the fund. As a shareholder, you are entitled to your portion of a fund's distributed income, including capital gains. Reinvesting your distributions buys you more shares of a
fund
—
which lets you take advantage of the potential for compound growth. Putting the money you earn back into your investment means it, in turn, may earn even more money. Over time, the power of
compounding has the potential to significantly increase the value of your investment. There is no assurance, however, that you'll earn more money if you reinvest your distributions rather than receive them in cash.
The Fund intends to pay out, in the form of
distributions to shareholders, a sufficient amount of its income and gains so that the Fund will qualify for treatment as a regulated investment company and generally will not have to pay any federal excise tax. The Fund generally intends to
distribute any net realized capital gain (whether long-term or short-term gain) at least once a year. Normally, the Fund will declare and pay distributions of net investment income according to the following schedule:
Declaration
and Distribution Schedule
|
Declarations
|
Annually
|
Distributions
|
Annually
|
The Fund may, however,
declare or pay distributions of net investment income more frequently.
Different share classes of the Fund usually pay
different net investment income distribution amounts, because each 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.
The Fund generally pays cash distributions within
five business days after the distribution was declared (or, if the Fund declares distributions daily, within five business days after the end of the month in which the distribution was declared). If you sell all of your shares after the record date,
but before the payment date, for a distribution, you'll normally receive that distribution in cash within five business days after the sale was made.
The Fund will automatically reinvest distributions
in additional shares of the same share class of the Fund unless you inform us you want to receive your distributions in cash (the selling agent through which you purchased shares may have different policies). You can do this by contacting the Funds
at the addresses and telephone numbers listed at the beginning of the section entitled
Choosing a Share Class
. No sales charges apply to the purchase or sale of such shares.
For accounts held directly with the Fund (through
the Transfer Agent), distributions of $10 or less will automatically be reinvested in additional Fund shares only. If you elect to receive distributions by check and the check is returned as undeliverable, all subsequent distributions will be
reinvested in additional shares of the Fund.
Unless you are a tax-exempt investor or holding Fund
shares through a tax-advantaged account (such as a 401(k) plan or IRA), you should consider avoiding buying Fund shares shortly before the Fund makes a distribution (other than distributions of net investment income that are declared daily) of net
investment income or net realized capital gain, because doing so can cost you money in taxes to the extent the distribution consists of taxable income or gains. This is because you will, in effect, receive part
Columbia Adaptive
Alternatives Fund
Distributions and Taxes
(continued)
of your purchase price back in the distribution. This is known as
“buying a dividend.” To avoid “buying a dividend,” before you invest check the Fund's distribution schedule, which is available at the Funds' website and/or by calling the Funds' telephone number listed at the beginning of
the section entitled
Choosing a Share Class
.
Taxes
You should be aware of the following considerations
applicable to all Funds (unless otherwise noted):
■
|
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 the Fund qualifies as a regulated investment
company, the Fund may be subject to federal excise tax on certain undistributed income or gains.
|
■
|
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.
|
■
|
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.
|
■
|
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.
|
■
|
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.
|
■
|
Certain derivative
instruments when held in the 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.
|
■
|
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.
|
■
|
The Fund invests a
substantial portion of its assets in shares of the Intermediary Fund (which in turn invests substantially all its assets in the Blackstone Fund) and other Underlying Funds. If the Blackstone Fund were to fail to qualify as a regulated
|
Columbia Adaptive Alternatives
Fund
Distributions and
Taxes
(continued)
investment
company and did not cure such failure, then the Fund would fail to qualify as a regulated investment company. In any event,
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.
|
Taxes
The information provided above is
only a summary of how U.S. federal income taxes may affect your investment in the Fund. It is not intended as a substitute for careful tax planning. Your investment in the Fund may have other tax implications. It does not apply to certain types of
investors who may be subject to special rules, including foreign or tax-exempt investors or those holding Fund shares through a tax-advantaged account, such as a 401(k) plan or IRA. Please see the SAI for more detailed tax information. You should
consult with your own tax advisor about the particular tax consequences to you of an investment in the Fund, including the effect of any foreign, state and local taxes, and the effect of possible changes in applicable tax laws.
Columbia Adaptive
Alternatives Fund
Because the Fund had not commenced operations prior to the date of this
prospectus, no financial highlights are provided.
Additional Information About the Fund
Additional information about the Fund’s
investments will be available in the Fund’s annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s
performance during its last fiscal year. The SAI also provides additional information about the Fund and its policies. The SAI, which has been filed with the SEC, is legally part of this prospectus (incorporated by reference). To obtain these
documents free of charge, to request other information about the Fund and to make shareholder inquiries contact Columbia Funds as follows:
By
Mail:
Columbia Funds
c/o Columbia Management Investment Services Corp.
P.O. Box 8081
Boston, MA 02266-8081
By Telephone:
800.345.6611
Online:
columbiamanagement.com
Information Provided by the SEC
You can review and copy information about the Fund
(including this prospectus, the SAI and shareholder reports when available) at the SEC’s Public Reference Room in Washington, D.C. To find out more about the operation of the Public Reference Room, call the SEC at 202.551.8090. Reports and
other information about the Fund are also available in the EDGAR Database on the SEC’s website at http://www.sec.gov. You can receive copies of this information, for a fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the Public Reference Section, Securities and Exchange Commission, Washington, D.C. 20549-1520.
The investment company registration number of Columbia
Funds Series Trust I, of which the Fund is a series, is 811-04367.
© 2015 Columbia Management Investment
Distributors, Inc.
225 Franklin Street, Boston, MA 02110
800.345.6611
Prospectus
January 28, 2015
Columbia Diversified Absolute Return Fund
Class
|
|
Ticker
Symbol
|
Class
A Shares
|
|
CDUAX
|
Class
C Shares
|
|
CDUCX
|
Class
I Shares
|
|
CDUIX
|
Class
R4 Shares
|
|
CDUFX
|
Class
R5 Shares
|
|
CDUGX
|
Class
W Shares
|
|
CDUWX
|
Class
Z Shares
|
|
CDUZX
|
The Securities and Exchange Commission (SEC) and the Commodity Futures
Trading Commission (CFTC) have not approved or disapproved these securities or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Columbia
Diversified Absolute Return Fund
|
3
|
|
3
|
|
3
|
|
4
|
|
5
|
|
12
|
|
12
|
|
12
|
|
13
|
|
13
|
|
14
|
|
14
|
|
14
|
|
16
|
|
26
|
|
29
|
|
32
|
|
33
|
|
33
|
|
34
|
|
34
|
|
34
|
|
38
|
|
45
|
|
47
|
|
50
|
|
51
|
|
51
|
|
52
|
|
56
|
|
58
|
|
63
|
|
64
|
|
67
|
|
67
|
|
68
|
|
70
|
Columbia Diversified Absolute Return
Fund
Investment Objective
Columbia Diversified Absolute Return Fund (the Fund)
seeks to provide shareholders with absolute (positive) returns.
Fees and Expenses of the Fund
This table describes the fees and expenses that you
may pay if you buy and hold shares of the Fund. You may qualify for sales charge discounts if you and members of your immediate family invest, or agree to invest in the future, at least $50,000 in certain classes of shares of eligible funds
distributed by Columbia Management Investment Distributors, Inc. (the Distributor). More information about these and other discounts is available from your financial intermediary, and can be found in the
Choosing a
Share Class
section beginning on page 34 of the Fund’s prospectus and in Appendix S to the Statement of Additional Information (SAI) under
Sales Charge Waivers
beginning on page S-1.
Shareholder
Fees (fees paid directly from your investment)
|
|
Class
A
|
Class
C
|
Classes
I,
R4, R5,
W and Z
|
Maximum
sales charge (load) imposed on purchases (as a % of offering price)
|
5.75%
|
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)
|
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
C
|
Class
I
|
Class
R4
|
Class
R5
|
Class
W
|
Class
Z
|
Management
fees
|
1.10%
|
1.10%
|
1.10%
|
1.10%
|
1.10%
|
1.10%
|
1.10%
|
Distribution
and/or service (12b-1) fees
|
0.25%
|
1.00%
|
0.00%
|
0.00%
|
0.00%
|
0.25%
|
0.00%
|
Other
expenses
(c)
|
0.72%
|
0.72%
|
0.52%
|
0.72%
|
0.57%
|
0.72%
|
0.72%
|
Dividend
expenses and borrowing costs on securities sold short
|
0.16%
|
0.16%
|
0.16%
|
0.16%
|
0.16%
|
0.16%
|
0.16%
|
Remainder
of other expenses
|
0.56%
|
0.56%
|
0.36%
|
0.56%
|
0.41%
|
0.56%
|
0.56%
|
Acquired
fund fees and expenses
(d)
|
0.08%
|
0.08%
|
0.08%
|
0.08%
|
0.08%
|
0.08%
|
0.08%
|
Total
annual Fund operating expenses
|
2.15%
|
2.90%
|
1.70%
|
1.90%
|
1.75%
|
2.15%
|
1.90%
|
Less:
Fee waivers and/or expense reimbursements
(e)
|
(0.28%)
|
(0.28%)
|
(0.23%)
|
(0.28%)
|
(0.23%)
|
(0.28%)
|
(0.28%)
|
Total
annual Fund operating expenses after fee waivers and/or expense reimbursements
|
1.87%
|
2.62%
|
1.47%
|
1.62%
|
1.52%
|
1.87%
|
1.62%
|
(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 applies to redemptions within one year of purchase, with certain limited exceptions.
|
(c)
|
Other expenses are based on
estimated amounts for the Fund's current fiscal year.
|
(d)
|
Acquired fund fees and
expenses are based on estimated amounts for the Fund's current fiscal year.
|
(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, dividend expenses and borrowing costs
on securities sold short, interest, taxes and extraordinary expenses) until September 30, 2016, 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 rate of 1.71% for Class A, 2.46% for Class C, 1.31% for Class I, 1.46% for Class R4, 1.36% for Class R5, 1.71% for Class W and 1.46% for Class Z.
|
Columbia
Diversified Absolute Return Fund
Summary of the Fund
(continued)
The following example is intended
to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example illustrates the hypothetical expenses that you would incur over the time periods indicated, and assumes that:
■
|
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.
|
Since the waivers and/or reimbursements shown in
the
Annual Fund Operating Expenses
table above expire as indicated in the preceding table, they are only reflected in the 1 year example and the first year of the 3 year example. Although your actual costs may
be higher or lower, based on the assumptions listed above, your costs (based on estimated Fund expenses) would be:
|
1
year
|
3
years
|
Class
A
(whether or not shares are redeemed)
|
$754
|
$1,184
|
Class
C
(assuming redemption of all shares at the end of the period)
|
$365
|
$
871
|
Class
C
(assuming no redemption of shares)
|
$265
|
$
871
|
Class
I
(whether or not shares are redeemed)
|
$150
|
$
513
|
Class
R4
(whether or not shares are redeemed)
|
$165
|
$
570
|
Class
R5
(whether or not shares are redeemed)
|
$155
|
$
529
|
Class
W
(whether or not shares are redeemed)
|
$190
|
$
646
|
Class
Z
(whether or not shares are redeemed)
|
$165
|
$
570
|
Portfolio Turnover
The Fund may pay transaction costs, such as
commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These
costs, which are not reflected in annual fund operating expenses or in the example, affect the Fund’s performance. Because the Fund is newly organized, portfolio turnover information is not available as of the date of this prospectus.
Principal Investment Strategies
The Fund pursues absolute (positive) returns through
a diversified portfolio reflecting multiple asset classes and various investment and hedging strategies employed across equity, fixed income and other markets, such as commodities markets, while seeking to capitalize on market inefficiencies.
Although the specific
strategies the Fund pursues and the manner in which the Fund pursues such strategies may change from time to time, the Fund is currently expected to combine tactical beta, alternative beta and alpha strategies in seeking the Fund’s investment
objective. (In general, beta is a measure of price volatility resulting from general market movements and alpha is a measure of return resulting from active management.) The Fund’s investment manager, Columbia Management Investment Advisers,
LLC (Columbia Management or the Investment Manager) may use fundamental and quantitative methods to identify and capitalize on short-term mispricings within and across traditional asset classes and markets, such as stocks and bonds. This strategy
may be referred to as a tactical beta strategy in that it seeks opportunities to earn returns from price movements of broad markets. For instance, if the Investment Manager believes the U.S. equity market is undervalued, the Investment Manager may
seek to capitalize on this mispricing by investing in futures on a U.S. equities index. The Investment Manager may also use fundamental and quantitative methods to identify and capitalize on systemic and structural market inefficiencies. This
strategy may be referred to as an alternative beta strategy in that it seeks to generate returns with relatively low correlation to overall market movements by employing a systematic, rules-based based approach. For instance, the Fund may take a
long position in a broad basket of equities that the Investment Manager believes are attractively valued and take a short position in a broad basket of equities that the Investment Manager believes are unattractively valued, in order to generate
returns from the relative price difference generally expected in the equity markets over time between undervalued and overvalued equities (i.e., the “value
Columbia Diversified Absolute Return
Fund
Summary of the
Fund
(continued)
premium”). The Investment Manager will also allocate assets
to long, short and other strategies intended to generate returns that are not dependent on overall market direction. These strategies may be referred to as alpha strategies in that they are intended to have relatively low correlation to market
movements and are derived from active management.
The Fund’s investments and
strategies are expected to employ both long and short positions in foreign and domestic equities (including common stock, preferred stock and convertible securities), equity futures, index futures, options, swaps, fixed-income, floating rate and
other debt securities (including U.S. government obligations, sovereign and quasi-sovereign debt obligations, asset-backed securities, exchange traded notes, mortgage-backed securities and fixed income futures), currency forwards and futures and
other commodity-related investments, and other investment companies (including mutual funds, closed-end funds and exchange-traded funds (ETFs)). The Fund may gain investment exposure to these securities and instruments directly or indirectly through
investment in one or more Subsidiaries (as defined below) or affiliated and third party investment companies
The Fund’s investment strategy may involve the
frequent trading of portfolio securities.
The Fund may invest without limit in foreign
investments (including currencies), which may include investments in emerging markets, and in investments that are rated below investment-grade or, if unrated, deemed to be of comparable quality (commonly referred to as “high yield
securities” or “junk bonds”).
The Fund may invest in
derivatives such as futures (including bond, currency, equity index, interest rate and volatility index futures), forward foreign currency contracts, forward interest rate agreements, options and swap contracts (including
credit default swaps, interest rate swaps and total return swaps), in an effort to produce incremental earnings, to hedge existing positions, to increase market exposure and investment flexibility, and/or to increase credit exposure.
The Fund may purchase or sell securities on a
when-issued, delayed delivery or forward commitment basis. Such securities may include mortgage-backed securities acquired or sold in the “to be announced” (TBA) market and those in a dollar roll transaction.
In addition, under normal circumstances, the Fund
uses forward foreign currency contracts in seeking to enhance returns based on fluctuations in the values of various foreign currencies relative to the U.S. dollar (the Currency Overlay Strategy). The Fund gains economic exposure to foreign
currencies through its investment in forward foreign currency contracts comparable to the exposure that it would have had if it had bought or sold the foreign currencies directly.
The Fund may invest directly in derivatives or
indirectly by investing in one or more offshore, wholly-owned subsidiaries (each, a Subsidiary, and, collectively, the Subsidiaries). Generally, Subsidiaries will invest in commodity futures, financial futures, option and swap contracts, fixed
income securities, pooled investment vehicles, including those that are not registered pursuant to the Investment Company Act of 1940, as amended (the 1940 Act), and other investments intended to serve as margin or collateral for the
Subsidiaries’ derivative positions.
The Fund expects to hold a significant amount of
cash, money market instruments (which may include investments in one or more affiliated or unaffiliated money market funds or similar vehicles) or other high-quality, short-term investments to cover obligations with respect to, or that may result
from, the Fund’s investments in forward foreign currency contracts, currency futures contracts, commodity-linked investments or other derivatives.
Principal Risks
An investment in the Fund involves risk, including
those associated with the Fund’s investment in the Subsidiaries, as described below.
There is no assurance that the Fund will achieve its investment objective and you may lose money
. The value of the
Fund’s holdings may decline, and the Fund’s net asset value (NAV) and share price may go down. (References in this section to “the Fund” also include the Subsidiaries, which share the same risks as the Fund.)
Active Management Risk.
Due to its active management, the Fund could underperform its benchmark index and/or other funds with similar investment objectives.
Allocation
Risk.
Because the Fund uses an asset allocation strategy in pursuit of its investment objective, there is a risk that the Fund's allocation among strategies and/or investment styles will cause the Fund's 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.
Columbia
Diversified Absolute Return Fund
Summary of the Fund
(continued)
Commodity Futures Trading Commission (CFTC) Regulatory
Risk.
The Fund does not qualify for an exemption from registration as a “commodity pool” under rules of the Commodity Exchange Act (the CEA). Accordingly, the Fund is a commodity pool under the CEA and
the Investment Manager is registered as a “commodity pool operator” under the CEA. The Fund is subject to dual regulation by the SEC and the CFTC. Compliance with the CFTC’s regulatory requirements could increase Fund expenses,
adversely affecting the Fund’s total return.
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. Exposure to commodities and commodities markets may subject the value of the Fund’s investments to greater volatility than other types of investments.
Commodities investments may also subject the Fund to counterparty risk and liquidity risk. The Fund may make commodity-related investments through one or more wholly-owned subsidiaries organized outside the U.S. that are generally not subject to
U.S. laws (including securities laws) and their protections.
Convertible Securities Risk.
Convertible securities are subject to the usual risks associated with debt securities, such as interest rate risk and credit risk. Convertible securities also react to changes in the value of the common stock into which
they convert, and are thus subject to market risk. The Fund may also be forced to convert a convertible security at an inopportune time, which may decrease the Fund’s return.
Counterparty Risk.
Counterparty risk is the risk that a counterparty to a financial instrument held by the Fund or by a special purpose or structured vehicle invested in by the Fund may become insolvent or otherwise fail to perform its obligations. As a result, the
Fund may obtain no or limited recovery of its investment, and any recovery may be significantly delayed.
Credit Risk.
The value of fixed-income securities may decline if the issuer of the security defaults or otherwise becomes unable or unwilling, or is perceived to be unable or unwilling, to honor its financial obligations, such as
making payments to the Fund when due. Rating agencies assign credit ratings to certain fixed-income securities to indicate their credit risk. Lower quality or unrated securities held by the Fund may present increased credit risk as compared to
higher-rated securities. Non-investment grade loans or fixed-income securities (commonly called “high-yield” or “junk”) are subject to greater price fluctuations and are more likely to experience a default than investment
grade loans or securities and therefore may expose the Fund to increased credit risk. If the Fund purchases unrated securities, or if the ratings of securities held by the Fund are lowered after purchase, the Fund will depend on analysis of credit
risk more heavily than usual.
Derivatives
Risk.
Losses involving derivative instruments may be substantial, because a relatively small movement in the price of an underlying security, 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 for the Fund. Derivative investments will typically increase the Fund’s exposure to principal risks to which it
is otherwise exposed, and may expose the Fund to additional risks, including correlation risk, counterparty risk, hedging risk, leverage risk and/or liquidity risk.
Derivatives Risk/Commodity-Linked Futures Contracts
Risk.
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 Fund’s NAV. 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 Swaps Risk.
Commodity-linked swaps could result in losses if the underlying asset (e.g., a particular commodity) 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, hedging risk, pricing risk and liquidity risk.
Columbia Diversified Absolute Return
Fund
Summary of the
Fund
(continued)
Derivatives Risk/Credit Default Swaps Risk.
A credit default swap enables an investor to buy or sell protection against a credit event, such as an issuer’s failure to make timely payments of interest or principal, bankruptcy or restructuring. A credit
default swap may be embedded within a structured note or other derivative instrument. Swaps can involve greater risks than direct investment in the underlying securities, because swaps 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, hedging risk, pricing risk and liquidity risk. 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 and the Fund will receive no benefit for the premium paid.
Derivatives Risk/Forward Foreign Currency Contracts
Risk.
These instruments are a type of derivative contract whereby the Fund may agree to buy or sell a country’s or region’s currency at a specific price on a specific date in the future. These
instruments may fall in value (sometimes dramatically) due to foreign market downswings or foreign currency value fluctuations, subjecting the Fund to foreign currency risk. Investment in these instruments also subjects the Fund to counterparty
risk. The Fund’s strategy of investing in these instruments may not be successful and the Fund may experience significant losses as a result.
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. These transactions involve risks, including counterparty risk, hedging risk and interest rate risk.
Derivatives Risk/Futures Contracts
Risk.
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 Fund’s 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 for the Fund.
Futures contracts may be illiquid. 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. Futures contracts executed on foreign exchanges may not provide the same protection as U.S. exchanges. These transactions involve additional risks, including
counterparty risk, hedging risk and pricing risk.
Derivatives Risk/Interest Rate Swaps Risk.
Interest rate swaps can be based on various measures of interest rates, including the London Interbank Offered Rate (commonly known as LIBOR), swap rates, treasury rates and other foreign interest rates. A swap
agreement can increase or decrease the volatility of the Fund's investments and its NAV. 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 and correlation risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset, and may offset gains, including because of a lack of correlation between the swaps and the portfolio of bonds that
the swaps are designed to hedge or replace), pricing risk (swaps may be difficult to value), liquidity risk (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 losses for 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. 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 Fund's losses are potentially unlimited. These transactions involve other risks, including counterparty risk and hedging risk.
Derivatives Risk/Swaps Risk.
The use of swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. Swaps could result in Fund losses if the
underlying asset or reference does not perform as anticipated. The value of swaps, like many other derivatives, may move in
Columbia
Diversified Absolute Return Fund
Summary of the Fund
(continued)
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 involving short exposures. 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, hedging risk, pricing risk and liquidity risk.
Derivatives Risk/Portfolio Swaps and Total Return
Swaps Risk.
The use of portfolio swaps or total return swaps is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities
transactions. Portfolio swaps and equity 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, hedging risk, pricing risk and liquidity risk.
Emerging Market Securities Risk.
Securities issued by foreign governments or companies in emerging market countries, such as China,
Russia and certain countries in Eastern Europe, the Middle East,
Asia, Latin America or Africa, 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 and economic 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, and some have a higher risk of currency devaluations.
Exchange-Traded Fund (ETF) Risk.
ETFs are subject to, among other risks, tracking risk and passive and, in some cases, active investment risk. In addition, shareholders bear both their proportionate share of the Fund’s expenses and similar
expenses incurred through ownership of the ETF.
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.
Foreign Securities Risk.
Investments in or exposure to foreign securities involve certain risks not associated with investments in or exposure to securities of U.S. companies. Foreign securities subject the Fund to the risks associated with
investing in the particular country of an issuer, including the political, regulatory, economic, social, diplomatic and other conditions or events occurring in the country or region, as well as risks associated with less developed custody and
settlement practices. Foreign securities may be more volatile and less liquid than securities of U.S. companies, and are subject to the risks associated with potential imposition of economic and other sanctions against a particular foreign country,
its nationals or industries or businesses within the country. The performance of the Fund may be negatively impacted by fluctuations in a foreign currency’s 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.
Forward Commitments on Mortgage-backed Securities
(including Dollar Rolls) Risk.
When purchasing mortgage-backed securities in the “to be announced” (TBA) market (MBS TBAs), the seller agrees to deliver mortgage-backed securities for an agreed upon
price on an agreed upon date, but may make no guarantee as to the specific securities to be delivered. In lieu of taking delivery of mortgage-backed securities, the Fund could enter into dollar rolls, which 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 Fund’s 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). MBS TBAs and dollar rolls are subject to counterparty risk.
Columbia Diversified Absolute Return
Fund
Summary of the
Fund
(continued)
Frequent Trading Risk.
The portfolio managers may actively and frequently trade investments in the Fund's portfolio to carry out its investment strategies. Frequent trading of investments increases the possibility that the Fund, as relevant,
will realize taxable capital gains (including short-term capital gains, which are generally taxable to shareholders at higher rates than long-term capital gains for U.S. federal income tax purposes), which could reduce the Fund's after-tax return.
Frequent trading can also mean higher brokerage and other transaction costs, which could reduce the Fund's return. The trading costs and tax effects associated with portfolio turnover may adversely affect the Fund’s performance.
Hedging Transactions Risk.
The Fund may invest in securities and utilize financial instruments for a variety of hedging purposes. Hedging transactions may limit the opportunity for gain if the value of the portfolio position should increase.
There can be no assurance that the Fund will engage in hedging transactions at any given time, even under volatile market conditions, or that any hedging transactions the Fund engages in will be successful. Moreover, it may not be possible for the
Fund to enter into a hedging transaction at a price sufficient to protect its assets. The Fund may not anticipate a particular risk so as to hedge against it.
High-Yield Securities Risk.
Securities rated below investment grade (commonly called “high-yield” or “junk” bonds) and unrated securities of comparable quality expose the Fund to a greater risk of loss of principal and
income than a fund that invests solely or primarily in investment grade securities. In addition, these investments have greater price fluctuations, are less liquid 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 issuer’s capacity to pay interest and repay principal.
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 tend to fall, and if interest rates fall, the values of
debt securities 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 will usually affect the value of the Fund's shares. In general, the longer the maturity or duration
of a debt security, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Similarly, a period of rising interest rates may
negatively impact the Fund’s performance. Actions by governments and central banking authorities can result in increases in interest rates. Such actions may negatively affect the value of fixed-income securities held by the Fund, resulting in
a negative impact on the Fund's performance and NAV.
Investing in Other Funds Risk.
The Fund’s 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 the
underlying funds in direct proportion to the Fund’s investment therein. In addition, investments in ETFs have unique characteristics, including, but not limited to, the expense structure and additional expenses associated with investing in
ETFs. The performance of the underlying funds could be adversely affected if other investors 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 underlying funds could result in decreased economies of scale and increased
operating expenses for such 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. Also, to the extent that the Fund is constrained/restricted from investing (or investing further) in a particular underlying fund for
one or more reasons (e.g., underlying fund capacity constraints or regulatory restrictions) or if the Fund chooses to sell its investment in an underlying fund because of poor investment performance or for other reasons, the Fund may have to invest
in another underlying fund(s), including less desirable funds – from a strategy or investment performance standpoint – which could have a negative impact on Fund performance. In addition, Fund performance could be negatively impacted if
an appropriate alternate underlying fund(s) does not present itself timely or at all.
Investing in Wholly-Owned Subsidiary Risk.
By investing in a Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. The Fund’s Principal Risks may also apply to a Subsidiary in which the Fund invests
(which are described in this prospectus). There can be no assurance that the investment objective of a Subsidiary will be achieved. Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and any Subsidiary in which
it invests, respectively, are organized, could result in the inability of the Fund and/or the Subsidiary to operate as described in this prospectus and the Fund’s SAI and could adversely affect the Fund and its shareholders.
Columbia
Diversified Absolute Return Fund
Summary of the Fund
(continued)
Issuer Risk.
An
issuer in which the Fund invests or to which it has exposure may perform poorly, and the value of its securities may therefore decline, which would negatively affect the Fund’s 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. Because short sales involve borrowing securities and then
selling them, the Fund’s short sales effectively leverage the Fund’s assets. The Fund's assets that are used as collateral to secure the Fund's 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 Fund's overall returns. Leverage presents the opportunity for increased net income and
capital gains, but may also exaggerate the Fund’s volatility and 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. Decreases in the number of financial institutions willing to make markets in the
Fund’s investments or in their capacity or willingness to transact may increase the Fund’s exposure to this risk. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may
also adversely affect the liquidity of the Fund's investments. The Fund may have to accept a lower selling price for the holding, 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. Price volatility may be higher for illiquid investments as a result of, for example, the relatively less frequent pricing of such securities (as compared to liquid
investments). Generally, the less liquid the market at the time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. Price volatility, liquidity of the market and other factors can lead to an increase
in Fund redemptions, which may negatively impact Fund performance and NAV, including, for example, if the Fund is forced to sell securities in a down market.
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. An investment in the Fund could lose money over short or long periods.
Although equity securities generally tend to have greater price volatility than debt securities, under certain market conditions, debt securities may have comparable or greater price volatility.
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. The Fund will also be exposed to the investment risks of the money market fund. 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 its 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
market's assessment of the quality of underlying assets. Payment of principal and interest on some mortgage-backed securities (but not the market value of the securities themselves) may be guaranteed by the full faith and credit of a particular
U.S. Government agency, authority, enterprise or instrumentality, and some, but not all, are also insured or guaranteed by the U.S. Government. 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 entail greater risk than obligations guaranteed by the U.S. Government. Mortgage- and other asset-backed securities are subject to
prepayment risk, which is the possibility that the underlying mortgage or other asset 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. Rising or high interest rates tend to extend the duration of mortgage- and other asset-backed securities, making their prices more volatile and more sensitive to changes in interest rates.
Columbia Diversified Absolute Return
Fund
Summary of the
Fund
(continued)
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
(
i.e.
, the risk of losses attributable to changes in interest rates).
Prepayment and Extension Risk.
Prepayment and extension risk is the risk that a loan, bond or other security or investment might, in the case of prepayment risk, be called or otherwise converted, prepaid or redeemed before maturity and, in the case
of extension risk, the investment might not be called as expected, and 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. In the case of
mortgage- or asset-backed securities, as interest rates decrease or spreads narrow, the likelihood of prepayment increases. Conversely, extension risk is the risk that an unexpected rise in interest rates will extend the life of a mortgage- or
asset-backed security beyond the prepayment time. If the Fund’s investments are locked in at a lower interest rate for a longer period of time, the portfolio managers may be unable to capitalize on securities with higher interest rates or
wider spreads.
Quantitative
Model Risk.
Investments selected using quantitative methods may perform differently from the market as a whole. There can be no assurance that these methodologies will enable the Fund to achieve its
objective.
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 or other asset) because the maximum sustainable loss on an instrument or other asset
purchased (held long) is limited to the amount paid for the instrument or other asset plus the transaction costs, whereas there is no maximum price of the shorted instrument or other asset when purchased in the open market. Therefore, in theory,
short positions have unlimited risk. The Fund’s 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 or other asset, this involves the risk of a potentially unlimited increase in the value of the underlying instrument or other
asset.
Sovereign Debt Risk.
A sovereign debtor’s 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 debtor’s policy toward international lenders, and the political constraints to
which a sovereign debtor may be subject. Sovereign debt risk is increased for emerging market issuers.
Tax Risk.
The Fund intends to qualify for treatment as a regulated investment company under the Internal Revenue Code of 1986, as amended (the Code). In order to so qualify, the Fund must meet certain requirements regarding the
source of its income. Certain instruments in which the Fund is permitted to invest do not give rise to qualifying income. If the Fund were to fail to limit its income from such investments appropriately, absent a cure the Fund would be unable to
qualify for treatment as a regulated investment company. The tax treatment of certain investments and of the income and gain therefrom under the qualifying income test applicable to regulated investment companies is uncertain. An adverse
determination or future guidance by the Internal Revenue Service (the IRS) regarding such investments or the income and gain from such investments might affect the Fund’s ability to qualify for treatment as a regulated investment company,
including on a retroactive basis.
If
the Fund were to fail to qualify as a regulated investment company, or if it were ineligible to or otherwise could not cure such failure, the Fund would be ineligible for the favorable tax treatment afforded to regulated investment companies for one
or more years, which would adversely affect the value of the Fund. Please refer to “Distributions and Taxes” in this prospectus or to “Taxation” in the SAI for additional information about the U.S. federal income tax
treatment of the Fund.
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 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.
Valuation Risk.
The
sales price the Fund (or an underlying fund or other investment vehicle) could receive for any particular investment may differ from the Fund’s (or an underlying fund’s or other investment vehicle’s) valuation of the investment,
particularly for securities that trade in thin or volatile markets or that are valued using a fair value methodology that produces an
Columbia
Diversified Absolute Return Fund
Summary of the Fund
(continued)
estimate of the fair value of the security/instrument, which may
prove to be inaccurate. Investors who purchase or redeem Fund shares on days when the Fund is holding securities or other instruments (or holding shares of underlying funds or other investment vehicles that have fair-valued securities or other
instruments in their portfolios) may receive fewer or more shares or lower or higher redemption proceeds than they would have received if the Fund (or underlying fund or other investment vehicle) had not fair-valued the security or instrument or had
used a different valuation methodology.
Performance
Information
The Fund is new as of the date of
this prospectus and therefore performance information is not available.
When available, the Fund intends
to compare its performance to the performance of the Citigroup 1-Month U.S. Treasury Bill Index.
When available, updated performance information can
be obtained by calling toll-free 800.345.6611 or visiting columbiamanagement.com.
Fund Management
Investment Manager:
Columbia Management Investment Advisers, LLC
Portfolio
Manager
|
|
Title
|
|
Role
with Fund
|
|
Managed
Fund Since
|
Jeffrey
Knight, CFA
|
|
Senior
Portfolio Manager, Managing Director, Global Head of Investment Solutions and Co-Head of Global Asset Allocation
|
|
Lead
manager
|
|
February
2015
|
William
Landes, Ph.D.
|
|
Senior
Vice President and Deputy Head of Global Investment Solutions
|
|
Co-manager
|
|
February
2015
|
Kent
Peterson, Ph.D.
|
|
Senior
Portfolio Manager
|
|
Co-manager
|
|
February
2015
|
Brian
Virginia
|
|
Portfolio
Manager and Vice President, Alternative and Absolute Return Investments
|
|
Co-manager
|
|
February
2015
|
In managing
the Fund, the portfolio managers allocate portions of Fund assets to be managed by investment professionals in other investment manager’s teams.
Purchase and Sale of Fund Shares
You may purchase or redeem shares of the Fund on any
business day by contacting the Fund in the ways described below:
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
|
You may purchase shares
and receive redemption proceeds by electronic funds transfer, by check or by wire. If you maintain your account with a broker-dealer or other financial intermediary, you must contact that financial intermediary to buy, sell or exchange shares of the
Fund through your account with the intermediary.
Columbia Diversified Absolute Return
Fund
Summary of the
Fund
(continued)
The minimum initial investment amounts for the share
classes offered by the Fund are shown below:
Minimum
Initial Investment
Class
|
Category
of eligible account
|
For
accounts other than
systematic investment
plan accounts
|
For
systematic investment
plan accounts
|
Classes
A & C
|
All
accounts other than IRAs
|
$2,000
|
$100
|
IRAs
|
$1,000
|
$100
|
Classes
I & R4
|
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
|
There is no minimum additional investment for any
share class.
Tax Information
The Fund intends to distribute net investment income
and net realized capital gains, if any, to shareholders. These distributions are generally taxable to you as ordinary income or capital gains, unless you are investing through a tax-advantaged account, such as a 401(k) plan or an IRA. If you are
investing through a tax-advantaged account, you may be taxed upon withdrawals from that account.
Payments to Broker-Dealers and Other Financial
Intermediaries
If you purchase the Fund
through a broker-dealer or other financial intermediary (such as a bank), the Fund and its related companies — including Columbia Management Investment Advisers, LLC (the Investment Manager), Columbia Management Investment Distributors, Inc.
(the Distributor) and Columbia Management Investment Services Corp. (the Transfer Agent) — may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the
broker-dealer or other intermediary and your financial advisor to recommend the Fund over another investment. Ask your financial advisor or visit your financial intermediary’s website for more information.
Columbia
Diversified Absolute Return Fund
More Information About the Fund
Investment Objective
Columbia Diversified Absolute Return Fund (the Fund)
seeks to provide shareholders with absolute (positive) returns. The Fund’s investment objective is not a fundamental policy and may be changed by the Fund’s Board of Trustees without shareholder approval. Because any investment involves
risk, there is no assurance the Fund’s objective will be achieved.
Principal Investment Strategies
The Fund pursues absolute (positive) returns through
a diversified portfolio reflecting multiple asset classes and various investment and hedging strategies employed across equity, fixed income and other markets, such as commodities markets, while seeking to capitalize on market inefficiencies. An
“absolute return” strategy pursues positive returns over a period of time regardless of market conditions. Although returns of “absolute return” strategies will fluctuate, they are intended to generate returns over longer
periods that are less volatile than more traditional investment strategies. Because any investment strategy involves risk, there is no assurance that positive returns will be achieved.
Although the specific strategies
the Fund pursues and the manner in which the Fund pursues such strategies may change from time to time, the Fund is currently expected to combine tactical beta, alternative beta and alpha strategies in seeking the Fund’s investment objective.
(In general, beta is a measure of price volatility resulting from general market movements and alpha is a measure of return resulting from active management.) The Investment Manager may use fundamental and quantitative methods to identify and
capitalize on short-term mispricings within and across traditional asset classes and markets, such as stocks and bonds. This strategy may be referred to as a tactical beta strategy in that it seeks opportunities to earn returns from price movements
of broad markets. For instance, if the Investment Manager believes the U.S. equity market is undervalued, the Investment Manager may seek to capitalize on this mispricing by investing in futures on a U.S. equities index. The Investment Manager may
also use fundamental and quantitative methods to identify and capitalize on systemic and structural market inefficiencies. This strategy may be referred to as an alternative beta strategy in that it seeks to generate returns with relatively low
correlation to overall market movements by employing a systematic, rules-based approach. For instance, the Fund may take a long position in a broad basket of equities that the Investment Manager believes are attractively valued and take a short
position in a broad basket of equities that the Investment Manager believes are unattractively valued, in order to generate returns from the relative price difference generally expected in the equity markets over time between undervalued and
overvalued equities (i.e., the “value premium”). The Investment Manager will also allocate assets to long, short and other strategies intended to generate returns that are not dependent on overall market direction. These strategies may
be referred to as alpha strategies in that they are intended to have relatively low correlation to market movements and are derived from active management.
The Fund’s investments and strategies are
expected to employ both long and short positions in foreign and domestic equities (including common stock, preferred stock and convertible securities), equity futures, index futures, options, swaps, fixed-income, floating rate and other debt
securities (including U.S. government obligations, sovereign and quasi-sovereign debt obligations, asset-backed securities, exchange traded notes, mortgage-backed securities and fixed income futures), currency forwards and futures and other
commodity-related investments, and other investment companies (including mutual funds, closed-end funds and ETFs). The Fund may gain investment exposure to these securities and instruments directly or indirectly through investment in one or more
Subsidiaries (as defined below) or affiliated and third party investment companies. A long position is an ordinary purchase of a security, future or currency. When the Fund takes a short position, it sells the instrument or currency that it has
borrowed in anticipation of a decline in the price of the instrument or currency. To complete the short sale transaction, the Fund buys back the same instrument or currency in the market and returns it to the lender. If the price of the instrument
or currency falls sufficiently, the Fund will make money. If it instead increases in price, the Fund will lose money.
Actual long and short exposures will vary over time based on
factors such as market movements and assessments of market conditions.
The Fund’s investment strategy may involve the
frequent trading of portfolio securities.
The Fund may invest without limit in foreign
investments (including currencies), which may include investments in emerging markets, and in investments that are rated below investment-grade or, if unrated, deemed to be of comparable quality (commonly referred to as “high yield
securities” or “junk bonds”).
Columbia Diversified Absolute Return
Fund
More Information
About the Fund
(continued)
The Fund may invest in fixed income securities of
any maturity and does not seek to maintain a particular dollar-weighted average maturity. A bond is issued with a specific maturity date, which is the date when the issuer must pay back the bond’s principal (face value). Bond maturities range
from less than 1 year to more than 30 years. Typically, the longer a bond’s maturity, the more price risk the Fund and the Fund’s investors face as interest rates rise, but the Fund could receive a higher yield in return for that longer
maturity and higher interest rate risk.
The Fund may invest in
derivatives such as futures (including bond, currency, equity index, interest rate and volatility index futures), forward foreign currency contracts, forward interest rate agreements, options and swap contracts (including
credit default swaps, interest rate swaps and total return swaps), in an effort to produce incremental earnings, to hedge existing positions, to increase market exposure and investment flexibility, and/or to increase credit exposure. Futures,
forwards and swaps, in particular, are expected to be utilized to gain long and short investment (or credit) exposures to securities, indexes, interest rates or currencies (in lieu of purchasing or selling a security, currency or other instrument
directly).
The Fund may purchase or sell
securities on a when-issued, delayed delivery or forward commitment basis. Such securities may include mortgage-backed securities in the “to be announced” (TBA) market and may be acquired or sold in a dollar roll transaction.
In addition, under normal circumstances,
the Fund uses forward foreign currency contracts in seeking to enhance returns based on fluctuations in the values of various foreign currencies relative to the U.S. dollar (the Currency Overlay Strategy). The Fund gains economic exposure to foreign
currencies through its investment in forward foreign currency contracts comparable to the exposure that it would have had if it had bought or sold the foreign currencies directly.
The Currency Overlay Strategy uses a quantitative,
proprietary model that applies various fundamental and technical factors, including based on current and historical data, to rank the anticipated value of several developed countries’ currencies relative to the U.S. dollar, subject to other
considerations (including other fundamental, technical, and macroeconomic factors) in the Investment Manager’s discretion that may affect these rankings. The Fund typically enters into long forward foreign currency contracts for currencies
that rank higher in the model, and it will experience profits (losses) to the extent the value of the currency appreciates (depreciates) relative to the U.S. dollar; and conversely, the Fund typically enters into short forward foreign currency
contracts for currencies that rank lower in the model, and it will experience profits (losses) to the extent the value of the currency depreciates (appreciates) relative to the U.S. dollar.
The Fund may invest directly in derivatives or
indirectly by investing in one or more offshore, wholly-owned subsidiaries (each, a Subsidiary, and, collectively, the Subsidiaries) that are subject to the same fundamental investment restrictions, compliance policies and procedures as the
Fund, but which are not expected to offer or sell their shares to investors other than the Fund.
Generally, Subsidiaries will
invest in commodity futures, financial futures, option and swap contracts, fixed income securities, pooled investment vehicles, including those that are not registered pursuant to the Investment Company Act of 1940, as amended (the 1940 Act), and
other investments intended to serve as margin or collateral for the Subsidiaries’ derivative positions.
Unlike the Fund (which is subject to limitations
under federal tax laws), Subsidiaries may invest without limitation in commodity-linked derivatives; however, the Fund, in combination with its Subsidiaries, will comply with the same 1940 Act asset coverage requirements with respect to the
Subsidiaries’ investments in commodity-linked derivatives that are applicable to the Fund’s direct transactions in derivatives.
The Fund expects to hold a significant amount of
cash, money market instruments (which may include investments in one or more affiliated or unaffiliated money market funds or similar vehicles) or other high-quality, short-term investments to cover obligations with respect to, or that may result
from, the Fund’s investments in forward foreign currency contracts, currency futures contracts, commodity-linked investments or other derivatives.
In managing the Fund, the portfolio managers
allocate portions of Fund assets to be managed by investment professionals in other investment manager’s teams.
Investment Process
Columbia Management Investment Advisers, LLC (the
Investment Manager) employs a variety of investment strategies, techniques and practices that, in the aggregate, are designed to seek positive long-term returns, while seeking to capitalize on market inefficiencies. The Investment Manager seeks to
identify investments that have the potential to exploit inefficiencies or mispricings within individual markets or across markets.
Columbia
Diversified Absolute Return Fund
More Information About the Fund
(continued)
The Investment Manager identifies asset classes and
related investment strategies for allocation of the Fund’s assets based on a number of qualitative and quantitative factors, including an assessment of their expected: relative return, risk, volatility and correlation with the performance of
other asset classes, strategies and major market indexes. On at least a monthly basis, the Fund’s investment allocations are reviewed and, as a result, may be rebalanced by the Investment Manager based on the foregoing factors. The Investment
Manager also considers prevailing market, economic, and other conditions and has the flexibility to adjust allocations, at any time, to align the portfolio with expected conditions.
Principal Risks
An investment in the Fund involves risk, including
those associated with the Fund’s investment in the Subsidiaries, as described below.
There is no assurance that the Fund will achieve its investment objective and you may lose money
. The value of the
Fund’s holdings may decline, and the Fund’s net asset value (NAV) and share price may go down. (References in this section to “the Fund” also include the Subsidiaries, which share the same risks as the Fund.)
Active Management Risk.
The Fund is actively managed and its performance therefore will reflect, in part, the ability of the portfolio managers to make investment decisions that will achieve the Fund’s investment objective. Due to its
active management, the Fund could underperform its benchmark index and/or other funds with similar investment objectives and/or strategies.
Allocation
Risk.
Because the Fund uses an asset allocation strategy in pursuit of its investment objective, there is a risk that the Fund's allocation among strategies and/or investment styles will cause the Fund's 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.
Commodity Futures Trading Commission (CFTC) Regulatory
Risk.
The Fund does not qualify for an exemption from registration as a “commodity pool” under rules of the Commodity Exchange Act (the CEA). Accordingly, the Fund is a commodity pool under the CEA and
the Investment Manager is registered as a “commodity pool operator” under the CEA. The Fund is subject to dual regulation by the SEC and the CFTC. Compliance with the CFTC’s regulatory requirements could increase Fund expenses,
adversely affecting the Fund’s total return.
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 underlying fund’s 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 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. The Fund may make commodity-related investments through one or more wholly-owned subsidiaries organized outside the U.S. that are generally not subject to U.S. laws (including securities laws) and
their protections. However, any such subsidiary is wholly owned and controlled by the Fund , making it unlikely that the subsidiary will take action contrary to the interests of the Fund and its shareholders. Further, any such subsidiaries will be
subject to the laws of a foreign jurisdiction, and can be adversely affected by developments in that jurisdiction.
Convertible Securities Risk.
Convertible securities are subject to the usual risks associated with debt securities, such as interest rate risk (the risk of losses attributable to changes in interest rates) and credit risk (the risk that the issuer
of a debt security 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 (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 stock's 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
Columbia Diversified Absolute Return
Fund
More Information
About the Fund
(continued)
common stock. In the event of a liquidation of the issuing company,
holders of convertible securities would typically be paid before the company's 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 Fund's 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 Fund’s share value to fluctuate.
Credit Risk.
The value of fixed-income securities may decline if the issuer of the security defaults or otherwise becomes unable or unwilling, or is perceived to be unable or unwilling, to honor its financial obligations, such as
making payments to the Fund when due. Various factors could affect the actual or perceived willingness or ability of the issuer to make timely interest or principal payments, including changes in the financial condition of the issuer or in general
economic conditions. Fixed-income securities backed by an issuer's taxing authority may be subject to legal limits on the issuer's power to increase taxes or otherwise to raise revenue, or may be dependent on legislative appropriation or government
aid. Certain fixed-income securities are backed only by revenues derived from a particular project or source, rather than by an issuer's taxing authority, and thus may have a greater risk of default. Rating agencies assign credit ratings to certain
fixed-income securities to indicate their credit risk. Lower quality or unrated securities held by the Fund may present increased credit risk as compared to higher-rated securities. Non-investment grade fixed-income securities (commonly called
“high-yield” or “junk”) are subject to greater price fluctuations and are more likely to experience a default than investment grade securities and therefore may expose the Fund to increased credit risk. If the Fund purchases
unrated fixed-income securities, or if the ratings of securities held by the Fund are lowered after purchase, the Fund will depend on analysis of credit risk more heavily than usual.
Derivatives Risk.
Derivatives are financial instruments whose value depends on, or is derived from, the value of other underlying assets. Losses involving derivative instruments may be substantial, because a relatively small movement in the price of an underlying
security, 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 for the Fund. Derivative
investments will typically increase the Fund’s exposure to principal risks to which it is otherwise exposed, and may expose the Fund to additional risks. Depending on the type and purpose of the Fund’s derivative investments, these risks
may include: correlation risk (there may be an imperfect correlation between the hedge and the opposite position, which is related to hedging risk), counterparty risk (the counterparty to the instrument may not perform or be able to perform in
accordance with the terms of the instrument), leverage risk (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 may offset gains), and/or 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 losses for the Fund.
Derivatives Risk/Commodity-Linked Futures Contracts
Risk.
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 Fund’s NAV. 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 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
Columbia
Diversified Absolute Return Fund
More Information About the Fund
(continued)
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 may offset gains), pricing risk (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 losses for the Fund.
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 issuer’s failure to make timely payments of interest or principal, bankruptcy or restructuring. A credit default swap may be embedded within a
structured 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, and may
offset gains), pricing risk (the risk that swaps may be difficult to value) and liquidity risk (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 losses for
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 these derivatives 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 country's or region’s currency at a specific price on a specific date in the future. These instruments may fall in value (sometimes dramatically)
due to foreign market downswings or foreign currency value fluctuations, subjecting the Fund to foreign currency risk (the risk that Fund performance may be negatively impacted by foreign currency strength or weakness relative to the U.S.
dollar, particularly if the Fund exposes a significant percentage of its assets in currencies other than the U.S. dollar). The effectiveness of any currency strategy by a Fund may be reduced by the Fund's 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.
Unanticipated changes in the currency markets could result in reduced performance for the Fund or losses. 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 will be unable to perform in accordance with the terms of the instrument). The
Fund’s strategy of investing in these instruments may not be successful and the Fund may experience significant losses as a result.
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 may offset gains) and interest rate risk (the risk of losses attributable to changes in
interest rates), each of which may result in significant losses for 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 offsetting transactions rather
Columbia Diversified Absolute Return
Fund
More Information
About the Fund
(continued)
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 the Fund may incur 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 Fund’s 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 for the Fund. Investments in these
instruments involve risks, including counterparty risk (the risk that the counterparty to the instrument may 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 may offset gains) and pricing risk (the risk that the instrument may be difficult to value), each of which may result in significant losses for the Fund.
Derivatives Risk/Interest Rate Swaps Risk.
Interest rate swaps can be based on various measures of interest rates, including the London Interbank Offered Rate (commonly known as LIBOR), swap rates, treasury rates and other foreign interest rates. A swap
agreement can increase or decrease the volatility of the Fund's investments and its NAV. 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 and correlation risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset, and may offset gains, including because of a lack of correlation between the swaps and the portfolio of bonds that
the swaps are designed to hedge or replace), pricing risk (swaps may be difficult to value), liquidity risk (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 losses for 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. 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 Fund's 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, and may offset gains), each of which may result in significant losses for 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 Fund 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 Fund’s 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, and may offset gains), pricing risk (swaps may be difficult to value) and liquidity risk (it may not be possible to liquidate a swap position at an advantageous time or price), each of which
may result in significant losses for the Fund.
Derivatives Risk/Portfolio Swaps and Total Return
Swaps Risk.
The use of portfolio swaps or 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 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)
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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 total return from a different underlying asset or non-asset reference. Portfolio swaps and equity 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 (swaps may be difficult to value) and liquidity
risk ( 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.
Emerging Market Securities Risk.
Securities issued by foreign governments or companies in emerging market countries, such as China,
Russia and certain countries in Eastern Europe, the Middle East,
Asia, Latin America or Africa, 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.
Exchange-Traded Fund (ETF) Risk.
An ETF’s share price may not track its specified market index (if any) and may trade below its NAV. Certain ETFs use a “passive” investment strategy and do not 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 indirectly subjects the Fund to active management risk. An active secondary market in ETF 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 that an ETF’s shares will continue to be listed on an active exchange. In
addition, shareholders bear both their proportionate share of the Fund’s expenses and similar expenses incurred through ownership of the ETF. There is a risk that ETFs in which the Fund invests may terminate due to extraordinary events. For
example, any of the service providers to ETFs, such as the trustee or sponsor, may close or otherwise fail to perform their obligations to the ETF, and the ETF may not be able to find a substitute service provider. Also, certain ETFs may be
dependent upon licenses to use various indexes as a basis for determining their compositions and/or otherwise to use certain trade names. If these licenses are terminated, the ETFs may also terminate. In addition, an ETF may terminate if its net
assets fall below a certain amount.
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 or long 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 Securities Risk.
Investments in or exposure to foreign securities involve certain risks not associated with investments in or exposure to securities of U.S. companies. For example, foreign markets can be extremely volatile. The
performance of the Fund may be negatively impacted by fluctuations in a foreign currency’s strength or weakness relative to the U.S. dollar. Foreign securities may also be less liquid than securities of U.S. companies 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 potentially confiscatory withholding or other taxes on the Fund’s income, capital gains or proceeds from the
disposition of foreign securities, which could reduce the Fund’s return 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
foreign companies; the impact of economic, political, social, diplomatic or other conditions or events; possible seizure, expropriation or nationalization of a company or its assets or
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the assets of a particular investor or category of investors;
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; the imposition of economic and other sanctions
against a particular foreign country, its nationals or industries or businesses within the country; and the generally 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 country’s 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.
Forward Commitments on
Mortgage-backed Securities (including Dollar Rolls) Risk.
When purchasing mortgage-backed securities in the “to be announced” (TBA) market (MBS TBAs), the seller agrees to deliver mortgage-backed
securities for an agreed upon price on an agreed upon date, but may make no guarantee as to the specific securities to be delivered. In lieu of taking delivery of mortgage-backed securities, the Fund could enter into dollar rolls, which 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 Fund’s 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). MBS TBAs and dollar rolls are subject to counterparty risk.
Frequent Trading Risk.
The portfolio managers may actively and frequently trade investments in the Fund's portfolio to carry out its investment strategies. Frequent trading of investments increases the possibility that the Fund, as relevant,
will realize taxable capital gains (including short-term capital gains, which are generally taxable to shareholders at higher rates than long-term capital gains for U.S. federal income tax purposes), which could reduce the Fund's after-tax return.
Frequent trading can also mean higher brokerage and other transaction costs, which could reduce the Fund's return. The trading costs and tax effects associated with portfolio turnover may adversely affect the Fund’s performance.
Hedging Transactions Risk.
The Fund may invest in securities and utilize financial instruments for a variety of hedging purposes. Hedging transactions may limit the opportunity for gain if the value of the portfolio position should increase.
There can be no assurance that the Fund will engage in hedging transactions at any given time, even under volatile market conditions, or that any hedging transactions the Fund engages in will be successful. Moreover, it may not be possible for the
Fund to enter into a hedging transaction at a price sufficient to protect its assets. The Fund may not anticipate a particular risk so as to hedge against it.
Hedging against a decline in the value of a
portfolio position does not eliminate fluctuations in the values of portfolio positions or prevent losses if the values of such positions decline, but establishes other positions designed to gain from those same developments, thus moderating the
decline in the portfolio positions’ value. Such hedging transactions also limit the opportunity for gain if the value of the portfolio position should increase. Moreover, it may not be possible for the Fund to hedge against an exchange rate,
interest rate or security price fluctuation that is so generally anticipated that the Fund is not able to enter into a hedging transaction at a price sufficient to protect its assets from the decline in value of the portfolio positions anticipated
as a result of such fluctuations.
The Fund is
not required to attempt to hedge portfolio positions and, for various reasons, may determine not to do so. Furthermore, the Fund may not anticipate a particular risk so as to hedge against it. While the Fund may enter into hedging transactions to
seek to reduce risk, such transactions may result in a poorer overall performance for the Fund than if the Fund had not engaged in any such hedging transaction. In addition, the degree of correlation between price movements of the instruments used
in a hedging strategy and price movements in the portfolio position being hedged may vary. For a variety of reasons, the Fund may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged.
Such imperfect correlation may prevent the Fund from achieving the intended hedge or expose the Fund to risk of loss. The successful utilization of hedging and risk management transactions requires skills complementary to those needed in the
selection of the Fund’s portfolio holdings. Moreover, it should be noted that a portfolio will always be exposed to certain risks that cannot be hedged, such as credit risk (relating both to particular securities and counterparties), liquidity
risk and widening risk.
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High-Yield Securities Risk.
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 experience greater price fluctuations in response 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 are generally more
likely to experience a default than higher-rated securities. High-yield securities are considered to be predominantly speculative with respect to the issuer’s 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. High-yield 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.
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 tend to fall, and if interest rates fall, the values of
debt securities 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 will usually affect the value of the Fund's shares. In general, the longer the maturity or duration
of a debt security, the greater its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Similarly, a period of rising interest rates may
negatively impact the Fund’s performance. Actions by governments and central banking authorities can result in increases in interest rates. Such actions may negatively affect the value of fixed-income securities held by the Fund, resulting in
a negative impact on the Fund's performance and NAV.
Investing in Other Funds Risk.
The Fund’s 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 the
underlying funds in direct proportion to the Fund’s investment therein. In addition, investments in ETFs have unique characteristics, including, but not limited to, the expense structure and additional expenses associated with investing in
ETFs. The performance of the underlying funds could be adversely affected if other investors 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 underlying funds 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 underlying funds. This risk may be particularly important when one investor owns a substantial portion of the underlying funds.
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. Also, to the extent that the Fund is constrained/restricted from investing (or investing further) in a particular underlying fund for one or more reasons (e.g.,
underlying fund capacity constraints or regulatory restrictions) or if the Fund chooses to sell its investment in an underlying fund because of poor investment performance or for other reasons, the Fund may have to invest in one or more other
underlying funds, including less desirable funds – from a strategy or investment performance standpoint – which could have a negative impact on Fund performance. In addition, Fund performance could be negatively impacted if one or more
appropriate alternate underlying funds are not identified or available for investment timely or at all.
Investing in Wholly-Owned Subsidiary Risk.
By investing in a Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. The Fund’s Principal Risks may also apply to a Subsidiary in which the Fund invests
(which are described in this prospectus). There can be no assurance that the investment objective of a Subsidiary will be achieved. No Subsidiary is registered under the 1940 Act and, except as otherwise noted in this prospectus, no Subsidiary is
subject to the investor protections of the 1940 Act. However, the Fund wholly owns and controls any Subsidiary in which it invests, and the Fund and any Subsidiary in which it invests are managed by Columbia Management, making it unlikely that a
Subsidiary will take action contrary to the interests of the Fund and its shareholders. The Fund’s Board has oversight responsibility for the investment activities of the Fund, including its investment in any Subsidiary, and the Fund’s
role as sole shareholder of the Subsidiary. In managing a Subsidiary’s investment portfolio, Columbia Management, or the Subsidiary’s subadviser (if any), will manage the Subsidiary’s portfolio in accordance with the Fund’s
investment policies and restrictions. Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and any Subsidiary in which it
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invests, respectively, are organized, could result in the inability
of the Fund and/or the Subsidiary to operate as described in this prospectus and the 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 any Subsidiary. If Cayman Islands law is changed and a Subsidiary is required to pay Cayman Island taxes, the investment returns of the Fund would likely decrease.
Issuer Risk.
An
issuer in which the Fund invests or to which it has exposure may perform poorly, and the value of its securities may therefore decline, which would negatively affect the Fund’s 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. Because short sales involve borrowing securities and then
selling them, the Fund’s short sales effectively leverage the Fund’s assets. The Fund's assets that are used as collateral to secure the Fund's 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 Fund's overall returns. Leverage presents the opportunity for increased net income and
capital gains, but may also exaggerate the Fund’s volatility and 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. Decreases in the number of financial institutions willing to make markets in the
Fund’s investments or in their capacity or willingness to transact may increase the Fund’s exposure to this risk. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may
also adversely affect the liquidity of the Fund's investments. The Fund may have to accept a lower selling price for the holding, 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. Price volatility may be higher for illiquid investments as a result of, for example, the relatively less frequent pricing of such securities (as compared to liquid
investments). Generally, the less liquid the market at the time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. Price volatility, liquidity of the market and other factors can lead to an increase
in Fund redemptions, which may negatively impact Fund performance and NAV, including, for example, if the Fund is forced to sell securities in a down market.
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 actual
or perceived factors affecting an issuer (e.g., an unfavorable earnings report), the industry or sector in which it operates, or the market as a whole, which may reduce the value of an investment in the Fund. Accordingly, an investment in the Fund
could lose money over short or long periods. The market values of the securities the Fund holds can be affected by changes or perceived changes in U.S. or foreign economies and financial markets, and the liquidity of these securities, among other
factors. Although equity securities generally tend to have greater price volatility than debt securities, under certain market conditions, debt securities may have comparable or greater price volatility. In addition, stock prices may be sensitive to
rising interest rates, as the cost of capital rises and borrowing costs increase.
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, along with the fees and expenses of any other funds in which the Fund may invest, are expected to equal or exceed 0.01% of the Fund’s 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 Fund’s investments in derivatives.
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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
market's 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. Other types of asset-backed securities typically represent interests in, or are backed by, pools of receivables such as credit, automobile, student and home equity loans.
Mortgage- and other asset-backed securities can have a fixed or an adjustable rate. Mortgage- and other asset-backed securities are subject to prepayment risk, which is the possibility that the underlying mortgage or other asset 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- and other
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 mortgage- and other asset-backed securities, making them more volatile and more sensitive to
changes in interest rates. 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.
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 (
i.e.
, the risk of losses attributable to changes in interest rates).
Prepayment and Extension Risk.
Prepayment risk is the risk that a loan, bond or other security or investment might be called or otherwise converted, prepaid or redeemed before maturity, and extension risk is the risk that the investment might not be
called as expected. In the case of prepayment risk, 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, in the case of extension risk, as interest rates rise or spreads widen, the likelihood of prepayment decreases and the maturity of the
investment may extend the life of the investment beyond the prepayment time. If the Fund's investments are locked in at a lower interest rate for a longer period of time, the portfolio managers may be unable to capitalize on securities with higher
interest rates or wider spreads.
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 manager’s
quantitative analyses or models, or in the data on which they are based, could adversely affect the portfolio manager’s effective use of such analyses or models, which in turn could adversely affect the Fund’s performance. It is not
possible or practicable for a manager to factor all relevant, available data into quantitative model forecasts and/or trading decisions. Quantitative managers will use their discretion to determine what data to gather with respect to an investment
strategy and what data the models will take into account to produce forecasts that may have an impact on ultimate trading decisions. Shareholders should be aware that there is no guarantee that a quantitative manager will use any specific data or
type of data in making trading decisions on behalf of the
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Fund, nor is there any guarantee that the data actually utilized in
generating forecasts or making trading decisions on behalf of the Fund will be the most accurate data available or free from errors. There can be no assurance that these methodologies will enable the Fund to achieve its objective.
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 or other asset) because the maximum sustainable loss on an instrument or
other asset purchased (held long) is limited to the amount paid for the instrument or other asset plus the transaction costs, whereas there is no maximum price of the shorted instrument or other asset when purchased in the open market. Therefore, in
theory, short positions have unlimited risk. The Fund’s 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 or other asset, this involves the risk of a potentially unlimited increase in the value of the underlying instrument or other
asset.
Sovereign Debt Risk.
A sovereign debtor’s 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 debtor’s 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 debtholders.
Sovereign debt risk is increased for emerging market issuers.
Tax Risk.
To qualify as a regulated investment company, the Fund must derive at least 90% of its gross income for each taxable year from sources treated as “qualifying income” under the Code. The Fund generally
intends to gain exposure to certain asset classes through investments that give rise to qualifying income, by investing directly in instruments that the Fund believes give rise to qualifying income, or indirectly through its investment in one or
more Subsidiaries, which, in turn, would invest in instruments providing exposure to such asset classes. The Fund intends to operate in such a manner that it will satisfy the 90% gross income requirement. In addition, the tax treatment of certain of
the Fund’s investments and of the income and gain therefrom under the qualifying income test is uncertain, and an adverse determination or future guidance by the IRS (which determination or guidance may be retroactive) may affect whether the
Fund has met the qualifying income test.
The Fund must also meet certain asset
diversification requirements in order to qualify as a regulated investment company, including that, at the end of each quarter of the Fund’s taxable year, not more than 25% of the value of its total assets be invested in any issuer, or two or
more issuers in which it owns a 20% voting stock interest (such as Subsidiaries) that are engaged in the same, similar or related trades or businesses (within the meaning of the diversification rules applicable to regulated investment
companies).
If the Fund were to fail to
appropriately limit its income from investments that do not give rise to qualifying income, the income or gain from certain of the Fund’s investments were to be recharacterized for purposes of the qualifying income test, or if the Fund were to
fail to appropriately limit its investment in Subsidiaries, it is possible that the Fund would be unable to qualify as a regulated investment company and thus be ineligible (including retroactively) for the favorable tax treatment afforded to it as
such for one or more years, which would adversely affect the value of the Fund.
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.
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Valuation Risk.
The
sales price the Fund (or an underlying fund or other investment vehicle) could receive for any particular investment may differ from the Fund’s (or an underlying fund’s or other investment vehicle’s) valuation of the investment,
particularly for securities that trade in thin or volatile markets or that are valued using a fair value methodology that produces an estimate of the fair value of the security/instrument, which may prove to be inaccurate. Investors who purchase or
redeem Fund shares on days when the Fund is holding securities or other instruments (or holding shares of underlying funds or other investment vehicles that have fair-valued securities or other instruments in their portfolios) may receive fewer or
more shares or lower or higher redemption proceeds than they would have received if the Fund (or underlying fund or other investment vehicle) had not fair-valued the security or instrument or had used a different valuation methodology. The value of
foreign securities, certain fixed income securities and currencies, as applicable, may be materially affected by events after the close of the market on which they are valued, but before the Fund determines its net asset value.
Additional Investment Strategies and Policies
This section describes certain investment strategies
and policies that the Fund may utilize in pursuit of its investment objective and some additional factors and risks involved with investing in the Fund.
Investment Guidelines
As a general matter, and except as
specifically described in the discussion of the Fund's principal investment strategies in this prospectus or as otherwise required by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief, whenever an investment
policy or limitation states a percentage of the Fund's assets that may be invested in any security or other asset or sets forth a policy regarding an investment standard, compliance with that percentage limitation or standard will be determined
solely at the time of the Fund's investment in the security or asset.
Holding Other Kinds of Investments
The Fund may hold investments that are not part of
its principal investment strategies. These investments and their risks are described below and/or in the SAI. The Fund may choose not to invest in certain securities described in this prospectus and in the SAI, although it has the ability to do so.
Information on the Fund’s holdings can be found in the Fund’s shareholder reports or by visiting columbiamanagement.com.
Transactions in Derivatives
The Fund may enter into derivative transactions or
otherwise have exposure to derivative transactions through underlying investments. Derivatives are financial contracts whose values are, for example, based on (or “derived” from) traditional securities (such as a stock or bond), assets
(such as a commodity like gold or a foreign currency), reference rates (such as the London Interbank Offered Rate (commonly known as LIBOR)) or market indices (such as the Standard & Poor's (S&P) 500
®
Index). The use of derivatives is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities
transactions. Derivatives involve special risks and may result in losses or may limit the Fund's potential gain from favorable market movements. Derivative strategies often involve leverage, which may exaggerate a loss, potentially causing the Fund
to lose more money than it would have lost had it invested in the underlying security or other asset directly. The values of derivatives may move in unexpected ways, especially in unusual market conditions, and may result in increased volatility in
the value of the derivative and/or the Fund’s shares, among other consequences. The use of derivatives may also increase the amount of taxes payable by shareholders holding shares in a taxable account. Other risks arise from the Fund's
potential inability to terminate or to sell derivative positions. A liquid secondary market may not always exist for the Fund's derivative positions at times when the Fund might wish to terminate or to sell such positions. Over-the-counter
instruments (investments not traded on an exchange) may be illiquid, and transactions in derivatives traded in the over-the-counter market are subject to the risk that the other party will not meet its obligations. The use of derivatives also
involves the risks of mispricing or improper valuation and that changes in the value of the derivative may not correlate perfectly with the underlying security, asset, reference rate or index. The Fund also may not be able to find a suitable
derivative transaction counterparty, and thus may be unable to engage in derivative transactions when it is deemed favorable to do so, or at all. U.S. federal legislation has been enacted that provides for new clearing, margin, reporting and
registration requirements for participants in the derivatives market. These changes could restrict and/or impose significant costs or other burdens upon the Fund’s participation in derivatives transactions. For more information on the risks of
derivative investments and strategies, see the SAI.
Columbia Diversified Absolute Return
Fund
More Information
About the Fund
(continued)
Investing in Affiliated Funds
The Investment Manager or an affiliate serves as
investment adviser to mutual funds using the Columbia brand (Columbia Funds), including those that are structured as “fund-of-funds”, and provides asset-allocation services to (i) shareholders by investing in shares of other Columbia
Funds, which may include the Fund (collectively referred to in this section as Underlying Funds), and (ii) discretionary managed accounts (collectively referred to as affiliated products) that invest exclusively in Underlying Funds. These
affiliated products, individually or collectively, may own a significant percentage of the outstanding shares of one or more Underlying Funds, and the Investment Manager seeks to balance potential conflicts of interest between the affiliated
products and the Underlying Funds in which they invest. The affiliated products’ investment in the Underlying Funds may have the effect of creating economies of scale, possibly resulting in lower expense ratios for the Underlying Funds,
because the affiliated products may own substantial portions of the shares of Underlying Funds. However, redemption of Underlying Fund shares by one or more affiliated products could cause the expense ratio of an Underlying Fund to increase, as its
fixed costs would be spread over a smaller asset base. Because of large positions of certain affiliated products, the Underlying Funds may experience relatively large inflows and outflows of cash due to affiliated products’ purchases and sales
of Underlying Fund shares. Although the Investment Manager or its affiliate may seek to minimize the impact of these transactions where possible, for example, by structuring them over a reasonable period of time or through other measures, Underlying
Funds may experience increased expenses as they buy and sell portfolio securities to manage the cash flow effect related to these transactions. Further, when the Investment Manager or its affiliate structures transactions over a reasonable period of
time in order to manage the potential impact of the buy and sell decisions for the affiliated products, those affiliated products, including funds-of-funds, may pay more or less (for purchase activity), or receive more or less (for redemption
activity), for shares of the Underlying Funds than if the transactions were executed in one transaction. In addition, substantial redemptions by affiliated products within a short period of time could require the Underlying Fund to liquidate
positions more rapidly than would otherwise be desirable, which may have the effect of reducing or eliminating potential gain or causing it to realize a loss. Substantial redemptions may also adversely affect the ability of the Underlying Fund to
implement its investment strategy. The Investment Manager or its affiliate also has an economic conflict of interest in determining the allocation of affiliated products’ assets among the Underlying Funds, as it earns different fees from the
various Underlying Funds.
Investing in Money Market
Funds
The Fund may invest cash in, or hold as
collateral for certain investments, shares of registered or unregistered money market funds, including funds advised by the Investment Manager or its affiliates. These funds are not insured or guaranteed by the Federal Deposit Insurance Corporation
(FDIC) or any other government agency. The Fund and its shareholders indirectly bear a portion of the expenses of any money market fund or other fund in which the Fund may invest.
Lending of Portfolio Securities
The Fund may lend portfolio securities to
broker-dealers or other financial intermediaries on a fully collateralized basis in order to earn additional income. The Fund may lose money from securities lending if, for example, it is delayed in or prevented from selling the collateral after the
loan is made or recovering the securities loaned or if it incurs losses on the reinvestment of cash collateral.
The Fund currently does not participate in the
securities lending program but the Board of Trustees (the Board) may determine to renew participation in the future. For more information on lending of portfolio securities and the risks involved, see the Fund’s SAI and its annual and
semiannual reports to shareholders.
Investing
Defensively
The Fund may from time to time
take temporary defensive investment positions that may be inconsistent with the Fund’s 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.
The Fund
may not achieve its investment objective while it is investing defensively. Investing defensively 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. See also
Investing in Money Market Funds
above for more information.
Columbia
Diversified Absolute Return Fund
More Information About the Fund
(continued)
Other Strategic and Investment Measures
The Fund may also from time to time take temporary
portfolio positions that may or may not be consistent with the Fund’s 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 exposures to a sector, country or region where the Investment
Manager believes such positioning is appropriate. The Fund may take such portfolio positions for as long a period as deemed necessary. While the Fund is so positioned, derivatives could comprise a substantial portion of the Fund’s 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. For information on the risks of investing in derivatives, see
Transactions in Derivatives
above.
Portfolio Holdings Disclosure
The Board has adopted policies and procedures that
govern the timing and circumstances of disclosure to shareholders and third parties of information regarding the securities owned by the Fund. A description of these policies and procedures is included in the SAI. Fund policy generally permits the
disclosure of portfolio holdings information on the Fund's website (columbiamanagement.com) only after a certain amount of time has passed, as described in the SAI.
Purchases and sales of portfolio securities can take
place at any time, so the portfolio holdings information available on the Fund's website may not always be current.
Portfolio Holdings Versus the
Benchmarks
The Fund does
not limit its investments to the securities within its benchmark(s), and it is anticipated that the Fund's holdings will diverge significantly from those of its benchmark(s). In addition, the Fund may invest in securities outside any industry and
geographic sectors represented in its benchmark(s). The Fund's weightings in individual securities, and in industry and geographic sectors, may also vary considerably from those of its benchmark(s). In addition, the value of the Fund’s
investments may be significantly more volatile than the value of the securities or assets comprising the Fund’s benchmark. The Fund may be exposed to greater risk of loss than a direct investment in the securities or
assets comprising the Fund’s benchmark.
Mailings to Households
In order to reduce shareholder expenses, the Fund
may, if prior consent has been provided, mail only one copy of the Fund’s prospectus and each annual and semiannual report to those addresses shared by two or more accounts. If you wish to receive separate copies of these documents, call
800.345.6611 or, if your shares are held through a financial intermediary, contact your intermediary directly.
Cash Flows
The timing and magnitude of cash inflows from
investors buying Fund shares could prevent the Fund from always being fully invested. Conversely, the timing and magnitude of cash outflows to shareholders redeeming Fund shares could require the Fund to sell portfolio securities at less than
opportune times or to hold ready reserves of uninvested cash in amounts larger than might otherwise be the case to meet shareholder redemptions. Either situation could adversely impact the Fund’s performance.
Understanding Annual Fund Operating Expenses
The Fund’s annual operating expenses,
presented in the
Annual Fund Operating Expenses
table in the
Fees and Expenses of the Fund
section of this prospectus, generally are based on estimated expenses for the
Fund’s current fiscal period and are expressed as a percentage (expense ratio) of the Fund’s average net assets. The expense ratios reflect current fee arrangements. In general, the Fund’s expense ratios will increase as its net
assets decrease, such that the Fund’s actual expense ratios may be higher than the expense ratios presented in the
Annual Fund Operating Expenses
table.
Columbia Diversified Absolute Return
Fund
More Information
About the Fund
(continued)
Other Expenses
“Other expenses”
consist of the fees the Fund pays to its administrator, custodian, transfer agent, auditors, lawyers and trustees, costs relating to compliance and miscellaneous expenses. Generally, these expenses are the same for each share class and are allocated
on a pro rata basis across all share classes. Transfer agent fees and certain shareholder servicing fees, however, are class specific. They differ by share class because the shareholder services provided to each share class may be different.
Accordingly, the differences in “other expenses” among share classes are primarily the result of the different transfer agent and shareholder servicing fees applicable to each share class. For more information on these fees, see
Choosing a Share Class — Selling Agent Compensation.
Expense Reimbursement Arrangements
The Investment Manager and certain
of its affiliates have contractually agreed to waive fees and/or reimburse expenses (excluding certain fees and expenses described below) through September 30, 2016, unless sooner terminated at the sole discretion of the Fund's Board, so that
the Fund’s net operating expenses, after giving effect to fees waived/expenses reimbursed and any balance credits and/or overdraft charges from the Fund’s custodian, do not exceed the annual rates of:
Columbia
Diversified Absolute Return Fund
|
Class
A
|
1.71%
|
Class
C
|
2.46%
|
Class
I
|
1.31%
|
Class
R4
|
1.46%
|
Class
R5
|
1.36%
|
Class
W
|
1.71%
|
Class
Z
|
1.46%
|
Under the agreement, the
following fees and expenses are excluded from the Fund’s operating expenses when calculating the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes), transaction
costs and brokerage commissions, costs related to any securities lending program, dividend expenses associated with securities sold short, inverse floater program fees and expenses, transaction charges and interest on borrowed money, interest,
extraordinary expenses and any other expenses the exclusion of which is specifically approved by the Board. This agreement may be modified or amended only with approval from all parties.
Obtaining Recent Net Asset Value Per Share
The price you pay or receive when you buy, sell or
exchange shares is the Fund's next determined net asset value (or NAV) per share for a given share class. The Fund calculates the NAV per share for each class of shares of the Fund at the end of each business day. For additional information on how
the Fund calculates its NAV, see
Buying, Selling and Exchanging Shares
—
Share Price Determination
below.
You may obtain the current NAV of Fund shares at no
cost by calling 800.345.6611 or by sending an e-mail to serviceinquiries@columbiamanagement.com.
Primary Service Providers
The Investment Manager, which also serves as the
Fund’s administrator (the Administrator), the Distributor and the Transfer Agent are all affiliates of Ameriprise Financial, Inc. (Ameriprise Financial). They and their affiliates currently provide key services, including investment advisory,
administration, distribution, shareholder servicing and transfer agency services, to the Fund and various other funds, including the Columbia Funds, and are paid for providing these services. These service relationships are described below.
Columbia
Diversified Absolute Return Fund
More Information About the Fund
(continued)
The Investment Manager
Columbia Management Investment Advisers, LLC is
located at 225 Franklin Street, Boston, MA 02110 and serves as investment adviser to the Columbia Funds. The Investment Manager is a registered investment adviser and a wholly-owned subsidiary of Ameriprise Financial. The Investment Manager’s
management experience covers all major asset classes, including equity securities, fixed-income securities and money market instruments. In addition to serving as an investment adviser to traditional mutual funds, exchange-traded funds and
closed-end funds, the Investment Manager acts as an investment adviser for itself, its affiliates, individuals, corporations, retirement plans, private investment companies and financial intermediaries.
Subject to oversight by the Board, the Investment
Manager manages the day-to-day operations of the Fund, determining what securities and other investments the Fund should buy or sell and executing portfolio transactions. The Investment Manager may use the research and other capabilities of its
affiliates and third parties in managing the Fund’s investments.
The SEC has issued an order that permits the
Investment Manager, subject to the approval of the Board, to appoint an unaffiliated subadviser or to change the terms of a subadvisory agreement for the Fund without first obtaining shareholder approval. The order permits the Fund to add or to
change unaffiliated subadvisers or to change the fees paid to subadvisers from time to time without the expense and delays associated with obtaining shareholder approval of the change. The Investment Manager and its affiliates may have other
relationships, including significant financial relationships, with current or potential subadvisers or their affiliates, which may create certain conflicts of interest. When making recommendations to the Board to appoint or to change a subadviser,
or to change the terms of a subadvisory agreement, the Investment Manager does not consider any other relationship it or its affiliates may have with a subadviser, and the Investment Manager discloses to the Board the nature of any material
relationships it has with a subadviser or its affiliates. At present, the Investment Manager has not engaged any investment subadviser for the Fund.
With respect to the Fund, the
Fund’s Board has approved a subadvisory agreement between the Investment Manager and Threadneedle International Limited (Threadneedle), an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Ameriprise Financial. At
present, Threadneedle is not providing services to the Fund pursuant to the subadvisory agreement. A discussion regarding the basis for the Board approving the adoption of the subadvisory agreement with Threadneedle will be available in the
Fund’s annual report to shareholders for the fiscal period ended May 31, 2015.
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 Financial 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 Fund’s prospectus and SAI, may provide such services to the Fund on behalf of the Investment Manager.
The Fund pays the Investment
Manager a fee for its investment advisory services. The fee is calculated as a percentage of the average daily net assets of the Fund, including assets invested in affiliated pooled investment vehicles (including mutual funds and exchange-traded
funds); however, with respect to Fund assets invested in the affiliated underlying funds, the Investment Manager will waive the net management fees (investment advisory and administrative services fees, less reimbursements/waivers) of the affiliated
underlying funds.
Columbia Diversified Absolute Return
Fund
More Information
About the Fund
(continued)
The fee is paid monthly using the
following fee rate schedule:
Annual
Advisory Fee, as a % of Average Daily Net Assets:
|
Up
to $500 million
|
1.100%
|
$500
million to $1 billion
|
1.055%
|
$1
billion to $3 billion
|
1.030%
|
$3
billion to $6 billion
|
1.010%
|
$6
billion and over
|
0.980%
|
A discussion regarding
the basis for the Board approving the adoption of the investment management services agreement will be available in the Fund’s annual report to shareholders for the fiscal period ended May 31, 2015.
Portfolio Managers
Information about the portfolio managers primarily
responsible for overseeing the Fund’s and the Subsidiary's investments is shown below. The SAI provides additional information about the portfolio managers, including information relating to compensation, other accounts managed by the
portfolio managers and ownership by the portfolio managers of Fund shares.
Portfolio
Manager
|
|
Title
|
|
Role
with Fund
|
|
Managed
Fund Since
|
Jeffrey
Knight, CFA
|
|
Senior
Portfolio Manager, Managing Director, Global Head of Investment Solutions and Co-Head of Global Asset Allocation
|
|
Lead
manager
|
|
February
2015
|
William
Landes, Ph.D.
|
|
Senior
Vice President and Deputy Head of Global Investment Solutions
|
|
Co-manager
|
|
February
2015
|
Kent
Peterson, Ph.D.
|
|
Senior
Portfolio Manager
|
|
Co-manager
|
|
February
2015
|
Brian
Virginia
|
|
Portfolio
Manager and Vice President, Alternative and Absolute Return Investments
|
|
Co-manager
|
|
February
2015
|
Mr. Knight
joined the Investment Manager in February 2013 as Head of Global Asset Allocation. Prior to joining the Investment Manager, Mr. Knight was at Putnam Investments from 1993 to 2013, most recently as head of global asset allocation.
Mr. Knight began his investment career in 1987 and earned a B.A. from Colgate University and an M.B.A. from Tuck School of Business.
Dr. Landes
joined the Investment Manager in June 2014 as Deputy Head of Global Investment Solutions. Prior to joining the Investment Manager, Dr. Landes was chief investment
officer of
the multi-asset business for Gottex Fund
Management from 2008 to 2014. Dr. Landes began his investment career in 1985 and earned a B.S. from the University of Findlay and a Ph.D. from the University of
Cincinnati.
Mr. Peterson
joined the Investment Manager in May 2010 when it acquired the long-term asset management business of Columbia Management Group, where he worked as an investment professional since 2006. Mr. Peterson began his
investment career in 1999 and earned a B.A. from Cornell University and a Ph.D. from Princeton University.
Mr. Virginia
joined
the Investment Manager in 2010. Prior to joining the Investment Manager, Mr. Virginia was Vice President of Investor Services and Accounting at Citadel’s Omnium Administration. Mr. Virginia began his investment career in 1996 and earned a B.S.
from Kansas State University.
In managing the Fund, the portfolio managers
allocate portions of Fund assets to be managed by investment professionals in other investment manager’s teams.
The Administrator
Columbia Management Investment Advisers, LLC is
responsible for overseeing the administrative operations of the Fund, including the general supervision of the Fund’s operations, the coordination of the Fund’s service providers and the provision of related clerical and administrative
services. The Fund pays the Administrator a fee (plus certain out-of-pocket expenses) for the administrative services it provides to the Fund.
Columbia
Diversified Absolute Return Fund
More Information About the Fund
(continued)
The Distributor
Shares of the Fund are distributed by Columbia
Management Investment Distributors, Inc., which is located at 225 Franklin Street, Boston, MA 02110. The Distributor is a registered broker-dealer and an indirect, wholly-owned subsidiary of Ameriprise Financial. The Distributor and its affiliates
may pay commissions, distribution and service fees and/or other compensation to entities, including Ameriprise Financial affiliates, for selling shares and providing services to investors.
The Transfer Agent
Columbia Management Investment Services Corp. is a
registered transfer agent and wholly-owned subsidiary of Ameriprise Financial. The Transfer Agent is located at 225 Franklin Street, Boston, MA 02110, and its responsibilities include processing purchases, redemptions and exchanges of Fund shares,
calculating and paying distributions, maintaining shareholder records, preparing account statements and providing customer service. The Transfer Agent has engaged DST Systems, Inc., including its affiliate, Boston Financial Data Services, to provide
various shareholder services. In addition, the Transfer Agent enters into agreements with various financial intermediaries through which you may hold Fund shares, pursuant to which the Transfer Agent pays these financial intermediaries for providing
certain shareholder services. The Fund generally pays the Transfer Agent a per account fee, pays a fee based on the assets invested through omnibus accounts and reimburses the Transfer Agent for certain out-of-pocket expenses.
Other Roles and Relationships of Ameriprise Financial and its
Affiliates — Certain Conflicts of Interest
The Investment Manager, Distributor and Transfer
Agent, all affiliates of Ameriprise Financial, provide various services to the Fund and other Columbia Funds for which they are compensated. Ameriprise Financial and its other affiliates may also provide other services to these funds and be
compensated for them.
The Investment Manager
and its affiliates may provide investment advisory and other services to other clients and customers substantially similar to those provided to the Columbia Funds. These activities, and other financial services activities of Ameriprise Financial and
its affiliates, may present actual and potential conflicts of interest and introduce certain investment constraints.
Ameriprise Financial is a major financial services
company, engaged in a broad range of financial activities beyond the mutual fund-related activities of the Investment Manager, including, among others, insurance, broker-dealer (sales and trading), asset management, banking and other financial
activities. These additional activities may involve multiple advisory, financial, insurance and other interests in securities and other instruments, and in companies that issue securities and other instruments, that may be bought, sold or held by
the Columbia Funds.
Conflicts of interest and
limitations that could affect a Columbia Fund may arise from, for example, the following:
■
|
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.
|
The Investment Manager and Ameriprise Financial have
adopted various policies and procedures that are intended to identify, monitor and address conflicts of interest. However, there is no assurance that these policies, procedures and disclosures will be effective.
Columbia Diversified Absolute Return
Fund
More Information
About the Fund
(continued)
Additional information about Ameriprise Financial
and the types of conflicts of interest and other matters referenced above are set forth in the
Investment Management and Other Services — Other Roles and Relationships of Ameriprise Financial and its Affiliates
— Certain Conflicts of Interest
section of the SAI. Investors in the Columbia Funds should carefully review these disclosures and consult with their financial advisor if they have any questions.
Certain Legal Matters
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 Fund is 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 Fund or the ability of Ameriprise Financial or its affiliates to perform under their contracts with the Fund. Information regarding certain pending and settled legal proceedings may be found in the Fund’s
shareholder reports and in the SAI. Additionally, Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary, 8-K filings with the SEC 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 sec.gov.
About the Fund’s Wholly-Owned
Subsidiary
The Fund may invest in one or more
wholly-owned subsidiaries (for purposes of this section, referred to collectively as the Subsidiary). The Subsidiary is an exempted company organized under the laws of the Cayman Islands. The Fund will invest in the Subsidiary in order to gain
exposure to certain asset classes within the diversification and other limitations of Subchapter M of the U.S. Internal Revenue Code of 1986, as amended, applicable to “regulated investment companies.” The Fund must invest no more
than 25% of its total assets in the Subsidiary as of the end of each quarter of its taxable year.
The Subsidiary is overseen by its own board of
directors. However, the Fund’s Board oversees investment activities of the Subsidiary generally as if the Subsidiary’s investments were held directly by the Fund. The Investment Manager is responsible for the Subsidiary’s
day-to-day business pursuant to a separate investment management services agreement between the Subsidiary and the Investment Manager. Under this agreement, the Investment Manager provides the Subsidiary with the same type of management services,
under the same terms, as are provided to the Fund. The Subsidiary has entered into separate contracts for the provision of administrative and custody services with the same service providers who provide these services to the Fund. The Subsidiary
will bear the fees and expenses incurred in connection with the advisory, administrative and custody services that it receives. The Fund expects that the expenses borne by the Subsidiary will not be material in relation to the value of the
Fund’s assets.
In managing the
Subsidiary’s investment portfolio, and in adhering to the Fund’s compliance policies and procedures, the Investment Manager will treat the assets of the Subsidiary generally as if the assets were held directly by the Fund. The Investment
Manager will also treat the assets of the Subsidiary generally as if the assets were held directly by the Fund with respect to its adherence to the Fund’s investment policies and restrictions.
Please refer to the SAI for additional information
about the organization and management of the Subsidiary.
Columbia
Diversified Absolute Return Fund
The Funds
The Columbia Funds (referred to as the Funds)
generally share the same policies and procedures for investor services, as described below. Each Fund is a series of Columbia Funds Series Trust (CFST), Columbia Funds Series Trust I (CFST I) or Columbia Funds Series Trust II (CFST II), and certain
features of distribution and/or service plans may differ among these trusts. The Fund offered by this prospectus is a series of CFST I.
Funds Contact Information
Additional information about the Funds can be
obtained at columbiamanagement.com,* by calling toll-free 800.345.6611, or by writing (regular mail) to Columbia Management Investment Services Corp., P.O. Box 8081, Boston, MA 02266-8081 or (express mail) Columbia Management Investment Services
Corp., c/o Boston Financial, 30 Dan Road, Suite 8081, Canton, MA 02021-2809.
*
|
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.
|
Selling and/or Servicing Agents
The terms “selling
agent” and “servicing agent” (collectively, selling agents) refer to the financial intermediaries that are authorized to sell shares of the Funds. Selling agents 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 advisers, third party administrators and other financial intermediaries, including Ameriprise Financial and its affiliates.
Omnibus Accounts
The term “omnibus
account” refers to a selling agent’s account with the Fund (through the Transfer Agent) that represents the combined holdings of, and transactions in, Fund shares of one or more clients of the selling agent (beneficial shareholders).
Omnibus accounts are held in the name of the selling agents and not in the name of the beneficial shareholders invested in the Fund through omnibus accounts.
Retirement Plans and Omnibus Retirement
Plans
The term
“retirement plan” refers to retirement plans created under sections 401(a), 401(k), 457 and 403(b) of the Internal Revenue Code of 1986, as amended (the Code), non-qualified deferred compensation plans governed by section 409A of the
Code and similar plans, but does not refer to individual retirement plans. The term “omnibus retirement plan” refers to a retirement plan that has a plan-level or omnibus account with the Transfer Agent.
Summary of Share Class Features
Each share class has its own investment eligibility
criteria, cost structure and other features. You may not be eligible for every share class. If you purchase shares of a Fund through a retirement plan or other product or program offered by your selling agent, not all share classes of the Fund may
be made available to you. When deciding which class of shares to buy, you should consider, among other things:
■
|
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.
|
Each investor's personal situation is different and
you may wish to discuss with your selling agent which share classes are available to you and which share class is appropriate for you.
Columbia Diversified Absolute Return
Fund
Choosing a Share
Class
(continued)
The following summarizes the primary features of
Class A, Class B, Class C, Class I, Class K, Class R, Class R4, Class R5, Class T, Class W, Class Y and Class Z shares.
Not all Funds offer every class of shares. The Fund
offers the class(es) of shares set forth on the cover of this prospectus and may offer other share classes through a separate prospectus. Although certain share classes are generally closed to new or existing investors, information relating to these
share classes is included in the table below because certain qualifying purchase orders are permitted, as described below.
Share Class Features
Share
Class
|
Eligible
Investors
(a)
;
Minimum Initial Investments
(b)
;
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
Minimum Initial Investment:
$2,000 for most
investors
|
5.75%
maximum, declining to 0.00% on investments of $1 million or more
None for Columbia Money Market Fund and certain other Funds
(e)
|
CDSC
on certain investments of between $1 million and $50 million redeemed within 18 months after purchase charged as follows:
• 1.00% CDSC if redeemed within 12 months after purchase
and
• 0.50% CDSC if redeemed more than 12, but less than 18, months after purchase
(e)
|
Distribution
and Service
Fees:
up to 0.25%
|
Class
B
|
Eligibility:
Closed to new investors
(f)
Conversion Features:
Converts to Class A shares
generally eight years after purchase
(g)
|
None
|
5.00%
maximum, gradually declining to 0.00% after six years
(g)
|
Distribution
Fee:
0.75%
Service Fee:
0.25%
|
Class
C
|
Eligibility:
Available to the general public for investment
Minimum Initial Investment:
$2,000 for most investors
Purchase Order Limit:
$999,999
(h)
; none for omnibus retirement plans
|
None
|
1.00%
on certain investments redeemed within one year of purchase
|
Distribution
Fee:
0.75%
Service Fee:
0.25%
|
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%
|
Columbia
Diversified Absolute Return Fund
Choosing a Share Class
(continued)
Share
Class
|
Eligible
Investors
(a)
;
Minimum Initial Investments
(b)
;
and Conversion Features
|
Front-End
Sales Charges
(c)
|
Contingent
Deferred
Sales Charges
(CDSCs)
(c)
|
Maximum
Distribution
and/or Service Fees
(d)
|
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%
Series of CFST II:
distribution and service fee of 0.50%, of which the service fee may
be up to 0.25%
|
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)
Minimum Initial Investment:
None for omnibus retirement plans; $100,000 for combined underlying
accounts of eligible registered investment advisers
|
None
|
None
|
None
|
Columbia Diversified Absolute Return
Fund
Choosing a Share
Class
(continued)
Share
Class
|
Eligible
Investors
(a)
;
Minimum Initial Investments
(b)
;
and Conversion Features
|
Front-End
Sales Charges
(c)
|
Contingent
Deferred
Sales Charges
(CDSCs)
(c)
|
Maximum
Distribution
and/or Service Fees
(d)
|
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 after purchase, charged as follows:
• 1.00% CDSC if redeemed within 12 months after purchase
and
• 0.50% CDSC if redeemed more than 12, but less than 18, months after purchase
|
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
Minimum Initial Investment:
$500
|
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)
Minimum Initial Investment:
See
Eligibility
above
|
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.
|
Columbia
Diversified Absolute Return Fund
Choosing a Share Class
(continued)
(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 AMT-Free Intermediate Muni Bond Fund, Columbia High Yield Municipal 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:
|
•
Class B Shares
. The Funds no longer accept investments from new or existing investors in Class B shares, except through reinvestment of dividend and/or capital gain distributions by existing Class B
shareholders, or a permitted exchange.
•
Class K Shares
. Shareholders who opened and funded a Class K account with a Fund as of the close of business on December 31, 2010 may continue to make additional purchases of such share class, and existing
Class K accounts may continue to allow new investors or participants to be established in their Fund account.
•
Class R5 Shares
. Shareholders with Class R5 accounts funded before November 8, 2012 who do not satisfy the current eligibility criteria for Class R5 shares may not establish new Class R5 accounts but may
continue to make additional purchases of Class R5 shares in existing accounts. In addition, investment advisory programs and similar programs that opened a Class R5 account as of May 1, 2010 and continuously hold Class R5 shares in such account
after such date, may generally not only continue to make additional purchases of Class R5 shares but also open new Class R5 accounts for such pre-existing programs and add new shareholders in the program.
•
Class T Shares.
Shareholders
with Class T accounts who received, and have continuously held, Class T shares in connection with the merger of certain Galaxy funds into
certain Funds that were then named Liberty funds may continue to make additional purchases of such share class.
•
Class Y Shares
. Shareholders with Class Y accounts funded before November 8, 2012 who do not satisfy the current eligibility criteria for Class Y shares may not establish new accounts for such share class but
may continue to make additional purchases of Class Y shares in existing accounts.
•
Class Z Shares
. Effective March 29, 2013, selling agents that clear Fund share transactions 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 omnibus retirement plans are no longer permitted to establish new Class Z accounts, subject to certain exceptions. Omnibus retirement plans that
opened and, subject to exceptions, funded a Class Z account as of close of business on March 28, 2013 and continuously hold Class Z shares in such account after such date, may generally continue to make additional purchases of Class Z shares, open
new Class Z accounts and add new participants. In certain circumstances and in the sole discretion of the Distributor, omnibus retirement plans affiliated with a grandfathered plan may also open new Class Z accounts. Accounts of selling agents
(other than omnibus retirement plans) that clear Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms are not permitted to establish new Class Z accounts or make
additional purchases of Class Z shares (other than through reinvestment of distributions).
(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.
|
(h)
|
If you are eligible to invest
in Class A shares without a front-end sales charge you should discuss your options with your Selling Agent. For more information, see
Choosing a Share Class – Reductions/Waivers of Sales Charges.
|
Sales Charges and
Commissions
Sales charges, commissions and
distribution and service fees (discussed in a separate sub-section below) compensate selling agents (typically your financial advisor) for selling shares to you and for maintaining and servicing the shares held in your account with them. These
charges, commissions and fees are intended to provide incentives for selling agents to provide such services. Depending on which share class you choose you will pay these charges either at the outset as a front-end sales charge, at the time you sell
your shares as a CDSC
and/or over time in the form of increased ongoing fees.
Whether the ultimate cost is
higher for one class over another depends on the amount you invest, how long you hold your shares and whether you are eligible for reduced or waived sales charges. The differential between classes also will vary depending on the actual investment
return for any given investment period. You are responsible for choosing the share class most appropriate for you after taking into account your share class eligibility and the value of accounts that you are eligible to include for the right
Columbia Diversified Absolute Return
Fund
Choosing a Share
Class
(continued)
of accumulation, which may reduce or eliminate otherwise applicable
sales charges. See
Choosing as Share Class
– Reductions/Waivers of Sales Charges
. We encourage you to consult with a financial advisor who can help you with your
investment decisions.
Class A Shares — Front-End
Sales Charge
You'll pay a front-end sales
charge when you buy Class A shares (other than shares of Columbia Money Market Fund and certain other Funds), resulting in a smaller dollar amount being invested in a Fund than the purchase price you pay, unless you qualify for a waiver of the
sales charge or you buy the shares through reinvested distributions. For more information, see
Choosing a Share Class — Reductions/Waivers of Sales Charges.
The Distributor receives the sales charge and
re-allows (or pays) a portion of the sales charge to the selling agent through which you purchased the shares. The Distributor retains the balance of the sales charge. The Distributor retains the full sales charge you pay when you purchase shares of
the Fund directly from the Fund (through the Transfer Agent, rather than through a selling agent). Sales charges vary depending on the amount of your purchase.
Front-End Sales Charge Calculation
The table below presents the
front-end sales charge as a percentage of both the offering price and the net amount invested.
■
|
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.
|
The dollar amount of the sales
charge is the difference between the offering price of the shares you buy (based on the applicable sales charge for the Fund) and the NAV of those shares. To determine the front-end sales charge you will pay when you buy your shares, the Fund will
add the amount of your investment to the value of your account (and any other accounts eligible for aggregation of which you or your selling agent notifies the Fund) and base the sales charge on the aggregate amount. See
Choosing a Share Class — Reductions/Waivers of Sales Charges
for a discussion of account value aggregation. There is no initial sales charge on reinvested dividend or capital gain distributions.
The front-end sales charge you'll pay on Class A
shares:
■
|
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).
|
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
|
Equity
Funds,
Columbia Absolute Return Emerging Markets Macro Fund,
Columbia Absolute Return Enhanced Multi-Strategy Fund,
Columbia Adaptive Alternatives Fund,
Columbia Adaptive Risk Allocation Fund,
Columbia Commodity Strategy
Fund,
Columbia Diversified Absolute Return Fund
and Funds-of-Funds (equity)*
|
$
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%
|
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
Diversified Absolute Return Fund
Choosing a Share Class
(continued)
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
AMT-Free Intermediate Muni Bond Fund, each of the AMT-Free State-Specific Intermediate Muni Bond Funds and Columbia Intermediate Bond Fund
|
$
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 Class A shares of a Fund in amounts not subject to initial sales charges, see
Class A Shares — Commissions
below.
|
Columbia Diversified Absolute Return
Fund
Choosing a Share
Class
(continued)
Class A Shares — CDSC
In some cases, you'll pay a CDSC if you sell Class A
shares that you purchased without an initial sales charge.
■
|
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 after purchase, which is charged as
follows: 1.00% CDSC if shares are redeemed within 12 months after 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 18 months after purchase as described in this paragraph.
|
Contingent Deferred Sales Charge
A contingent deferred sales
charge or CDSC is a sales charge applied at the time you sell your shares, unlike a front-end sales charge that is applied at the time of purchase. A CDSC varies based on the length of time that you have held your shares. A CDSC is applied to the
NAV at the time of your purchase or sale, whichever is lower, and will not be applied to any shares you receive through reinvested distributions or any amount that represents appreciation in the value of your 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.
When you place an order to sell
shares of a class that has a CDSC, the Fund will first redeem any shares that aren't subject to a CDSC, followed by those you have held the longest. This means that if a CDSC is imposed, you cannot designate the individual shares being redeemed for
U.S. federal income tax purposes. You should consult your tax advisor about the tax consequences of investing in the Fund. In certain circumstances, the CDSC may not apply. See
Choosing a Share Class —
Reductions/Waivers of Sales Charges
for details.
Class A Shares — Commissions
The Distributor may pay your selling agent an
up-front commission when you buy Class A shares. The Distributor generally funds the commission through the applicable sales charge paid by you. For more information, see
Class A Shares — Front-End Sales Charge
— Breakpoint Schedule.
The Distributor may also pay your
selling agent a cumulative commission when you buy Class A shares in amounts not subject to initial sales charges, according to the following schedule:
Class
A 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%
|
*
|
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.
|
Class B Shares — Sales Charges
The Funds no longer accept new investments in Class
B shares, except for certain limited transactions as described in more detail under
Buying, Selling and Exchanging Shares — Buying Shares — Eligible Investors — Class B Shares (Closed).
You don't pay a front-end sales charge when you buy
Class B shares, but you may pay a CDSC when you sell Class B shares.
Columbia
Diversified Absolute Return Fund
Choosing a Share Class
(continued)
Class B Shares — CDSC
You'll pay a CDSC if you sell Class B shares unless
you qualify for a waiver of the CDSC or the shares you're selling were bought through reinvested distributions. See
Choosing a Share Class — Reductions/Waivers of Sales Charges
for details. The CDSC you
pay on Class B shares depends on how long you've held your shares and generally declines each year until there is no sales charge, as follows:
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 AMT-Free Intermediate Muni Bond Fund, the AMT-Free State-specific Intermediate Muni Bond Funds, Columbia Intermediate Bond Fund and Columbia Short Term Bond Fund
|
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.
|
Class B shares of Columbia Short Term Municipal Bond
Fund are not subject to a CDSC.
Class B Shares —
Commissions
The Distributor paid an up-front
commission directly to your selling agent when you bought the Class B shares (a portion of this commission may have been paid to your financial advisor).
This up-front commission, which varies across the
Funds, was up to 4.00% of the net asset value per share of Funds with a maximum CDSC of 5.00% and of Class B shares of Columbia Short Term Municipal Bond Fund and up to 2.75% of the net asset value per share of Funds with a maximum CDSC of 3.00%.
The Distributor continues to seek to recover this commission through distribution fees it receives under the Fund's distribution plan and any applicable CDSC paid when you sell your shares. For more information, see
Choosing a Share Class — Distribution and Service Fees.
Columbia Diversified Absolute Return
Fund
Choosing a Share
Class
(continued)
Class B Shares — Conversion to Class A Shares
Class B shares of the Funds automatically convert to
Class A shares at different times depending upon the Fund. In general, Class B shares convert to Class A shares after eight years. For details and related information about how the Funds' Class B shares convert to Class A shares, see Appendix S to
the SAI. Class B shares of Columbia Short Term Municipal Bond Fund do not convert to Class A shares.
Class C Shares — Front-End Sales Charge
You don't pay a front-end sales
charge when you buy Class C shares. Although Class C shares do not have a front-end sales charge, over time Class C shares can incur distribution and/or service fees that are equal to or more than the front-end sales charge and distribution and/or
service fees you would pay for Class A shares. Thus, although the full amount of your purchase of Class C shares is invested in a Fund, any positive investment return on this money may be partially or fully offset by the expected higher annual
expenses of Class C shares. If you are eligible to invest in Class A shares without a front-end sales charge you should discuss your options with your Selling Agent. For more information, see
Choosing a Share
Class
– Reductions/Waivers of Sales Charges.
Class C Shares — CDSC
You'll pay a CDSC of 1.00% if you redeem Class C
shares within 12 months of buying them unless you qualify for a waiver of the CDSC or the shares you're selling were purchased through reinvested distributions. For more information, see
Choosing a Share Class
— Reductions/Waivers of Sales Charges
. Redemptions of Class C shares are not subject to a CDSC if redeemed after 12 months.
Class C Shares — Commissions
Although there is no front-end sales charge when you
buy Class C shares, the Distributor pays an up-front commission directly to your selling agent of up to 1.00% of the NAV per share when you buy Class C shares (a portion of this commission may be paid to your financial advisor). The Distributor
seeks to recover this commission through distribution fees it receives under the Fund's distribution and/or service plan and any applicable CDSC applied when you sell your shares. For more information, see
Choosing a
Share Class — Distribution and Service Fees.
Class R Shares — Sales Charges and Commissions
You don't pay a front-end sales charge when you buy
Class R shares or a CDSC when you sell Class R shares. The Distributor pays an up-front commission directly to your selling agent when you buy Class R shares (a portion of this commission may be paid to your financial advisor), according to the
following schedule:
Class
R Shares — Commission Schedule (Paid by the Distributor to Selling Agents)
|
Purchase
Amount
|
Commission
Level
(as a % of net asset
value per share)
|
$0
– $49,999,999
|
0.50%
|
$50
million or more
|
0.25%
|
The Distributor seeks to
recover this commission through distribution fees it receives under the Fund's distribution plan. For more information, see
Choosing a Share Class — Distribution and Service Fees.
Class T Shares — Front-End Sales Charge
You'll pay a front-end sales charge when you buy
Class T shares, resulting in a smaller dollar amount being invested in a Fund than the purchase price you pay, unless you qualify for a waiver of the sales charge or you buy the shares through reinvested distributions. For more information, see
Choosing a Share Class — Reductions/Waivers of Sales Charges.
The front-end sales charge you'll pay on Class T
shares:
■
|
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).
|
Columbia
Diversified Absolute Return Fund
Choosing a Share Class
(continued)
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.
|
Class T Shares — CDSC
In some cases, you'll pay a CDSC if you sell Class T
shares that you bought without an initial sales charge.
■
|
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 after purchase, which is charged as
follows: 1.00% CDSC if shares are redeemed within 12 months after 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 — Commissions
The Distributor may pay your selling agent an
up-front commission when you buy Class T shares (a portion of this commission may, in turn, be paid to your financial advisor). For more information, see
Class T Shares — Front-End Sales Charge —
Breakpoint Schedule, Amount retained by or paid to selling agents as a % of the offering price.
The Distributor may also pay your selling agent a
cumulative commission when you buy $1 million or more of Class T shares, according to the following schedule:
Columbia Diversified Absolute Return
Fund
Choosing a Share
Class
(continued)
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%
|
Reductions/Waivers of Sales
Charges
Front-End Sales Charge Reductions
There are two ways in which you may be able to
reduce the front-end sales charge that you may pay when you buy Class A shares or Class T shares of a Fund. These types of sales charge reductions are also referred to as breakpoint discounts.
First, through the right of accumulation (ROA), you
may combine the value of eligible accounts maintained by you and members of your immediate family to reach a breakpoint discount level and apply a lower sales charge to your purchase. To calculate the combined value of your Fund accounts in the
particular class of shares, the Fund will use the current public offering price per share. For purposes of obtaining a breakpoint discount through ROA, you may aggregate your or your immediate family members' ownership of different classes of
shares, except for Class I, Class K, Class R, Class R4, Class R5 and Class Y shares of the Funds and direct purchases of Columbia Money Market Fund shares, which may not be aggregated. Shares of Columbia Money Market Fund acquired by exchange from
other Funds may be combined for ROA purposes.
Second, by making a statement of
intent to purchase additional shares (commonly referred to as a letter of intent (LOI)), you may pay a lower sales charge on all purchases (including existing ROA purchases) of Class A shares or Class T shares made within 13 months after the date of
your LOI. Your LOI must state the aggregate amount of purchases you intend to make in that 13-month period, which must be at least $50,000 (or $100,000 for Funds with breakpoint discounts beginning at $100,000). The required form of LOI may vary by
selling agent, so please contact them directly for more information. Five percent of the purchase commitment amount will be placed in escrow. At the end of the 13-month period, the shares will be released from escrow, provided that you have invested
the commitment amount. If you do not invest the commitment amount by the end of the 13 months, the remaining amount of the unpaid sales charge will be redeemed from the escrowed shares and the remaining balance released from escrow. To calculate the
total value of the purchases you've made under an LOI, the Fund will use the historic cost (i.e., dollars invested) of the shares held in each eligible account. For purposes of making an LOI to purchase additional shares, you may aggregate your
ownership of different classes of shares, except for Class I, Class K, Class R, Class R4, Class R5 and Class Y shares of the Funds and direct purchases of Columbia Money Market Fund shares, which may not be aggregated. Shares of Columbia Money
Market Fund acquired by exchange from other Funds may be combined for LOI purposes.
You must request the reduced sales charge (whether
through ROA or an LOI) when you buy shares. If you do not complete and file an LOI, or do not request the reduced sales charge at the time of purchase, you will not be eligible for the reduced sales charge. To obtain a breakpoint discount, you must
notify your selling agent in writing at the time you buy your shares of each eligible account maintained by you and members of your immediate family, including accounts maintained through different selling agents. You and your selling agent are
responsible for ensuring that you receive discounts for which you are eligible. The Fund is not responsible for a selling agent's failure to apply the eligible discount to your account. You may be asked by your selling agent for account statements
or other records to verify your discount eligibility, including, when applicable, records for accounts opened with a different selling agent and records of accounts established by members of your immediate family.
Columbia
Diversified Absolute Return Fund
Choosing a Share Class
(continued)
Your “Immediate Family” and
Account Value Aggregation
For purposes of obtaining a
breakpoint discount for Class A shares or Class T shares the value of your account will be deemed to include the value of all applicable shares in eligible Fund accounts that are held by you and your “immediate family,” which includes
your spouse, domestic partner, parent, step-parent, legal guardian, child under 21, step-child under 21, father-in-law and mother-in-law, provided that you and your immediate family members share the same mailing address. Any Fund accounts linked
together for account value aggregation purposes as of the close of business on September 3, 2010 will be permitted to remain linked together. Group plan accounts are valued at the plan level.
Eligible Accounts
The following accounts are eligible for account
value aggregation as described above, provided that they are invested in Class A, Class B, Class C, Class E, Class F, Class T, Class W or Class Z shares of a Fund: individual or joint accounts; 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); Uniform Gifts to Minors Act (UGMA)/Uniform Transfers to Minors Act
(UTMA) accounts for which you, your spouse, or your domestic partner is parent or guardian of the minor child; revocable trust accounts for which you or an immediate family member, individually, is the beneficial owner/grantor; accounts held in the
name of your, your spouse’s, or your domestic partner’s sole proprietorship or single owner limited liability company or S corporation; 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 investments in wrap accounts.
The following accounts are
not eligible
for account value aggregation as described above: 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); investments in 529 plans, donor advised funds, variable annuities, variable insurance products or managed separate accounts; charitable
and irrevocable trust accounts; accounts holding shares of money market funds that used the Columbia brand before May 1, 2010; and accounts invested in Class I, Class K, Class R, Class R4, Class R5 or Class Y shares of a Fund.
Front-End Sales Charge Waivers
The Distributor may waive front-end sales charges on
purchases of Class A and Class T shares of the Funds by certain categories of investors, including Board members, certain employees of selling agents, Fund portfolio managers and certain retirement and employee benefit plans. The Distributor may
waive front-end sales charges 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. For a more complete description of categories of investors who may purchase Class A and Class T shares of the Funds at
NAV, without payment of any front-end sales charge that would otherwise apply, see Appendix S to the SAI. In addition, certain types of purchases of Class A and Class T shares may be made at NAV. For a description of these eligible transactions, see
Appendix S to the SAI.
CDSC Waivers
You may be able to avoid an otherwise applicable
CDSC when you sell Class A, Class B, Class C or Class T shares of the Fund. This could happen because of the way in which you originally invested in the Fund, because of your relationship with the Funds or for other reasons. For example, the CDSC
will be waived on redemptions of shares in the event of the shareholder's death; that result from required minimum distributions taken from retirement accounts when the shareholder reaches age 70½; in connection with the Fund's Small Account
Policy (which is described in
Buying, Selling and Exchanging Shares — Transaction Rules and Policies
); and by certain other investors and in certain other types of transactions. For a more complete
description of the available waivers of the CDSC on redemptions of Class A, Class B, Class C or Class T shares, see Appendix S to the SAI.
Columbia Diversified Absolute Return
Fund
Choosing a Share
Class
(continued)
Repurchases
Investors can also buy Class A shares without paying
a sales charge if the purchase is made from the proceeds of a redemption of any Class A, Class B, Class C or Class T shares of a Fund (other than Columbia Money Market Fund) within 90 days, up to the amount of the redemption proceeds. Any CDSC paid
upon redemption of your Class A, Class B, Class C or Class T shares of a Fund will not be reimbursed.
To be eligible for the reinstatement privilege, 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 from you or your
selling agent within 90 days after the shares are redeemed 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 form.” The
repurchased shares will be deemed to have the original purchase date for purposes of applying the CDSC (if any) to subsequent redemptions. Systematic withdrawals and purchases are excluded from this policy.
Restrictions and Changes in Terms and Conditions
Restrictions may apply to certain accounts and
certain transactions. The Funds may change or cancel these terms and conditions at any time. Unless you provide your selling agent with information in writing about all of the factors that may count toward a waiver of a 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 selling agent provide this information to the Fund when placing your purchase order. Please see Appendix S of the SAI for more information
about the sales charge reductions and waivers.
Distribution and Service Fees
The Board has approved, and the Funds have adopted,
distribution and/or shareholder service plans which set the distribution and/or service fees that are periodically deducted from the Funds’ assets. These fees are calculated daily, may vary by share class and are intended to compensate the
Distributor and/or eligible selling agents for selling Fund shares and directly or indirectly providing services to shareholders. Because the fees are paid out of the Fund's assets on an ongoing basis, they will increase the cost of your investment
over time.
The table below shows the maximum
annual distribution and/or service fees (as an annual % of average daily net assets) and the combined amount of such fees applicable to each share class:
|
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
|
Columbia
Diversified Absolute Return Fund
Choosing a Share Class
(continued)
(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
AMT-Free Oregon Intermediate Muni Bond Fund, Columbia Balanced Fund, Columbia Contrarian Core Fund, Columbia Dividend Income Fund, Columbia Global Technology Growth Fund, Columbia Intermediate Bond Fund, Columbia Large Cap Growth Fund, Columbia Mid
Cap Growth Fund, Columbia Real Estate Equity Fund, Columbia Small Cap Core Fund, Columbia Small Cap Growth Fund I
|
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
Adaptive Alternatives Fund, Columbia Adaptive Risk Allocation 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 Bond Fund, Columbia California Tax-Exempt Fund, Columbia Corporate Income Fund, Columbia Diversified Absolute Return 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 New York Tax-Exempt Fund, Columbia Pacific/Asia Fund, Columbia Select Large Cap Growth Fund, Columbia Small Cap Value Fund I,
Columbia Strategic Income Fund, Columbia U.S. Treasury Index Fund, Columbia Value and Restructuring Fund
|
—
|
0.25%
|
0.25%
|
Columbia
AMT-Free Intermediate Muni Bond Fund, Columbia High Yield Municipal 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 AMT-Free Intermediate Muni Bond Fund, Columbia High Yield Municipal 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 a portion of the distribution fee it receives from Class B shares of Columbia Short Term Bond Fund so that the distribution fee does not exceed 0.30% annually. This arrangement 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: 0.45% for 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 AMT-Free Oregon Intermediate Muni Bond Fund, Columbia California Tax-Exempt Fund and Columbia New York Tax-Exempt
Fund; 0.60% for Columbia Corporate Income Fund and Columbia Short Term Bond Fund; 0.65% for Columbia High Yield Municipal Fund and Columbia Tax-Exempt Fund; and 0.70% for Columbia U.S. Treasury Index Fund. These arrangements may be modified or
terminated by the Distributor at any time.
|
Columbia Diversified Absolute Return
Fund
Choosing a Share
Class
(continued)
(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 0.25% for equity Funds and 0.15%
for fixed-income Funds. See
Class T Shareholder Service Fees
below for more information.
|
The distribution and/or service fees for Class A,
Class B, Class C, Class R and Class W shares, as applicable, may be subject to the requirements of Rule 12b-1 under the Investment Company Act of 1940, as amended (the 1940 Act). The Distributor may retain these fees otherwise payable to selling
agents if the amounts due are below an amount determined by the Distributor in its sole discretion.
Series of CFST II.
For Class A, Class B and Class W shares, the Distributor begins to pay these fees immediately after purchase. For Class C shares, the Distributor pays these fees in advance for the first 12 months. Selling agents also
receive distribution fees up to 0.75% of the average daily net assets of Class C shares sold and held through them, which the Distributor begins to pay 12 months after purchase. For Class B shares and for the first 12 months following the sale of
Class C shares, the Distributor retains the distribution fee of up to 0.75% in order to finance the payment of sales commissions to selling agents and to pay for other distribution related expenses. Selling agents may compensate their financial
advisors with the shareholder service and distribution fees paid to them by the Distributor. The maximum fee for services under the distribution and/or shareholder servicing plan for series of CFST II is the lesser of the amount of reimbursable
expenses and the fee rates in the table above. If a share class of a series of CFST II has no reimbursable distribution or shareholder servicing expenses, it will suspend the payment of any such fee.
Series of CFST and CFST I.
For Class R shares and, with the exception noted in the next sentence, Class A shares, the Distributor begins to pay these fees immediately after purchase. For Class B shares, Class A shares (if purchased as part of a
purchase of shares of $1 million or more) and, with the exception noted in the next sentence, Class C shares, the Distributor begins to pay these fees 12 months after purchase (for Class B share, and for the first 12 months following the sale of
Class C shares, the Distributor retains the distribution fee of up to 0.75% in order to finance the payment of sales commissions to selling agents and to pay for other distribution related expenses). For Class C shares, selling agents may opt to
decline payment of sales commission and, instead, may receive these fees immediately after purchase. Selling agents may compensate their financial advisors with the shareholder service and distribution fees paid to them by the
Distributor.
If you maintain shares of
the Fund directly with the Fund, without working directly with a financial advisor or other selling agent, distribution and service fees may be retained by the Distributor as payment or reimbursement for incurring certain distribution and
shareholder service related expenses.
Over
time, these distribution and/or 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 agents for as long as
the distribution plan and/or shareholder servicing plans continue in effect, which is expected to be indefinitely. 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.
Class K Plan Administration Services Fee
Class K shares pay an annual plan administration
services fee for the provision of various administrative, recordkeeping, communication and educational services, including services such as implementation and conversion services, account set-up and maintenance, reconciliation and account
recordkeeping and administration to various plan types, including 529 plans, retirement plans and health savings accounts. The fee for Class K shares is equal on an annual basis to 0.25% of average daily net assets attributable to the class.
Class T Shareholder Services 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 Fund's average daily net
assets attributable to Class T shares (comprised of up to 0.25% for
Columbia
Diversified Absolute Return Fund
Choosing a Share Class
(continued)
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 Fund's average daily net assets attributable to Class T shares (comprised 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 0.25% 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 agents to the extent necessary to prevent net investment income from falling below 0% on a daily basis.
Selling Agent Compensation
The Distributor, the Investment Manager and their
affiliates make payments, from their own resources, to selling agents, including other Ameriprise Financial affiliates, for marketing/sales support services relating to the Funds (Marketing Support Payments). Such payments are generally based upon
one or more of the following factors: average net assets of the Funds sold by the Distributor attributable to that selling agent; gross sales of the Funds distributed by the Distributor attributable to that selling agent; reimbursement of ticket
charges (fees that a selling agent 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, Marketing Support Payments to any one
selling agent are generally between 0.05% and 0.50% on an annual basis for payments based on average net assets of the Fund 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 Funds attributable to the selling agent. The Distributor, the Investment Manager and their affiliates may make payments in larger amounts or on a basis other than those described above when dealing with certain selling agents,
including certain affiliates of Bank of America Corporation (Bank of America). Such increased payments may enable such selling agents to offset credits that they may provide to customers. The Distributor, the Investment Manager and their affiliates
do not make Marketing Support Payments with respect to Class Y shares; provided, however, that such payments are made to Bank of America with respect to Class Y shares of Columbia Bond Fund, Columbia Global Dividend Opportunity Fund, Columbia Income
Opportunities Fund, Columbia Large Cap Enhanced Core Fund, Columbia Mid Cap Growth Fund, Columbia Mid Cap Value Fund, Columbia Multi-Advisor International Equity Fund, Columbia Short Term Bond Fund, Columbia Small Cap Growth Fund I and Columbia
Small Cap Value Fund I.
In addition, the
Transfer Agent has certain arrangements in place to compensate selling agents, including other Ameriprise Financial affiliates, that hold Fund shares through omnibus accounts, including omnibus retirement plans, for services that they provide to
beneficial shareholders (Shareholder Services). Shareholder Services may include sub-accounting, sub-transfer agency, participant recordkeeping, shareholder or participant reporting, shareholder or participant transaction processing, maintenance of
shareholder records, preparation of account statements and provision of customer service. Payments for Shareholder Services vary by selling agent but generally are not expected, with certain limited exceptions, to exceed 0.40% of the average
aggregate value of the Fund’s shares. Generally, each Fund (other than the Columbia Acorn Funds) pays a percentage of the average aggregate value of shares maintained in omnibus accounts: 0.20% for all share classes other than Class I, K, R5
and Y shares; 0.05% for Class K and R5 shares; and 0% for Class I and Y shares. The amounts in excess of that reimbursed by the Fund are borne by the Distributor, the Investment Manager and/or their affiliates. The Transfer Agent does not pay
selling agents for Shareholder Services and the Fund does not pay the Transfer Agent for any Shareholder Services provided by selling agents, with respect to Class Y shares.
In addition to the payments described above, the
Distributor, the Investment Manager and their affiliates may make other payments or allow promotional incentives to broker-dealers to the extent permitted by SEC and Financial Industry Regulatory Authority (FINRA) rules and by other applicable laws
and regulations.
Amounts paid by the
Distributor, the Investment Manager and their affiliates are paid out of their own resources and do not increase the amount paid by you or the Fund. You can find further details in the SAI about the payments made by the Distributor, the Investment
Manager and their affiliates, as well as a list of the selling agents, including Ameriprise Financial affiliates, to which the Distributor and the Investment Manager have agreed to make Marketing Support Payments and pay Shareholder Services
fees.
Your selling agent may charge you fees
and commissions in addition to those described in this prospectus. You should consult with your selling agent 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 advisors may have a financial incentive for recommending the Fund or a particular share class over others.
Columbia Diversified Absolute Return
Fund
Buying, Selling
and Exchanging Shares
Share Price Determination
The price you pay or receive when you buy, sell or
exchange shares is the Fund's next determined net asset value (or NAV) per share for a given share class. The Fund calculates the NAV per share for each class of shares of the Fund at the end of each business day.
NAV Calculation
Each of the Fund's share classes
calculates its NAV as follows:
NAV
=
(Value of assets of the share class) – (Liabilities of the share class)
Number of outstanding shares of the class
Business Days
A business day is any day that
the New York Stock Exchange (NYSE) is open. A business day ends at the close of regular trading on the NYSE, usually at 4:00 p.m. Eastern time. If the NYSE closes early, the business day ends as of the time the NYSE closes. On holidays and other
days when the NYSE is closed, the Fund's NAV is not calculated and the Fund does not accept buy or sell orders. However, the value of the Fund's assets may still be affected on such days to the extent that the Fund holds foreign securities that
trade on days that foreign securities markets are open.
Equity securities are valued primarily on the basis
of market quotations reported on stock exchanges and other securities markets around the world. If an equity security is listed on a national exchange, the security is valued at the closing price or, if the closing price is not readily available,
the mean of the closing bid and asked prices. Certain equity securities, debt securities and other assets are valued differently. For instance, bank loans trading in the secondary market are valued primarily on the basis of indicative bids,
fixed-income investments maturing in 60 days or less are valued primarily using the amortized cost method and those maturing in excess of 60 days are valued at the readily available market price, if available. Investments in other open-end funds are
valued at their NAVs. Both market quotations and indicative bids are obtained from outside pricing services approved and monitored pursuant to a policy approved by the Fund's Board. For a money market fund, the Fund's investments are valued at
amortized cost, which approximates market value.
If a market price isn't readily available or is
deemed not to reflect market value, the Fund will determine the price of the security held by the Fund based on a determination of the security's fair value pursuant to a policy approved by the Fund's Board. In addition, the Fund may use fair
valuation to price securities that trade on a foreign exchange when a significant event has occurred after the foreign exchange closes but before the time at which the Fund's share price is calculated. Foreign exchanges typically close before the
time at which Fund share prices are calculated, and may be closed altogether on some days when the Fund is open. Such significant events affecting a foreign security may include, but are not limited to: (1) corporate actions, earnings announcements,
litigation or other events impacting a single issuer; (2) governmental action that affects securities in one sector or country; (3) natural disasters or armed conflicts affecting a country or region; or (4) significant domestic or foreign market
fluctuations. The Fund uses various criteria, including an evaluation of U.S. market moves after the close of foreign markets, in determining whether a foreign security's market price is readily available and reflective of market value and, if not,
the fair value of the security. To the extent the Fund has significant holdings of small cap stocks, high yield bonds, floating rate loans, or tax-exempt, foreign or other securities that may trade infrequently, fair valuation may be used more
frequently than for other funds.
Fair
valuation may have the effect of reducing stale pricing arbitrage opportunities presented by the pricing of Fund shares. However, when the Fund uses fair valuation to price securities, it may value those securities higher or lower than another fund
would have priced the security. Also, the use of fair valuation may cause the Fund's performance to diverge to a greater degree from the performance of various benchmarks used to compare the Fund's performance because benchmarks generally do not
use
Columbia
Diversified Absolute Return Fund
Buying, Selling and Exchanging Shares
(continued)
fair valuation techniques. Because of the judgment involved in fair
valuation decisions, there can be no assurance that the value ascribed to a particular security is accurate. The Fund has retained one or more independent fair valuation pricing services to assist in the fair valuation process for foreign
securities.
Transaction Rules and Policies
The Fund, the Distributor or the Transfer Agent may
refuse any order to buy or exchange shares. If this happens, the Fund will return any money it received, but no interest will be paid on that money.
Order Processing
Orders to buy, sell or exchange Fund shares are
processed on business days. Depending upon the class of shares, orders can be made by mail, by telephone or online. Orders received in “good form” by the Transfer Agent or your selling agent before the end of a business day are priced at
the NAV per share of the Fund's applicable share class on that day. Orders received after the end of a business day will receive the next business day's NAV per share. When a written order to buy, sell or exchange shares is sent to the Transfer
Agent, the share price used to fill the order is the next price calculated by the Fund after the Transfer Agent receives the order at its transaction processing center in Canton, Massachusetts, not the P.O. Box provided for regular mail delivery.
The market value of the Fund's investments may change between the time you submit your order and the time the Fund next calculates its NAV per share. The business day that applies to your order is also called the trade date.
“Good Form”
An order is in “good form” if the
Transfer Agent or your selling agent has all of the information and documentation it deems necessary to effect your order. For example, when you sell shares by letter of instruction, “good form” means that your letter has (i) complete
instructions and the signatures of all account owners, (ii) a Medallion Signature Guarantee for amounts greater than $100,000 and other transactions, as described below, and (iii) any other required documents completed and attached. For the
documents required for sales by corporations, agents, fiduciaries, surviving joint owners and other legal entities, call 800.345.6611.
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 Automated Clearing House (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 changing legal ownership of your account.
Customer Identification Program
Federal law requires the Fund to obtain and record
specific personal information to verify your identity when you open an account. This information may include your name, address, date of birth (for individuals) and taxpayer or other government issued identification (e.g., social security number
(SSN) or other taxpayer identification number (TIN)). If you fail to provide the requested information, the Fund may need to delay the date of your purchase or may be unable to open your account, which may result in a return of your investment
monies. In addition, if the Fund is unable to verify your identity after your account is open, the Fund reserves the right to close your account or take other steps as deemed reasonable. The Fund will not be liable for any loss resulting from any
purchase delay, application rejection or account closure due to a failure to provide proper identifying information.
Columbia Diversified Absolute Return
Fund
Buying, Selling
and Exchanging Shares
(continued)
Small Account Policy — Class A, Class B, Class C, Class T
and Class Z Share Accounts Below the Minimum Account Balance
The Funds generally will automatically sell your
shares if the value of your Fund account (treating each account of the Fund you own separately from any other account of the Fund you may own) falls below the applicable Minimum Account Balance. The Minimum Account Balance varies among Funds, share
classes and types of accounts, as follows:
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
|
If your shares are sold,
the Transfer Agent will remit the sale proceeds to you. Any otherwise applicable CDSC will not be imposed on such an automatic sale of your shares. The Transfer Agent will send you written notification in advance of any automatic sale, which will
provide details on how you may avoid such an automatic sale. Generally, you may avoid such an automatic sale by raising your account balance, consolidating your accounts through an exchange of shares of another Fund in which you hold shares, or
setting up a Systematic Investment Plan. For more information, contact the Transfer Agent or your selling agent. The Transfer Agent's contact information (toll-free number and mailing addresses) as well as the Funds' website address can be found at
the beginning of the section
Choosing a Share Class
.
The Fund also may sell your Fund shares if your
selling agent tells us to sell your shares pursuant to arrangements made with you, and under certain other circumstances allowed under the 1940 Act.
Small Account Policy — Class A, Class B, Class C, Class T
and Class Z Share Accounts Minimum Balance Fee
If the value of your Fund account (treating each
account of the Fund you own separately from any other account of the Fund you may own) falls below the minimum initial investment requirement applicable to you for any reason, including as a result of market decline, your account generally will be
subject to a $20 annual fee. This fee will be assessed through the automatic sale of Fund shares in your account. Any otherwise applicable CDSC will not be imposed on such an automatic sale of your shares. The Transfer Agent will reduce the expenses
paid by the Fund by any amounts it collects from the assessment of this fee. For Funds that do not have transfer agency expenses against which to offset the amount collected through assessment of this fee, the fee will be paid directly to the Fund.
The Transfer Agent will send you written notification in advance of assessing any fee, which will provide details on how you can avoid the imposition of such fee. Generally, you may avoid the imposition of such fee by raising your Fund account
balance, consolidating your Fund accounts through an exchange of shares of another Fund in which you hold shares, or setting up a Systematic Investment Plan that invests at least monthly. For more information, contact the Transfer Agent or your
selling agent. The Transfer Agent's contact information (toll-free number and mailing address(es)) as well as the Funds' website address can be found at the beginning of the section
Choosing a Share
Class
.
The Funds reserve the right to
lower the account size trigger point for the minimum balance fee in any year or for any class of shares when we believe it is appropriate to do so in light of declines in the market value of Fund shares, sales loads applicable to a particular class
of shares, or for other reasons.
Exceptions to the Small
Account Policy (Accounts Below Minimum Account Balance and Minimum Balance Fee)
The automatic sale of Fund shares of accounts under
$250 and the annual minimum balance fee described above do not apply to shareholders of Class I, Class K, Class R, Class R4, Class R5, Class W and Class Y shares; shareholders holding their shares through broker-dealer networked accounts; wrap fee
and omnibus accounts; accounts with active Systematic Investment Plans; certain qualified retirement plans; and health savings accounts. The automatic sale of Fund shares of accounts under the applicable Minimum Account Balance does not apply to
individual retirement plans.
Columbia
Diversified Absolute Return Fund
Buying, Selling and Exchanging Shares
(continued)
Small Account Policy — Broker-Dealer and Wrap Fee
Accounts
The Funds may automatically redeem,
at any time, broker-dealer networked accounts and wrap fee accounts that have account balances of $20 or less or have less than one share.
Information Sharing Agreements
As required by Rule 22c-2 under the 1940 Act, the
Funds or certain of their service providers will enter into information sharing agreements with selling agents, including participating life insurance companies and selling agents that sponsor or offer retirement plans through which shares of the
Funds are made available for purchase. Pursuant to Rule 22c-2, selling agents are required, upon request, to: (i) provide shareholder account and transaction information and (ii) execute instructions from the Fund to restrict or prohibit further
purchases of Fund shares by shareholders who have been identified by the Fund as having engaged in transactions that violate the Fund's excessive trading policies and procedures.
Excessive Trading Practices Policy of Non-Money Market
Funds
Right to Reject or Restrict Share
Transaction Orders —
The Fund is intended for investors with long-term investment purposes and is not intended as a vehicle for frequent trading activity (market timing) that is excessive. Investors should
transact in Fund shares primarily for investment purposes. The Board has adopted excessive trading policies and procedures that are designed to deter excessive trading by investors (the Excessive Trading Policies and Procedures).
The Fund discourages and does not accommodate excessive trading.
The Fund reserves the right to reject, without any
prior notice, any purchase or exchange order for any reason, and will not be liable for any loss resulting from rejected orders. For example, the Fund may in its sole discretion restrict or reject a purchase or exchange order even if the transaction
is not subject to the specific limitation described below if the Fund or its agents determine that accepting the order could interfere with efficient management of the Fund's portfolio or is otherwise contrary to the Fund's best interests. The
Excessive Trading Policies and Procedures apply equally to purchase or exchange transactions communicated directly to the Transfer Agent and to those received by selling agents.
Specific Buying and Exchanging Limitations
— If a Fund detects that an investor has made two “material round trips” in any 28-day period, it will generally reject the investor's future purchase orders, including exchange purchase orders,
involving any Fund.
For these purposes,
a “round trip” is a purchase or exchange into the Fund followed by a sale or exchange out of the Fund, or a sale or exchange out of the Fund followed by a purchase or exchange into the Fund. A “material” round trip is one
that is deemed by the Fund to be material in terms of its amount or its potential detrimental impact on the Fund. Independent of this limit, the Fund may, in its sole discretion, reject future buy orders by any person, group or account that appears
to have engaged in any type of excessive trading activity.
These limits generally do not apply to automated
transactions or transactions by registered investment companies in a “fund-of-funds” structure. These limits do not apply to payroll deduction contributions by retirement plan participants, transactions initiated by a retirement plan
sponsor or certain other retirement plan transactions consisting of rollover transactions, loan repayments and disbursements, and required minimum distribution redemptions. They may be modified or rescinded for accounts held by certain retirement
plans to conform to plan limits, for considerations relating to the Employee Retirement Income Security Act of 1974 or regulations of the Department of Labor, and for certain asset allocation or wrap programs. Accounts known to be under common
ownership or control generally will be counted together, but accounts maintained or managed by a common intermediary generally will not be considered to be under common ownership or control. The Fund retains the right to modify these restrictions at
any time without prior notice to shareholders. In addition, the Fund may, in its sole discretion, reinstate trading privileges that have been revoked under the Fund's Excessive Trading Policies and Procedures.
Limitations on the Ability to Detect and Prevent
Excessive Trading Practices —
The Fund takes various steps designed to detect and prevent excessive trading, including daily review of available shareholder transaction information. However, the Fund receives
buy, sell or exchange orders through selling agents, and cannot always know of or reasonably detect excessive trading that may be facilitated by selling agents or by the use of the omnibus account arrangements they offer. Omnibus account
arrangements are common forms of holding shares of mutual funds, particularly among certain selling agents such as broker-dealers, retirement plans and variable insurance products. These arrangements often permit selling agents to aggregate their
clients' transactions and accounts, and in these circumstances, the identity of the shareholders is often not known to the Fund.
Columbia Diversified Absolute Return
Fund
Buying, Selling
and Exchanging Shares
(continued)
Some selling agents apply their own restrictions or
policies to underlying investor accounts, which may be more or less restrictive than those described here. This may impact the Fund's ability to curtail excessive trading, even where it is identified. For these and other reasons, it is possible that
excessive trading may occur despite the Fund's efforts to detect and prevent it.
Although these restrictions and policies involve
judgments that are inherently subjective and may involve some selectivity in their application, the Fund seeks to act in a manner that it believes is consistent with the best interests of shareholders in making any such judgments.
Risks of Excessive Trading —
Excessive trading creates certain risks to the Fund's long-term shareholders and may create the following adverse effects:
■
|
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.
|
To the extent that the Fund invests significantly in
foreign securities traded on markets that close before the Fund's valuation time, it may be particularly susceptible to dilution as a result of excessive trading. Because events may occur after the close of foreign markets and before the Fund's
valuation time that influence the value of foreign securities, investors may seek to trade Fund shares in an effort to benefit from their understanding of the value of foreign securities as of the Fund's valuation time. This is often referred to as
price arbitrage. The Fund has adopted procedures designed to adjust closing market prices of foreign securities under certain circumstances to reflect what the Fund believes to be the fair value of those securities as of its valuation time. To the
extent the adjustments don't work fully, investors engaging in price arbitrage may cause dilution in the value of the Fund's shares held by other shareholders.
Similarly, to the extent that the Fund invests
significantly in thinly traded high-yield bonds (junk bonds) or equity securities of small-capitalization companies, because these securities are often traded infrequently, investors may seek to trade Fund shares in an effort to benefit from their
understanding of the value of these securities. This is also a type of price arbitrage. Any such frequent trading strategies may interfere with efficient management of the Fund's portfolio to a greater degree than would be the case for mutual funds
that invest in highly liquid securities, in part because the Fund may have difficulty selling those portfolio securities at advantageous times or prices to satisfy large and/or frequent sell orders. Any successful price arbitrage may also cause
dilution in the value of Fund shares held by other shareholders.
Excessive Trading Practices Policy of Columbia Money Market
Fund
A money market fund is designed to offer
investors a liquid cash option that they may buy and sell as often as they wish. Accordingly, the Board has not adopted policies and procedures designed to discourage excessive or short-term trading of Columbia Money Market Fund shares. However,
since frequent purchases and sales of Columbia Money Market Fund shares could in certain instances harm shareholders in various ways, including reducing the returns to long-term shareholders by increasing costs (such as spreads paid to dealers who
trade money market instruments with Columbia Money Market Fund) and disrupting portfolio management strategies, Columbia Money Market Fund reserves the right, but has no obligation, to reject any purchase or exchange transaction at any time. Except
as expressly described in this prospectus (such as minimum purchase amounts), Columbia Money Market Fund has no limits on purchase or exchange transactions. In addition, Columbia Money Market Fund reserves the right to impose or modify restrictions
on purchases, exchanges or trading of Fund shares at any time.
Columbia
Diversified Absolute Return Fund
Buying, Selling and Exchanging Shares
(continued)
Opening an Account and Placing Orders
We encourage you to consult with a financial advisor
who can help you with your investment decisions and who can help you open an account. Once you have an account, you can buy, sell or exchange shares by contacting your financial advisor who will send your order to the Transfer Agent or your selling
agent. As described below, once you have an account you can also communicate your orders directly to the Transfer Agent by mail, by telephone or online.
The Funds are generally available directly and
through broker-dealers, banks and other selling agents or institutions, and through certain qualified and non-qualified plans, wrap fee products or other investment products sponsored by selling agents. You may exchange or sell shares through your
selling agent. If you maintain your account directly with your selling agent, you must contact that agent to process your transaction.
Not all selling agents offer the Funds and certain
selling agents that offer the Funds may not offer all Funds on all investment platforms or programs.
Please consult with your financial advisor to determine the availability of the Funds. If you set up an account at
a selling agent that does not have, and is unable to obtain, a selling agreement with the Distributor, you will not be able to transfer Fund holdings to that account. In that event, you must either maintain your Fund holdings with your current
selling agent, find another selling agent with a selling agreement, or sell your Fund shares, paying any applicable CDSC. Please be aware that transactions in taxable accounts are taxable events and may result in income tax liability.
Selling agents that offer the Funds may charge you
additional fees for the services they provide and they may have different policies that are not described in this prospectus.
Some policy differences may include different minimum investment amounts, exchange
privileges, Fund choices and cutoff times for investments. Additionally, recordkeeping, transaction processing and payments of distributions relating to your account may be performed by the selling agents through which your shares of the Fund are
held. Since the Fund (and its service providers) may not have a record of your account transactions, you should always contact the financial advisor employed by the selling agent through which you purchased or at which you maintain your shares of
the Fund to make changes to your account or to give instructions concerning your account, or to obtain information about your account. The Fund and its service providers, including the Distributor and the Transfer Agent, are not responsible for the
failure of these selling agents to carry out their obligations to its customers.
The Fund may engage selling agents to receive
purchase, exchange and sell orders on its behalf. Accounts established directly with the Fund will be serviced by the Transfer Agent. The Funds, the Transfer Agent and the Distributor do not provide investment advice.
Accounts Established Directly with the Fund
You or the financial advisor through which you buy
shares may establish an account with the Fund. To do so, complete a Fund account application with your financial advisor or investment professional, and mail the account application to the Transfer Agent. Account applications may be obtained at
columbiamanagement.com or may be requested by calling 800.345.6611. Make your check payable to the Fund. You will be assessed a $15 fee for any checks rejected by your financial institution due to insufficient funds or other reasons. The Funds do
not accept cash, credit card convenience checks, money orders, traveler's checks, starter checks, third or fourth party checks, or other cash equivalents.
Mail your check and completed application to the
Transfer Agent at its address that can be found at the beginning of the section
Choosing a Share Class.
You may also use these addresses to request an exchange or redemption of Fund shares. When a written
order to buy, sell or exchange shares is sent to the Transfer Agent, the share price used to fill the order is the next price calculated by the Fund after the Transfer Agent receives the order at its transaction processing center in Canton,
Massachusetts, not the P.O. Box provided for regular mail delivery.
You will be sent a statement confirming your
purchase and any subsequent transactions in your account. You will also be sent quarterly and annual statements detailing your transactions in the Fund and the other Funds you own under the same account number. Duplicate quarterly account statements
for the current year and duplicate annual statements for the most recent prior calendar year will be sent to you free of charge. Copies of year-end statements for prior years are available for a fee. Please contact the Transfer Agent for more
information.
Columbia Diversified Absolute Return
Fund
Buying, Selling
and Exchanging Shares
(continued)
Written Transactions
Once you have an account, you can communicate
written buy, sell or exchange orders to the Transfer Agent at its address that can be found at the beginning of the section
Choosing a Share Class
. When a written order to buy, sell or exchange shares is sent
to the Transfer Agent, the share price used to fill the order is the next price calculated by the Fund after the Transfer Agent receives the order at its transaction processing center in Canton, Massachusetts, not the P.O. Box provided for regular
mail delivery.
Include in your letter: your
name; the name of the Fund(s); your account number; the class of shares to be exchanged or sold; your SSN or other TIN; the dollar amount or number of shares you want to exchange or sell; specific instructions regarding delivery of redemption
proceeds or exchange destination; signature(s) of registered account owner(s); and any special documents the Transfer Agent may require in order to process your order.
Corporate, trust or partnership accounts may need to
send additional documents. Payment will be mailed to the address of record and made payable to the names listed on the account, unless your request specifies differently and is signed by all owners.
Telephone Transactions
For Class A, Class B, Class C, Class R, Class T,
Class Y and Class Z shares, once you have an account, you may place orders to buy, sell or exchange shares by telephone. To place orders by telephone, call 800.422.3737. Have your account number and SSN or TIN available when calling.
You can sell Fund shares via the telephone, by
electronic funds transfer or by check to the address of record, up to and including an aggregate of $100,000 of shares per day, per Fund account, if you qualify for telephone orders. Wire redemptions requested via the telephone are subject to a
maximum of $3 million of shares per day, per Fund. You can buy up to and including $100,000 of shares per day, per Fund account through your bank account as an Automated Clearing House (ACH) transaction via the telephone if you qualify for telephone
orders.
Telephone orders may not be as secure
as written orders. The Fund will take reasonable steps to confirm that telephone instructions are genuine. For example, we require proof of your identification before we will act on instructions received by telephone and may record telephone
conversations. However, the Fund and its agents will not be responsible for any losses, costs or expenses resulting from an unauthorized telephone instruction when reasonable steps have been taken to confirm that telephone instructions are genuine.
Telephone orders may be difficult to complete during periods of significant economic or market change or business interruption.
Online Transactions
For Class A, Class B, Class C, Class R, Class T,
Class Y and Class Z shares, once you have an account, you may contact the Transfer Agent at 800.345.6611 for more information on account trading restrictions and the special sign-up procedures required for online transactions. The Transfer Agent has
procedures in place to authenticate electronic orders you deliver through the internet. You will be required to accept the terms of an online agreement and to establish and utilize a password in order to access online account services. You can sell
up to and including an aggregate of $100,000 of shares per day, per Fund account through the internet if you qualify for internet orders.
Wire Transactions
You may buy (or redeem) Class A, Class B
(redemptions only), Class C, Class T, Class W (redemptions only), Class Y and Class Z shares of a Fund by wiring money from (or to) your bank account to (or from) your Fund account by calling the Transfer Agent at 800.422.3737. You must set up this
feature prior to your request unless you are submitting your request in writing with a Medallion Signature Guarantee. The Transfer Agent charges a fee for shares sold by Fedwire. The Transfer Agent may waive the fee for certain accounts. In the case
of a redemption, the receiving bank may charge an additional fee. The minimum amount that can be redeemed by wire is $500. The maximum amount that can be redeemed over the telephone is $3 million per day, per Fund account.
Columbia
Diversified Absolute Return Fund
Buying, Selling and Exchanging Shares
(continued)
Electronic Funds Transfer
You may buy (or redeem) Class A, Class B
(redemptions only), Class C, Class T, Class Y and Class Z shares of a Fund by electronically transferring money from (or to) your bank account to (or from) your Fund account by calling the Transfer Agent at 800.422.3737. An electronic funds transfer
may take up to three business days to settle and be considered in “good form.” You must set up this feature by contacting the Transfer Agent prior to your request to obtain any necessary forms.
Important:
Payments
sent by an electronic fund transfer, a bank authorization, or check that are not guaranteed may take up to 10 or more days to clear. If you request a redemption before the purchase funds clear, this may cause your redemption request to fail to
process if the requested amount includes unguaranteed funds. If you purchased your shares by check or from your bank account as an ACH transaction, the Fund may hold the redemption proceeds when you sell those shares for a period of time after the
trade date of the purchase.
Buying Shares
Eligible Investors
Class A and Class C Shares
Class A and Class C shares are
available to the general public for investment. Once you have opened an account, you can buy Class A and Class C shares in a lump sum, through our Systematic Investment Plan, by dividend diversification, by wire or by electronic funds transfer. As
described in this prospectus, Class A shares but not Class C shares are generally subject to a front-end sales charge, which reduces the dollar amount invested in a Fund. However, Class C shares are generally subject to higher fees than Class A
shares, which will reduce any returns on Class C shares relative to Class A shares. You may be eligible to purchase Class A shares without a front-end sales charge if the value of your Columbia Fund shares held in eligible accounts reaches
$1,000,000. If you are eligible to invest in Class A shares without a front-end sales charge you should discuss your options with your selling agent. For more information, see
Choosing a Share Class
– Reductions/Waivers of Sales Charges
. A purchase order for Class C shares is limited to $999,999. Your selling agent may impose additional limits on investments in Class C shares.
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 transacts 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 these classes of shares.
Class B Shares (Closed)
The Funds no longer accept investments from new or
existing investors in Class B shares, except for certain limited transactions involving existing investors in Class B shares as described in more detail below.
Additional Class B shares will be issued only to
existing investors in Class B shares and only through the following two types of transactions (Qualifying Transactions):
■
|
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.
|
Any initial purchase orders for the Fund's Class B
shares will be rejected (other than through a Qualifying Transaction that is an exchange transaction).
Unless contrary instructions are received in advance
by the Fund, any purchase orders (except those submitted by a selling agent through the National Securities Clearing Corporation (NSCC) as described in more detail below) that are orders for additional Class B shares of the Fund received from
existing investors in Class B shares, including orders made through an active systematic investment plan, will automatically be invested in Class A shares of the Fund, without regard to the normal minimum initial investment requirement for Class A
shares, but subject to the front-end sales charge that generally applies to Class A shares. See
Choosing a Share Class — Sales Charges and Commissions — Class A Shares — Front-End Sales Charge
for
Columbia Diversified Absolute Return
Fund
Buying, Selling
and Exchanging Shares
(continued)
additional information. Your selling agent may have different
policies not described here, including a policy to reject purchase orders for a Fund's Class B shares or to automatically invest the purchase amount in Columbia Money Market Fund. Please consult your selling agent to understand its policy.
Additional purchase orders for a Fund's Class B
shares by an existing Class B shareholder, submitted by such shareholder's selling agent through the NSCC, will be rejected due to operational limitations of the NSCC. Investors should consult their selling agent if they wish to invest in the Fund
by purchasing a share class of the Fund other than Class B shares.
Dividend and/or capital gain distributions from
Class B shares of a Fund will not be automatically invested in Class B shares of another Fund. Unless contrary instructions are received in advance of the date of declaration, such dividend and/or capital gain distributions from Class B shares of a
Fund will be reinvested in Class B shares of the same Fund that is making the distribution.
Class I Shares
Class I shares are available only to the Funds
(i.e., fund-of-funds investments).
Class K Shares
(Closed)
Class K shares are closed to new
investors and new accounts, subject to certain limited exceptions described below.
Shareholders who opened and funded a Class K account
with the Fund as of the close of business on December 31, 2010 (including accounts once funded that subsequently reached a zero balance) may continue to make additional purchases of Class K shares. Plans may continue to make additional purchases of
Fund shares and add new participants, and new plans sponsored by the same or an affiliated sponsor may invest in the Fund (and add new participants) if an initial plan so sponsored invested in the Fund as of December 31, 2010 (or had approved the
Fund as an investment option as of December 31, 2010 and funded its initial account with the Fund prior to March 31, 2011) and holds Fund shares at the plan level.
An order to purchase Class K shares received by the
Fund or the Transfer Agent after the close of business on December 31, 2010 (other than as described above) from a new investor or a new account that is not eligible to purchase shares will be refused by the Fund and the Transfer Agent and any money
that the Fund or the Transfer Agent received with the order will be returned to the investor or the selling agent, as appropriate, without interest.
Class K shares are designed for qualified employee
benefit plans, trust companies or similar institutions, charitable organizations that meet the definition in Section 501(c)(3) of the Code, non-qualified deferred compensation plans whose participants are included in a qualified employee benefit
plan described above, state sponsored college savings plans established under Section 529 of the Code, and health savings accounts created pursuant to public law 108-173. Class K shares may be purchased, sold or exchanged only through the
Distributor or an authorized selling agent.
Prior to October 25, 2012, Class K shares were named
Class R4 shares.
Class R Shares
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, in the sole 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.
Class R4 Shares
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.
Prior to October 31, 2012, Class R4 shares were
named Class R3 shares.
Columbia
Diversified Absolute Return Fund
Buying, Selling and Exchanging Shares
(continued)
Class R5 Shares
Class R5 shares are 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. Prior to November 8, 2012, Class R5 shares were closed to new investors and new accounts, subject to certain
exceptions. Existing shareholders who do not satisfy the new eligibility requirements for investment in Class R5 may not establish new Class R5 accounts but may continue to make additional purchases of Class R5 shares in accounts opened and funded
prior to November 8, 2012; provided, however, that investment advisory programs and similar programs that opened a Class R5 account as of May 1, 2010, and continuously hold Class R5 shares in such account after such date, may generally not only
continue to make additional purchases of Class R5 shares but also open new Class R5 accounts for such pre-existing programs and add new shareholders in the program.
Class T Shares
Class T shares are available only to investors who
received (and who have continuously held) Class T shares in connection with the merger of certain Galaxy funds into certain Funds that were then named Liberty funds.
Class W Shares
Class W shares are available only to investors
purchasing through authorized investment programs managed by investment professionals, including discretionary managed account programs. Class W shares may be purchased, sold or exchanged only through the Distributor or an authorized selling agent.
Shares originally purchased in a discretionary managed account may continue to be held in Class W outside of a discretionary managed account, but no additional Class W purchases may be made and no exchanges to Class W shares of another Fund may be
made outside of a discretionary managed account.
Class Y
Shares
Class Y shares, except as noted below,
are available only to retirement plans that maintain plan-level or omnibus accounts with the Fund (through the Transfer Agent).
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.
Class Z Shares
Class Z shares are available only to the categories
of eligible investors described below under
Class Z Shares Minimum Initial Investments
.
Selling agents that clear Fund share transactions through designated selling agents and
their mutual fund trading platforms that were given specific written notice from the Transfer Agent of the termination, effective March 29, 2013, of their eligibility for new purchases of Class Z shares and omnibus retirement plans are not permitted
to establish new Class Z accounts, subject to certain exceptions described below.
Omnibus retirement plans that opened and, subject to
certain exceptions, funded a Class Z account with the Fund as of the close of business on March 28, 2013, and have continuously held Class Z shares in such account after such date, may generally continue to make additional purchases of Class Z
shares, open new Class Z accounts and add new participants. In addition, an omnibus retirement plan affiliated with a grandfathered plan may, in the sole discretion of the Distributor, open new Class Z accounts in a Fund if the affiliated plan
opened a Class Z account on or before March 28, 2013. If an omnibus retirement plan invested in Class Z shares changes recordkeepers after March 28, 2013, any new accounts established for that plan may not be established in Class Z shares, but such
a plan may establish new accounts in a different share class for which the plan is eligible. The Distributor may, in its sole discretion, delay the funding requirement described above for omnibus retirement plans to allow an omnibus retirement plan
that opened a Class Z account (the initial Class Z account) with the Fund as of the close of business on March 28, 2013 to make additional purchases of Class Z shares, open new Class Z accounts and add new participants so long as the initial Class Z
account was funded by July 2, 2013.
Columbia Diversified Absolute Return
Fund
Buying, Selling
and Exchanging Shares
(continued)
Accounts of selling agents (other than omnibus
retirement plans, which are discussed above) that clear Fund share transactions for their client or customer accounts through designated selling agents and their mutual fund trading platforms that received specific written notice from the Transfer
Agent of the termination, effective March 29, 2013, of their eligibility for new purchases of Class Z shares will not be permitted to establish new Class Z accounts or make additional purchases of Class Z shares (other than through reinvestment of
distributions). Such accounts may, at their holder’s option, exchange Class Z shares of a Fund, without the payment of a sales charge, for Class A shares of the same Fund.
Additional Eligible Investors
In addition, the Distributor, in its sole
discretion, may accept investments in any share class from investors other than those listed in this prospectus.
Minimum Initial Investments
The table below shows the Fund's minimum initial
investment requirements, which may vary by Fund, class and type of account.
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.
|
The minimum initial investment requirements may be
waived for accounts that are managed by an investment professional, for accounts held in approved discretionary or non-discretionary wrap programs, or for accounts that are a part of an employer-sponsored retirement plan. The Distributor, in its
sole discretion, may also waive minimum initial investment requirements for other account types.
Minimum investment and related requirements may be
modified at any time, with or without prior notice. If your account is closed and then re-opened with a systematic investment plan, your account must meet the then-current applicable minimum initial investment.
Columbia
Diversified Absolute Return Fund
Buying, Selling and Exchanging Shares
(continued)
Class Z Shares Minimum Initial Investments
There is no minimum initial investment in Class Z
shares for the following categories of eligible investors:
■
|
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.
|
The minimum initial investment in Class Z shares for
the following categories of eligible investors is $1,000:
■
|
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.
|
The minimum initial investment in Class Z shares for
the following categories of eligible investors is $2,000:
■
|
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.
|
Columbia Diversified Absolute Return
Fund
Buying, Selling
and Exchanging Shares
(continued)
Systematic Investment Plan
The Systematic Investment Plan allows you to
schedule regular purchases via automatic transfers from your bank account to the Fund on a monthly, quarterly or semiannual basis. Contact the Transfer Agent or your selling agent to set up the plan. Systematic Investment Plans may not be available
for all share classes.
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.
Other Purchase Rules You Should Know
■
|
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.
|
Selling Shares
When you sell your shares, the Fund is effectively
buying them back from you. This is called a redemption. The payment will be sent within seven days after your request is received in “good form.” When you sell shares, the amount you receive may be more or less than the amount you
invested.
Your sale price will be the next NAV
calculated after your request is received in “good form,” minus any applicable CDSC.
Systematic Withdrawal Plan
The Systematic Withdrawal Plan allows you to
schedule regular redemptions from your account any business day on a monthly, quarterly or semiannual basis. Currently, Systematic Withdrawal Plans are generally available for Class A, Class B, Class C, Class R4, Class R5, Class T, Class W, Class Y
and Class 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. 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 you've opened your account, we may require your signature to be Medallion Signature Guaranteed.
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. It’s important to remember that if you withdraw more than your investment in the Fund is earning, you'll eventually withdraw your entire investment.
Check Redemption Service (for Columbia Money Market Fund)
Class A and Class Z shares of Columbia Money Market
Fund offer check writing privileges. If you have $2,000 in Columbia Money Market Fund, you may request checks which may be drawn against your account. The amount of any check drawn against your Columbia Money Market Fund must be at least $100. You
can elect this service on your initial application or thereafter. Call 800.345.6611 for the appropriate forms to establish this service. If you own Class A shares that were originally
Columbia
Diversified Absolute Return Fund
Buying, Selling and Exchanging Shares
(continued)
purchased in another Fund at NAV because of the size of the
purchase, and then exchanged into Columbia Money Market Fund, check redemptions may be subject to a CDSC. A $15 charge will be assessed for any stop payment order requested by you or any overdraft in connection with checks written against your
Columbia Money Market Fund account. Note that a Medallion Signature Guarantee may be required if this service is established after the account is opened.
In-Kind Redemptions
The Fund reserves the right to honor redemption
orders with in-kind distributions of portfolio securities instead of cash. In the event the Fund distributes portfolio securities in-kind, you may incur brokerage and transaction costs associated with converting the portfolio securities you receive
into cash. Also, the portfolio securities you receive may increase or decrease in value before you convert them into cash. For U.S. federal income tax purposes redemptions paid in securities are generally treated the same as redemptions paid in
cash.
Other Redemption Rules You Should Know
■
|
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.
|
Exchanging Shares
You can generally sell shares of your Fund to buy
shares of another Fund, in what is called an exchange. You should read the prospectus of, and make sure you understand the investment objective, principal investment strategies, risks, fees and expenses of, the Fund into which you are
exchanging.
You may be subject to a sales
charge if you exchange from Columbia Money Market Fund or any other Fund that does not charge a front-end sales charge into a non-money market Fund.
If you hold your Fund shares through certain selling agents,
including Ameriprise Financial Services, Inc., you may have limited exchangeability among the Funds.
Please contact your selling agent for more information.
You can generally make exchanges between like share
classes of any Fund and, subject to eligibility requirements, other share classes of any Fund. Some exceptions apply. Although the Funds allow certain exchanges from one share class to another share class with higher expenses, you should consider
the expenses of each class before making such an exchange.
Columbia Diversified Absolute Return
Fund
Buying, Selling
and Exchanging Shares
(continued)
Systematic Exchanges
You may buy Class A, Class C, Class T, Class W,
Class Y and/or Class Z shares of a Fund by exchanging each month from another Fund for shares of the same class of the Fund at no additional cost, subject to the following exchange amount minimums: $50 each month for individual retirement accounts
(i.e. tax qualified accounts); and $100 each month for non-retirement accounts. Contact the Transfer Agent or your selling agent to set up the plan. If you set up your plan to exchange more than $100,000 each month, you must obtain a Medallion
Signature Guarantee.
Exchanges will continue
as long as your balance is sufficient to complete the systematic monthly transfers, subject to the Funds' Small Account Policy described above in
Buying, Selling and Exchanging Shares — Transaction Rules and
Policies.
You may terminate the program or change the amount you would like to exchange (subject to the $50 and $100 minimum requirements noted immediately above) by calling the Transfer Agent at 800.345.6611. 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.
Other Exchange Rules You Should Know
■
|
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.
|
Columbia
Diversified Absolute Return Fund
Buying, Selling and Exchanging Shares
(continued)
■
|
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.
|
Same-Fund Exchange Privilege
Certain shareholders of a Fund may be or become
eligible to invest in other classes of shares of the same Fund. Upon a determination of such eligibility, such shareholders may be eligible to exchange their shares for shares of the other share class, if offered. Such exchanges include exchanges of
shares of one class for shares of another share class with higher expenses. Before making such an exchange, you should consider the expenses of each class. Investors should contact their selling agents to learn more about the details of the exchange
privilege.
Note the following rules relating
to same-Fund exchanges:
■
|
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.
|
Columbia Diversified Absolute Return
Fund
Distributions to Shareholders
A mutual fund can make money two ways:
■
|
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).
|
Distributions
Mutual funds make payments of
fund earnings to shareholders, distributing them among all shareholders of the fund. As a shareholder, you are entitled to your portion of a fund's distributed income, including capital gains. Reinvesting your distributions buys you more shares of a
fund
—
which lets you take advantage of the potential for compound growth. Putting the money you earn back into your investment means it, in turn, may earn even more money. Over time, the power of
compounding has the potential to significantly increase the value of your investment. There is no assurance, however, that you'll earn more money if you reinvest your distributions rather than receive them in cash.
The Fund intends to pay out, in the form of
distributions to shareholders, a sufficient amount of its income and gains so that the Fund will qualify for treatment as a regulated investment company and generally will not have to pay any federal excise tax. The Fund generally intends to
distribute any net realized capital gain (whether long-term or short-term gain) at least once a year. Normally, the Fund will declare and pay distributions of net investment income according to the following schedule:
Declaration
and Distribution Schedule
|
Declarations
|
Annually
|
Distributions
|
Annually
|
The Fund may, however,
declare or pay distributions of net investment income more frequently.
Different share classes of the Fund usually pay
different net investment income distribution amounts, because each 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.
The Fund generally pays cash distributions within
five business days after the distribution was declared (or, if the Fund declares distributions daily, within five business days after the end of the month in which the distribution was declared). If you sell all of your shares after the record date,
but before the payment date, for a distribution, you'll normally receive that distribution in cash within five business days after the sale was made.
The Fund will automatically reinvest distributions
in additional shares of the same share class of the Fund unless you inform us you want to receive your distributions in cash (the selling agent through which you purchased shares may have different policies). You can do this by contacting the Funds
at the addresses and telephone numbers listed at the beginning of the section entitled
Choosing a Share Class
. No sales charges apply to the purchase or sale of such shares.
For accounts held directly with the Fund (through
the Transfer Agent), distributions of $10 or less will automatically be reinvested in additional Fund shares only. If you elect to receive distributions by check and the check is returned as undeliverable, all subsequent distributions will be
reinvested in additional shares of the Fund.
Unless you are a tax-exempt investor or holding Fund
shares through a tax-advantaged account (such as a 401(k) plan or IRA), you should consider avoiding buying Fund shares shortly before the Fund makes a distribution (other than distributions of net investment income that are declared daily) of net
investment income or net realized capital gain, because doing so can cost you money in taxes to the extent the distribution consists of taxable income or gains. This is because you will, in effect, receive part
Columbia
Diversified Absolute Return Fund
Distributions and Taxes
(continued)
of your purchase price back in the distribution. This is known as
“buying a dividend.” To avoid “buying a dividend,” before you invest check the Fund's distribution schedule, which is available at the Funds' website and/or by calling the Funds' telephone number listed at the beginning of
the section entitled
Choosing a Share Class
.
Taxes
You should be aware of the following considerations
applicable to all Funds (unless otherwise noted):
■
|
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 the Fund qualifies as a regulated investment
company, the Fund may be subject to federal excise tax on certain undistributed income or gains.
|
■
|
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.
|
■
|
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.
|
■
|
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.
|
■
|
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.
|
■
|
Certain derivative
instruments when held in the 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.
|
■
|
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.
|
Columbia Diversified Absolute Return
Fund
Distributions and
Taxes
(continued)
■
|
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.
|
Taxes
The information provided above is
only a summary of how U.S. federal income taxes may affect your investment in the Fund. It is not intended as a substitute for careful tax planning. Your investment in the Fund may have other tax implications. It does not apply to certain types of
investors who may be subject to special rules, including foreign or tax-exempt investors or those holding Fund shares through a tax-advantaged account, such as a 401(k) plan or IRA. Please see the SAI for more detailed tax information. You should
consult with your own tax advisor about the particular tax consequences to you of an investment in the Fund, including the effect of any foreign, state and local taxes, and the effect of possible changes in applicable tax laws.
Columbia
Diversified Absolute Return Fund
Because the Fund had not commenced operations prior to the date of this
prospectus, no financial highlights are provided.
Additional Information About the Fund
Additional information about the Fund’s
investments will be available in the Fund’s annual and semiannual reports to shareholders. In the annual report, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund’s
performance during its last fiscal year. The SAI also provides additional information about the Fund and its policies. The SAI, which has been filed with the SEC, is legally part of this prospectus (incorporated by reference). To obtain these
documents free of charge, to request other information about the Fund and to make shareholder inquiries contact Columbia Funds as follows:
By
Mail:
Columbia Funds
c/o Columbia Management Investment Services Corp.
P.O. Box 8081
Boston, MA 02266-8081
By Telephone:
800.345.6611
Online:
columbiamanagement.com
Information Provided by the SEC
You can review and copy information about the Fund
(including this prospectus, the SAI and shareholder reports when available) at the SEC’s Public Reference Room in Washington, D.C. To find out more about the operation of the Public Reference Room, call the SEC at 202.551.8090. Reports and
other information about the Fund are also available in the EDGAR Database on the SEC’s website at http://www.sec.gov. You can receive copies of this information, for a fee, by electronic request at the following e-mail address:
publicinfo@sec.gov or by writing the Public Reference Section, Securities and Exchange Commission, Washington, D.C. 20549-1520.
The investment company registration number of Columbia
Funds Series Trust I, of which the Fund is a series, is 811-04367.
© 2015 Columbia Management Investment
Distributors, Inc.
225 Franklin Street, Boston, MA 02110
800.345.6611
STATEMENT OF ADDITIONAL INFORMATION
January 28, 2015
Columbia Funds Series Trust I
Active
Portfolios
®
Multi-Manager Alternative Strategies Fund
|
Class
A: CPASX
|
|
|
Active
Portfolios
®
Multi-Manager Core Plus Bond Fund
|
Class
A: CMCPX
|
|
|
Active
Portfolios
®
Multi-Manager Growth Fund
|
Class
A: CSLGX
|
|
|
Active
Portfolios
®
Multi-Manager Small Cap Equity Fund
|
Class
A: CSCEX
|
|
|
CMG
Ultra Short Term Bond Fund
|
CMGUX
|
|
|
Columbia
Adaptive Alternatives Fund
|
Class
A: CLAAX
|
Class
C: CLABX
|
Class
I: CLIIX
|
Class
R: CRRLX
|
Class
R4: CLFUX
|
Class
R5: CLIVX
|
Class
W: CLAWX
|
Class
Y: CLAYX
|
Class
Z: CLAZX
|
Columbia
Adaptive Risk Allocation Fund
|
Class
A: CRAAX
|
Class
C: CRACX
|
Class
K: CRFRX
|
Class
R: CRKRX
|
Class
R4: CARRX
|
Class
R5: CRDRX
|
Class
W: CRAWX
|
Class
Y: CARYX
|
Class
Z: CRAZX
|
Columbia
AMT-Free Connecticut Intermediate Muni Bond Fund
|
Class
A: LCTAX
|
Class
B: LCTBX
|
Class
C: LCTCX
|
Class
R4: CCTMX
|
Class
T: GCBAX
|
Class
Z: SCTEX
|
Columbia
AMT-Free Intermediate Muni Bond Fund
|
Class
A: LITAX
|
Class
B: LITBX
|
Class
C: LITCX
|
Class
R4: CIMRX
|
Class
R5: CTMRX
|
Class
T: GIMAX
|
Class
Z: SETMX
|
|
|
Columbia
AMT-Free Massachusetts Intermediate Muni Bond Fund
|
Class
A: LMIAX
|
Class
B: LMIBX
|
Class
C: LMICX
|
Class
R4: CMANX
|
Class
T: GMBAX
|
Class
Z: SEMAX
|
Columbia
AMT-Free New York Intermediate Muni Bond Fund
|
Class
A: LNYAX
|
Class
B: LNYBX
|
Class
C: LNYCX
|
Class
R4: CNYIX
|
Class
T: GANYX
|
Class
Z: GNYTX
|
Columbia
AMT-Free Oregon Intermediate Muni Bond Fund
|
Class
A: COEAX
|
Class
B: COEBX
|
Class
C: CORCX
|
Class
R4: CORMX
|
Class
R5: CODRX
|
Class
Z: CMBFX
|
Columbia
Balanced Fund
|
Class
A: CBLAX
|
Class
B: CBLBX
|
Class
C: CBLCX
|
Class
K: CLRFX
|
Class
R: CBLRX
|
Class
R4: CBDRX
|
Class
R5: CLREX
|
Class
Y: CBDYX
|
Class
Z: CBALX
|
Columbia
Bond Fund
|
Class
A: CNDAX
|
Class
B: CNDBX
|
Class
C: CNDCX
|
Class
I: CBNIX
|
Class
R: CBFRX
|
Class
R4: CNDRX
|
Class
R5: CNFRX
|
Class
T: CNDTX
|
Class
W: CBDWX
|
Class
Y: CBFYX
|
Class
Z: UMMGX
|
|
Columbia
California Tax-Exempt Fund
|
Class
A: CLMPX
|
Class
B: CCABX
|
Class
C: CCAOX
|
Class
R4: CCARX
|
Class
Z: CCAZX
|
|
Columbia
Contrarian Core Fund
|
Class
A: LCCAX
|
Class
B: LCCBX
|
Class
C: LCCCX
|
Class
I: CCCIX
|
Class
K: CCRFX
|
Class
R: CCCRX
|
Class
R4: CORRX
|
Class
R5: COFRX
|
Class
T: SGIEX
|
Class
W: CTRWX
|
Class
Y: COFYX
|
Class
Z: SMGIX
|
Columbia
Corporate Income Fund
|
Class
A: LIIAX
|
Class
B: CIOBX
|
Class
C: CIOCX
|
Class
I: CPTIX
|
Class
R4: CIFRX
|
Class
R5: CPIRX
|
Class
W: CPIWX
|
Class
Y: CRIYX
|
Class Z:
SRINX
|
Columbia
Diversified Absolute Return Fund
|
Class
A: CDUAX
|
Class
C: CDUCX
|
Class
I: CDUIX
|
Class
R4: CDUFX
|
Class
R5: CDUGX
|
Class
W: CDUWX
|
Class
Z: CDUZX
|
|
|
Columbia
Diversified Real Return Fund
|
Class
A: CDRAX
|
Class
C: CDRCX
|
Class
R4: CDRRX
|
Class
R5: CDRFX
|
Class
W: CDTWX
|
Class
Z: CDRZX
|
Columbia
Dividend Income Fund
|
Class
A: LBSAX
|
Class
B: LBSBX
|
Class
C: LBSCX
|
Class
I: CDVIX
|
Class
R: CDIRX
|
Class
R4: CVIRX
|
Class
R5: CDDRX
|
Class
T: GEQAX
|
Class
W: CDVWX
|
Class
Y: CDDYX
|
Class
Z: GSFTX
|
|
Columbia
Emerging Markets Fund
|
Class
A: EEMAX
|
Class
B: CEBMX
|
Class
C: EEMCX
|
Class
I: CEHIX
|
Class
K: CEKMX
|
Class
R: CEMRX
|
Class
R4: CEMHX
|
Class
R5: CEKRX
|
Class
W: CEMWX
|
Class
Y: CEKYX
|
Class
Z: UMEMX
|
|
Columbia
Global Dividend Opportunity Fund
|
Class
A: CSVAX
|
Class
B: CSVBX
|
Class
C: CSRCX
|
Class
I: CEVIX
|
Class
R: CSGRX
|
Class
R4: CGOLX
|
Class
R5: CADPX
|
Class
W: CTVWX
|
Class
Y: CLSYX
|
Class
Z: CSVFX
|
|
|
Columbia
Global Energy and Natural Resources Fund
|
Class
A: EENAX
|
Class
B: CEGBX
|
Class
C: EENCX
|
Class
I: CERIX
|
Class
K: CEGFX
|
Class
R: CETRX
|
Class
R4: CENRX
|
Class
R5: CNRRX
|
Class
Z: UMESX
|
Columbia
Global Inflation-Linked Bond Plus Fund
|
Class
I: CGNIX
|
Class
W: CLBGX
|
Class
Z: CGNZX
|
Columbia
Global Technology Growth Fund
|
Class
A: CTCAX
|
Class
B: CTCBX
|
Class
C: CTHCX
|
Class
R4: CTYRX
|
Class
R5: CTHRX
|
Class
Z: CMTFX
|
Columbia
Greater China Fund
|
Class
A: NGCAX
|
Class
B: NGCBX
|
Class
C: NGCCX
|
Class
I: CCINX
|
Class
R4: CGCHX
|
Class
R5: CGCRX
|
Class
W: CGCWX
|
Class
Z: LNGZX
|
|
Columbia
High Yield Municipal Fund
|
Class
A: LHIAX
|
Class
B: CHMBX
|
Class
C: CHMCX
|
Class
R4: CHIYX
|
Class
R5: CHMYX
|
Class
Z: SRHMX
|
Columbia
Intermediate Bond Fund
|
Class
A: LIBAX
|
Class
B: LIBBX
|
Class
C: LIBCX
|
Class
I: CIMIX
|
Class
K: CIBKX
|
Class
R: CIBRX
|
Class
R4: CBNRX
|
Class
R5: CTBRX
|
Class
W: CIBWX
|
Class
Y: CTBYX
|
Class
Z: SRBFX
|
|
Columbia
International Bond Fund*
|
Class
A: CNBAX
|
Class
C: CNBCX
|
Class
I: CIBIX
|
Class
W: CLBWX
|
Class
Z: CNBZX
|
|
Columbia
Large Cap Growth Fund
|
Class
A: LEGAX
|
Class
B: LEGBX
|
Class
C: LEGCX
|
Class
E: CLGEX
|
Class
F: CLGFX
|
Class
I: CLGIX
|
Class
K: CLRUX
|
Class
R: CGWRX
|
Class
R4: CCGRX
|
Class
R5: CLWFX
|
Class
T: GAEGX
|
Class
W: CLGWX
|
Class
Y: CGFYX
|
Class
Z: GEGTX
|
|
Columbia
Mid Cap Growth Fund
|
Class
A: CBSAX
|
Class
B: CBSBX
|
Class
C: CMCCX
|
Class
I: CMTIX
|
Class
K: CMCKX
|
Class
R: CMGRX
|
Class
R4: CPGRX
|
Class
R5: CMGVX
|
Class
T: CBSTX
|
Class
W: CMRWX
|
Class
Y: CMGYX
|
Class
Z: CLSPX
|
Columbia
New York Tax-Exempt Fund
|
Class
A: COLNX
|
Class
B: CNYBX
|
Class
C: CNYCX
|
Class
R4: CNYEX
|
Class
R5: CNYRX
|
Class Z:
CNYZX
|
Columbia
Pacific/Asia Fund
|
Class
A: CASAX
|
Class
C: CASCX
|
Class
I: CPCIX
|
Class
R4: CPRAX
|
Class
W: CPAWX
|
Class
Z: USPAX
|
Columbia
Real Estate Equity Fund
|
Class
A: CREAX
|
Class
B: CREBX
|
Class
C: CRECX
|
Class
I: CREIX
|
Class
K: CRRFX
|
Class
R: CRSRX
|
Class
R4: CRERX
|
Class
R5: CRRVX
|
Class
W: CREWX
|
Class
Z: CREEX
|
|
|
Columbia
Select Large Cap Growth Fund
|
Class
A: ELGAX
|
Class
C: ELGCX
|
Class
I: CSPIX
|
Class
R: URLGX
|
Class
R4: CSRRX
|
Class
R5: CGTRX
|
Class
W: CSLWX
|
Class
Y: CCWRX
|
Class
Z: UMLGX
|
Columbia
Small Cap Core Fund
|
Class
A: LSMAX
|
Class
B: LSMBX
|
Class
C: LSMCX
|
Class
I: CPOIX
|
Class
R4: CFFRX
|
Class
R5: CLLRX
|
Class
T: SSCEX
|
Class
W: CSCWX
|
Class
Y: CPFRX
|
Class
Z: SMCEX
|
|
|
Columbia
Small Cap Growth Fund I
|
Class
A: CGOAX
|
Class
B: CGOBX
|
Class
C: CGOCX
|
Class
I: CSWIX
|
Class
K: CSCKX
|
Class
R: CCRIX
|
Class
R4: CHHRX
|
Class
R5: CSCRX
|
Class
Y: CSGYX
|
Class
Z: CMSCX
|
|
|
Columbia
Small Cap Value Fund I
|
Class
A: CSMIX
|
Class
B: CSSBX
|
Class
C: CSSCX
|
Class
I: CVUIX
|
Class
R: CSVRX
|
Class
R4: CVVRX
|
Class
R5: CUURX
|
Class
Y: CSVYX
|
Class
Z: CSCZX
|
Columbia
Strategic Income Fund
|
Class
A: COSIX
|
Class
B: CLSBX
|
Class
C: CLSCX
|
Class
K: CSIVX
|
Class
R: CSNRX
|
Class
R4: CMNRX
|
Class
R5: CTIVX
|
Class
W: CTTWX
|
Class
Y: CPHUX
|
Class
Z: LSIZX
|
|
|
Columbia
Tax-Exempt Fund
|
Class
A: COLTX
|
Class
B: CTEBX
|
Class
C: COLCX
|
Class
R4: CTERX
|
Class
R5: CADMX
|
Class
Z: CTEZX
|
Columbia
U.S. Treasury Index Fund
|
Class
A: LUTAX
|
Class
B: LUTBX
|
Class
C: LUTCX
|
Class
I: CUTIX
|
Class
R5: CUTRX
|
Class
W: CTIWX
|
Class
Z: IUTIX
|
|
|
Columbia
Value and Restructuring Fund
|
Class
A: EVRAX
|
Class
C: EVRCX
|
Class
I: CVRIX
|
Class
R: URBIX
|
Class
R4: CVRRX
|
Class
R5: CVCRX
|
Class
W: CVRWX
|
Class
Y: CVRYX
|
Class Z:
UMBIX
|
*
|
The Fund’s Board of
Trustees has approved a Plan of Liquidation and Termination (the Plan); it is anticipated that the Fund will be liquidated on or about February 6, 2015. Please refer to the Fund’s prospectus for further details regarding the Plan.
|
Unless the context
indicates otherwise, references herein to “each Fund”, “the Funds”, “a Fund” or “Funds” refers to each Fund listed above.
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 each Fund’s 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 Fund’s audited financial statements for its most recent fiscal period, is 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.
Table of Contents
|
2
|
|
6
|
|
9
|
|
17
|
|
17
|
|
53
|
|
73
|
|
74
|
|
75
|
|
75
|
|
92
|
|
103
|
|
106
|
|
109
|
|
113
|
|
116
|
|
119
|
|
122
|
|
123
|
|
126
|
|
126
|
|
137
|
|
140
|
|
140
|
|
143
|
|
145
|
|
147
|
|
153
|
|
153
|
|
154
|
|
154
|
|
160
|
|
161
|
|
164
|
|
164
|
|
166
|
|
166
|
|
167
|
|
169
|
|
187
|
|
228
|
|
A-1
|
|
B-1
|
|
C-1
|
|
D-1
|
|
S-1
|
Statement
of Additional Information – January 28, 2015
|
1
|
SAI PRIMER
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 SEC’s
website at www.sec.gov.
For purposes of any
electronic version of this SAI, all references to websites, or universal resource locators (URLs), are intended to be inactive and 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 each Trust;
|
■
|
the Funds'
investments;
|
■
|
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;
|
■
|
the governance of
the Funds;
|
■
|
the Funds'
brokerage practices;
|
■
|
the share classes
offered by the Funds;
|
■
|
the purchase,
redemption and pricing of Fund shares; and
|
■
|
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, if applicable, between a 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
Trust's Board of Trustees
|
Business
Day
|
Any
day on which the 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
United States Commodities Futures Trading Commission
|
CMOs
|
Collateralized
mortgage obligations
|
Code
|
Internal
Revenue Code of 1986, as amended
|
Statement
of Additional Information – January 28, 2015
|
2
|
Codes
of Ethics
|
The
codes of ethics adopted by the Funds, the Investment Manager, the Distributor and/or any sub-adviser, as applicable, pursuant to Rule 17j-1 under the 1940 Act
|
Columbia
Funds Complex
|
The
fund 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 or principally underwritten by Columbia Management Investment Distributors, Inc.
|
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 a 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 Agreements, as amended, between the Trust, on behalf of the Funds, and the Investment Manager
|
Investment
Manager
|
Columbia
Management Investment Advisers, LLC
|
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.
|
Moody’s
|
Moody’s
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, for example, Moody’s, Fitch or S&P)
|
NSCC
|
National
Securities Clearing Corporation
|
NYSE
|
New
York Stock Exchange
|
Previous
Administrator
|
Columbia
Management Advisors, LLC, the administrator of certain Columbia Funds 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.
|
Statement
of Additional Information – January 28, 2015
|
3
|
Previous
Adviser
|
Columbia
Management Advisors, LLC, the investment adviser of certain Columbia Funds 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 certain Columbia Funds 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 certain Columbia Funds 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 Code
|
S&P
|
Standard
& Poor’s, a division of The McGraw-Hill Companies, Inc. (“Standard & Poor’s” 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 & Poor’s and Standard & Poor’s makes no representation regarding the advisability of investing in the Columbia Funds)
|
SAI
|
This
Statement of Additional Information, as amended and supplemented from time-to-time
|
SEC
|
United
States Securities and Exchange Commission
|
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
|
Sub-Advisory
Agreement
|
The
Subadvisory Agreement among the Trust on behalf of the Fund(s), the Investment Manager and a Fund’s investment subadviser(s), as the context may require
|
Subsidiary
|
One
or more wholly-owned subsidiaries of a Fund
|
TCW
|
TCW
Investment Management Company
|
Threadneedle
|
Threadneedle
International Limited
|
Transfer
Agency Agreement
|
The
Transfer and Dividend Disbursing Agent Agreement between the Trust, on behalf of the Funds, and the Transfer Agent
|
Transfer
Agent
|
Columbia
Management Investment Services Corp.
|
Trustee(s)
|
One
or more of the Board’s Trustees
|
Trust
|
Columbia
Funds Series Trust I, the registered investment company in the Columbia Fund Family to which this SAI relates
|
Wasatch
|
Wasatch
Advisors, Inc.
|
Water
Island
|
Water
Island Capital, LLC
|
Statement
of Additional Information – January 28, 2015
|
4
|
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
Adaptive Alternatives Fund
|
|
Adaptive
Alternatives Fund
|
Columbia
Adaptive Risk Allocation Fund
|
|
Adaptive
Risk Allocation 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 Absolute Return Fund
|
|
Diversified
Absolute Return 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
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 – January 28, 2015
|
5
|
ABOUT THE Trust
The Trust is an open-end management investment
company registered under the 1940 Act located at 225 Franklin Street, Boston, Massachusetts 02110.
The Trust was organized as a Massachusetts business
trust in 1987. On October 13, 2003, the Trust changed its name from Liberty-Stein Roe Funds Municipal Trust to Columbia Funds Trust IX. On September 19, 2005, the Trust changed its name from Columbia Funds Trust IX to its current name. The offering
of the shares is registered under the 1933 Act.
Fund
|
Fiscal
Year End
|
Prospectus
Date
|
Date
Began
Operations*
|
Diversified**
|
Fund
Investment Category***
|
Adaptive
Alternatives Fund
|
May
31
|
1/28/2015
|
1/27/2015
|
No
|
Alternative
|
Adaptive
Risk Allocation Fund
|
May
31
|
10/1/2014
|
6/19/2012
|
No
|
Alternative
|
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)
|
12/1/2014
|
7/2/1984
|
Yes
|
Tax-exempt
fixed-income
|
AP
– Alternative Strategies Fund
|
August
31
|
1/1/2015
|
4/23/2012
|
No
|
Alternative
|
AP
– Core Plus Bond Fund
|
August
31
|
1/1/2015
|
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
|
1/1/2015
|
4/20/2012
|
Yes
|
Equity
|
Balanced
Fund
|
August
31
|
1/1/2015
|
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)
|
1/1/2015
|
12/14/1992
|
Yes
|
Equity
|
Corporate
Income Fund
|
April
30
(a)
|
9/1/2014
|
3/5/1986
|
Yes
|
Taxable
fixed-income
|
Diversified
Absolute Return Fund
|
May
31
|
1/28/2015
|
†
|
Yes
|
Alternative
|
Diversified
Real Return Fund
|
January
31
|
3/10/2014
|
3/11/2014
|
Yes
|
Fund-of-funds-fixed
income
|
Dividend
Income Fund
|
May
31
(c)
|
10/1/2014
|
3/4/1998
|
Yes
|
Equity
|
Emerging
Markets Fund
|
August
31
(d)
|
1/1/2015
|
1/2/1998
|
Yes
|
Equity
|
Global
Dividend Opportunity Fund
|
August
31
|
1/1/2015
|
11/9/2000
|
Yes
|
Equity
|
Global
Energy and Natural Resources Fund
|
August
31
(d)
|
1/1/2015
|
12/31/1992
|
No
|
Equity
|
Global
ILB Plus Fund
|
July
31
|
12/1/2014
|
3/12/2014
|
No
|
Taxable
fixed-income
|
Global
Technology Growth Fund
|
August
31
|
1/1/2015
|
11/9/2000
|
No
|
Equity
|
Greater
China Fund
|
August
31
|
1/1/2015
|
5/16/1997
|
No
|
Equity
|
HY
Municipal Fund
|
May
31
(e)
|
10/1/2014
|
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)
|
12/1/2014
|
12/14/1990
|
Yes
|
Equity
|
Mid
Cap Growth Fund
|
August
31
|
1/1/2015
|
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
|
5/1/2014
|
4/1/1994
|
No
|
Equity
|
Statement
of Additional Information – January 28, 2015
|
6
|
Fund
|
Fiscal
Year End
|
Prospectus
Date
|
Date
Began
Operations*
|
Diversified**
|
Fund
Investment Category***
|
Select
Large Cap Growth Fund
|
March
31
|
8/1/2014
|
10/1/1997
|
Yes
|
Equity
|
Small
Cap Core Fund
|
August
31
(b)
|
1/1/2015
|
12/14/1992
|
Yes
|
Equity
|
Small
Cap Growth Fund I
|
August
31
|
1/1/2015
|
10/1/1996
|
Yes
|
Equity
|
Small
Cap Value Fund I
|
April
30
(i)
|
9/1/2014
|
7/25/1986
|
Yes
|
Equity
|
Strategic
Income Fund
|
October
31
(f)
|
3/1/2014
|
4/21/1977
|
Yes
|
Taxable
fixed-income
|
Tax-Exempt
Fund
|
July
31
(j)
|
12/1/2014
|
11/21/1978
|
Yes
|
Tax-exempt
fixed-income
|
Ultra
Short Term Bond Fund
|
July
31
|
12/1/2014
|
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)
|
1/1/2015
|
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” Fund’s 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 Fund’s principal investment strategies, which are described in the Fund’s prospectus.
|
†
|
The Fund is expected to
commence investment operations on or about February 19, 2015.
|
(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)
|
AMT-Free OR Intermediate
Municipal Bond Fund changed its fiscal year end in 2012 from August 31 to July 31.
|
(i)
|
Small Cap Value Fund I
changed its fiscal year end in 2012 from June 30 to April 30.
|
(j)
|
Tax-Exempt Fund changed its
fiscal year end in 2012 from November 30 to July 31.
|
Statement
of Additional Information – January 28, 2015
|
7
|
Name Changes.
The table below identifies the Funds whose names have 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
|
Adaptive
Risk Allocation
|
October
1, 2014
|
Columbia
Risk Allocation Fund
|
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 Muni 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 – January 28, 2015
|
8
|
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 only with Board approval and does not require shareholder approval.
Unless otherwise noted in a
Fund’s Prospectus or this SAI, whenever an investment policy or limitation states a maximum percentage of a Fund’s 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 Fund’s acquisition of such security or asset (Time of Purchase Standard).
Notwithstanding any of a Fund’s other
investment policies, the 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 Fund’s investment policies.
In adhering to the fundamental and
non-fundamental investment restrictions and policies applicable to Adaptive Alternatives Fund, AP – Alternative Strategies Fund and Diversified Absolute Return Fund , each Fund will, to the extent possible, treat any assets of its Subsidiary
generally as if the assets were held directly by the Fund.
Fundamental Policies
The table below shows fund-specific policies that
may be changed only with a “vote of a majority of the outstanding voting securities” of the Fund, which means the affirmative vote of the lesser of (1) more than 50% of the outstanding shares of the 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 table indicates whether or not the fund has a policy on a particular topic. A dash indicates that the Fund does not have a
Fundamental policy on a particular topic. The specific policy is stated in the paragraphs that follow the table.
Fund
|
A
Buy or
sell real
estate
|
B
Buy or sell
commodities
|
C
Issuer
Diversification
|
D
Concentrate
in any one
industry
|
E
Invest
at least
80%
|
F
Act as an
underwriter
|
G
Lending
|
H
Borrow
money
|
I
Issue
senior
securities
|
Adaptive
Alternatives Fund
|
A2
|
B4
|
—
|
D6
|
—
|
F2
|
G2
|
H2
|
I2
|
Adaptive
Risk Allocation Fund
|
A1
|
B1
|
—
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
AMT-Free
CT Intermediate Muni Bond Fund
|
A1
|
B1
|
—
|
D1
|
E2
|
F1
|
G1
|
H1
|
I1
|
AMT-Free
Intermediate Muni Bond Fund
|
A1
|
B1
|
C1
|
D1
|
E3
|
F1
|
G1
|
H1
|
I1
|
AMT-Free
MA Intermediate Muni Bond Fund
|
A1
|
B1
|
—
|
D1
|
E4
|
F1
|
G1
|
H1
|
I1
|
AMT-Free
NY Intermediate Muni Bond Fund
|
A1
|
B1
|
—
|
D1
|
E5
|
F1
|
G1
|
H1
|
I1
|
AMT-Free
OR Intermediate Muni Bond Fund
|
A1
|
B1
|
C3
|
D1
|
E6
|
F1
|
G1
|
H1
|
I1
|
AP
– Alternative Strategies Fund
|
A1
|
B2
|
—
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
AP
– Core Plus Bond Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
AP
– Growth Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
AP
– Small Cap Equity Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Balanced
Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Bond
Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
CA
Tax-Exempt Fund
|
A1
|
B1
|
—
|
D1
|
E1
|
F1
|
G1
|
H1
|
I1
|
Contrarian
Core Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Corporate
Income Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Diversified
Absolute Return Fund
|
A2
|
B4
|
C4
|
D6
|
—
|
F2
|
G2
|
H2
|
I2
|
Diversified
Real Return Fund
|
A1
|
B3
|
C1
|
D5
|
—
|
F1
|
G1
|
H1
|
I1
|
Dividend
Income Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Emerging
Markets Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Global
Dividend Opportunity Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Statement
of Additional Information – January 28, 2015
|
9
|
Fund
|
A
Buy or
sell real
estate
|
B
Buy or sell
commodities
|
C
Issuer
Diversification
|
D
Concentrate
in any one
industry
|
E
Invest
at least
80%
|
F
Act as an
underwriter
|
G
Lending
|
H
Borrow
money
|
I
Issue
senior
securities
|
Global
Energy and Natural Resources Fund
|
A1
|
B1
|
—
|
D2
|
—
|
F1
|
G1
|
H1
|
I1
|
Global
ILB Plus Fund
|
A1
|
B3
|
—
|
D5
|
—
|
F1
|
G1
|
H1
|
I1
|
Global
Technology Growth Fund
|
A1
|
B1
|
—
|
D4
|
E9
|
F1
|
G1
|
H1
|
I1
|
Greater
China Fund
|
A1
|
B1
|
C2
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
HY
Municipal Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Intermediate
Bond Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
International
Bond Fund
|
A1
|
B1
|
—
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Large
Cap Growth Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Mid
Cap Growth Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
NY
Tax-Exempt Fund
|
A1
|
B1
|
—
|
D1
|
E1
|
F1
|
G1
|
H1
|
I1
|
Pacific/Asia
Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Real
Estate Equity Fund
|
A1
|
B1
|
—
|
D3
|
E7
|
F1
|
G1
|
H1
|
I1
|
Select
Large Cap Growth Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Small
Cap Core Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Small
Cap Growth Fund I
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Small
Cap Value Fund I
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Strategic
Income Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Tax-Exempt
Fund
|
A1
|
B1
|
C1
|
D1
|
E8
|
F1
|
G1
|
H1
|
I1
|
Ultra
Short Term Bond Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
U.S.
Treasury Index Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
Value
and Restructuring Fund
|
A1
|
B1
|
C1
|
D1
|
—
|
F1
|
G1
|
H1
|
I1
|
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.
|
A2 –
|
The Fund will not
buy or sell real estate, unless acquired as a result of ownership of securities or other instruments, except this shall not prevent the Fund from investing in: (i) securities or other instruments backed by real estate or interests in real estate,
(ii) securities or other instruments of issuers or entities that deal in real estate or are engaged in the real estate business, (iii) real estate investment trusts (REITs) or entities similar to REITs formed under the laws of non-U.S. countries or
(iv) real estate or interests in real estate acquired through the exercise of its rights as a holder of securities 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.
|
Statement
of Additional Information – January 28, 2015
|
10
|
B4 –
|
The Fund will not
purchase or sell commodities, except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief, as interpreted or modified by regulatory authority having jurisdiction, from time to time.
|
(a)
|
For purposes of the
fundamental investment policy on buying and 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.
|
C.
|
Issuer
Diversification
|
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, more than 5% of its total assets will be invested in the securities of such issuer or 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 Fund’s 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, more than 5% of its total assets will be invested in the
securities of such issuer or 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 Fund’s 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.
|
C4 –
|
The Fund will 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 or it would
own more than 10% of the voting securities of such issuer, except that: (a) up to 25% of its total assets may be invested without regard to these limitations; and (b) a Fund’s 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, as interpreted or modified by regulatory authority having jurisdiction, from time to time.
|
D1 –
|
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
(a)
; 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.
|
D2 –
|
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.
(b)
|
D3 –
|
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.
|
D4
–
|
The
Fund will, under normal market conditions, 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 technology and related group of industries,
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
|
Statement
of Additional Information – January 28, 2015
|
11
|
|
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.
|
D5
–
|
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.
|
D6 –
|
The Fund will 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 investment companies or subsidiaries to the extent permitted by the 1940 Act, the rules and regulations
thereunder and any applicable exemptive relief, as interpreted or modified by regulatory authority having jurisdiction, from time to time. The Fund will consider the concentration policies of any underlying funds in which it invests when evaluating
compliance with its concentration policy.
|
*
|
For purposes of applying the
limitation set forth in its concentration policy, above, a Fund will generally use the industry classifications provided by the Global Industry Classification System (GICS) for classification of issuers of equity securities and the classifications
provided by the Barclays Capital Aggregate Bond Index for classification of issues of fixed-income securities. To the extent that a Fund’s concentration policy requires the Fund to consider the concentration policies of any underlying funds in
which it invests, the Fund will consider, in the case of unaffiliated underlying funds, the portfolio positions at the time of purchase of such unaffiliated underlying funds based on portfolio information made publicly available by them. The Fund
does not consider futures or swaps clearinghouses or securities clearinghouses, where the Fund has exposure to such clearinghouses in the course of making investments in futures and securities, to be part of any industry.
|
(a)
|
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.
|
(b)
|
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).
|
E1 –
|
The Fund will,
under normal circumstances, invest at least 80% of its total assets in state bonds, subject to applicable state requirements.
|
E2
–
|
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, 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 Fund’s investment in such entity shall be deemed to be an investment in the underlying
securities in the same proportion as such entity’s investment in such securities bears to its net assets.
|
Statement
of Additional Information – January 28, 2015
|
12
|
E3 –
|
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 Fund’s investment in such entity shall be deemed to be an investment in the underlying securities in the
same proportion as such entity’s investment in such securities bears to its net assets.
|
E4
–
|
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 Fund’s investment in such entity shall be deemed to be an investment
in the underlying securities in the same proportion as such entity’s investment in such securities bears to its net assets.
|
E5 –
|
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 Fund’s investment in such entity shall be deemed to be an investment in the underlying
securities in the same proportion as such entity’s investment in such securities bears to its net assets.
|
E6 –
|
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.
|
E7 –
|
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.
|
E8 –
|
Under normal
circumstances, the Fund invests at least 80% of its total assets in tax-exempt bonds.
|
E9
–
|
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.
|
F1 –
|
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 Fund’s investment objective. This restriction shall not limit the Fund’s ability to invest in securities issued by other registered investment companies.
|
F2 –
|
The Fund will 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 where the Fund later resells such securities. This restriction shall not limit the Fund’s ability to invest in securities issued by other registered investment companies.
|
G1 –
|
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.
|
G2 –
|
The Fund will not
make loans, except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief, as interpreted or modified by regulatory authority having jurisdiction, from time to time.
|
Statement
of Additional Information – January 28, 2015
|
13
|
H1 –
|
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.
|
H2 –
|
The Fund will not
borrow money except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief, as interpreted or modified by regulatory authority having jurisdiction, from time to time.
|
I.
|
Issue senior
securities
|
I1 –
|
The Fund may not
issue senior securities, except as permitted under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief.
|
I2 –
|
The Fund will not
issue senior securities, except as permitted under the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief, as interpreted or modified by regulatory authority having jurisdiction, from time to time.
|
Non-fundamental Policies
The following non-fundamental policies may be
changed by the Board at any time and may be in addition to those described in the 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 staff’s 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. Compliance with this limitation is not measured under the Time of Purchase
Standard.
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 the 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 fund’s 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 fund’s total assets; and (iii) purchase securities issued by investment companies that in the aggregate represent more than 10% of the acquiring
fund’s total assets (the “3, 5 and 10 Rule”). Affiliated funds-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. Additionally, certain exceptions to these limitations apply to investments in money market mutual funds.
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.
|
■
|
Balanced Fund,
Contrarian Core Fund and Dividend Income Fund each may invest up to 20% of its net assets in foreign securities.
|
■
|
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.
|
■
|
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.
|
Statement
of Additional Information – January 28, 2015
|
14
|
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
Fund’s 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 Fund’s fundamental and
non-fundamental policies set forth above prohibit transactions “except to the extent permitted by the 1940 Act, the rules and regulations thereunder and any applicable exemptive relief”. The following discussion summarizes 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 providing greater flexibility, the Fund will be able to use that flexibility without seeking shareholder approval of its fundamental policies.
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. Compliance with this limitation is not measured
under the Time of Purchase Standard.
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 company’s common stock with respect to the same earnings or assets. The 1940 Act 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 other derivative instruments and selling put and call options), provided that the Fund segregates or designates on the Fund’s books and records liquid assets, or otherwise covers the transaction with offsetting
portfolio securities, in amounts sufficient to offset any liability associated with the transaction. The exception in the fundamental policy allows the Fund to operate in reliance upon these staff interpretations.
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 Fund’s total value. A Fund must receive from the borrower collateral at least equal in value to the loaned securities, marked to market daily. The exception in the fundamental
policy allows the Fund to make loans to third parties, including loans of its portfolio securities, subject to these conditions.
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”
Statement
of Additional Information – January 28, 2015
|
15
|
above, a mutual fund must segregate or designate on the
Fund’s books and records liquid assets with a value equal to, or otherwise cover the obligation to return, the security. The exception in the fundamental policy allows the 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 – January 28, 2015
|
16
|
ABOUT FUND INVESTMENTS
Each Fund’s investment objective, principal
investment strategies and related principal risks are discussed in each Fund’s prospectus. Each Fund’s prospectus identifies the types of securities in which the Fund invests principally and summarizes the principal risks to the
Fund’s 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 Fund’s 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 also 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 securities and other instruments and may engage in the 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
Fund’s 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 Fund’s 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
Fund’s 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 Fund’s 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 Fund’s 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.
Types of Investments
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
|
Asset-Backed
Securities
|
•
|
•
|
•
|
•
|
•
|
Bank
Obligations (Domestic and Foreign)
|
•
|
•
|
•
|
•
|
•
|
Collateralized
Bond Obligations
|
•
|
•
|
•
|
•
|
•
|
Statement
of Additional Information – January 28, 2015
|
17
|
Type
of Investment
|
Alternative
|
Equity
and
Flexible
|
Funds-of-Funds
– Equity and
Fixed Income
|
Taxable
Fixed
Income
(a)
|
Tax-Exempt
Fixed
Income
|
Commercial
Paper
|
•
|
•
|
•
|
•
|
•
|
Common
Stock
|
•
|
•
|
•
|
•
|
—
|
Convertible
Securities
|
•
|
•
|
•
|
•
|
•
|
Corporate
Debt Securities
|
•
|
•
|
•
|
•
|
•
|
Custody
Receipts and Trust Certificates
|
•
|
•
|
•
|
•
|
•
|
Debt
Obligations
|
•
|
•
|
•
|
•
|
•
|
Depositary
Receipts
|
•
|
•
|
•
|
•
|
—
|
Derivatives
|
•
|
•
|
•
|
•
|
•
|
Dollar
Rolls
|
•
|
•
|
•
|
•
|
•
|
Foreign
Currency Transactions
|
•
|
•
|
•
|
•
|
•
|
Foreign
Securities
|
•
|
•
|
•
|
•
|
•
|
Guaranteed
Investment Contracts (Funding Agreements)
|
•
|
•
|
•
|
•
|
•
|
High-Yield
Securities
|
•
|
•
|
•
|
•
|
•
|
Illiquid
Securities
|
•
|
•
|
•
|
•
|
•
|
Inflation
Protected Securities
|
•
|
•
|
•
|
•
|
•
|
Initial
Public Offerings
|
•
|
•
|
•
|
•
|
•
|
Inverse
Floaters
|
•
|
•
|
•
|
•
|
•
|
Investments
in Other Investment Companies (Including ETFs)
|
•
|
•
|
•
|
•
|
•
|
Listed
Private Equity Funds
|
•
|
•
|
•
|
•
|
•
|
Money
Market Instruments
|
•
|
•
|
•
|
•
|
•
|
Mortgage-Backed
Securities
|
•
|
•
|
•
|
•
|
•
|
Municipal
Securities
|
•
|
•
|
•
|
•
|
•
|
Participation
Interests
|
•
|
•
|
•
|
•
|
•
|
Partnership
Securities
|
•
|
•
|
•
|
•
|
•
|
Preferred
Stock
|
•
|
•
|
•
|
•
|
•
|
Private
Placement and Other Restricted Securities
|
•
|
•
|
•
|
•
|
•
|
Real
Estate Investment Trusts
|
•
|
•
|
•
|
•
|
•
|
Repurchase
Agreements
|
•
|
•
|
•
|
•
|
•
|
Reverse
Repurchase Agreements
|
•
|
•
|
•
|
•
|
•
|
Short
Sales
(b)
|
•
|
•
|
•
|
•
|
•
|
Sovereign
Debt
|
•
|
•
|
•
|
•
|
•
|
Standby
Commitments
|
•
|
•
|
•
|
•
|
•
|
U.S.
Government and Related Obligations
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•
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•
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•
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•
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•
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Variable
and Floating Rate Obligations
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•
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•
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•
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•
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•
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(a)
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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, high-yield 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.
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(b)
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See
Fundamental and Non-Fundamental Investment Policies
for Funds that are not permitted to sell securities short.
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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
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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 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 and Related Derivatives 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: Counterparty Risk, Credit Risk, Interest Rate Risk, Issuer Risk, Liquidity 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 the federal securities laws.
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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 – High-Yield
Securities
.
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, 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 Types of Investments — 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 security’s 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 stock’s 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.
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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 company’s 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 issuer’s common stock in the event of liquidation but generally are subordinate to similar non-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 company’s 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, Types of Investments – Debt Obligations, Types of
Investments – Commercial Paper
and
Types of Investments – High-Yield 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 ECN’s 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.
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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 issuer’s 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.
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, Types of Investments – 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.
Unless otherwise stated in the Fund’s prospectus, when determining, under a Fund’s investment policies, whether a debt instrument is investment grade or below
investment grade for purposes of purchase by the Fund, the Fund will apply a particular credit quality rating methodology, as described within the Fund’s shareholder reports, when available. These methodologies typically make use of credit
quality ratings assigned by a third-party rating agency or agencies, when available. Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. Credit quality
ratings apply to the Fund’s debt instrument investments and not the Fund itself.
Ratings limitations under a Fund’s investment
policies are applied at the time of purchase by a Fund. Subsequent to purchase, a debt instrument may cease to be rated by a rating agency or its rating may be reduced by a rating agency(ies) below the minimum required for purchase by a Fund.
Neither event will require the sale of such debt instrument, but it may be a factor in considering whether to continue to hold the instrument. Unless otherwise stated in a Fund’s prospectus or in this SAI, a Fund may invest in debt instruments
that are not rated by a rating agency. When a debt instrument is not rated by a rating agency, the Investment Manager or, as applicable, a Fund subadviser determines, at the time of purchase, whether such debt instrument is of investment grade or
below investment grade (e.g., junk bond) quality. A Fund’s debt instrument holdings that are not rated by a rating agency are typically referred to as “Not Rated” within the Fund’s shareholder reports.
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 debt obligations include: Confidential Information Access Risk, Credit Risk, Highly Leveraged Transactions Risk, Impairment of Collateral Risk, Interest Rate Risk,
Issuer Risk, Liquidity Risk, Prepayment and Extension Risk and Reinvestment Risk.
Determining Average Maturity.
When determining the average maturity of a Fund's portfolio, the Fund may use the effective maturity of a portfolio security by, among other things, adjusting for interest rate re-set dates, call dates
or “put” dates.
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
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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.
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.
Indexed 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 Fund’s 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 trust’s 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.
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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 the end of the term of the security. However, these payments are conditioned on or linked to the
issuer’s receipt of payments from, and the issuer’s 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 Fund’s 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 Fund’s
portfolio manager. Markets and underlying investments and indexes may move in a direction that was not anticipated by a Fund’s 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 Fund’s 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 trust’s 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.
Statement
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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 CEA by the CFTC, a U.S. Government agency. See
Types of Investments – Derivatives – CFTC Regulation
below for information on
CFTC regulation.
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 Fund’s obligation under the contract (less any applicable margin deposits and any assets that constitute “cover” for such obligation), will
be segregated with a Fund’s 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 manager’s 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.
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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 Fund’s 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, 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
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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.
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 Fund’s 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 security’s or other asset’s 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 writer’s futures margin account, which represents
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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 Fund’s 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.
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 security’s 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 security’s 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 assets 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 Fund’s 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 security’s then-current market value, resulting in a potential
capital loss unless the security subsequently appreciates in value.
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A Fund’s 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 Fund’s 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. 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 security’s 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 security’s 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 Fund’s prospectuses) of a Fund’s 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 Fund’s 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 party’s 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.
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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 Fund’s
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 Fund’s 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 Fund’s exposure to U.S. interest rates and increase its exposure to foreign
currency and interest rates.
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 counterparty’s 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 counterparty’s obligations are secured by collateral because the Fund’s 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 counterparty’s 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 member’s 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 Fund’s 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 broker’s 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 Fund’s 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 Fund’s 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.
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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 agreement’s 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 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 Fund’s
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 Fund’s 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 Fund’s
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 Fund’s 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 Fund’s
obligations over its entitlements with respect to each total return swap will be accrued on a daily basis, and an amount of liquid
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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 Fund’s obligations will be accrued on a daily basis, and the full amount of a Fund’s
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 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 Fund’s 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 give a party 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 Fund’s net asset value.
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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. The effects of present or future legislation and regulation in this area are not known, but the effects could be substantial and adverse.
The futures markets are subject to comprehensive
statutes, regulations, and margin requirements. In addition, the SEC, 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.
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, will change the way in which the U.S. financial system is supervised and regulated. Title VII of the
Dodd-Frank Act 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
Fund’s 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 a cleared derivatives transaction, 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, centrally cleared derivative
arrangements are less favorable to mutual funds than bilateral arrangements. For example, the Funds may be required to provide greater amounts of margin for cleared derivatives positions than for bilateral derivatives transactions. 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 increases 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 also expose
a Fund to greater credit risk to its clearing member, because margin for cleared derivatives transactions in excess of clearing house’s 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 Fund’s behalf. While the documentation in place between the
Funds and their clearing members generally provides that the clearing members will accept for clearing all transactions submitted for clearing 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 developed 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
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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 Fund’s behalf, against any losses or costs that may be incurred as a result of
the Fund’s transactions on the swap execution facility.
These and other new rules and regulations could,
among other things, further restrict a Fund’s 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 the 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 a number of those dealers 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
Pursuant to Rule 4.5 under the
Commodity Exchange Act (CEA), each of Adaptive Alternatives Fund, AP – Alternative Strategies Fund, Adaptive Risk Allocation Fund and Diversified Absolute Return Fund no longer qualifies for an exclusion from the definition of a commodity
pool. Accordingly, the Investment Manager is registered as a “commodity pool operator” under the CEA with respect to these funds. The Investment Manager and these Funds are subject to dual regulation by the SEC and the CFTC. Compliance
with the CFTC’s new regulatory requirements could increase Fund expenses, adversely affecting a Fund’s 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 Fund’s 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 Manager’s eligibility to claim the exclusion with respect to a Fund will be based upon, among other things, the level and scope of a
Fund’s 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 Fund’s 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 Manager’s 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 Fund’s 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 Fund’s expenses may increase, adversely affecting that Fund’s 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.
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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.
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 Fund’s 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 Fund’s 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
Fund’s 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.
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A Fund may also enter into forward contracts when
the Fund’s 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 Fund’s 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 Fund’s 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.
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.
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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.
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 Fund’s 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 issuer’s creditworthiness deteriorates. Because the value of a Fund’s 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 Fund’s 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 Fund’s prospectus, stocks, bonds
and other securities or investments are deemed to be “foreign” based primarily on the issuer’s place of organization/incorporation, but the Fund may also consider the issuer’s domicile, its principal place of business, its
primary stock exchange listing, the source of its revenue or other factors. A Fund’s 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 issuer’s 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
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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 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, 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 company’s 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 Moody’s), that are below
investment grade (
e.g.
, lower than BBB by S&P and Fitch or Baa by Moody’s) or that are unrated but determined by a Fund’s 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. High-yield 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 issuer’s 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. High-yield securities may be structured as fixed-, variable- or floating-rate obligations or as
zero-coupon,
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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 Manager’s (or, if applicable, a subadviser’s) credit analysis with respect to these types of securities than is the case for more highly rated
securities.
The market values of certain
high-yield 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 high-yield
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 high-yield and comparable unrated securities than it is for higher rated securities because high-yield 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 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 Fund’s 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 Fund’s Trustees. Investments in illiquid securities, including restricted securities that have not been determined to be liquid, may not exceed 15% of a Fund’s 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 high-yield securities include: Credit Risk, Interest Rate Risk, High-Yield Securities Risk and Prepayment and Extension Risk.
Illiquid Securities
Illiquid securities are defined by a Fund consistent with the SEC
staff’s 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 investor’s 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.
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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 bond’s 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.
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 Fund’s performance while the Fund’s assets are relatively small. The impact of an IPO on a Fund’s performance may tend to diminish as the Fund’s assets grow.
In circumstances when investments in IPOs make a significant contribution to a Fund’s 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), UCITS funds (pooled investment vehicles established in accordance with the Undertaking for Collective Investment in Transferable Securities adopted by European Union member states) 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.
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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
.
Adaptive Alternatives Fund
invests a substantial portion of its assets in Columbia Intermediary Alternatives Fund, a Fund advised by the Investment Manager, in reliance on Section 12(d)(1)(G) of the 1940 Act, which generally exempts investments in affiliated funds from the
limitations described above, subject to certain conditions. Columbia Intermediary Alternatives Fund, in turn, invests substantially all of its assets in Blackstone Alternative Multi-Strategy Fund (the Blackstone Fund), a third-party mutual fund (and
registered commodity pool) managed by Blackstone Alternative Investment Advisors LLC, in reliance on Section 12(d)(1)(E) of the 1940 Act, which generally exempts master/feeder funds from the limitations described above. As a result, shareholders of
Adaptive Alternatives Fund are subject not only to the fees and expenses incurred by Adaptive Alternatives Fund directly, but also to fees and expenses incurred indirectly through Adaptive Alternatives Fund’s investment in Columbia
Intermediary Alternatives Fund and that Fund’s investment in the Blackstone Fund. The Investment Manager and its affiliates will seek to limit the amount of shares of the Blackstone Fund beneficially owned on an aggregated basis by any
Columbia fund or managed account for which beneficial ownership is attributable to the Investment Manager or its affiliates to less than 25% of the Blackstone Fund.
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: Exchange-Traded Fund (ETF) Risk, Investing in Other Funds Risk, Issuer Risk and Market Risk.
Listed Private Equity Funds
A Fund may invest directly in listed private equity
funds, which may include, among others, business development companies, investment holding companies, publicly traded limited partnership interests (common units), publicly traded venture capital funds, publicly traded venture capital trusts,
publicly traded private equity funds, publicly traded private equity investment trusts, publicly traded closed-end funds, publicly traded financial institutions that lend to or invest in privately held companies and any other publicly traded vehicle
whose purpose is to invest in privately held companies.
A Fund may invest in listed private equity funds
that hold investments in a wide array of businesses and industries at various stages of development, from early to later stage to fully mature businesses. A Fund may invest in listed private equity funds that emphasize making equity and equity-like
(preferred stock, convertible stock and warrants) investments in later stage to mature businesses, or may invest in listed private equity funds making debt investments or investments in companies at other stages of development. In addition, a Fund
may invest in the common stock of closed-end management investment companies, including business development companies that invest in securities of listed private equity companies.
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 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.
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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 Complex 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
Mae’s or Freddie Mac’s 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.
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
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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 Fund’s 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.
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, including states, political subdivisions, agencies, instrumentalities, and authorities, as well as U.S. territories (such as Guam and Puerto Rico) and their political subdivisions, agencies, instrumentalities, and
authorities, 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 issuer’s 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
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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 Fund’s
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.
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 government’s taxing power is pledged, a lease obligation ordinarily is backed by the government’s 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 Fund’s 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
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securities to the institution and receive the face value thereof.
The financial institution receives periodic fees equal to the difference between the municipal security’s 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 Fund’s 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 municipality’s underfunded pension plan.
For more information about the key risks associated
with investments in municipal securities of particular states, see Appendix C. 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.
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.
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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. Shares typically are
bought and sold at face values generally ranging from $100,000 to $500,000 per share. 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.
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, high-yield
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.
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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 Fund’s cost plus interest). The
repurchase agreement specifies the yield during the purchaser’s 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.
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.
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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
Fund’s decision to make a short sale “against the box” may be a technique to hedge against market risks when a Fund’s 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 Fund’s 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 debtor’s 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 debtor’s 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.
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.
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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 trust’s common
securities, which may typically represent a small percentage of the trust’s capital structure. The remainder of the trust’s 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 institution’s 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.
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
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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, 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 Fannie Mae and Freddie Mac 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 Fund’s shares may be adversely affected by S&P’s downgrade
or any future downgrades of the U.S. Government’s credit rating. 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 lender’s right to redeem is dependent on the ability of 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, high-yield 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 Fund’s 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 Fund’s NAV. 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 Manager’s analysis may include consideration of the borrower’s financial strength and managerial
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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
Fund’s 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 lender’s 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 bank’s 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 Fund’s 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 Fund’s portfolio. Possession of such information may in some instances occur despite the Investment Manager’s 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 Manager’s 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 Manager’s 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 Fund’s portfolio. These other securities may include, for example, debt securities that are subordinate to the floating rate loans held
in the Fund’s portfolio, convertible debt or common or preferred equity securities.
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 issuer’s 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 Manager’s client accounts collectively held only a single category of the issuer’s 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.
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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, Counterparty 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 Fund’s 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, high-yield 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 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.
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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.
Information Regarding Risks
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 Fund’s risk profile is largely defined by the Fund’s primary portfolio holdings and principal investment
strategies (for the description of a Fund’s principal investment strategies and principal risks, please see that Fund’s prospectus). However, the Funds are allowed to use securities, instruments, strategies and other assets and
investments other than those described in the Fund’s principal investment strategies, subjecting the Fund to the risks associated with these securities, instruments, strategies and other assets and investments. One or more of the following
risks may be associated with investment in a Fund at any time:
Active Management Risk.
The Fund is actively managed and its performance therefore will reflect, in part, the ability of the portfolio managers to make investment decisions that will achieve the Fund’s investment objective. Due to its
active management, the Fund could underperform its benchmark index and/or other funds with similar investment objectives and/or strategies.
Activist Strategies Risk.
The Fund may purchase securities of a company that is the subject of a proxy contest or which activist investors are attempting to influence, in the expectation that new management or a change in business strategies
will cause the price of the company’s securities to increase. If the proxy contest, or the new management, is not successful, the market price of the company’s securities will typically fall.
In addition, where an acquisition or restructuring
transaction or proxy fight is opposed by the subject company’s management, the transaction often becomes the subject of litigation. Such litigation involves substantial uncertainties and may impose substantial cost and expense on the
Fund.
Allocation Risk.
For any Fund that uses an asset allocation strategy in pursuit of its investment objective, there is a risk that the Fund's allocation among asset classes, investments, managers, strategies and/or investment styles will
cause the Fund's 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.
Arbitrage Strategies Risk.
The Fund may purchase securities at prices only slightly below the anticipated value to be paid or exchanged for such securities in a merger, exchange offer or cash tender offer, and substantially above the prices at
which such securities traded immediately prior to announcement of the transaction. If there is a perception that the proposed transaction will not be consummated or will be delayed, the market price of the security may decline sharply, which would
result in a loss to the Fund. In addition, if the manager determines that the offer is likely to be increased, either by the original bidder or by another party, the Fund may purchase securities above the offer price; such purchases are subject to a
high degree of risk.
The consummation
of mergers and tender and exchange offers can be prevented or delayed by a variety of factors, including opposition by the management or shareholders of the target company, private litigation or litigation involving regulatory agencies, and approval
or non-action of regulatory agencies. The likelihood of occurrence of these and other factors, and their impact on an investment, can be very difficult to evaluate.
Asset-Backed Securities Risk.
The value of the Fund's 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 market's 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.
Bankruptcy Process Risk.
The Fund may purchase bankruptcy claims. There are a number of significant risks inherent in the bankruptcy process. The effect of a bankruptcy filing on a company may adversely and permanently affect the company by
causing it to lose its market position and key employees and otherwise become incapable of restoring itself as a viable business. Many events in a bankruptcy are the product of contested matters and adversarial proceedings and are beyond the control
of the creditors. The duration of a bankruptcy proceeding is difficult to predict and a creditor’s return on investment can be adversely affected by delays while the plan of reorganization is being negotiated, approved by the creditors,
confirmed by the bankruptcy court, and until it ultimately becomes effective. The administrative costs in connection with a bankruptcy proceeding are
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frequently high and are paid out of the debtor’s estate
before any return to creditors. Furthermore, bankruptcy law permits the classification of “substantially similar” claims in determining the classification of claims in a bankruptcy reorganization. Because the standard for classification
is vague, there exists the risk that the Fund’s influence with respect to the class of securities it owns can be impaired as a result of increases in the number and amount of claims in that class or by different classification and treatment of
that class. Finally, amounts previously paid to the Fund may be challenged as fraudulent conveyances or preferences as part of a bankruptcy proceeding.
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.
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 underlying fund’s 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 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. The Fund may make commodity-related investments through, and may invest in one or more underlying funds that make commodity-related investments through, one or more wholly-owned subsidiaries organized
outside the U.S. that are generally not subject to U.S. laws (including securities laws) and their protections. However, any such subsidiary is wholly owned and controlled by the Fund and any underlying fund subsidiary is wholly-owned and controlled
by the underlying fund, making it unlikely that the subsidiary will take action contrary to the interests of the Fund or the underlying fund and their shareholders. Further, any such subsidiaries will be subject to the laws of a foreign
jurisdiction, and can be adversely affected by developments in that jurisdiction.
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.
Portfolio managers may 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 issuer’s floating rate loans to help potential investors assess the value of the loan. A 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 ability to assess the desirability of such consents, waivers or amendments may be compromised. For these and other
reasons, it is possible that the decision not to receive Confidential Information could adversely affect the Fund’s performance.
Convertible Securities Risk.
Convertible securities are subject to the usual risks associated with debt securities, such as interest rate risk (the risk of losses attributable to changes in interest rates) and credit risk (the risk that the issuer
of a debt security 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 (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 stock's 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 company's 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 Fund's 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
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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 Fund’s share value to fluctuate.
Credit Risk.
The
value of loans or fixed-income securities may decline if the borrower or the issuer of the security defaults or otherwise becomes unable or unwilling, or is perceived to be unable or unwilling, to honor its financial obligations, such as making
payments to the Fund when due. Various factors could affect the actual or perceived willingness or ability of the borrower or the issuer to make timely interest or principal payments, including changes in the financial condition of the borrower or
the issuer or in general economic conditions. Fixed-income securities backed by an issuer's taxing authority may be subject to legal limits on the issuer's power to increase taxes or otherwise to raise revenue, or may be dependent on legislative
appropriation or government aid. Certain fixed-income securities are backed only by revenues derived from a particular project or source, rather than by an issuer's taxing authority, and thus may have a greater risk of default. Rating agencies
assign credit ratings to certain loans and fixed-income securities to indicate their credit risk. Lower quality or unrated securities held by the Fund may present increased credit risk as compared to higher-rated securities. Non-investment grade
loans or fixed-income securities (commonly called “high-yield” or “junk”) are subject to greater price fluctuations and are more likely to experience a default than investment grade loans or securities and therefore may
expose the Fund to increased credit risk. If the Fund purchases unrated loans or fixed-income securities, or if the ratings of securities held by the Fund are lowered after purchase, the Fund will depend on analysis of credit risk more heavily than
usual. 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 that is adverse to the holders of the loan. Such actions may include 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 Fund’s performance. 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 Fund’s operating expenses and adversely affect its NAV. Loans that
have a lower priority for repayment in an issuer’s 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 Fund and its service providers may be prone to operational and information
security risks resulting from cyber-attacks. In general, cyber-attacks result from deliberate attacks but unintentional events may have effects similar to those caused by cyber-attacks. Cyber-attacks include, among other behaviors, stealing or
corrupting data maintained online or digitally, denial-of-service attacks on fund 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 and/or other third party service providers may adversely impact a Fund or its shareholders. For instance, cyber-attacks may interfere with the processing of
shareholder transactions, impact a Fund’s 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 in order to prevent any cyber incidents in the future. The
Fund and its shareholders could be negatively impacted as a result. While the Fund or the Fund’s service providers have established business continuity plans and systems designed to prevent such cyber-attacks, there are inherent limitations in
such plans and systems including the possibility that certain risks have not been identified. Similar types of cyber security risks are also present for issuers of securities or other instruments in which the Fund invests, which could result in
material adverse consequences for such issuers, and may cause the Fund’s investment therein to lose value.
Depositary Receipts Risk.
Depositary receipts are receipts issued by a bank or trust company reflecting ownership of underlying securities issued by foreign companies. Some foreign securities are traded in the form of American Depositary
Receipts (ADRs). Depositary receipts involve risks similar to the risks associated with investments in foreign securities, including those of the particular country, which may be related to the particular political, regulatory, economic, social and
other conditions or events occurring in the country and fluctuations in its currency, as well as market risk tied to the underlying foreign company. In addition, ADR holders may have limited voting rights and may not have the same rights afforded
typical company stockholders in the event of a corporate action such as an acquisition, merger or rights offering and may experience difficulty in receiving company stockholder communications.
Derivatives Risk.
Derivatives are financial instruments whose value depends on, or is derived from, the value of other underlying assets. Losses involving derivative instruments may be substantial, because a relatively small movement in the price of an underlying
security, 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 for the Fund. Derivative
investments will typically increase the Fund’s exposure to principal risks to which it is otherwise exposed, and may expose the
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Fund to additional risks. Depending on the type and purpose of the
Fund’s derivative investments, these risks may include: correlation risk (there may be an imperfect correlation between the hedge and the opposite position, which is related to hedging risk), counterparty risk (the counterparty to the
instrument may not perform or be able to perform in accordance with the terms of the instrument), leverage risk (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 may offset gains), and/or 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 losses for the Fund.
Derivatives
Risk/Commodity-Linked Futures Contracts Risk.
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 Fund’s NAV. 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 securities
transactions. The Fund’s 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 Fund’s 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 Fund’s 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, and may offset gains), each of which may result in significant losses for 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, and may offset gains), pricing risk (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 losses
for 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 obligation’s 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
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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
Fund’s 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 Fund's 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 Fund’s 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 Fund’s net assets, the terms of the Fund’s 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 issuer’s failure to make timely payments of interest or principal, bankruptcy or restructuring. A credit default swap may be embedded within a structured 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, and may offset gains),
pricing risk (the risk that swaps may be difficult to value) and liquidity risk (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 losses for 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/Contracts for Difference Risk.
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 or other instruments.
Often, one or both baskets will be an established securities index. The Fund’s 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. The Fund also may use actual long and short futures positions and achieve similar market exposure by netting the
payment obligations of the two contracts. If the short basket outperforms the long basket, the Fund will realize a loss – even in circumstances when the securities in both the long and short baskets appreciate in value.
Derivatives Risk/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 Fund's 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 Fund’s 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.
Derivatives Risk/Forward Foreign Currency Contracts
Risk.
The use of these derivatives 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 country's or region’s currency at a specific price on a specific date in the future. These instruments may fall in value (sometimes dramatically) due to foreign
market downswings or foreign currency value fluctuations, subjecting the Fund to foreign currency risk (the risk that Fund
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performance may be negatively impacted by foreign currency strength
or weakness relative to the U.S. dollar, particularly if the Fund exposes a significant percentage of its assets in currencies other than the U.S. dollar). The effectiveness of any currency hedging strategy by a Fund may be reduced by the
Fund’s 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. Unanticipated changes in the currency markets could result in reduced performance for the Fund or losses. 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 will be unable to perform in accordance with the terms
of the instrument) and leverage risk (i.e., the risk that losses from the derivative instrument may be greater than the amount invested in the derivative instruments). The Fund’s strategy of investing in these instruments may not be successful
and the Fund may experience significant losses as a result.
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 may offset gains) and interest rate risk (the risk of losses attributable to changes in interest rates), each
of which may result in significant losses for 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 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. 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 the Fund may incur 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 Fund’s 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 for the Fund. Investments in these instruments involve risks, including counterparty risk (the risk that the counterparty to the instrument may 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 may offset gains) and pricing risk (the risk that the instrument may be difficult to value), each of which may result in
significant losses for 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, and may offset gains), 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 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 losses for the Fund.
Derivatives Risk/Interest Rate Swaps Risk.
Interest rate swaps can be based on various measures of interest rates, including the London Interbank Offered Rate (commonly known as LIBOR), swap rates, treasury rates and other foreign interest rates. A swap
agreement can increase or decrease the volatility of the Fund's investments and its NAV. 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 and correlation risk (the risk that a hedging strategy may not eliminate the risk that it is intended to offset, and may offset gains, including because of a lack of correlation between the swaps and the portfolio of bonds that
the swaps are
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designed to hedge or replace), pricing risk (swaps may be difficult
to value), liquidity risk (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 losses
for 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 issuer’s 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, and may offset gains), each of which may result in significant losses for 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. 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 Fund's 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, and may offset gains), each of which may result in significant losses for 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 Fund 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 Fund’s 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, and may offset gains), pricing risk (swaps may be difficult to value) and liquidity risk (it may not be possible to liquidate a swap position at an advantageous time or price), each of which
may result in significant losses for the Fund.
Derivatives Risk/Portfolio Swaps and Total Return
Swaps Risk.
The use of portfolio swaps or 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 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 would make periodic payments based on a fixed or variable interest rate or on the total return from a different underlying asset or non-asset reference. Portfolio swaps and equity 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 (swaps may be difficult to value) and liquidity risk ( 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.
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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 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 Fund 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 (creating leverage risk in that the Fund’s 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, and may offset
gains), pricing risk (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), which may result in significant losses for 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 losses for the Fund.
Distressed Securities Risk.
The Fund may purchase distressed securities of business enterprises involved in workouts, liquidations, reorganizations, bankruptcies and similar situations. Since there is typically substantial uncertainty concerning
the outcome of transactions involving business enterprises in these situations, there is a high degree of risk of loss, including loss of the entire investment.
In bankruptcy, there can be considerable delay in
reaching accord on a restructuring plan acceptable to a bankrupt company’s lenders, bondholders and other creditors and then obtaining the approval of the bankruptcy court. Such delays could result in substantial losses to the investments in
such company’s securities or obligations. Moreover, there is no assurance that a plan favorable to the class of securities held by the Fund will be adopted or that the subject company might not eventually be liquidated rather than
reorganized.
In liquidations (both in and out
of bankruptcy) and other forms of corporate reorganization, there exists the risk that the reorganization either will be unsuccessful, will be delayed or will result in a distribution of cash or a new security, the value of which will be less than
the purchase price of the security in respect of which such distribution is received. It may be difficult to obtain accurate information concerning a company in financial distress, with the result that the analysis and valuation are especially
difficult. The market for securities of such companies tends to be illiquid and sales may be possible only at substantial discounts.
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 Fund’s 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, such as China, Russia and certain countries in Eastern Europe, the Middle East, Asia, Latin America or Africa, 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.
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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.
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 country’s 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.
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 China and Russia.
EuroZone-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 Fund’s 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 Fund’s 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.
Event-Driven Trading Risk.
The Fund may seek to profit from the occurrence of specific corporate or other events. A delay in the timing of these events, or the failure of these events to occur at all, may have a significant negative effect on the
Fund’s performance.
Event-driven
investing requires the relevant manager to make predictions about (i) the likelihood that an event will occur and (ii) the impact such event will have on the value of a company’s securities. If the event fails to occur or it does not have the
effect foreseen, losses can result. For example, the adoption of new business strategies, a meaningful change in management or the sale of a division or other significant assets by a company may not be valued as highly by the market as the manager
had anticipated, resulting in losses. In addition, a company may announce a plan of restructuring which promises to enhance value and fail to implement it, resulting in losses to investors.
Exchange-Traded Fund (ETF) Risk.
An ETF’s 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 do not 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 indirectly subjects the Fund to active management risk. An active secondary market in an ETF’s shares may
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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 ETF’s shares will continue to be listed on an active exchange. In addition, shareholders bear both their proportionate share of the
Fund’s expenses and similar expenses incurred through ownership of the ETF.
The Fund generally expects to purchase shares of
ETFs through broker-dealers in transactions on a securities exchange, and in such cases the Fund 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
ETF’s 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 ETF’s 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 ETF’s net asset value) together with a cash payment generally 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 or long 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 RIC’s 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 Fund’s 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 Fund’s Board may authorize a significant change in investment strategy or the Fund’s liquidation.
Foreign Securities Risk.
Investments in or exposure to foreign securities involve certain risks not associated with investments in or exposure to securities of U.S. companies. For example, foreign markets can be extremely volatile. The
performance of the Fund may be negatively impacted by fluctuations in a foreign currency’s strength or weakness relative to the U.S. dollar. Foreign securities may also be less liquid than securities of U.S. companies 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 potentially confiscatory withholding or other taxes on the Fund’s income, capital gains or proceeds from the
disposition of foreign securities, which could reduce the Fund’s return 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
foreign companies; the impact of economic, political, social, diplomatic or other conditions or events; possible seizure, expropriation or nationalization of a company or its assets or the assets of a particular investor or category of investors;
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; the imposition of economic and other sanctions
against a particular foreign country, its nationals or industries or businesses within the country; and the generally 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 country’s 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.
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Operational and Settlement Risks of Foreign
Securities.
The Fund’s 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 (the 1940 Act). 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 issuer’s 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 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 Commitments on Mortgage-backed Securities
(including Dollar Rolls) Risk.
When purchasing mortgage-backed securities in the “to be announced” (TBA) market (MBS TBAs), the seller agrees to deliver mortgage-backed securities for an agreed upon
price on an agreed upon date, but may make no guarantee as to the specific securities to be delivered. In lieu of taking delivery of mortgage-backed securities, the Fund could enter into dollar rolls, which 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 Fund’s 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). MBS TBAs and dollar rolls are subject to counterparty risk.
Frontier Market
Risk.
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 more
developed market countries) and, as a result, the risks of investing in emerging market countries are magnified when the Fund invests in frontier market countries. The increased risks include: the potential for extreme price volatility and
illiquidity in frontier market countries; government ownership or control of parts of the private sector and of certain companies; trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist measures
imposed or negotiated by the countries with which frontier market countries trade; and the relatively new and unsettled securities laws in many frontier market countries. Securities issued by foreign governments or companies in frontier market
countries are even more likely than emerging markets securities to have greater exposure to the risks of investing in foreign securities that are described in
Foreign Securities Risk
.
Fund-of-Funds Risk.
Determinations regarding asset classes or underlying funds and the Fund’s allocations thereto may not successfully achieve the Fund’s investment objective, in whole or in part. 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. By investing in a combination of underlying funds, the Fund has exposure to the risks of many areas of the market. The ability of the Fund to
realize its investment objective will depend, in large part, on the extent to which the underlying funds realize their investment objectives. 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 each underlying fund are shared by its investors, redemptions by other investors in an underlying 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 an underlying fund. This risk may be particularly important when one investor owns a substantial portion of an underlying
fund. The Investment Manager
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may have potential conflicts of interest in selecting affiliated
funds over unaffiliated funds for investment by the Fund, and may also face potential conflicts of interest in selecting affiliated funds, because the fees the Investment Manager receives from some underlying funds may be 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 Fund’s NAV may be
more volatile than the NAV of 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 never reach their expected market value and may decline
in price. 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.
Hedging Transactions Risk.
The Fund may invest in securities and utilize financial instruments for a variety of hedging purposes. Hedging transactions may limit the opportunity for gain if the value of the portfolio position should increase.
There can be no assurance that the Fund will engage in hedging transactions at any given time, even under volatile market conditions, or that any hedging transactions the Fund engages in will be successful. Moreover, it may not be possible for the
Fund to enter into a hedging transaction at a price sufficient to protect its assets. The Fund may not anticipate a particular risk so as to hedge against it.
Hedging against a decline in the value of a
portfolio position does not eliminate fluctuations in the values of portfolio positions or prevent losses if the values of such positions decline, but establishes other positions designed to gain from those same developments, thus moderating the
decline in the portfolio positions’ value. Such hedging transactions also limit the opportunity for gain if the value of the portfolio position should increase. Moreover, it may not be possible for the Fund to hedge against an exchange rate,
interest rate or security price fluctuation that is so generally anticipated that the Fund is not able to enter into a hedging transaction at a price sufficient to protect its assets from the decline in value of the portfolio positions anticipated
as a result of such fluctuations.
The Fund is
not required to attempt to hedge portfolio positions and, for various reasons, may determine not to do so. Furthermore, the Fund may not anticipate a particular risk so as to hedge against it. While the Fund may enter into hedging transactions to
seek to reduce risk, such transactions may result in a poorer overall performance for the Fund than if the Fund had not engaged in any such hedging transaction. In addition, the degree of correlation between price movements of the instruments used
in a hedging strategy and price movements in the portfolio position being hedged may vary. For a variety of reasons, the Fund may not seek to establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged.
Such imperfect correlation may prevent the Fund from achieving the intended hedge or expose the Fund to risk of loss. The successful utilization of hedging and risk management transactions requires skills complementary to those needed in the
selection of the Fund’s portfolio holdings. Moreover, it should be noted that a portfolio will always be exposed to certain risks that cannot be hedged, such as credit risk (relating both to particular securities and counterparties), liquidity
risk and widening risk.
High-Yield Securities
Risk.
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 experience greater price fluctuations in response 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 are
generally more likely to experience a default than higher-rated securities. High-yield securities are considered to be predominantly speculative with respect to the issuer’s 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. High-yield 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.
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
Fund’s 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 Fund’s 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 achieve its business objectives. Such business objectives may include but are not limited to: management’s taking over control of a company
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(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.
Impairment of Collateral Risk.
The value of collateral, if any, securing a loan can decline, and may be insufficient to meet the borrower’s obligations or difficult or costly to liquidate. In addition, the Fund’s 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 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 Fund’s investments may not keep pace with inflation, which may result in losses to Fund investors.
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. A Fund’s 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.
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 Fund’s 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
Fund’s 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 tend to fall, and if interest rates fall, the values of debt securities 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 will usually affect the value of the Fund's shares. In general, the longer the maturity or duration of a debt security, the greater
its sensitivity to changes in interest rates. Interest rate declines also may increase prepayments of debt obligations, which, in turn, would increase prepayment risk. Similarly, a period of rising interest rates may negatively impact the
Fund’s performance. Actions by governments and central banking authorities can result in increases in interest rates. Such actions may negatively affect the value of fixed-income securities held by the Fund, resulting in a negative impact on
the Fund's performance and NAV. Securities with floating coupon rates are typically less sensitive to interest rate changes, but these securities may decline in value if their coupon rates do not rise as much as, or keep pace with, yields on such
types of securities. 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
Fund’s NAV.
Investing in Other Funds Risk.
The Fund’s 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 the
underlying funds in direct proportion to the Fund’s investment therein. In addition, investments in ETFs have unique characteristics, including, but not limited to, the expense structure and additional expenses associated with investing in
ETFs. The performance of the underlying funds could be adversely affected if other investors 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 underlying funds 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 underlying funds. This risk may be particularly important when one investor owns a substantial portion of the underlying funds.
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. Also, to the extent that the Fund is constrained/restricted from investing (or investing further) in a particular underlying fund for one or more reasons (e.g.,
underlying fund capacity constraints or regulatory restrictions) or if the Fund chooses to sell its investment in an underlying fund because of poor investment performance or for other reasons, the Fund
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may have to invest in one or more other underlying funds, including
less desirable funds – from a strategy or investment performance standpoint – which could have a negative impact on Fund performance. In addition, Fund performance could be negatively impacted if one or more appropriate alternate
underlying funds are not identified or available for investment timely or at all.
Issuer Risk.
An
issuer in which the Fund invests or to which it has exposure may perform poorly, and the value of its securities may therefore decline, which would negatively affect the Fund’s 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. Because short sales involve borrowing securities and then selling them, the Fund’s
short sales effectively leverage the Fund’s assets. The Fund’s assets that are used as collateral to secure the Fund’s 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 Fund's overall returns. Leverage presents the opportunity for increased net income and capital gains, but may
also exaggerate the Fund’s volatility and 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. Decreases in the number of financial institutions
willing to make markets in the Fund’s investments or in their capacity or willingness to transact may increase the Fund’s exposure to this risk. Changing regulatory, market or other conditions or environments (for example, the interest
rate or credit environments) may also adversely affect the liquidity of the Fund's investments. The Fund may have to accept a lower selling price for the holding, 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. Price volatility may be higher for illiquid investments as a result of, for example, the relatively less frequent pricing of such securities
(as compared to liquid investments). Generally, the less liquid the market at the time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. Price volatility, liquidity of the market and other factors
can lead to an increase in Fund redemptions, which may negatively impact Fund performance and NAV, including, for example, if the Fund is forced to sell securities in a down market.
Listed Private Equity Fund Investment Risk.
Private equity funds include financial institutions or vehicles whose principal business is to invest in and lend capital to privately held companies. The Fund is subject to the underlying risks that affect private
equity funds in which it invests, which may include increased liquidity risk, valuation risk, sector risk and credit risk. Limited or incomplete information about the companies in which private equity funds invest, and relatively concentrated
investment portfolios of private equity funds, may expose the Fund to greater volatility and risk of loss. Fund investment in private equity funds subjects Fund shareholders indirectly to the fees and expenses incurred by private equity
funds.
Macro Strategy Risk.
The profitability of any macro program depends primarily on the ability of its manager to predict derivative contract price movements to implement investment theses regarding macroeconomic trends. Price movements for
commodity interests are influenced by, among other things: changes in interest rates; governmental, agricultural, trade, fiscal, monetary and exchange control programs and policies; weather and climate conditions; natural disasters, such as
hurricanes; changing supply and demand relationships; changes in balances of payments and trade; U.S. and international rates of inflation and deflation; currency devaluations and revaluations; U.S. and international political and economic events;
and changes in philosophies and emotions of market participants. The manager’s trading methods may not take all of these factors into account.
The global macro programs to which the Fund’s
investments are exposed typically use derivative financial instruments that are actively traded using a variety of strategies and investment techniques that involve significant risks. The derivative financial instruments traded include commodities,
currencies, futures, options and forward contracts and other derivative instruments that have inherent leverage and price volatility that result in greater risk than instruments used by typical mutual funds, and the systematic programs used to trade
them may rely on proprietary investment strategies that are not fully disclosed, which may in turn result in risks that are not anticipated.
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 actual or
perceived factors affecting an issuer (e.g., an unfavorable earnings report), the industry or sector in which it operates, or the market as a whole, which may reduce the value of an investment in the Fund. Accordingly, an investment in the Fund
could lose money over short or long periods. The market values of the securities the Fund holds can be affected by changes or perceived changes in U.S. or foreign economies and financial markets, and the liquidity of these securities, among other
factors. Although equity securities generally tend to have greater price volatility than debt securities, under certain market conditions, debt securities may have comparable or greater price volatility. In addition, stock prices may be sensitive to
rising interest rates, as the cost of capital rises and borrowing costs increase.
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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 Fund’s investment in master limited partnerships can be limited by the
Fund’s intention to qualify as a regulated investment company for U.S. federal income tax purposes, and can limit the Fund’s 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 partner’s 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 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.
Model and Technology Risk.
Investment strategies or programs that are fundamentally dependent on proprietary or licensed technology, such as, among other things, hardware, software, model-based strategies, data gathering systems, order execution,
and trade allocation systems, and/or risk management systems may not be successful on an ongoing basis or could contain errors, omissions, imperfections, or malfunctions. Any such errors, imperfections or limitations in a model could affect the
ability of the manager to implement strategies. Despite testing, monitoring and independent safeguards, these errors may result in, among other things, execution and allocation failures and failures to properly gather and organize data — all
of which may have a negative effect on the Fund.
Such errors are often extremely difficult to detect
and some may go undetected for long periods of time and some may never be detected. The adverse impact caused by these errors can compound over time. A manager (and/or the licensor of the models or technology) may detect certain errors that it
chooses, in its sole discretion, not to address or fix. By necessity, models make simplifying assumptions that limit their efficacy. Models that appear to explain prior market data can fail to predict future market events. Moreover, an increasing
number of market participants may rely on models that are similar to those used by a manager (or an affiliate of a manager), which may result in a substantial number of market participants taking the same action with respect to an investment. Should
one or more of these other market participants begin to divest themselves of one or more portfolio investments, the Fund could suffer losses.
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, along with the fees and expenses of any other funds in which the Fund may invest, are expected to equal or exceed 0.01% of the Fund’s 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 Fund’s 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 market's 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. Other types of asset-backed securities typically represent interests in, or are backed by, pools of receivables such as credit, automobile, student and home equity loans. Mortgage- and other asset-backed securities
can have a fixed or an adjustable rate. Mortgage- and other asset-backed securities are subject to prepayment risk, which is the possibility that the underlying mortgage or other asset may be refinanced or prepaid prior to maturity during periods of
declining or low
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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- and other 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 mortgage- and other asset-backed securities, making them more volatile and more sensitive to changes in interest rates. 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.
Multi-Strategy Risk.
The multi-strategy approach employed by the Fund involves special risks, which include the risk that investment decisions, at the Fund or the underlying fund level, may conflict with each other; for example, at any particular time, one manager may
be purchasing shares of an issuer whose shares are being sold by another manager. Consequently, the Fund could indirectly incur transaction costs without accomplishing any net investment result. Also, managers may use proprietary or licensed
investment strategies that are based on considerations and factors that are not fully disclosed to the Fund or other investors.
Moreover, consistent with the Fund’s
investment objectives, these proprietary or licensed investment strategies, which may include quantitative mathematical models or systems, may be changed or refined over time. A manager (or the licensor of the strategies used by the manager) may
make certain changes to the strategies the manager has previously used, may not use such strategies at all (or the manager’s license may be revoked), or may use additional strategies, where such changes or discretionary decisions, and the
reasons for such changes or decisions, are also not disclosed to the Fund or other investors. These strategies may involve risks under some market conditions that are not anticipated by the Investment Manager or the Fund.
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, and include obligations of the governments of the U.S. territories, commonwealths and possessions such as Puerto Rico, the Virgin Islands, Guam and the Northern Mariana Islands to the extent such obligations are exempt from state and
federal income taxes. 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 issuer's taxing authority and may be vulnerable to limits on a government's 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.
Certain of the municipalities or territories in
which the Fund may invest have recently experienced significant financial difficulties. A credit rating downgrade relating to, default by, or insolvency or bankruptcy of, one or several municipal security issuers of a state, territory, commonwealth
or possession in which the Fund invests could affect the market values and marketability of many or all municipal obligations of such state, territory, commonwealth or possession.
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The Fund’s investments in municipal securities
may include securities of issuers in the health care sector, which subjects the Fund’s investments to the risks associated with that sector, including the risk of regulatory action or policy changes by numerous governmental agencies and
bodies, including federal, state, and local governmental agencies, as well as requirements imposed by private entities, such as insurance companies. A major source of revenue for the health care industry is payments from the Medicare and Medicaid
programs. As a result, the industry is sensitive to legislative changes and reductions in governmental spending for such programs. Numerous other factors may affect the industry, such as general and local economic conditions, demand for services,
expenses (including, among others, malpractice insurance premiums) and competition among health care providers. Additional factors also may adversely affect health care facility operations, such as adoption of legislation proposing a national health
insurance program, other state or local health care reform measures, medical and technological advances that alter the need for or cost of health services or the way in which such services are delivered, changes in medical coverage that alter the
traditional fee-for-service revenue stream, and efforts by employers, insurers, and governmental agencies to reduce the costs of health insurance and health care services.
Opportunistic Investing Risk.
Undervalued securities involve the risk that they may never reach their expected full market value, either because the market fails to recognize the security's intrinsic worth or the expected value was misgauged.
Undervalued securities also may decline in price even though the Investment Manager believes they are already undervalued. Turnaround companies may never improve their fundamentals, may take much longer than expected to improve, or may improve much
less than expected. Development stage companies could fail to develop and deplete their assets, resulting in large percentage losses.
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 (
i.e.
, the risk of losses attributable to changes in interest rates).
Prepayment and Extension Risk.
Prepayment risk is the risk that a loan, bond or other security or investment might be called or otherwise converted, prepaid or redeemed before maturity, and extension risk is the risk that the investment might not be
called as expected. In the case of prepayment risk, 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, in the case of extension risk, as interest rates rise or spreads widen, the likelihood of prepayment decreases and the maturity of the
investment may extend the life of the investment beyond the prepayment time. If the Fund's investments are locked in at a lower interest rate for a longer period of time, the portfolio managers may be unable to capitalize on securities with higher
interest rates or wider spreads.
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 manager’s
quantitative analyses or models, or in the data on which they are based, could adversely affect the portfolio manager’s effective use of such analyses or models, which in turn could adversely affect the Fund’s performance. It is not
possible or practicable for a manager to factor all relevant, available data into quantitative model forecasts and/or trading decisions. Quantitative managers will use their discretion to determine what data to gather with respect to an investment
strategy and what data the models will take into account to produce forecasts that may have an impact on ultimate trading decisions. Shareholders should be aware that there is no guarantee that a quantitative manager will use any specific data or
type of data in making trading decisions on behalf of the Fund, nor is there any guarantee that the data actually utilized in generating forecasts or making trading decisions on behalf of the Fund will be the most accurate data available or free
from errors. There can be no assurance that these methodologies will enable the Fund to achieve its objective.
Real Estate-Related Investment Risk.
Investments in real estate investment trusts (REITs) and in securities of other companies (wherever organized) principally engaged in the real estate industry subject the Fund to, among other things, risks similar to
those of direct investments in real estate and the real estate industry in general. These include 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 interests in a REIT may be affected by, among other factors, changes in the value of the
underlying properties owned by the REIT, 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
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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 — Alternative Investments.
Legal, tax, and regulatory developments may adversely affect the Fund and its investments. The regulatory environment for the Fund and certain of its investments is evolving, and changes in the regulation of investment
funds, their managers, and their trading activities and capital markets, or a regulator’s disagreement with the Fund’s or other’s interpretation of the application of certain regulations, may adversely affect the ability of the
Fund to pursue its investment strategy, its ability to obtain leverage and financing, and the value of investments held by the Fund. There has been an increase in governmental, as well as self-regulatory, scrutiny of the investment industry in
general and the alternative investment industry in particular. It is impossible to predict what, if any, changes in regulations may occur, but any regulation that restricts the ability of the Fund or any underlying funds or other investments to
trade in securities or other instruments or the ability of the Fund or underlying funds to employ, or brokers and other counterparties to extend, credit in their trading (as well as other regulatory changes that result) could have a material adverse
impact on the Fund’s performance.
Shareholders should understand that the Fund’s
business is dynamic and is expected to change over time. Therefore, the Fund and its underlying investments may be subject to new or additional regulatory constraints in the future. Such regulations may have a significant impact on shareholders or
the operations of the Fund, including, without limitation, restricting the types of investments the Fund may make, preventing the Fund from exercising its voting rights with regard to certain financial instruments, requiring the Fund to disclose the
identity of its investors or otherwise. To the extent the Fund or its underlying investments are subject to such regulation, such regulations may have a detrimental effect on one or more shareholders. Prospective investors are encouraged to consult
their own advisors regarding an investment in the Fund.
Regulatory Risk — Money
Market Funds.
Money market funds and the securities they invest in are subject to comprehensive regulations. The enactment of new legislation or regulations, as well as changes in interpretation and enforcement of
current laws, may affect the manner of operation, performance and/or yield of money market funds. For example, in July, 2014 the SEC adopted amendments to money market regulation designed to address, among other things, systemic risks associated
with money market funds and to enhance transparency for money market fund investors. These rules provide for liquidity fees or redemption gates for non-government money market funds if portfolio liquidity drops below specified levels and will
require institutional prime money market funds to price shares with a floating net asset value. These rule changes may impact the future operations, performance and/or yields of the Columbia money market funds and other money market funds.
Non-governmental money market funds will be required to restrict beneficial owners to natural persons if they want to maintain a stable net asset value. Because government money market funds will not be required to float their net asset value or
impose liquidity fees or redemption gates, money market funds may decide to change investment strategies to qualify as government money market funds. Money market funds are required to comply with the liquidity fees, redemption gates and floating
net asset value rules by October 2016 and most of the other rules by April 2016.
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 Fund's 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, and borrowed assets used for investment creates leverage risk. Leverage can create an interest expense that may lower the Fund's overall returns. Leverage presents the opportunity for increased net income and capital gains, but may also
exaggerate the Fund’s volatility and risk of loss. There can be no guarantee that this strategy will be successful.
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Rule 144A Securities Risk.
The Fund may invest significantly in privately placed “Rule 144A” securities that are determined to be liquid in accordance with procedures adopted by the Fund’s 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 Fund’s 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 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. Issuers of Rule 144A securities are required to furnish information to potential investors upon request. However, the required disclosure
is much less extensive than that required of public companies and is not publicly available since it is not filed with the SEC. Further, issuers of Rule 144A securities can require recipients of the information (such as the Fund) to agree
contractually to keep the information confidential, which could also adversely affect the Fund’s ability to dispose of the security.
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, which may make 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.
Sector Risk — Consumer Discretionary Sector
Investments.
To the extent a Fund concentrates its investments in companies in the consumer discretionary sector, it may be more susceptible to the particular risks that may affect companies in that sector than if
it were invested in a wider variety of companies in unrelated sectors. Companies in the consumer discretionary sector are subject to certain risks, including fluctuations in the performance of the overall domestic and international economy, interest
rate changes, increased competition and consumer confidence. Performance of such companies may be affected by factors including reduced disposable household income, reduced consumer spending, changing demographics and consumer tastes.
Sector Risk — Energy Sector Investments.
To the extent a Fund concentrates its investments in companies in the energy sector, it may be more susceptible to the particular risks that may affect companies in that sector than if it were invested in a wider
variety of companies in unrelated sectors. Companies in the energy sector are subject to certain risks, including legislative or regulatory changes, adverse market conditions and increased competition. Performance of such companies may be affected
by factors including, among others, fluctuations in energy prices and supply and demand of energy fuels, energy conservation, the success of exploration projects, events occurring in nature and local and international politics. In addition, rising
interest rates and high inflation may affect the demand for certain natural resources and, therefore, the performance of companies in the energy sector.
Sector Risk — Financial Services Sector
Investments.
To the extent a Fund concentrates its investments in companies in the financial services sector, it may be more susceptible to the particular risks that may affect companies in that sector than if it
were invested in a wider variety of companies in unrelated sectors. Companies in the financial services sector are subject to certain risks, including the risk of regulatory change, decreased liquidity in credit markets and unstable interest rates.
Such companies may have concentrated portfolios, such as a high level of loans to real estate developers, which makes them vulnerable to economic conditions that affect that industry. Performance of such companies may be affected by competitive
pressures and exposure to investments or agreements that, under certain circumstances, may lead to losses (
e.g.
, subprime loans). Companies in the
financial services sector are subject to extensive governmental regulation that may limit the amount and types of loans and other financial commitments they can make, and interest rates and fees that they may charge. In addition, profitability of
such companies is largely dependent upon the availability and the cost of capital.
Sector Risk — Health Care Sector Investments.
To the extent a Fund concentrates its investments in companies in the health care sector, it may be more susceptible to the particular risks that may affect companies in that sector than if it were invested in a wider
variety of companies in unrelated sectors. Companies in the health care sector are subject to certain risks, including restrictions on government reimbursement for medical expenses, government approval of medical products and services, competitive
pricing pressures, and the rising cost of medical products and services (especially for companies dependent upon a relatively limited number of products or services). Performance of such companies may be affected by factors including, government
regulation, obtaining and protecting patents (or the failure to do so), product liability and other similar litigation as well as product obsolescence.
Sector Risk — Industrials Sector Investments.
To the extent a Fund concentrates its investments in companies in the industrials sector, it may be more susceptible to the particular risks that may affect companies in that sector than if it were invested in a wider
variety of companies in unrelated sectors. Companies in the industrials sector are subject to certain risks, including changes in supply and demand for their specific product or service and for industrial sector products in general,
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including decline in demand for such products due to rapid
technological developments and frequent new product introduction. Performance of such companies may be affected by factors including government regulation, world events and economic conditions and risks for environmental damage and product liability
claims.
Sector Risk — Technology and
Technology-Related Sector Investment Risk.
To the extent a Fund concentrates its investments in companies in technology and technology related sectors, it may be more susceptible to the particular risks that may
affect companies in those sectors, as well as other technology-related sectors (collectively, the technology sectors) than if it were invested in a wider variety of companies in unrelated sectors. Companies in the technology sectors are subject to
certain risks, including the risk that new services, equipment or technologies will not be accepted by consumers and businesses or will become rapidly obsolete. Performance of such companies may be affected by factors including obtaining and
protecting patents (or the failure to do so) and significant competitive pressures, including aggressive pricing of their products or services, new market entrants, competition for market share and short product cycles due to an accelerated rate of
technological developments. Such competitive pressures may lead to limited earnings and/or falling profit margins. As a result, the value of their securities may fall or fail to rise. In addition, many technology sector companies have limited
operating histories and prices of these companies’ securities historically have been more volatile than other securities, especially over the short term.
Short Positions
Risk.
A Fund that establishes short positions introduces more risk to the Fund than a fund that only takes long positions (where the Fund owns the instrument or other asset) because the maximum sustainable loss on
an instrument or other asset purchased (held long) is limited to the amount paid for the instrument or other asset plus the transaction costs, whereas there is no maximum price of the shorted instrument or other asset when purchased in the open
market. Therefore, in theory, short positions have unlimited risk. The Fund’s 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 or other asset, this involves the risk of a potentially unlimited increase in the value of the
underlying instrument or other asset.
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 losses to the Fund. 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 debtor’s 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 debtor’s 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 debtholders.
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 be exposed to heightened 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. Initial public
offerings 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 initial public offerings, 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 initial public offering are available to the Fund. The investment performance of the Fund during periods when it is unable to invest significantly or at all in initial
public offerings may be lower than during periods when the Fund is able to do so. Securities purchased in initial public offerings which are sold within 12 months of purchase may result in increased short-term capital gains, which will be taxable to
the Fund’s shareholders as ordinary income. Certain “special situation” investments are investments in securities or other instruments that are determined to be illiquid or lacking a readily ascertainable fair value.
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Certain special situation investments prevent ownership interest
therein from being withdrawn until the special situation investment, or a portion thereof, is realized or deemed realized, which may negatively impact Fund performance. 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 Fund’s 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.
Trade Claims Risk.
The Fund may also purchase trade claims against companies, including companies in bankruptcy or reorganization proceedings, which include claims of suppliers for goods delivered and not paid, claims for unpaid services rendered, claims for contract
rejection damages and claims related to litigation. An investment in trade claims is very speculative and carries a high degree of risk. Trade claims may be illiquid instruments that generally do not pay interest and there can be no guarantee that
the debtor will ever be able to satisfy the obligation on the trade claim. Trade claims are typically unsecured and may be subordinated to other unsecured obligations of a debtor, and generally are subject to defenses of the debtor with respect to
the underlying transaction giving rise to the trade claim. The markets in trade claims are not regulated by U.S. federal securities laws or the SEC.
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.
Valuation Risk.
The
sales price the Fund (or an underlying fund or other investment vehicle) could receive for any particular investment may differ from the Fund’s (or an underlying fund’s or other investment vehicle’s) valuation of the investment,
particularly for securities that trade in thin or volatile markets or that are valued using a fair value methodology that produces an estimate of the fair value of the security/instrument, which may prove to be inaccurate. Investors who purchase or
redeem Fund shares on days when the Fund is holding securities or other instruments (or holding shares of underlying funds or other investment vehicles that have fair-valued securities or other instruments in their portfolios) may receive fewer or
more shares or lower or higher redemption proceeds than they would have received if the Fund (or underlying fund or other investment vehicle) had not fair-valued the security or instrument or had used a different valuation methodology. The value of
foreign securities, certain fixed income securities and currencies, as applicable, may be materially affected by events after the close of the market on which they are valued, but before the Fund determines its net asset value.
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.
Borrowings
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.
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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 Fund securities to approved borrowers pursuant to
borrower agreements in exchange for collateral at least equal in value to the loaned securities, marked to market daily. 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, but the Fund 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 Fund 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 Fund 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, as described in this SAI under
Investment Management and Other Services – Proxy Voting
Policies and Procedures – General.
Securities lending involves counterparty risk,
including the risk that a borrower may not provide sufficient or any collateral when required or may not return the loaned securities, timely or at all. 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 Fund’s 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 Fund’s 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 borrower’s 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.
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INVESTMENT MANAGEMENT AND OTHER
SERVICES
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 administrator of other funds in the Columbia Fund Family. 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.
The Investment Manager and its
investment advisory affiliates (Participating Affiliates) around the world may coordinate in providing services to their clients. Such coordination may include functional leadership of the business (the “Global” business). From time to
time the Investment Manager (or any affiliated investment subadviser to the Fund, as the case may be) may engage its Participating Affiliates 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. These Participating Affiliates will provide services to the
Investment Manager (or any affiliated investment subadviser to the Fund as the case may be) either pursuant to sub-advisory agreements, personnel-sharing agreements or similar inter-company arrangements and the Fund will pay no additional fees and
expenses as a result of any such arrangements. 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 Fund’s prospectus and this 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 Trusts, a Fund and/or its shareholders is limited to situations involving the Investment Manager’s 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.
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 Board 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 Trusts, 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 Trusts 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 expenses 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 Fund’s Investment Management Services Agreement.
Statement
of Additional Information – January 28, 2015
|
75
|
Management Fee Rates Paid by the Funds
Each Fund, unless otherwise noted, pays the Investment Manager an
annual fee for its investment management 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 Fund’s 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
Fund’s expenses. See the Funds’ prospectuses for more information.
Investment Management Fee Rates.
The Investment Manager receives a monthly investment advisory fee based on each Fund’s average daily net assets at the following annual rates:
Investment Management Services Agreement Fee Schedule
Fund
|
Assets
(billions)
|
Annual
rate at
each asset level
|
Adaptive
Alternatives Fund
|
All
assets
|
1.250%
|
AMT-Free
CT Intermediate Muni Bond Fund
AMT-Free MA Intermediate Muni Bond Fund
AMT-Free NY Intermediate Muni Bond Fund
AMT-Free OR Intermediate Muni Bond Fund
CA Tax-Exempt Fund
NY Tax-Exempt Fund
|
First
$0.5
|
0.400%
|
$0.5
to $1.0
|
0.350%
|
$1.0
to $3.0
|
0.320%
|
$3.0
to $6.0
|
0.290%
|
$6.0
to $7.5
|
0.280%
|
Over
$7.5
|
0.270%
|
AMT-Free
Intermediate Muni Bond Fund
Tax-Exempt Fund
|
First
$1.0
|
0.410%
|
$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%
|
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
Bond Fund
Intermediate Bond Fund
Corporate Income Fund
|
First
$1.0
|
0.430%
|
$1.0
to $2.0
|
0.420%
|
$2.0
to $6.0
|
0.400%
|
$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
Contrarian Core Fund
Global Dividend Opportunity Fund
Large Cap Growth Fund
Select Large Cap Growth Fund
|
First
$0.5
|
0.710%
|
$0.5
to $1.0
|
0.665%
|
$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%
|
AP
– Small Cap Equity Fund
|
First
$0.25
|
0.900%
|
|
$0.25
to $0.5
|
0.850%
|
|
Over
$0.5
|
0.800%
|
Balanced
Fund
Dividend Income Fund
|
First
$0.5
|
0.660%
|
$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%
|
Statement
of Additional Information – January 28, 2015
|
76
|
Fund
|
Assets
(billions)
|
Annual
rate at
each asset level
|
Diversified
Absolute Return Fund
|
First
$0.5
|
1.100%
|
$0.5
to $1.0
|
1.055%
|
|
$1.0
to $3.0
|
1.030%
|
|
$3.0
to $6.0
|
1.010%
|
|
Over
$6.0
|
0.980%
|
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%
|
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%
|
Statement
of Additional Information – January 28, 2015
|
77
|
Fund
|
Assets
(billions)
|
Annual
rate at
each asset level
|
Small
Cap Core Fund
Small Cap Growth Fund I
Small Cap Value Fund I
|
First
$0.5
|
0.790%
|
$0.5
to $1.0
|
0.745%
|
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%
(a)
|
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%
|
(a)
|
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.
|
Adaptive Risk Allocation Fund.
The Investment Manager has implemented a schedule for Adaptive Risk Allocation Fund’s 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:
|
|
|
Adaptive
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%
|
Diversified Real Return
Fund.
The Investment Manager has implemented a schedule for Diversified Real Return Fund’s 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
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 Fund’s 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.
Under the Investment
Management Services Agreement, a Fund, with the exception of Ultra Short Term Bond Fund, as noted above, also pays taxes, brokerage commissions and nonadvisory expenses, which include custodian fees and charges; fidelity bond premiums; certain legal
fees; registration fees for shares; consultants’ fees; compensation of Board members, officers and
Statement
of Additional Information – January 28, 2015
|
78
|
employees not employed by the Investment Manager or its affiliates;
corporate filing fees; organizational expenses; expenses incurred in connection with lending securities; interest and fee expense related to a Fund’s participation in inverse floater structures; and expenses properly payable by a Fund,
approved by the Board.
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
|
|
2014
|
2013
|
2012
|
For
Funds with fiscal period ending January 31
|
Diversified
Real Return Fund
(a)
|
N/A
|
N/A
|
N/A
|
For
Funds with fiscal period ending March 31
|
AP
Growth Fund
|
$9,510,480
|
$6,230,101
(b)
|
N/A
|
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
|
4,135,423
|
6,213,824
|
9,867,994
(c)
|
Corporate
Income Fund
|
6,040,737
|
6,237,060
|
4,666,572
(c)
|
Intermediate
Bond Fund
|
18,867,679
|
13,418,625
|
14,158,418
(c)
|
Small
Cap Value Fund I
|
10,928,618
|
11,658,742
|
10,740,169
(d)
|
U.S.
Treasury Index Fund
|
315,583
|
400,928
|
465,104
(c)
|
For
Funds with fiscal period ending May 31
|
Adaptive
Alternatives Fund
(e)
|
N/A
|
N/A
|
N/A
|
Adaptive
Risk Allocation Fund
|
112,337
|
51,020
(f)
|
N/A
|
Diversified
Absolute Return Fund
(g)
|
N/A
|
N/A
|
N/A
|
Dividend
Income Fund
|
45,795,703
|
37,839,114
|
18,535,458
(h)
|
HY
Municipal Fund
|
3,539,495
|
4,621,066
|
3,435,899
(i)
|
For
Funds with fiscal period ending July 31
|
AMT-Free
OR Intermediate Muni Bond Fund
|
1,762,302
|
1,992,185
|
1,715,839
(j)
|
Global
ILB Plus Fund
|
11,647
(k)
|
N/A
|
N/A
|
Large
Cap Growth Fund
|
18,583,489
|
16,526,481
|
13,345,526
(l)
|
Tax-Exempt
Fund
|
14,994,704
|
17,140,124
|
11,382,292
(m)
|
Ultra
Short Term Bond Fund
|
4,577,428
|
4,262,492
|
2,729,842
|
For
Funds with fiscal period ending August 31
|
AP
– Alternative Strategies Fund
|
7,445,886
|
5,713,001
|
1,570,915
(n)
|
AP
– Core Plus Bond Fund
|
16,983,316
|
18,964,179
|
6,266,540
(o)
|
AP
– Small Cap Equity Fund
|
5,699,757
|
4,261,994
|
1,163,423
(o)
|
Balanced
Fund
|
11,084,447
|
8,516,272
|
6,967,277
|
Contrarian
Core Fund
|
24,213,965
|
16,485,570
|
10,862,663
(p)
|
Emerging
Markets Fund
|
13,473,223
|
8,951,551
|
7,947,668
(q)
|
Global
Dividend Opportunity Fund
|
6,295,514
|
5,493,181
|
5,565,472
|
Global
Energy and Natural Resources Fund
|
2,627,816
|
2,956,409
|
6,717,718
(q)
|
Global
Technology Growth Fund
|
1,674,084
|
1,206,218
|
1,640,143
|
Greater
China Fund
|
1,191,231
|
1,833,662
|
1,944,751
|
Mid
Cap Growth Fund
|
17,409,882
|
15,698,296
|
13,873,055
|
Statement
of Additional Information – January 28, 2015
|
79
|
|
Management
Fees
|
|
2014
|
2013
|
2012
|
Small
Cap Core Fund
|
$9,076,791
|
$7,942,625
|
$5,961,050
(p)
|
Small
Cap Growth Fund I
|
9,821,868
|
8,867,134
|
8,072,792
|
Value
and Restructuring Fund
|
14,148,667
|
16,455,919
|
45,264,126
(q)
|
|
2013
|
2012
|
2011
|
For
Funds with fiscal period ending October 31
|
AMT-Free
CT Intermediate Muni Bond Fund
|
807,504
|
865,432
|
945,991
(r)
|
AMT-Free
Intermediate Muni Bond Fund
|
9,938,231
|
10,291,609
|
9,448,247
(r)
|
AMT-Free
MA Intermediate Muni Bond Fund
|
1,414,463
|
1,511,872
|
1,512,989
(r)
|
AMT-Free
NY Intermediate Muni Bond Fund
|
1,233,273
|
1,296,104
|
1,257,586
(r)
|
CA
Tax-Exempt Fund
|
2,089,802
|
2,174,124
|
1,781,596
(r)
|
International
Bond Fund
(s)
|
378,515
|
494,344
|
116,214
(r)
|
NY
Tax-Exempt Fund
|
761,105
|
768,227
|
468,778
(r)
|
Strategic
Income Fund
(s)
|
13,715,882
|
17,539,908
|
10,514,321
(r)
|
For
Funds with fiscal period ending December 31
|
Real
Estate Equity Fund
|
4,091,656
|
3,927,019
|
3,831,112
|
(a)
|
The Fund commenced operations
on March 11, 2014, and therefore has no reporting information for periods prior to such date.
|
(b)
|
For the period from April 20,
2012 (commencement of operations) to March 31, 2013.
|
(c)
|
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.
|
(d)
|
The Fund 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.
|
(e)
|
The Fund commenced operations
on January 27, 2015, and therefore has no reporting information for periods prior to such date.
|
(f)
|
For the period from June 19,
2012 (commencement of operations) to May 31, 2013.
|
(g)
|
The Fund is expected to
commence operations on or about February 19, 2015, and therefore has no reporting information for periods prior to such date.
|
(h)
|
The 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 management fees paid were $20,026,109.
|
(i)
|
The 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 management fees paid were $3,084,968.
|
(j)
|
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 management fees paid were
$2,201,895.
|
(k)
|
For the period from March 12,
2014 (commencement of operations) to July 31, 2014.
|
(l)
|
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 management fees paid were $12,427,666.
|
(m)
|
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 management fees paid were $12,644,779.
|
(n)
|
For the period from April 23,
2012 (commencement of operations) to August 31, 2012.
|
(o)
|
For the period from April 20,
2012 (commencement of operations) to August 31, 2012.
|
(p)
|
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
management fees paid were $7,499,179 and $5,993,236, respectively.
|
(q)
|
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 fees of $9,105,787.
|
(r)
|
Prior to May 1, 2010, these
Funds were managed by the Previous Adviser. The figures in this table include the management fees paid to both the Investment Manager and the Previous Adviser during the fiscal year ended 2011. The amount paid to each adviser separately during the
fiscal year ended 2011 are as follows: for AMT-Free CT Intermediate Muni Bond Fund, the Fund paid $602,895 to the Investment Manager and $580,713 to the Previous Adviser; for AMT-Free Intermediate Muni Bond Fund, the Fund paid $5,165,472 to the
Investment Manager and $5,091,941 to the Previous Adviser; for AMT-Free MA Intermediate Muni Bond Fund, the Fund paid $885,980 to the Investment Manager and
|
Statement
of Additional Information – January 28, 2015
|
80
|
|
$844,565 to the Previous
Adviser; for AMT-Free NY Intermediate Muni Bond Fund, the Fund paid $781,694 to the Investment Manager and $763,013 to the Previous Adviser; for CA Tax-Exempt Fund, the Fund paid $982,935 to the Investment Manager and $984,233 to the Previous
Adviser; for International Bond Fund, the Fund paid $7,487 to the Investment Manager and $69,573 to the Previous Adviser; for NY Tax-Exempt Bond Fund, the Fund paid $171,758 to the Investment Manager and $166,121 to the Previous Adviser; and for
Strategic Income Fund, the Fund paid $949,914 to the Investment Manager and $10,224,619 to the Previous Adviser.
|
(s)
|
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.
|
Manager of Managers Exemption
The SEC has issued an order that permits the Investment Manager,
subject to the approval of the Board, to appoint an unaffiliated subadviser or to change the terms of a subadvisory agreement for the Fund without first obtaining shareholder approval. The order permits the Fund to add or to change unaffiliated
subadvisers or to change the fees paid to subadvisers from time to time without the expense and delays associated with obtaining shareholder approval of the change.
The Investment Manager and its affiliates may have
other relationships, including significant financial relationships, with current or potential subadvisers or their affiliates, which may create certain conflicts of interest. When making recommendations to the Board to appoint or to change a
subadviser, or to change the terms of a subadvisory agreement, the Investment Manager does not consider any other relationship it or its affiliates may have with a subadviser, and the Investment Manager discloses to the Board the nature of any
material relationships it has with a subadviser or its affiliates.
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 Fund’s 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 a
subadvisory agreement with each subadviser under which the subadviser provides investment advisory assistance and day-to-day management of some or all of the Fund’s 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 Adaptive
Alternatives Fund, Diversified Absolute Return Fund, 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. As of the date of this SAI, Threadneedle is not providing services to the Funds pursuant to the subadvisory agreement.
The following table shows the subadvisory fee
schedules for fees paid by the Investment Manager to subadvisers for Funds that have subadvisers. The table is organized by fiscal year end.
Subadvisers and Subadvisory Agreement Fee Schedules
Fund
|
Subadviser
|
Parent
Company/Other
Information
|
Fee
Schedule
|
For
Funds with fiscal period ending March 31
|
AP
– Growth Fund
|
Loomis
Sayles
(effective December 11, 2013)
|
A
|
0.27%
for all assets
|
Statement
of Additional Information – January 28, 2015
|
81
|
Fund
|
Subadviser
|
Parent
Company/Other
Information
|
Fee
Schedule
|
For
Funds with fiscal period ending May 31
|
Adaptive
Alternatives Fund
|
Threadneedle
(since commencement of operations)
|
J
|
0.45%
for all assets
|
Diversified
Absolute Return Fund
|
Threadneedle
(since commencement of operations)
|
J
|
0.45%
for all assets
|
For
Funds with fiscal period ending August 31
|
AP
– Alternative Strategies Fund
|
AQR
(since commencement of operations)
|
B
|
0.65%
on the first $500 million declining to 0.50% as assets increase
(a)
|
Wasatch
(since commencement of operations)
|
C
|
0.70%
on the first $100 million declining to 0.60% as assets increase
|
Water
Island
(since commencement of operations)
|
D
|
0.70%
on the first $50 million declining to 0.60% as assets increase
|
AP
– Core Plus Bond Fund
|
Federated
(since commencement of operations)
|
E
|
0.15%
on the first $100 million declining to 0.08% as assets increase
|
TCW
(since commencement of operations)
|
F
|
0.18%
on the first $500 million declining to 0.05% as assets increase
|
AP
– Small Cap Equity Fund
|
Conestoga
(effective October 1, 2012)
|
G
|
0.48%
on all assets
|
DGHM
(since commencement of operations)
|
H
|
0.65%
of the first $50 million declining to 0.35% as assets increase
|
EAM
(since commencement of operations)
|
I
|
0.50%
of the first $100 million declining to 0.40% as assets increase
|
(a)
|
The fee is calculated based
on the combined net assets of Columbia Funds subject to the subadviser’s investment management.
|
A – 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.
B – 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., M.B.A. 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.
C – 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.
D – Water Island is located at 41 Madison
Avenue, 42nd Floor, New York, New York 10010. John S. Orrico, President of Water Island, controls Water Island.
E – 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.
F – 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.
Statement
of Additional Information – January 28, 2015
|
82
|
G – 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.
H – 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.
I – 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.
J – Threadneedle is a direct
subsidiary of Threadneedle Asset Management Holdings Limited and an affiliate of the Investment Manager, and an indirect wholly-owned subsidiary of Ameriprise Financial. Threadneedle and Threadneedle Asset Management Holdings Limited are located at
60 St Mary Axe, London EC3A 8JQ, United Kingdom.
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 Fund’s commencement of operations.
With respect to each of Adaptive
Alternatives Fund, Diversified Absolute Return Fund, Diversified Real Return Fund and Global ILB Plus Fund, since as of the date of this SAI Threadneedle is not providing services to the Funds pursuant to the subadvisory agreement, these Funds are
not included in the following table.
|
|
Subadvisory
Fees Paid
|
Fund
|
Subadviser
|
2014
|
2013
|
2012
|
For
Funds with fiscal period ending March 31
|
AP
Growth Fund
|
Loomis
Sayles
|
$52,526
(a)
|
N/A
|
N/A
|
For
Funds with fiscal period ending August 31
|
AP
– Alternative Strategies Fund
|
AQR
|
1,541,430
|
$912,940
|
$255,985
(b)
|
Former
subadviser:
Eaton Vance
(through November 25, 2013)
|
193,271
|
823,464
|
221,078
(b)
|
Wasatch
|
1,597,801
|
1,185,657
|
312,741
(b)
|
Water
Island
|
1,420,066
|
745,392
|
212,015
(b)
|
AP
– Core Plus Bond Fund
|
Federated
|
1,184,125
|
1,516,526
|
549,731
(c)
|
TCW
|
1,883,217
|
2,055,181
|
539,286
(c)
|
AP
– Small Cap Equity Fund
|
Conestoga
|
769,719
|
531,558
(d)
|
N/A
|
DGHM
|
778,710
|
524,799
|
121,072
(c)
|
EAM
|
768,575
|
580,685
|
159,349
(c)
|
Former
subadviser:
RS Investments
(through September 30, 2012)
|
N/A
|
42,593
(e)
|
169,473
(c)
|
(a)
|
For the period from December
11, 2013 to March 31, 2014.
|
(b)
|
For the period from April 23,
2012 (commencement of operations) to August 31, 2012.
|
(c)
|
For the period from April 20,
2012 (commencement of operations) to August 31, 2012.
|
(d)
|
For the period from October
1, 2012 to August 31, 2013.
|
(e)
|
For the period from September
1, 2012 to September 30, 2012.
|
Statement
of Additional Information – January 28, 2015
|
83
|
Portfolio Managers.
The following table provides information about the portfolio managers of each Fund as of the end of the applicable Fund’s most recent fiscal period, unless otherwise noted. The table is organized
by fiscal year end.
|
|
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**
|
For
Funds with fiscal year ending January 31
|
Diversified
Real Return
Fund
|
Jeffrey
Knight
(d)
|
20
RICs
3 other accounts
|
$64.31
billion
$1.63 million
|
None
|
None
|
(2)
|
(13)
|
Orhan
Imer
(d)
|
9
RICs
1 PIVs
4 other accounts
|
$7.16
billion
$4.26 million
$411,046
|
None
|
None
|
For
Funds with fiscal year ending March 31
|
AP
– Growth
Fund
|
Columbia
Management:
Thomas M. Galvin
|
7 RICs
1 PIV
2851 other accounts
|
$7.43 billion
$59.43 million
$4.61 billion
|
None
|
None
|
(2)
|
(13)
|
Richard
A. Carter
|
7
RICs
1 PIV
2851 other accounts
|
$7.43
billion
$59.43 million
$4.60 billion
|
None
|
None
|
Todd
D. Herget
|
7
RICs
1 PIV
2855 other accounts
|
$7.43
billion
$59.43 million
$4.60 billion
|
None
|
None
|
Loomis
Sayles:
Aziz
Hamzaogullari
|
8 RICs
5 PIVs
54 other accounts
|
$7.2 billion
$529 million
$3.4 billion
|
1
PIV
($483 million)
|
None
|
(8)
|
(19)
|
Pacific/Asia
Fund
|
Jasmine
(Weili)
Huang
|
3
RICs
1 PIV
12 other accounts
|
$2.42
billion
$585.37 million
$84.31 million
|
None
|
$10,001
–
$50,000
(b)
|
(2)
|
(13)
|
Daisuke
Nomoto
|
3
RICs
3 other accounts
|
$1.18
billion
$546,168
|
None
|
$50,001
–
$100,000
(a)
|
Christine
Seng
(f)
|
1
PIV
|
$5.20
million
|
None
|
None
(c)
|
(10)
|
(21)
|
Select
Large
Cap Growth
Fund
|
Thomas
M. Galvin
|
7
RICs
1 PIV
2851 other accounts
|
$2.10
billion
$59.43 million
$4.61 billion
|
None
|
Over
$1,000,000
(a)
|
(2)
|
(13)
|
Richard
A. Carter
|
7
RICs
1 PIV
2851 other accounts
|
$2.10
billion
$59.43 million
$4.60 billion
|
None
|
$100,001
–
$500,000
(a)
$50,001 –
$100,000
(b)
|
Todd
D. Herget
|
7
RICs
1 PIV
2855 other accounts
|
$2.10
billion
$59.43 million
$4.60 billion
|
None
|
$100,001
–
$500,000
(a)
|
For
the Funds with fiscal year ending April 30
|
Bond
Fund
|
Carl
W. Pappo
|
4
RICs
4 PIVs
19 other accounts
|
$9.86
billion
$1.44 billion
$2.12 billion
|
None
|
None
|
(2)
|
(13)
|
Michael
Zazzarino
|
5
RICs
1 PIVs
9 other accounts
|
$13.89
billion
$46.85 million
$84.25 million
|
None
|
$1
–
$10,000
(a)
$1 –
$10,000
(b)
|
Statement
of Additional Information – January 28, 2015
|
84
|
|
|
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**
|
Corporate
Income Fund
|
Tom
Murphy
|
8
RICs
29 PIVs
34 other accounts
|
$4.07
billion
$31.87 billion
$4.05 billion
|
None
|
$100,001
–
$500,000
(a)
|
(2)
|
(13)
|
Tim
Doubek
|
6
RICs
30 other accounts
|
$4.07
billion
$2.62 billion
|
None
|
$50,001
–
$100,000
(a)
$100,001 –
$500,000
(b)
|
Brian
Lavin
|
12
RICs
3 PIV
5 other accounts
|
$19.49
billion
$97.07 million
$3.46 million
|
None
|
None
|
Mark
Van Holland
(g)
|
2
PIVs
7 other accounts
|
$11.57
million
$108.92 million
|
None
|
None
|
Intermediate
Bond Fund
|
Brian
Lavin
|
12
RICs
3 PIV
5 other accounts
|
$16.93
billion
$97.01 million
$3.46 million
|
None
|
None
|
(2)
|
(13)
|
Carl
W. Pappo
|
4
RICs
4 PIVs
19 other accounts
|
$6.65
billion
$1.44 billion
$2.12 billion
|
None
|
$10,001
–
$50,000
(b)
|
Michael
Zazzarino
|
5
RICs
1 PIVs
9 other accounts
|
$10.68
billion
$46.85 million
$84.25 million
|
None
|
$1
–
10,000
(b)
|
Small
Cap
Value Fund I
|
Jeremy
Javidi
|
1
RICs
1 PIV
10 other accounts
|
$386.28
million
$183.81 million
$33.09 million
|
None
|
$100,001
–
$500,000
(a)
$1-
$10,001
(b)
|
(2)
|
(13)
|
John
S. Barrett
|
1
RICs
1 PIV
8 other accounts
|
$386.28
million
$183.81 million
$32.96 million
|
None
|
$1-
$10,001
(b)
|
U.S.
Treasury
Index Fund
|
William
Finan
|
3
other accounts
|
$841,002.53
|
None
|
$10,001
–
$50,000
(b)
|
(2)
|
(13)
|
Orhan
Imer
|
12
RICs
1 PIV
4 other accounts
|
$1.27
billion
$3.58 million
$473,590.25
|
None
|
None
|
For
Funds with fiscal year ending May 31
|
Adaptive
Alternatives
Fund
|
Jeffrey
L. Knight
(h)
|
23
RICs
1 PIV
3 other accounts
|
$67.59
billion
$10.45 million
$1.75 million
|
None
|
None
|
(2)
|
(13)
|
William
Landes
(h)
|
2
other accounts
|
$108,184.31
|
None
|
Marc
Khalamayzer
(h)
|
1
other account
|
$52,475.19
|
None
|
Adaptive
Risk Allocation
Fund
|
Jeffrey
L. Knight
|
38
RICs
1 PIV
9 other accounts
|
$59.67
billion
$10.24 million
$1.00 million
|
None
|
None
|
(1),
(2)
|
(13)
|
Beth
M. Vanney
|
7
RICs
11 PIVs
4 other accounts
|
$6.74
billion
$10.24 million
$436,083.65
|
None
|
None
|
Orhan
Imer
|
12
RICs
2 PIV
9 other accounts
|
$1.45
billion
$13.82 million
$1.00 million
|
None
|
None
|
Toby
Nangle
|
8
RICs
14 PIVs
1 other account
|
$6.53
billion
$68.04 million
$349.0 million
|
3
PIVs
($57.8 M)
|
None
(c)
|
(10)
|
(21)
|
Statement
of Additional Information – January 28, 2015
|
85
|
|
|
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**
|
Diversified
Absolute
Return
Fund
|
Jeffrey
L. Knight
(i)
|
23
RICs
1 PIV
3 other accounts
|
$67.59
billion
$10.45 million
$1.75 million
|
None
|
None
|
(2)
|
(13)
|
William
Landes
(i)
|
2
other accounts
|
$108,184.31
|
None
|
Kent
Peterson
(i)
|
8
RICs
1 PIV
6 other accounts
|
$16.95
billion
$9.89 million
$550,933.08
|
None
|
Brian
Virginia
(i)
|
4
RICs
8 other accounts
|
$16.48
billion
$2.88 million
|
None
|
Dividend
Income Fund
|
Michael
S.
Barclay
|
5
RIC
1 PIV
75 other accounts
|
$131.16
million
$1.00 billion
$1.24 billion
|
None
|
$10,001
–
$50,000
(b)
|
(2)
|
(13)
|
Scott
L. Davis
|
5
RICs
1 PIV
74 other accounts
|
$131.16
million
$1.00 billion
$1.29 billion
|
None
|
$100,001
–
$500,000
(a)
$100,001 –
$500,000
(b)
|
Peter
Santoro
(g)
|
8
RICs
2 PIV
78 other accounts
|
$1.15
billion
$1.02 million
$1.50 billion
|
None
|
None
|
High
Yield
Municipal
Fund
|
Chad
H.
Farrington
|
6
other accounts
|
$44.88
million
|
None
|
$10,001
–
$50,000
(a)
$100,001 –
$500,000
(b)
|
(2)
|
(13)
|
For
Funds with fiscal year ending July 31
|
AMT-Free
OR
Intermediate
Muni Bond
Fund
|
Brian
M.
McGreevy
|
11
RICs
6 other accounts
|
$2.45
billion
$363.57 million
|
None
|
None
|
(2)
|
(13)
|
Global
ILB
Plus Fund
|
Orhan
Imer
|
12
RICs
2 PIVs
4 other accounts
|
$7.35
billion
$14.06 million
$478,707.38
|
None
|
None
|
(2)
|
(13)
|
Dave
Chappell
|
2
PIVs
31 other accounts
|
$406.1
million
$2.55 billion
|
None
|
None
(c)
|
(10)
|
(21)
|
Large
Cap
Growth Fund
|
Peter
R.
Deininger
|
2
RICs
1 PIV
9 other accounts
|
$1.25
billion
$3.49 million
$182.27 million
|
None
|
$100,001
–
$500,000
(b)
|
(2)
|
(13)
|
John
T. Wilson
|
2
RICs
1 PIV
10 other accounts
|
$1.25
billion
$3.49 million
$193.79 million
|
None
|
$500,001
–
$1,000,000
(a)
$100,001 –
$500,000
(b)
|
Tax-Exempt
Fund
|
Kimberly
A.
Campbell
|
4
PIVs
17 other accounts
|
$502
million
$1.50 million
|
None
|
$10,001
–
$50,000
(b)
|
(2)
|
(13)
|
Ultra
Short
Term Bond
Fund
|
Leonard
A. Aplet
|
6
RICs
16 PIVs
72 other accounts
|
$15.27
billion
$2.62 billion
$8.13 billion
|
None
|
None
|
(2)
|
(13)
|
Mary
K. Werler
|
7
other accounts
|
$2.89
million
|
None
|
None
|
Statement
of Additional Information – January 28, 2015
|
86
|
|
|
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**
|
For
Funds with fiscal year ending August 31
|
AP
– Alternative
Strategies Fund
|
AQR:
Clifford S. Asness
|
33 RICs
35 PIVs
63 other accounts
|
$17.9 billion
$12.29 billion
$25.93 billion
|
34 PIVs
($11.97 B)
19 other
accounts
($8.57 B)
|
None
|
(3)
|
(14)
|
Brian
K. Hurst
|
13
RICs
38 PIVs
21 other accounts
|
$14.34
billion
$26.44 billion
$11.82 billion
|
34
PIVs
($24.41 B)
5 other
accounts
($4.15 B)
|
None
|
John
M. Liew
|
19
RICs
27 PIVs
29 other accounts
|
$15.12
billion
$9.17 billion
$13.72 billion
|
25
PIVs
($8.28 B)
9 other
accounts
($4.8 B)
|
None
|
Yao
Hua Ooi
|
13
RICs
29 PIVs
2 other accounts
|
$14.34
billion
$19.87 billion
$445.88 million
|
26
PIVs
($18.37 B)
1 other
account
($103.31 M)
|
None
|
Ari
Levine
|
5
RICs
30 PIVs
5 other accounts
|
$2.51
billion
$12.98 billion
$1.82 billion
|
29
PIVs
($12.16 B)
1 other
accounts
($146.65 M)
|
None
|
Wasatch:
Michael L.
Shinnick
|
1 RIC
1 PIV
|
$260 million
$2.84 billion
|
None
|
None
|
(11)
|
(22)
|
Ralph
C. Shive
|
1
RIC
1 PIV
|
$260
million
$2.84 billion
|
None
|
None
|
Water
Island:
Edward Chen
|
1 RIC
|
$673.5 million
|
None
|
None
|
(12)
|
(23)
|
Gregory
Loprete
|
4
RICs
|
$1.10
billion
|
None
|
None
|
Todd
W. Munn
|
4
RICs
|
$3.62
billion
|
None
|
None
|
Roger
P.
Foltynowicz
|
4
RICs
|
$3.62
billion
|
None
|
None
|
Statement
of Additional Information – January 28, 2015
|
87
|
|
|
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**
|
AP
– Core Plus
Bond Fund
|
Columbia
Management:
Carl W. Pappo
|
4 RICs
4 PIVs
22 other accounts
|
$9.06 billion
$1.40 billion
$2.15 billion
|
None
|
None
|
(2)
|
(13)
|
Brian
Lavin
|
14
RICs
3 PIVs
5 other accounts
|
$19.71
billion
$97.47 million
$3.89 million
|
None
|
None
|
Michael
Zazzarino
|
4
RICs
1 PIV
10 other accounts
|
$9.06
billion
$47.30 million
$84.12 million
|
None
|
None
|
Federated:
Jerome D. Conner
|
1 RIC
|
$65.3 million
|
None
|
None
|
(7)
|
(18)
|
Donald
T.
Ellenberger
|
3
RICs
1 PIV
7 other accounts
|
$5.84
billion
$2.34 billion
$1.22 billion
|
None
|
None
|
TCW:
Tad Rivelle
|
25 RICs
31 PIVs
231 other accounts
|
$55.58 billion
$4.23 billion
$28.68 billion
|
2 RICs
($224.4 M)
26 PIVs
($2.78 B)
6 other
accounts
($2.73 B)
|
None
|
(9)
|
(20)
|
Stephen
M. Kane
|
26
RICs
33 PIVs
231 other accounts
|
$49.50
billion
$5.09 billion
$28.77 billion
|
2
RICs
($224.4 M)
27 PIVs
($3.17 B)
6 other
accounts
($2.73 B)
|
None
|
Laird
R.
Landmann
|
25
RICs
31 PIVs
231 other accounts
|
$49.52
billion
$4.23 billion
$28.77 billion
|
1
RIC
($219 M)
26 PIVs
($2.78 B)
6 other
accounts
($2.73 B)
|
None
|
Bryan
Whalen
|
23
RICs
31 PIVs
229 other accounts
|
$55.56
billion
$4.23 billion
$26.84 billion
|
1
RIC
($219 M)
26 PIVs
($2.78 B)
6 other
accounts
($2.73 B)
|
None
|
Statement
of Additional Information – January 28, 2015
|
88
|
|
|
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**
|
AP
– Small Cap
Equity Fund
|
Columbia
Management:
Jarl Ginsberg
|
3 RICs
13 other accounts
|
$3.52 billion
$47.80 billion
|
None
|
None
|
(2)
|
(13)
|
Christian
K.
Stadlinger
|
3
RICs
13 other accounts
|
$3.52
billion
$57.92 million
|
None
|
None
|
Conestoga:
Robert M. Mitchell
|
3 RICs
129 other accounts
|
$745.13 million
$883.16 million
|
None
|
None
|
(4)
|
(15)
|
Joseph
F.
Monahan
|
3
RICs
129 other accounts
|
$745.13
million
$883.13 million
|
None
|
None
|
DGHM:
Jeffrey C. Baker
|
2 RICs
6 PIVs
76 other accounts
|
$76 million
$372 million
$1.44 billion
|
2 other
accounts
($172 million)
|
None
|
(5)
|
(16)
|
Bruce
H. Geller
|
2
RICs
6 PIVs
76 other accounts
|
$76
million
$372 million
$1.44 billion
|
2
other
accounts
($172 million)
|
None
|
Peter
A. Gulli
|
2
RICs
6 PIVs
76 other accounts
|
$76
million
$372 million
$1.44 billion
|
2
other
accounts
($172 million)
|
None
|
Edward
W. Turville
(with REMS)
|
2
RICs
6 PIVs
76 other accounts
|
$76
million
$372 million
$1.44 billion
|
2
other
accounts
($172 million)
|
None
|
EAM:
Montie L.
Weisenberger
|
1 RIC
1 PIV
7 other accounts
|
$113.33 million
$127.24 million
$68.12 million
|
None
|
None
|
(6)
|
(17)
|
Balanced
Fund
|
Leonard
A. Aplet
|
6
RICs
15 PIVs
72 other accounts
|
$16.72
billion
$2.52 billion
$7.89 billion
|
None
|
$10,001
–
$50,000
(b)
$50,001 –
$100,000
(a)
|
(2)
|
(13)
|
Brian
Lavin
|
13
RICs
3 PIVs
5 other accounts
|
$23.69
billion
$97.47 million
$3.89 million
|
None
|
None
|
Gregory
S.
Liechty
|
2
RICs
15 PIVs
49 other accounts
|
$2.77
billion
$4.35 billion
$6.56 billion
|
None
|
$10,001
–
$50,000
(b)
|
Guy
W. Pope
|
10
RICs
15 PIVs
114 other accounts
|
$10.51
billion
$471.13 million
$2.94 billion
|
None
|
$100,001
–
$500,000
(b)
$1 –
$10,000
(a)
|
Ronald
B. Stahl
|
2
RICs
15 PIVs
59 other accounts
|
$2.77
billion
$4.35 billion
$6.81 billion
|
None
|
$1
–
$10,000
(b)
$100,001 –
$500,000
(a)
|
Contrarian
Core Fund
|
Guy
W. Pope
|
11
RICs
5 PIVs
114 other accounts
|
$7.12
billion
$471.13 million
$2.94 billion
|
None
|
$500,001
–
$1,000,000
(b)
$500,001 –
$1,000,000
(a)
|
(2)
|
(13)
|
Statement
of Additional Information – January 28, 2015
|
89
|
|
|
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**
|
Emerging
Markets Fund
|
Robert
B.
Cameron
|
1
RIC
1 PIV
7 other accounts
|
$1.13
billion
$697.24 million
$90.81 million
|
None
|
$100,001
–
$500,000
(b)
|
(2)
|
(13)
|
Jasmine
(Weili)
Huang
|
3
RICs
1 PIV
12 other accounts
|
$1.55
billion
$697.24 million
$90.81 million
|
None
|
$10,001
–
$50,000
(b)
|
Dara
J. White
|
2
RICs
1 PIV
9 other accounts
|
$1.19
billion
$698.21 million
$90.83 million
|
None
|
$100,001
–
$500,000
(b)
$100,001 –
$500,000
(a)
|
Global
Dividend
Opportunity
Fund
|
Steven
R. Schroll
|
4
RICs
1 PIV
352 other accounts
|
$12.75
billion
$6.81 million
$72.26 million
|
None
|
$100,001
–
$500,000
(b)
$100,001 –
$500,000
(a)
|
(2)
|
(13)
|
Paul
F. Stocking
|
4
RICs
1 PIV
357 other accounts
|
$12.75
billion
$6.81 million
$82.75 million
|
None
|
$100,001
–
$500,000
(b)
|
Dean
A. Ramos
|
4
RICs
1 PIV
352 other accounts
|
$12.75
billion
$6.81 million
$69.76 million
|
None
|
$50,001
–
$100,000
(b)
|
Global
Energy
and Natural
Resources
Fund
|
Josh
Kapp
|
1
PIV
5 other accounts
|
$15.43
million
$1.13 million
|
None
|
None
|
(2)
|
(13)
|
Jonathan
Mogil
|
1
PIV
9 other accounts
|
$15.43
million
$1.83 million
|
None
|
None
|
Global
Technology
Growth Fund
|
Wayne
M.
Collette
|
3
RICs
1 PIV
11 other accounts
|
$1.32
billion
$13.46 million
$77.52 million
|
None
|
$1
–
$10,000
(a)
|
(2)
|
(13)
|
Rahul
Narang
|
4
RICs
9 other accounts
|
$1.69
billion
$64.79 million
|
None
|
$100,001
–
$500,000
(b)
|
Greater
China
Fund
|
Jasmine
(Weili)
Huang
|
3
RICs
1 PIV
12 other accounts
|
$2.98
billion
$69.72 million
$9.08 million
|
None
|
$10,001
–
$50,000
(b)
|
(2)
|
(13)
|
Mid
Cap
Growth Fund
|
George
J. Myers
|
2
RICs
2 PIVs
10 other accounts
|
$680.43
million
$374.51 million
$25.63 million
|
None
|
$100,001
–
$500,000
(b)
$10,001 –
$50,000
(a)
|
(2)
|
(13)
|
Brian
D. Neigut
|
2
RICs
2 PIVs
11 other accounts
|
$680.43
million
$374.51 million
$24.95 million
|
None
|
$10,001
–
$50,000
(b)
|
James
E. King
|
2
RICs
1 PIV
9 other accounts
|
$680.43
million
$361.05 million
$15.35 million
|
None
|
$10,001
–
$50,000
(b)
|
William
Chamberlain
|
1
RIC
1 PIV
5 other accounts
|
$423.60
million
$361.05 million
$14.87 million
|
None
|
$1
–
$10,000
(b)
|
Statement
of Additional Information – January 28, 2015
|
90
|
|
|
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**
|
Small
Cap
Core Fund
|
Richard
D’Auteuil
|
1
PIV
17 other accounts
|
$142.98
million
$700.25 million
|
None
|
$50,001
–
$100,000
(b)
$100,001 –
$500,000
(a)
|
(2)
|
(13)
|
Jeffrey
Hershey
|
1
PIV
29 other accounts
|
$142.98
million
$693.32 million
|
None
|
$1
–
$10,000
(b)
|
Paul
S. Szczygiel
|
1
PIV
23 other accounts
|
$142.98
million
$699.89 million
|
None
|
$10,001
–
$50,000
(b)
|
Small
Cap
Growth Fund I
|
Daniel
Cole
(j)
|
5
other accounts
|
$2.97
million
|
None
|
None
|
(2)
|
(13)
|
Wayne
M.
Collette
|
3
RICs
1 PIV
11 other accounts
|
$510.31
million
$13.46 million
$77.52 million
|
None
|
$50,001
–
$100,000
(b)
|
Lawrence
W. Lin
|
2
RICs
1 PIV
14 other accounts
|
$288.14
million
$13.46 million
$75.39 million
|
None
|
$10,001
–
$50,000
(b)
$10,001 –
$50,000
(a)
|
Rahul
Narang
|
4
RICs
9 other accounts
|
$877.03
million
$64.79 million
|
None
|
None
|
Value
and
Restructuring
Fund
|
Guy
W. Pope
|
11
RICs
5 PIVs
114 other accounts
|
$10.01
billion
$471.13 million
$2.94 billion
|
None
|
$100,001
–
$500,000
(b)
$100,001 –
$500,000
(a)
|
(2)
|
(13)
|
J.
Nicholas Smith
|
96
other accounts
|
$330.62
million
|
None
|
$100,001
–
$500,000
(a)
|
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)
|
AMT-Free
Intermediate
Muni Bond
Fund
|
Paul
F. Fuchs
|
4
RICs
4 PIVs
3 other accounts
|
$872.06
million
$898.95 million
$455,105
|
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
$455,105
|
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
$455,105
|
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)
|
Statement
of Additional Information – January 28, 2015
|
91
|
|
|
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**
|
International
Bond Fund
|
Gene
Tannuzzo
(e)
|
6
RICs
72 other accounts
|
$4.92
billion
$1.27 billion
|
None
|
None
|
(2)
|
(13)
|
Zach
Pandl
(e)
|
3
RICs
7 other accounts
|
$4.61
billion
$0.23 million
|
None
|
None
|
Jim
Cielinski
|
2
RICs
4 PIVs
1 other account
|
$1.45
billion
$1.23 million
$38 million
|
2
PIVs
($266 million)
|
None
(c)
|
(10)
|
(21)
|
Matthew
Cobon
|
4
PIVs
2 RICs
|
$2.10
million
$1.45 billion
|
4
PIVs
($2.10 million)
|
None
(c)
|
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
|
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)
|
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.
|
(d)
|
The Fund commenced operations
March 11, 2014; reporting information is provided as of December 31, 2013.
|
(e)
|
The portfolio manager began
managing the fund after its last fiscal year end; reporting information is provided as of January 31, 2014.
|
(f)
|
The portfolio manager began
managing the fund after its last fiscal year end; reporting information is provided as of April 30, 2014.
|
(g)
|
The portfolio manager began
managing the fund after its last fiscal year end; reporting information is provided as of July 31, 2014.
|
(h)
|
The Fund commenced operations
on January 27, 2015; reporting information is provided as of November 30, 2014.
|
(i)
|
The Fund is expected to
commence operations on or about February 19, 2015; reporting information is provided as of November 30, 2014.
|
(j)
|
The portfolio manager began
managing the fund after its last fiscal year end; reporting information is provided as of November 30, 2014.
|
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-fund’s 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-fund’s 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.
|
Statement
of Additional Information – January 28, 2015
|
92
|
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 Fund’s 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 Manager’s 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 Fund’s 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 Manager’s Code of Ethics and
certain limited exceptions, the Investment Manager’s 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 manager’s 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 Manager’s 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. In addition, although the Investment Manager has
entered into a personnel sharing arrangement with Threadneedle, the Investment Manager and Threadneedle maintain separate trading operations for their clients. By maintaining separate trading operations in this manner, the Funds may forego certain
opportunities including the aggregation of trades across certain accounts managed by Threadneedle. This could result in the Funds competing in the market with one or more accounts managed by Threadneedle for similar trades. In addition, it is
possible that the separate trading desks of the Investment Manager and Threadneedle may be on opposite sides of a trade execution for a Fund at the same time.
|
|
“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.
|
|
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 account’s 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 manager’s 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
|
Statement
of Additional Information – January 28, 2015
|
93
|
|
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 manager’s 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
Fund’s 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 Manager’s 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:
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. Other accounts may include, without limitation, separately
managed accounts for foundations, endowments, pension plans, and high net-worth families; registered investment companies; 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”); foreign investment companies; and may also include accounts or investments managed or made by the portfolio managers in a personal or other capacity (“Proprietary Accounts”). Management
of other accounts in addition to the Fund can present certain conflicts of interest, as described below.
|
|
From time to time,
potential conflicts of interest may arise between a portfolio manager’s 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 Fund’s 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 a portfolio manager’s management of a number of accounts (including Proprietary Accounts) with similar investment strategies. Often, an investment opportunity may be suitable for both the Fund and
other accounts, 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. In addition,
different account guidelines and/or differences within particular investment strategies may lead to the use of different investment practices for portfolios with a similar investment strategy. AQR will not necessarily purchase or sell the same
securities at the same time, same direction, or in the same proportionate amounts for all eligible accounts, particularly if different accounts have materially different amounts of capital under management by AQR, different amounts of investable
cash available, different strategies, or different risk tolerances. As a result, although AQR manages numerous accounts and/or portfolios with similar or identical investment objectives, or may manage accounts with different objectives that trade in
the same securities, the portfolio decisions relating to these accounts, and the performance resulting from such decisions, may differ from account to account.
|
|
Whenever decisions
are made to buy or sell securities by the Fund and one or more of the other accounts (including Proprietary Accounts) simultaneously, AQR or the portfolio manager 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. To this end, AQR has adopted policies and procedures that are intended to ensure that investment opportunities are allocated equitably among accounts over
time. As a result of the allocations, there may be instances where the Fund will not participate in a transaction that is allocated among other accounts or the Fund 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
Fund’s 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. Specifically, the entitlement to a performance fee in managing one or more accounts
may create an incentive for AQR to take risks in managing assets that it would not otherwise take in the absence of such arrangements. Additionally, since performance fees reward AQR for performance in accounts which are subject to such fees, AQR
may have an incentive to favor these accounts over those that have only fixed asset-based fees with respect to areas such as trading opportunities, trade allocation, and allocation of new investment opportunities.
|
|
AQR has
implemented specific policies and procedures (e.g., a code of ethics and trade allocation policies) that seek to address potential conflicts of interest that may arise in connection with the management of the Fund and other accounts and that are
designed to ensure that all client accounts are treated fairly and equitably over time.
|
Statement
of Additional Information – January 28, 2015
|
94
|
(4)
|
Conestoga:
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 Fund’s assets allocated to
Conestoga (Conestoga’s 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 Conestoga’s portfolio managers face in this
regard. Certain of those conflicts of interest are summarized below.
|
|
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 manager’s decision as to the selection of broker-dealers could produce disproportionate
costs and benefits among Conestoga’s 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 Conestoga’s 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 Conestoga’s Sleeve as well as other accounts, the Conestoga’s 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 Conestoga’s 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 Conestoga’s 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 Conestoga’s Sleeve and other accounts managed by its portfolio manager(s). Depending on another account’s objectives and other factors, a
portfolio manager may give advice to and make decisions for Conestoga’s Sleeve that may differ from advice given, or the timing or nature of decisions made, with respect to another account. A portfolio manager’s 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 Conestoga’s Sleeve, even though it could have
been bought or sold for Conestoga’s 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
manager’s 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 Conestoga’s Sleeve, and the description above is not a complete description of every conflict that could exist in managing Conestoga’s Sleeve and other
accounts. Many of the potential conflicts of interest to which the Conestoga’s 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:
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 Fund’s assets
allocated to DGHM (DGHM’s 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 DGHM’s
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 DGHM’s Sleeve. The portfolio managers know the size and
timing of trades for DGHM’s Sleeve and the Other Accounts, and may be able to predict the market impact of the DGHM’s 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 DGHM’s Sleeve, or vice versa.
|
Statement
of Additional Information – January 28, 2015
|
95
|
|
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 DGHM’s investment products may give rise to a conflict of interest by 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:
The portfolio manager is responsible for managing other accounts invested in the same strategy as the portion of the Fund’s assets allocated to EAM (EAM’s 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 EAM’s Sleeve or the Fund.
|
|
From time to time,
potential conflicts of interest may arise between the portfolio manager’s management of the investments of EAM’s Sleeve, on the one hand, and the management of other accounts, on the other. For example, an investment opportunity may be
suitable for both EAM’s Sleeve and other accounts, but may not be available in sufficient quantities for both EAM’s Sleeve and the other accounts to participate fully. Similarly, there may be limited opportunity to sell an investment
held by EAM’s Sleeve and another account. Whenever decisions are made to buy or sell securities by EAM’s 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 EAM’s 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:
As a general matter, certain conflicts of interest may arise in connection with a portfolio manager’s management of a fund’s 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:
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
account’s 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:
TCW’s 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
|
Statement
of Additional Information – January 28, 2015
|
96
|
|
manager intends to
trade the same security on the same day for more than one account, the trades typically are “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 manager’s 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 manager’s 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 manager’s 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:
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 manager’s 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:
There may be certain inherent conflicts of interest that arise in connection with a portfolio manager’s management of the portion of the Fund’s assets allocated to Wasatch (Wasatch’s 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
|
Statement
of Additional Information – January 28, 2015
|
97
|
|
based fee from
Cross Creek Capital, L.P. Such conflicts include allocation of investment opportunities among Wasatch’s 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 Wasatch’s 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.
|
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|
Water Island:
The fact that the portfolio managers serve as both portfolio managers of the portion of the Fund’s assets allocated to Water Island (Water Island’s 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:
|
■
|
Water
Island’s Sleeve and the other account are similarly managed;
|
■
|
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;
|
■
|
Water Island has
adopted policies limiting the ability of the portfolio managers to cross trade securities between Water Island’s Sleeve and other accounts; and
|
■
|
all
allocations are subject to review by Water Island’s 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 employee’s 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 employee’s 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 group’s 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.
|
|
In
addition to the annual incentive award described above, top performing portfolio managers may also receive additional equity awards with extended vesting terms.
|
Statement
of Additional Information – January 28, 2015
|
98
|
|
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 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:
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 AQR’s 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 manager’s individual performance, including efficiency, contributions to AQR and quality of work performed. A portfolio manager’s performance is not based on any specific fund’s
or strategy’s performance, but is affected by the overall performance of the firm.
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|
Conestoga:
Each of the Fund’s portfolio managers is a partner of Conestoga. As such, each portfolio manager receives a share of Conestoga’s annual profits, as specified in the manager’s partnership agreement with
Conestoga, from Conestoga’s management of the Fund and all other accounts.
|
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|
DGHM:
The portfolio managers’ compensation varies with the general success of the firm. Each portfolio manager’s 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:
The portfolio manager’s 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:
The portfolio manager 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 manager’s 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 manager’s role.
|
|
IPP
is measured on a rolling one, three and five calendar year pre-tax gross total return basis vs. the Fund’s benchmark (i.e., Barclays Universal Index) and vs. the Fund's designated peer group of comparable accounts. 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, the portfolio manager also manages other
accounts in addition to the Fund. Such other accounts may have different benchmarks, peer groups, IPP weightings and performance measures. For purposes of calculating the annual incentive amount, each fund or account is categorized into an IPP
group. 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 groups. The weighting assigned to the Fund is
greater than or equal to the weighting assigned to other accounts or funds used to determine IPP. Additionally, the portfolio manager serves on one or more Investment Teams that establish guidelines on various performance drivers (e.g., currency,
duration, sector, volatility and/or yield curve) for taxable fixed income funds. A portion of the IPP score is based on Federated’s senior management’s assessment of team contributions. A portion of the IPP score may be adjusted on
management’s assessment of overall contributions to fund performance and any other factors as deemed relevant.
|
Statement
of Additional Information – January 28, 2015
|
99
|
|
The Financial
Success category is designed to tie the portfolio manager’s bonus, in part, to Federated’s 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.
|
(19)
|
Loomis Sayles:
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 manager’s 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 manager’s 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 product’s 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 manager’s performance relative to the peer group for the 1, 3 and 5 year periods (or since the start of the manager’s 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 manager’s 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 product’s 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:
|
■
|
the plan grants
units that entitle participants to an annual payment based on a percentage of company earnings above an established threshold;
|
■
|
upon retirement, a
participant will receive a multi-year payout for his or her vested units; and
|
■
|
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.
Statement
of Additional Information – January 28, 2015
|
100
|
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:
TCW’s 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 TCW’s 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 firm’s 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, MetWest’s 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 TCW’s 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.
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(21)
|
Threadneedle:
To align the interests of its investment staff with those of Threadneedle’s clients, the remuneration plan for senior individuals comprises basic salary and an annual profit share scheme (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 Threadneedle’s own funds. Investment performance is a major factor within that performance appraisal, judged relative to each fund’s targets on a 1- and 3-year basis, with a bias
towards 3-year performance in order to incentivize delivery of longer-term performance. Threadneedle Fund Deferral program, through which the deferral is notionally invested in a number of Threadneedle funds, vesting in three equal parts over three
years, provides a strong tie for Threadneedle’s 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 – January 28, 2015
|
101
|
|
Incentives are
devised to reward:
|
■
|
investment
performance and Threadneedle client requirements, in particular the alignment with Threadneedle clients through a mandatory deferral into Threadneedle’s own products; and
|
■
|
team
cooperation and values.
|
The split of the incentive
pool focuses on the:
■
|
performance of the
individual’s own funds and research recommendations;
|
■
|
performance of all
portfolios in the individual’s 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
individual’s 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 manager’s demonstration of Threadneedle values, as part of Threadneedle’s team-based investment philosophy.
|
It is important to appreciate
that for individuals to maximize 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 Manager’s demonstration of Threadneedle’s corporate values. This structure is closely aligned with Threadneedle’s 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, Threadneedle also takes into consideration longer-term performance (rolling three and five years) together with a manager’s contribution to the
investment dialogue and desk success and their control of and adherence to Threadneedle’s risk controls.
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|
Wasatch:
As of September 30, 2013, the Wasatch’s 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. 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 manager’s 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 Fund’s 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 manager’s 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 – January 28, 2015
|
102
|
|
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 Wasatch’s 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 Wasatch’s revenues. Each portfolio
manager’s 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 Wasatch’s 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 Wasatch’s full-time employees, including 401(k), health and other employee benefit
plans
|
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|
Water Island:
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.
|
The Administrator
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
|
Adaptive
Risk Allocation Fund; AP – Growth Fund; Balanced Fund; Contrarian Core Fund; Dividend Income Fund; Global Dividend Opportunity Fund; Large Cap Growth Fund; Mid Cap Growth 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%
|
AMT-Free
Intermediate Muni Bond Fund; AP – Core Plus Bond Fund; Bond Fund; Corporate Income Fund; HY Municipal Fund; Intermediate 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%
|
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; CA Tax-Exempt 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%
|
Adaptive
Alternatives Fund; AP – Alternative Strategies Fund; AP – Small Cap Equity Fund; Diversified Absolute Return Fund; International Bond Fund; Small Cap Core Fund; Small Cap Growth Fund I; Small Cap Value Fund I
|
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%
|
Statement
of Additional Information – January 28, 2015
|
103
|
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%
|
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 Fund’s 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.
Administrative Fees
|
Administrative
services fees paid in:
|
|
2014
|
2013
|
2012
|
For
Funds with fiscal period ending January 31
|
Diversified
Real Return Fund
(a)
|
N/A
|
N/A
|
N/A
|
For
Funds with fiscal period ending March 31
|
AP
Growth Fund
|
$788,903
|
$520,929
(b)
|
N/A
|
Pacific/Asia
Fund
|
246,870
|
231,116
|
$161,661
|
Statement
of Additional Information – January 28, 2015
|
104
|
|
Administrative
services fees paid in:
|
|
2014
|
2013
|
2012
|
Select
Large Cap Growth Fund
|
$2,844,401
|
$2,478,680
|
$3,883,788
|
For
Funds with fiscal period ending April 30
|
Bond
Fund
|
648,503
|
948,292
|
1,457,228
(c)
|
Corporate
Income Fund
|
923,677
|
951,612
|
842,074
(c)
|
Intermediate
Bond Fund
|
2,670,960
|
1,979,462
|
2,101,907
(c)
|
Small
Cap Value Fund I
|
1,100,362
|
1,173,360
|
1,080,277
(d)
|
U.S.
Treasury Index Fund
|
946,749
|
1,202,784
|
1,395,311
(c)
|
For
Funds with fiscal period ending May 31
|
Adaptive
Alternatives Fund
(e)
|
N/A
|
N/A
|
N/A
|
Adaptive
Risk Allocation Fund
|
14,195
|
7,391
(f)
|
N/A
|
Diversified
Absolute Return Fund
(g)
|
N/A
|
N/A
|
N/A
|
Dividend
Income Fund
|
3,874,276
|
3,225,004
|
1,613,728
(h)
|
HY
Municipal Fund
|
514,436
|
663,990
|
498,162
(i)
|
For
Funds with fiscal period ending July 31
|
AMT-Free
OR Intermediate Muni Bond Fund
|
298,874
|
336,536
|
290,276
(j)
|
Global
ILB Plus Fund
|
1,503
(k)
|
N/A
|
N/A
|
Large
Cap Growth Fund
|
1,574,915
|
1,399,749
|
1,128,959
(l)
|
Tax-Exempt
Fund
|
2,389,135
|
2,709,174
|
1,799,630
(m)
|
Ultra
Short Term Bond Fund
|
0
|
0
|
0
|
For
Funds with fiscal period ending August 31
|
AP
– Alternative Strategies Fund
|
580,432
|
447,084
|
123,209
(n)
|
AP
– Core Plus Bond Fund
|
2,434,558
|
2,681,881
|
893,526
(o)
|
AP
– Small Cap Equity Fund
|
524,224
|
389,342
|
105,377
(o)
|
Balanced
Fund
|
1,003,963
|
763,256
|
626,931
|
Contrarian
Core Fund
|
1,980,665
|
1,391,706
|
906,997
(p)
|
Emerging
Markets Fund
|
1,030,737
|
631,189
|
619,432
(q)
|
Global
Dividend Opportunity Fund
|
527,055
|
460,691
|
466,699
|
Global
Energy and Natural Resources Fund
|
228,506
|
257,079
|
646,021
(q)
|
Global
Technology Growth Fund
|
0
|
0
|
0
|
Greater
China Fund
|
109,539
|
168,613
|
178,828
|
Mid
Cap Growth Fund
|
1,364,213
|
1,226,218
|
1,078,839
|
Small
Cap Core Fund
|
915,159
|
801,561
|
602,264
(p)
|
Small
Cap Growth Fund I
|
989,666
|
894,140
|
814,772
|
Value
and Restructuring Fund
|
1,230,319
|
1,430,949
|
5,527,725
(q)
|
|
2013
|
2012
|
2011
|
For
Funds with fiscal period ending October 31
|
AMT-Free
CT Intermediate Muni Bond Fund
|
141,313
|
151,451
|
152,251
(r)
|
AMT-Free
Intermediate Muni Bond Fund
|
1,606,395
|
1,665,246
|
1,527,709
(r)
|
AMT-Free
MA Intermediate Muni Bond Fund
|
242,345
|
258,185
|
241,327
(r)
|
AMT-Free
NY Intermediate Muni Bond Fund
|
212,901
|
223,123
|
207,519
(r)
|
CA
Tax-Exempt Fund
|
354,853
|
369,822
|
204,533
|
International
Bond Fund
(s)
|
53,125
|
68,332
|
10,565
(r)
|
NY
Tax-Exempt Fund
|
133,193
|
134,440
|
63,589
|
Statement
of Additional Information – January 28, 2015
|
105
|
|
Administrative
services fees paid in:
|
|
2013
|
2012
|
2011
|
Strategic
Income Fund
(s)
|
$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
|
(a)
|
The Fund commenced operations
on March 11, 2014, and therefore has no reporting information for periods prior to such date.
|
(b)
|
For the period from April 20,
2012 (commencement of operations) to March 31, 2013.
|
(c)
|
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.
|
(d)
|
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. For the fiscal year from July 1, 2010 to June 30, 2011, the administrative
services fees paid were $1,080,277.
|
(e)
|
The Fund commenced operations
on January 27, 2015, and therefore has no reporting information for periods prior to such date.
|
(f)
|
For the period from June 19,
2012 (commencement of operations) to May 31, 2013.
|
(g)
|
The Fund is expected to
commence operations on or about February 19, 2015, and therefore has no reporting information for periods prior to such date.
|
(h)
|
The 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 administrative services fees paid were $2,133,693.
|
(i)
|
The 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 administrative services fees paid were $827,759.
|
(j)
|
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 administrative services
fees paid were $51,335.
|
(k)
|
For the period from March 12,
2014 (commencement of operations) to July 31, 2014.
|
(l)
|
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 from October 1, 2010 to September 30, 2011, the
administrative services fees paid were $1,099,242.
|
(m)
|
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 from December 1, 2010 to November 30, 2011, the administrative
services fees paid were $1,621,818.
|
(n)
|
For the period from April 23,
2012 (commencement of operations) to August 31, 2012.
|
(o)
|
For the period from April 20,
2012 (commencement of operations) to August 31, 2012.
|
(p)
|
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
administrative services fees paid were $652,775 and $563,842, respectively.
|
(q)
|
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.
|
(r)
|
Prior to May 1, 2010, these
Funds were managed by the Previous Adviser. The figures in the table include the administrative fees paid to both the Administrator and the Previous Administrator during the fiscal year ended 2011. The amount paid to each adviser separately for the
fiscal year ended 2011 is as follows: for AMT-Free CT Intermediate Muni Bond Fund, the Fund paid $84,125 to the Administrator and $81,058 to the Previous Administrator; for AMT-Free Intermediate Muni Bond Fund, the Fund paid $844,084 to the
Administrator and $832,258 to the Previous Administrator; for AMT-Free MA Intermediate Muni Bond Fund, the Fund paid $123,624 to the Administrator and $117,887 to the Previous Administrator; for AMT-Free NY Intermediate Muni Bond Fund, the Fund paid
$109,072 to the Administrator and $106,504 to the Previous Administrator; and for International Bond Fund, the Fund paid $680 to the Administrator and $6,325 to the Previous Administrator.
|
(s)
|
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.
|
The Distributor
Columbia Management Investment Distributors, Inc.
(the Distributor), 225 Franklin Street, Boston, MA 02110, an indirect wholly-owned 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 reasonable efforts to find purchasers for the shares of the Funds.
Statement
of Additional Information – January 28, 2015
|
106
|
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 reasonable 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
as it deems reasonable and 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/or 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
The Distributor and the Previous Distributor each 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 January 31
|
Diversified
Real Return Fund
(a)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
For
Funds with fiscal period ending March 31
|
AP
Growth Fund
|
$0
|
$0
(b)
|
N/A
|
$0
|
$0
(b)
|
N/A
|
Pacific/Asia
Fund
|
5,038
|
3,385
|
9,127
|
716
|
481
|
1,251
|
Select
Large Cap Growth Fund
|
1,763,649
|
537,817
|
931,436
|
249,119
|
73,612
|
129,051
|
For
Funds with fiscal period ending April 30
|
Bond
Fund
|
39,971
|
104,298
|
73,780
(c)
|
6,105
|
15,841
|
10,443
(c)
|
Corporate
Income Fund
|
141,793
|
313,196
|
235,909
(c)
|
19,858
|
45,617
|
35,243
(c)
|
Intermediate
Bond Fund
|
262,066
|
182,479
|
121,667
(c)
|
35,479
|
24,806
|
15,263
(c)
|
Small
Cap Value Fund I
|
43,299
|
39,051
|
44,090
(d)
|
5,815
|
4,518
|
5,648
(d)
|
U.S.
Treasury Index Fund
|
23,853
|
56,927
|
50,283
(c)
|
2,907
|
7,162
|
6,083
(c)
|
For
Funds with fiscal period ending May 31
|
Adaptive
Alternatives Fund
(e)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Adaptive
Risk Allocation Fund
|
8,014
|
28,521
(f)
|
N/A
|
1,120
|
4,053
(f)
|
N/A
|
Diversified
Absolute Return Fund
(g)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Dividend
Income Fund
|
2,273,504
|
2,729,806
|
1,601,808
(h)
|
312,175
|
378,699
|
220,461
(h)
|
HY
Municipal Fund
|
157,293
|
239,037
|
189,325
(i)
|
23,185
|
34,324
|
28,388
(i)
|
Statement
of Additional Information – January 28, 2015
|
107
|
|
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 July 31
|
AMT-Free
OR Intermediate Muni Bond Fund
|
$97,659
|
$119,800
|
69,065
(j)
|
$13,598
|
$15,501
|
9,691
(j)
|
Global
ILB Plus Fund
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Large
Cap Growth Fund
|
753,732
|
797,355
|
609,337
(k)
|
105,780
|
110,928
|
81,374
(k)
|
Tax-Exempt
Fund
|
1,198,509
|
2,021,887
|
1,662,289
(l)
|
174,336
|
299,142
|
247,242
(l)
|
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
|
0
|
0
|
0
(m)
|
0
|
0
|
0
(m)
|
AP
Core Plus Bond Fund
|
0
|
0
|
0
(n)
|
0
|
0
|
0
(n)
|
AP
Small Cap Equity Fund
|
0
|
0
|
0
(n)
|
0
|
0
|
0
(n)
|
Balanced
Fund
|
3,027,922
|
1,853,350
|
1,214,741
|
426,600
|
260,322
|
169,384
|
Contrarian
Core Fund
|
2,420,284
|
1,287,465
|
462,723
(o)
|
335,748
|
180,993
|
63,901
(o)
|
Emerging
Markets Fund
|
298,791
|
258,706
|
71,055
(p)
|
41,913
|
36,690
|
9,766
(p)
|
Global
Dividend Opportunity Fund
|
114,351
|
137,131
|
48,802
|
15,789
|
18,503
|
5,484
|
Global
Energy and Natural Resources Fund
|
130,325
|
106,922
|
282,368
(p)
|
18,065
|
15,157
|
38,842
(p)
|
Global
Technology Growth Fund
|
157,172
|
54,778
|
34,208
|
21,485
|
7,167
|
3,425
|
Greater
China Fund
|
42,848
|
39,470
|
54,633
|
5,459
|
4,664
|
4,916
|
Mid
Cap Growth Fund
|
324,615
|
170,360
|
121,192
|
45,884
|
23,292
|
15,365
|
Small
Cap Core Fund
|
134,084
|
80,922
|
102,172
(o)
|
19,057
|
11,068
|
13,925
(o)
|
Small
Cap Growth Fund I
|
37,109
|
19,592
|
13,221
|
5,165
|
2,556
|
1,222
|
Value
and Restructuring Fund
|
32,716
|
34,462
|
79,112
(p)
|
4,662
|
4,785
|
9,468
(p)
|
|
2013
|
2012
|
2011
|
2013
|
2012
|
2011
|
For
Funds with fiscal period ending October 31
|
AMT-Free
CT Intermediate Muni Bond Fund
|
14,854
|
12,392
|
9,674
(q)
|
2,003
|
1,773
|
1,420
(q)
|
AMT-Free
Intermediate Muni Bond Fund
|
164,871
|
195,666
|
90,409
(q)
|
21,099
|
27,301
|
9,718
(q)
|
AMT-Free
MA Intermediate Muni Bond Fund
|
16,645
|
41,361
|
27,217
(q)
|
1,890
|
5,135
|
3,650
(q)
|
AMT-Free
NY Intermediate Muni Bond Fund
|
32,757
|
42,966
|
35,145
(q)
|
3,307
|
5,700
|
4,967
(q)
|
CA
Tax-Exempt Fund
|
181,538
|
280,050
|
104,309
(q)
|
25,219
|
39,516
|
15,814
(q)
|
International
Bond Fund
(r)
|
4,725
|
19,683
|
1,205
(q)
|
734
|
2,450
|
1,205
(q)
|
NY
Tax-Exempt Fund
|
96,722
|
165,603
|
85,009
(q)
|
14,342
|
25,021
|
12,744
(q)
|
Strategic
Income Fund
(r)
|
1,347,525
|
2,596,739
|
170,752
(q)
|
187,155
|
386,926
|
87,035
(q)
|
For
Funds with fiscal period ending December 31
|
Real
Estate Equity Fund
|
189,469
|
155,158
|
106,417
|
26,128
|
21,577
|
14,514
|
(a)
|
The Fund commenced operations
on March 11, 2014, and therefore has no reporting information for periods prior to such date.
|
(b)
|
For the period from April 20,
2012 (commencement of operations) to March 31, 2013.
|
(c)
|
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.
|
(d)
|
The Fund 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.
|
(e)
|
The Fund commenced operations
on January 27, 2015, and therefore has no reporting information for periods prior to such date.
|
(f)
|
For the period from June 19,
2012 (commencement of operations) to May 31, 2013.
|
(g)
|
The Fund is expected to
commence operations on or about February 19, 2015, and therefore has no reporting information for periods prior to such date.
|
Statement
of Additional Information – January 28, 2015
|
108
|
(h)
|
The 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.
|
(i)
|
The 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.
|
(j)
|
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.
|
(k)
|
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.
|
(l)
|
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.
|
(m)
|
For the period from April 23,
2012 (commencement of operations) to August 31, 2012.
|
(n)
|
For the period from April 20,
2012 (commencement of operations) to August 31, 2012.
|
(o)
|
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.
|
(p)
|
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.
|
(q)
|
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.
|
(r)
|
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.
|
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/or Servicing Plans
The Trustees have 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)
|
Class
W
|
up
to 0.25%
|
up
to 0.25%
|
0.25%
|
Class
Y
|
None
|
None
|
None
|
Statement
of Additional Information – January 28, 2015
|
109
|
|
Distribution
Fee
|
Service
Fee
|
Combined
Total
|
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
|
Adaptive
Alternatives Fund, Adaptive Risk Allocation Fund, AMT-Free CT Intermediate Muni Bond Fund, AMT-Free MA Intermediate Muni Bond Fund, AMT-Free NY Intermediate Muni Bond Fund, Bond Fund, CA Tax-Exempt Fund, Corporate Income Fund, Diversified Absolute
Return Fund, Diversified Real Return Fund; Emerging Markets Fund, Global Dividend Opportunity Fund, Global Energy and Natural Resources Fund, Greater China Fund, International Bond Fund, NY Tax-Exempt Fund, Pacific/Asia 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%
|
AMT-Free
Intermediate Muni Bond Fund, HY Municipal Fund, and Tax-Exempt Fund
|
—
|
0.20%
|
0.20%
|
AMT-Free
OR Intermediate Muni Bond Fund, Balanced Fund, Contrarian Core Fund, Dividend Income Fund, Global Technology Growth Fund, Intermediate Bond Fund, Large Cap Growth Fund, Mid Cap Growth Fund, Real Estate Equity Fund, Small Cap Core Fund, Small Cap
Growth Fund I
|
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%
|
(b)
|
Service Fee for Class A,
Class B and Class C shares of HY Municipal Fund, AMT-Free Intermediate Muni 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 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. 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 Fund’s 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: 0.45% for AMT-Free CT Intermediate Muni Bond Fund, AMT-Free MA
Intermediate Muni Bond Fund, AMT-Free NY Intermediate Muni Bond Fund, AMT-Free OR Intermediate Muni Bond Fund, CA Tax-Exempt Fund and NY Tax-Exempt Fund; 0.60% for Corporate Income Fund; 0.65% for HY Municipal Fund and Tax-Exempt 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 Fund’s 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 0.25% 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 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.
Statement
of Additional Information – January 28, 2015
|
110
|
The shareholder servicing plans permit the Funds to
compensate or reimburse servicing agents for the shareholder services they have provided. The Distribution Plans 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 Fund’s 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 Fund’s 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 Fund’s 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 0.25% 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.
12b-1 Fees
Fund
|
Class
A
|
Class
B
|
Class
C
|
Class
R
|
Class
T
|
Class
W
|
For
Funds with fiscal period ending January 31
|
Diversified
Real Return Fund
(a)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
For
Funds with fiscal period ending March 31
|
AP
Growth Fund
|
$3,566,433
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Pacific/Asia
Fund
|
5,062
|
N/A
|
$5,629
|
N/A
|
N/A
|
$7
|
Select
Large Cap Growth Fund
|
3,432,844
|
N/A
|
1,286,925
|
$78,887
|
N/A
|
64,119
|
Statement
of Additional Information – January 28, 2015
|
111
|
Fund
|
Class
A
|
Class
B
|
Class
C
|
Class
R
|
Class
T
|
Class
W
|
For
Funds with fiscal period ending April 30
|
Bond
Fund
|
$167,084
|
$14,935
|
106,024
|
12,602
|
$19,545
|
7
|
Corporate
Income Fund
|
307,340
|
17,739
|
160,946
|
N/A
|
N/A
|
364,794
|
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
|
For
Funds with fiscal period ending May 31
|
Adaptive
Alternatives Fund
(b)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Adaptive
Risk Allocation Fund
|
17,757
|
N/A
|
7,517
|
12
|
N/A
|
26,568
|
Diversified
Absolute Return Fund
(c)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Dividend
Income Fund
|
6,506,805
|
140,963
|
5,364,908
|
401,408
|
251,295
|
8,715
|
HY
Municipal Fund
|
173,182
|
8,561
|
106,986
|
N/A
|
N/A
|
N/A
|
For
Funds with fiscal period ending July 31
|
AMT-Free
OR Intermediate Muni Bond Fund
|
94,746
|
89
|
155,558
|
N/A
|
N/A
|
N/A
|
Global
ILB Plus Fund
(d)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
2
|
Large
Cap Growth Fund
(e)
|
3,874,044
|
299,536
|
594,306
|
8,645
|
509,982
|
237,390
|
Tax-Exempt
Fund
|
6,696,246
|
43,102
|
607,536
|
N/A
|
N/A
|
N/A
|
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
|
1,851,667
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
AP
– Core Plus Bond Fund
|
10,302,928
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
AP
– Small Cap Equity Fund
|
1,664,307
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Balanced
Fund
|
2,959,196
|
127,450
|
2,230,594
|
85,981
|
N/A
|
N/A
|
Contrarian
Core Fund
|
3,221,987
|
154,333
|
1,656,721
|
107,495
|
428,955
|
486,885
|
Emerging
Markets Fund
|
785,774
|
75,452
|
261,841
|
36,538
|
N/A
|
35,928
|
Global
Dividend Opportunity Fund
|
377,255
|
28,910
|
152,400
|
7,198
|
N/A
|
7
|
Global
Energy and Natural Resources Fund
|
312,051
|
26,739
|
158,643
|
12,080
|
N/A
|
N/A
|
Global
Technology Growth Fund
|
170,548
|
28,195
|
197,034
|
N/A
|
N/A
|
N/A
|
Greater
China Fund
|
202,087
|
36,613
|
164,748
|
N/A
|
N/A
|
7
|
Mid
Cap Growth Fund
|
2,537,626
|
161,495
|
538,174
|
136,878
|
70,059
|
52,613
|
Small
Cap Core Fund
|
1,086,567
|
7,637
|
324,074
|
N/A
|
242,604
|
169,523
|
Small
Cap Growth Fund I
|
625,422
|
34,800
|
222,427
|
16,061
|
N/A
|
N/A
|
Value
and Restructuring Fund
|
261,555
|
N/A
|
291,368
|
66,656
|
N/A
|
7
|
For
Funds with fiscal period ending October 31
|
AMT-Free
CT Intermediate Muni Bond Fund
|
22,583
|
1,563
|
74,455
|
N/A
|
20,972
|
N/A
|
AMT-Free
Intermediate Muni Bond Fund
|
423,189
|
11,904
|
474,230
|
N/A
|
27,880
|
N/A
|
AMT-Free
MA Intermediate Muni Bond Fund
|
75,422
|
428
|
122,841
|
N/A
|
39,220
|
N/A
|
AMT-Free
NY Intermediate Muni Bond Fund
|
56,141
|
1,488
|
215,466
|
N/A
|
13,346
|
N/A
|
CA
Tax-Exempt Fund
|
1,003,711
|
11,359
|
436,560
|
N/A
|
N/A
|
N/A
|
International
Bond Fund
|
4,771
|
N/A
|
1,977
|
N/A
|
N/A
|
10,896
|
NY
Tax-Exempt Fund
|
412,793
|
10,631
|
192,275
|
N/A
|
N/A
|
N/A
|
Strategic
Income Fund
|
3,632,845
|
381,530
|
2,553,328
|
4,262
|
N/A
|
6
|
For
Funds with fiscal period ending December 31
|
Real
Estate Equity Fund
|
291,398
|
48,173
|
211,361
|
38,098
|
N/A
|
25,174
|
Statement
of Additional Information – January 28, 2015
|
112
|
(a)
|
The Fund commenced operations
on March 11, 2014, and therefore has no reporting information for periods prior to such date.
|
(b)
|
The Fund commenced operations
on January 27, 2015, and therefore has no reporting information for periods prior to such date.
|
(c)
|
The Fund is expected to
commence operations on or about February 19, 2015, and therefore has no reporting information for periods prior to such date.
|
(d)
|
For the period from March 12,
2014 (commencement of operations) to July 31, 2014.
|
(e)
|
The Fund paid distribution
and/or service fees of $53,456 for Class E shares and $8,434 for Class F shares for the fiscal year ended 2014.
|
Other Services Provided
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 Agency 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. For all other share classes, the Funds pay the Transfer Agent an annual fee payable monthly that varies by account type. For accounts established directly with the Fund (other than
certain networked or omnibus accounts), the annual transfer agency fee is $34.25 per account; for certain accounts that are established or maintained directly with the Fund pursuant to the networking system of the NSCC and certain other similar
“networked” accounts, the annual transfer agency fee is $11.00 per account; and for other omnibus accounts, the transfer agency fee is paid at an annual rate of 0.014% of the value of such accounts. Prior to November 1, 2014, the Funds
paid 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 an annual transfer agency fee of $21.00 per account, payable monthly;
and prior to July 1, 2012, the Funds paid 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 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.
Statement
of Additional Information – January 28, 2015
|
113
|
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
custodian’s 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 Adviser’s 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.
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 following table shows net pricing and bookkeeping fees paid for
the three most recently completed fiscal years.
|
Pricing
and Bookkeeping Fees
|
Fund
|
2014
|
2013
|
2012
|
For
Funds with fiscal period ending March 31
|
AP
– Growth Fund
|
N/A
|
N/A
|
N/A
|
Pacific/Asia
Fund
|
N/A
|
N/A
|
$11,950
|
Select
Large Cap Growth Fund
|
N/A
|
N/A
|
46,858
|
Statement
of Additional Information – January 28, 2015
|
114
|
|
Pricing
and Bookkeeping Fees
|
Fund
|
2014
|
2013
|
2012
|
For
Funds with fiscal period ending April 30
|
Bond
Fund
(a)
|
N/A
|
N/A
|
$$29,937
|
Corporate
Income Fund
(a)
|
N/A
|
N/A
|
37,889
|
Intermediate
Bond Fund
(a)
|
N/A
|
N/A
|
44,820
|
Small
Cap Value Fund I
(b)
|
N/A
|
N/A
|
N/A
|
U.S.
Treasury Index Fund
(a)
|
N/A
|
N/A
|
N/A
|
For
Funds with fiscal period ending August 31
|
Balanced
Fund
|
N/A
|
N/A
|
N/A
|
Contrarian
Core Fund
(c)
|
N/A
|
N/A
|
N/A
|
Emerging
Markets Fund
(d)
|
N/A
|
N/A
|
38,036
|
Global
Dividend Opportunity Fund
|
N/A
|
N/A
|
N/A
|
Global
Energy and Natural Resources Fund
(d)
|
N/A
|
N/A
|
11,820
|
Global
Technology Growth Fund
|
N/A
|
N/A
|
N/A
|
Greater
China Fund
|
N/A
|
N/A
|
N/A
|
Mid
Cap Growth Fund
|
N/A
|
N/A
|
N/A
|
Small
Cap Core Fund
(c)
|
N/A
|
N/A
|
N/A
|
Small
Cap Growth Fund I
|
N/A
|
N/A
|
N/A
|
Value
and Restructuring Fund
(d)
|
N/A
|
N/A
|
48,156
|
Fund
|
2013
|
2012
|
2011
|
For
Funds with fiscal period ending October 31
|
AMT-Free
CT Intermediate Muni Bond Fund
|
N/A
|
N/A
|
47,163
|
AMT-Free
Intermediate Muni Bond Fund
|
N/A
|
N/A
|
107,575
|
AMT-Free
MA Intermediate Muni Bond Fund
|
N/A
|
N/A
|
61,320
|
AMT-Free
NY Intermediate Muni Bond Fund
|
N/A
|
N/A
|
56,864
|
CA
Tax-Exempt Fund
|
N/A
|
N/A
|
61,310
|
International
Bond Fund
(e)
|
N/A
|
3,373
|
50,767
|
NY
Tax-Exempt Fund
|
N/A
|
N/A
|
30,397
|
Strategic
Income Fund
(e)
|
N/A
|
N/A
|
181,794
|
For
Funds with fiscal period ending December 31
|
Real
Estate Equity Fund
|
N/A
|
N/A
|
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)
|
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.
|
(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. 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.
|
(e)
|
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 Fund’s 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 years.
Statement
of Additional Information – January 28, 2015
|
115
|
The
Report of
Independent Registered Public Accounting Firm
and the audited financial statements are included in the annual report to shareholders of each Fund, and are incorporated herein by reference. No other parts of the annual or semi-annual 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.
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.
Expense Limitations
The Investment Manager and certain
of its affiliates have agreed to waive fees and/or reimburse certain expenses, subject to certain exclusions, 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 Fund’s custodian, do not exceed specified rates for specified time periods, also as described in a Fund’s prospectus. Effective September 24, 2014, the Investment Manager has voluntarily agreed to waive the
advisory fee and administrative services fee for AP Core Plus Bond Fund and Intermediate Bond Fund assets that are invested in affiliated mutual funds, ETFs and closed-end funds that pay an investment management services fee to the Investment
Manager. This arrangement may be modified or terminated by the Investment Manager at any time.
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 ending January 31
|
Diversified
Real Return Fund
(a)
|
N/A
|
N/A
|
N/A
|
For
Funds with fiscal period ending March 31
|
AP
Growth Fund
|
$21,114
|
$520,356
(b)
|
N/A
|
Pacific/Asia
Fund
|
0
|
162
|
$960
|
Select
Large Cap Growth Fund
|
0
|
3,960
|
5,090
|
For
Funds with fiscal period ending April 30
|
Bond
Fund
|
238,061
|
1,169,108
|
4,145,871
(c)
|
Corporate
Income Fund
|
1,218
|
107,556
|
428,674
(c)
|
Intermediate
Bond Fund
|
2,408,094
|
2,440,859
|
3,584,370
(c)
|
Small
Cap Value Fund I
|
0
|
0
|
0
(d)
|
U.S.
Treasury Index Fund
|
657,944
|
827,939
|
969,834
(c)
|
For
Funds with fiscal period ending May 31
|
Adaptive
Alternatives Fund
(e)
|
N/A
|
N/A
|
N/A
|
Adaptive
Risk Allocation Fund
|
299,257
|
291,148
(f)
|
N/A
|
Diversified
Absolute Return Fund
(g)
|
N/A
|
N/A
|
N/A
|
Dividend
Income Fund
|
0
|
674,160
|
1,781,743
(h)
|
HY
Municipal Fund
|
660,295
|
1,028,930
|
1,189,180
(i)
|
For
Funds with fiscal period ending July 31
|
AMT-Free
OR Intermediate Muni Bond Fund
|
228,550
|
298,719
|
295,895
(j)
|
Global
ILB Plus Fund
|
41,890
(k)
|
N/A
|
N/A
|
Large
Cap Growth Fund
|
0
|
0
|
91,537
(l)
|
Tax-Exempt
Fund
|
0
|
0
|
37,429
(m)
|
Ultra
Short Term Bond Fund
|
123,048
|
113,452
|
146,116
|
Statement
of Additional Information – January 28, 2015
|
116
|
|
Amounts
Reimbursed
|
Fund
|
2014
|
2013
|
2012
|
For
Funds with fiscal period ending August 31
|
AP
– Alternative Strategies Fund
|
$0
|
$174,772
|
$150,833
(n)
|
AP
– Core Plus Bond Fund
|
0
|
0
|
0
(o)
|
AP
– Small Cap Equity Fund
|
1,560,798
|
1,421,145
|
560,869
(o)
|
Balanced
Fund
|
0
|
174,344
|
501,495
|
Contrarian
Core Fund
|
0
|
57,718
|
397,756
(p)
|
Emerging
Markets Fund
|
0
|
531,115
|
937,684
(q)
|
Global
Dividend Opportunity Fund
|
70,960
|
365,991
|
7
|
Global
Energy and Natural Resources Fund
|
0
|
0
|
0
(q)
|
Global
Technology Growth Fund
|
0
|
31,538
|
0
|
Greater
China Fund
|
0
|
0
|
0
|
Mid
Cap Growth Fund
|
0
|
0
|
0
|
Small
Cap Core Fund
|
0
|
23,843
|
72,282
(p)
|
Small
Cap Growth Fund I
|
0
|
53,467
|
79,402
|
Value
and Restructuring Fund
|
0
|
0
|
3,234,501
(q)
|
|
2013
|
2012
|
2011
|
For
Funds with fiscal period ending October 31
|
AMT-Free
CT Intermediate Muni Bond Fund
|
338,425
|
441,958
|
540,983
(r)
|
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
(r)
|
AMT-Free
NY Intermediate Muni Bond Fund
|
611,524
|
782,387
|
628,205
(r)
|
CA
Tax-Exempt Fund
|
455,738
|
441,438
|
455,210
(r)
|
International
Bond Fund
(s)
|
117,641
|
215,670
|
192,393
(r)
|
NY
Tax-Exempt Fund
|
241,744
|
275,120
|
229,929
(r)
|
Strategic
Income Fund
(s)
|
159
|
248,867
|
59,857
|
For
Funds with fiscal period ending December 31
|
Real
Estate Equity Fund
|
N/A
|
17,962
|
49,418
|
(a)
|
The Fund commenced operations
on March 11, 2014, and therefore has no reporting information for periods prior to such date.
|
(b)
|
For the period from April 20,
2012 (commencement of operations) to March 31, 2013.
|
(c)
|
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.
|
(d)
|
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.
|
(e)
|
The Fund commenced operations
on January 27, 2015, and therefore has no reporting information for periods prior to such date.
|
(f)
|
For the period from June 19,
2012 (commencement of operations) to May 31, 2013.
|
(g)
|
The Fund is expected to
commence operations on or about February 19, 2015, and therefore has no reporting information for periods prior to such date.
|
(h)
|
The 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.
|
(i)
|
The 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.
|
(j)
|
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.
|
(k)
|
For the period from March 12,
2014 (commencement of operations) to July 31, 2014.
|
(l)
|
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.
|
Statement
of Additional Information – January 28, 2015
|
117
|
(m)
|
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.
|
(n)
|
For the period from April 23,
2012 (commencement of operations) to August 31, 2012.
|
(o)
|
For the period from April 20,
2012 (commencement of operations) to August 31, 2012.
|
(p)
|
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.
|
(q)
|
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.
|
(r)
|
Prior to May 1, 2010, these
Funds were managed by the Previous Adviser. The figures in the table include amounts reimbursed by the Previous Adviser and its affiliates (together, the "Previous Adviser") and the Investment Manager and its affiliates (together, the "Investment
Manager") for the fiscal year ended 2011. The amounts reimbursed separately to each adviser during the fiscal year ended 2011 are as follows: for AMT-Free CT Intermediate Muni Bond Fund, the Fund paid $163,248 to the Investment Manager and $187,129
to the Previous Adviser; for AMT-Free MA Intermediate Muni Bond Fund, the Fund paid $204,395 to the Investment Manager and $181,924 to the Previous Adviser; for AMT-Free NY Intermediate Muni Bond Fund, the Fund paid $210,091 to the Investment
Manager and $201,876 to the Previous Adviser; for CA Tax-Exempt Fund, the Fund paid $43,089 to the Investment Manager and $58,176 to the Previous Adviser; for International Bond Fund, the Fund paid $25,747 to the Investment Manager and $124,507 to
the Previous Adviser; and for NY Tax-Exempt Fund, the Fund paid $96,659 to the Investment Manager and $91,479 to the Previous Adviser.
|
(s)
|
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.
|
Fees Waived
If a Fund is not shown, there were no fees waived
for the relevant fiscal periods.
|
Fees
Waived
|
|
2014
|
2013
|
2012
|
For
Funds with fiscal period ending April 30
|
Bond
Fund
|
$18,710
|
$25,716
|
$23,276
(a)
|
Corporate
Income Fund
|
28,402
|
32,985
|
19,237
(a)
|
Intermediate
Bond Fund
|
114,650
|
66,685
|
55,357
(a)
|
U.S.
Treasury Index Fund
|
11,418
|
17,297
|
20,463
(a)
|
For
Funds with fiscal period ending May 31
|
HY
Municipal Fund
|
20,060
|
20,886
|
13,678
(b)
|
For
Funds with fiscal period ending July 31
|
AMT-Free
OR Intermediate Muni Bond Fund
|
83,762
|
91,741
|
66,179
(c)
|
Tax-Exempt
Fund
|
280,401
|
198,871
|
87,652
(d)
|
|
2013
|
2012
|
2011
|
For
Funds with fiscal period ending October 31
|
AMT-Free
CT Intermediate Muni Bond Fund
|
26,076
|
25,209
|
25,305
(e)
|
AMT-Free
Intermediate Muni Bond Fund
|
251,117
|
197,803
|
119,542
(e)
|
AMT-Free
MA Intermediate Muni Bond Fund
|
43,021
|
39,241
|
35,026
(e)
|
AMT-Free
NY Intermediate Muni Bond Fund
|
75,465
|
68,035
|
47,097
(e)
|
CA
Tax-Exempt Fund
|
131,079
|
126,525
|
97,657
(e)
|
NY
Tax-Exempt Fund
|
57,732
|
54,467
|
34,835
(e)
|
Strategic
Income Fund
(f)
|
383,776
|
482,776
|
290,741
(e)
|
(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 fees were
waived, $17,162 in Corporate Income Fund fees were waived, $50,856 in Intermediate Bond Fund fees were waived and $18,969 in U.S. Treasury Index Fund fees were waived. For the fiscal period from April 1, 2012 to April 30, 2012, $2,148 in Bond Fund
fees were waived, $2,075 in Corporate Income Fund fees were waived, $4,501 in Intermediate Bond Fund fees were waived and $1,494 in U.S. Treasury Index Fund fees were waived.
|
(b)
|
The 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, $13,980 in fees were waived.
|
Statement
of Additional Information – January 28, 2015
|
118
|
(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, there were no fees 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 from December 1, 2010 to November 30, 2011 the fees waived were
$84,839.
|
(e)
|
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 (together, the "Previous Adviser") and the Investment Manager and its affiliates (together, the "Investment
Manager") for the fiscal year ended 2011. The amounts waived separately by each adviser during the fiscal year ended 2011 are as follows: for AMT-Free CT Intermediate, the Investment Manager waived $14,122 and the Previous Adviser waived $13,994;
for AMT-Free Intermediate Muni Bond Fund, the Investment Manager waived $53,213 and the Previous Adviser waived $32,825; for AMT-Free MA Intermediate Muni Bond Fund, the Investment Manager waived $17,706 and the Previous Adviser waived $15,939; for
AMT-Free NY Intermediate Muni Bond Fund, the Investment Manager waived $18,581 and the Previous Adviser waived $12,307; for CA Tax-Exempt Fund, the Investment Manager waived $46,253 and the Previous Adviser waived $44,309; for NY Tax-Exempt Fund,
the Investment Manager waived $13,926 and the Previous Adviser waived $13,574; and for Strategic Income Fund, the Investment Manager waived $25,214 and the Previous Adviser waived $262,119.
|
(f)
|
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.
|
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
Fund's 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 Fund's 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 Manager’s Form ADV, which it must file with the SEC as an investment adviser registered under the Investment Advisers Act of 1940, provides information about the Investment Manager’s
business, assets under management, affiliates and potential conflicts of interest. Part 1A of the Investment Manager’s Form ADV is available online through the SEC’s 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 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, Ameriprise Financial 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 Financial’s other investment adviser affiliates (including, for example, Columbia Wanger Asset Management, LLC) will give investment advice to and make
investment decisions for advised/managed funds and accounts, including the Funds, as they believe to be in that fund’s and/or account’s 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.
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of Additional Information – January 28, 2015
|
119
|
A variety of other actual and potential conflicts of
interest may arise from the advisory relationships of the Investment Manager, Ameriprise Financial 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 by the Investment Manager, Ameriprise Financial and other Ameriprise Financial affiliates 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, Ameriprise Financial 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, Ameriprise Financial 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, Ameriprise Financial 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, Ameriprise Financial 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 designed to address the allocation of investment
opportunities among the Funds and other funds and accounts advised by the Investment Manager, Ameriprise Financial and other affiliates of Ameriprise Financial. For more information, see
Investment
Management and Other Services – The Investment Manager and Subadvisers – Portfolio Managers – Potential Conflicts of Interest
.
Sharing of Information among Advised/Managed
Accounts
Ameriprise Financial and its affiliates, including
the Investment Manager, 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 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 Interest
.
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.
Statement
of Additional Information – January 28, 2015
|
120
|
Services Provided to Other Advised/Managed
Accounts
Ameriprise Financial and its affiliates, including
the Investment Manager, Distributor and Transfer Agent, 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
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 Manager and/or its affiliates, including Ameriprise
Financial and its affiliates. 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 Manager’s proxy voting decisions with respect to a Fund’s portfolio securities may or may not benefit other advised/managed funds and accounts, and/or clients, of 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
.
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 Fund’s
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 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
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|
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 Manager’s 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 Manager’s affiliates had been excluded
from the limitation. 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 Fund’s inability to participate (or participate further)
in a particular investment, despite a portfolio manager’s 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 Fund’s investment activities. See also
About Fund 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 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, subject to applicable legal and regulatory requirements, 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, if any. 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
Other Practices – Additional Shareholder Servicing
Payments
and
–
Additional Selling Agent Payments
for more information.
Codes of Ethics
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 SEC’s Public Reference Room and may be
obtained by calling the SEC at 202.551.8090; they also are available on the SEC’s 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 SEC’s Public
Reference Section, Washington, D.C. 20549-1520.
Statement
of Additional Information – January 28, 2015
|
122
|
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 Manager’s 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 year’s evaluation of the issuer’s 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 Manager’s proxy voting policy and procedures is overseen by a committee (the “Proxy Voting Committee”) composed of representatives of the Investment
Manager’s equity investments, equity research, compliance, legal and operations functions. The Proxy Voting Committee has the responsibility to review, at least annually, the Investment Manager’s proxy voting policies to ensure
consistency with internal policies, regulatory requirements, conflicts of interest and client disclosures.
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
Manager’s proxy voting administrator or research provider); (ii) causing the proxies to be delegated to an independent third party (which may be the Investment Manager’s proxy voting administrator or research provider); and (iii) in
unusual cases, with the client’s consent and upon ample notice, forwarding the proxies to the Investment Manager’s 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 fund’s shares and vote such proxies in accordance with such instructions or vote
the shares held by it in the same
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|
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 fund’s 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 SEC’s website at www.sec.gov. For a copy of the Investment
Manager’s voting guidelines in effect on the date of this SAI, see Appendix B to this SAI.
Organization and Management of Wholly-Owned Subsidiaries
Adaptive Alternatives
Fund, AP – Alternative Strategies Fund and Diversified Absolute Return Fund (for purposes of this section, referred to collectively as the “Fund”) may invest a portion of its assets, within the limitations of Subchapter M of the
Code, in one or more of its wholly-owned subsidiaries (previously defined collectively as the “Subsidiary”). The Subsidiary is a limited liability company organized under the laws of the Cayman Islands, whose registered office is located
at P.O. Box 309, Ugland House, Grand Cayman Islands.
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 Fund’s Board of Trustees oversees the investment activities of the Fund, including its investment in the Subsidiary, and the Fund’s role as sole shareholder of the Subsidiary.
The Investment Manager and , where applicable, the Fund’s subadvisers are responsible for the Subsidiary’s day-to-day business pursuant to their separate agreements with, or in respect of, the Subsidiary. The following individuals serve
as a director 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
Born 1964
|
Director
since
November 2013
|
Vice
President – Finance, Ameriprise Financial, Inc.
since June 2004
|
Amy
K. Johnson
5228 Ameriprise
Financial Center
Minneapolis, MN 55474-2405
Born 1965
|
Director
since
November 2013
|
See
Fund Governance – Fund Officers
.
|
Christopher
O. Petersen
5228 Ameriprise
Financial Center
Minneapolis, MN 55474-2405
Born 1970
|
Director
since
January 2015
|
See
Fund Governance – Fund 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. The Subsidiary has also entered into arrangements with PricewaterhouseCoopers LLP to serve as the
Subsidiary’s independent registered public accounting firm. Each Subsidiary will bear the fees and expenses incurred in connection with the services that it receives pursuant to those agreements and arrangements. The Fund expects that the
expenses borne by the Subsidiary will not be material in relation of the value of the Fund’s assets.
For purposes of adhering to the Fund’s
compliance policies and procedures, the Investment Manager will treat the assets of the Subsidiary generally as if the assets were held directly by the Fund. The Chief Compliance Officer makes periodic reports to the Fund’s Board regarding the
management and operations of the Subsidiary.
The financial information of the Subsidiary is
consolidated into the Fund’s financial statements, as contained within the Fund’s annual and semiannual reports provided to shareholders.
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Please refer to the section titled “
Taxation – The Subsidiary
” for information about certain tax considerations relating to the Fund’s investment in the Subsidiary.
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 Fund’s prospectus and this SAI, and could negatively affect the Fund and its shareholders. For example, Cayman Islands laws currently do 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 the Subsidiary, the Fund is indirectly exposed to the risks associated with the Subsidiary’s 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 Fund’s 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 Fund’s Board has oversight responsibility for the investment
activities of the Fund, including its investment in the Subsidiary, and the Fund’s role as sole shareholder of the Subsidiary. In managing the Subsidiary’s investment portfolio, the Investment Manager will manage the Subsidiary’s
portfolio in accordance with the Fund’s 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 laws currently do 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 Islands taxes, the investment returns of the Fund would
likely decrease.
Statement
of Additional Information – January 28, 2015
|
125
|
FUND GOVERNANCE
Board of Trustees and Officers
Shareholders elect the Board that oversees the
Funds' operations. The Board appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following table provides basic biographical information about the Funds' Trustees as of the date of this
SAI, including their principal occupations during the past five years, although specific titles for individuals 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.
Trustees
Independent Trustees
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 During
the Past Five Years
|
Committee
Memberships
|
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
|
59
|
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
|
Audit,
Governance, Investment Oversight Committee #1
|
Statement
of Additional Information – January 28, 2015
|
126
|
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 During
the Past Five Years
|
Committee
Memberships
|
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
|
59
|
None
|
Compliance,
Product and Distribution, Governance, Investment Oversight Committee #2
|
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
|
59
|
None
|
Advisory
Fees & Expenses, Product and Distribution, Investment Oversight Committee #2
|
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
|
59
|
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)
|
Product
and Distribution, Governance, Investment Oversight Committee #2
|
Statement
of Additional Information – January 28, 2015
|
127
|
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 During
the Past Five Years
|
Committee
Memberships
|
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
|
59
|
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
|
Compliance,
Audit, Investment Oversight Committee #1
|
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
|
59
|
None
|
Advisory
Fees & Expenses, Compliance, Investment Oversight Committee #2
|
John
J. Neuhauser
(Born 1943)
Trustee
|
1984
|
President,
Saint Michael’s 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
|
59
|
Liberty
All-Star Equity Fund and Liberty All-Star Growth Fund (closed-end funds)
|
Advisory
Fees & Expenses, Product and Distribution, Investment Oversight Committee #2
|
Statement
of Additional Information – January 28, 2015
|
128
|
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 During
the Past Five Years
|
Committee
Memberships
|
Patrick
J. Simpson
(Born 1944)
Trustee
|
2000
|
Partner,
Perkins Coie LLP (law firm)
|
59
|
None
|
Advisory
Fees & Expenses, Audit, Governance, Investment Oversight Committee #1
|
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)
|
59
|
Enesco
Group, Inc. (producer of giftware and home and garden decor products) from 2001 to 2006
|
Audit,
Compliance, Investment Oversight Committee #1
|
Statement
of Additional Information – January 28, 2015
|
129
|
Interested Trustee Affiliated with Investment
Manager*
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 During
the Past Five Years
|
Committee
Memberships
|
William
F. Truscott
(Born 1960)
Trustee
|
2012
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively (previously President and Chief Investment Officer, 2001-April 2010); Chief Executive Officer, Global Asset Management,
Ameriprise Financial, Inc. since September 2012 (previously Chief Executive Officer, U.S. Asset Management & President, Annuities, May 2010- September 2012 and President –U.S. Asset Management and Chief Investment Officer, 2005-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, 2006-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-August 2012.
|
191
|
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
|
None
|
*
|
Interested person (as defined
under the 1940 Act) by reason of being an officer, director, security holder and/or employee of the Investment Manager or Ameriprise Financial.
|
The Officers
The Board has appointed officers who are responsible
for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The following table provides basic information about the Officers or the Trust as of the date of this SAI, including principal
occupations during the past five years, although their specific titles may have varied over the period. In addition to Mr. Truscott, who is Senior Vice President, the Funds' other officers are:
Statement
of Additional Information – January 28, 2015
|
130
|
Fund Officers
Name,
Address
and Year of Birth
|
Position
and Year
First Appointed to
Position for any Fund in the
Columbia Funds Complex
or a Predecessor Thereof
|
Principal
Occupation(s) During Past Five Years
|
Christopher
O. Petersen
5228 Ameriprise Financial Center
Minneapolis, MN 55474
Born 1970
|
President
and Principal Executive Officer (2015)
|
Vice
President and Lead Chief Counsel, Ameriprise Financial, Inc. since January 2015 (previously, Vice President and Chief Counsel January 2010 – December 2014; and Vice President and Group Counsel or Lead Counsel 2004 - January 2010); officer of
Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Treasurer
(2011) and Chief Financial Officer (2009)
|
Vice
President – Mutual Fund Administration, Columbia Management Investment Advisers, LLC, since May 2010; Managing Director of Fund Administration, Columbia Management Advisors, LLC, September 2004 - April 2010; senior officer of Columbia Funds
and affiliated funds since 2002.
|
Paul
B. Goucher
100 Park Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011), Chief Legal Officer (2015) and Assistant Secretary (2008)
|
Vice
President and Lead Chief Counsel, Ameriprise Financial, Inc. since November 2008 and January 2013, respectively (previously Chief Counsel, January 2010 - January 2013 and Group Counsel, November 2008 - January 2010).
|
Thomas
P. McGuire
225 Franklin Street
Boston, MA 02110
Born 1972
|
Senior
Vice President and 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, 2005 - 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; Manager, Managing Director and Chief
Investment Officer, Columbia Management Advisors, LLC, 2007 - April 2010.
|
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, 2005 - April 2010.
|
Joseph
F. DiMaria
225 Franklin Street
Boston, MA 02110
Born 1968
|
Vice
President (2011), Assistant Treasurer (2012) and Chief Accounting Officer (2008)
|
Vice
President – Mutual Fund Treasurer, Columbia Management Investment Advisers, LLC since May 2010; Director of Fund Administration, Columbia Management Advisors, LLC, 2006 - April 2010.
|
Amy
Johnson
5228 Ameriprise Financial Center
Minneapolis, MN 55474
Born 1965
|
Vice
President (2006)
|
Managing
Director and Chief Operating Officer, Columbia Management Investment Advisers, LLC since May 2010 (previously Chief Administrative Officer, 2009 - April 2010, and Vice President – Asset Management and Trust Company Services, 2006 - 2009).
|
Lyn
Kephart-Strong
5228 Ameriprise Financial Center
Minneapolis, MN 55474
Born 1960
|
Vice
President (2015)
|
President,
Columbia Management Investment Services Corp. since October 2014; Vice President & Resolution Officer, Ameriprise Trust Company since August 2009; President, RiverSource Service Corporation 2004-2010.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Vice
President and Secretary (2015)
|
Vice
President and Group Counsel, Ameriprise Financial, Inc. since August 2011 (previously, Counsel from May 2010 to August 2011); Assistant General Counsel, Bank of America, 2005 - April 2010; officer of Columbia Funds and affiliated funds since 2005.
|
Responsibilities
of the Board with respect to fund management
The Board
consists of ten Trustees who have varied experience and skills. 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
Statement
of Additional Information – January 28, 2015
|
131
|
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 Fund’s overall governance and risk
oversight structure. The roles of each committee are more fully described in the section
Committees of the Board
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
Manager’s risk management services with respect to the particular activities within the committee’s 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 Fund’s 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.
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 individual’s business and professional experience and accomplishments; (ii) the individual’s ability to work effectively with the other Trustees; (iii)
the individual’s 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 individual’s skills,
experience and attributes would contribute to an appropriate mix of relevant skills and experience on the Board.
In respect of each current Trustee, the
individual’s 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 Trustee’s particular professional experience and additional considerations that contributed to the Board’s 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.
Statement
of Additional Information – January 28, 2015
|
132
|
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 Michael’s 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. Simpson’s 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 certain Columbia funds 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.
Committees of the Board
The Board has organized the following standing committees to
facilitate its work: the Audit Committee, the Governance Committee, the Advisory Fees & Expenses Committee, the Compliance Committee, the Investment Oversight Committees and the Product and Distribution Committee. These Committees are comprised
solely of Independent Trustees. The table above describing each Trustee also includes their respective committee memberships. The duties of these committees are described below.
Board Governance Committee.
The Governance Committee’s functions include recommending to the Board nominees for Independent Trustee positions and for appointments to various committees, overseeing the Board’s 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, as applicable, such recommendations are submitted by the date disclosed in a Fund’s 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
nominee’s 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.
Compliance Committee.
The Compliance Committee’s 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 Fund’s portfolio execution.
Advisory Fees & Expenses Committee.
The Advisory Fees & Expenses Committee’s 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 or fee proposals that may be referred to the Advisory Fees & Expenses Committee by the Board.
Statement
of Additional Information – January 28, 2015
|
133
|
Investment Oversight Committee.
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 Fund’s 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.
Audit Committee.
The Audit Committee’s 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.
Product and Distribution Committee.
The Product and Distribution Committee’s functions include, among other things, reviewing such matters relating to the marketing of the Funds and the distribution of the Fund’s 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.
The table below shows the number of times each
committee met during each Fund’s most recent fiscal period. The Table is organized by fiscal year end.
Committee Meetings
Fiscal
Period
|
Audit
Committee
|
Governance
Committee
|
Advisory
Fees
& Expenses
Committee
|
Compliance
Committee
|
Investment
Oversight
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
|
12
|
5
|
For
Funds with fiscal periods
ending July 31
|
5
|
4
|
4
|
4
|
11
|
4
|
For
Funds with fiscal periods
ending August 31
|
5
|
4
|
5
|
4
|
4
|
4
|
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
|
Beneficial Equity
Ownership
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,
where 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 information is provided as of December 31, 2014.
The tables only include ownership of Columbia Funds
overseen by the Trustees; the Trustees and Officers may own shares of other Columbia Funds they do not oversee. The tables do not include ownership of Columbia Funds overseen by other boards of trustees/directors.
Independent Trustee Ownership
Fund
|
Hacker
|
Kelly
|
Lukitsh
|
Mayer
|
Moffett
|
Nelson
|
Neuhauser
|
Simpson
|
Verville
|
Adaptive
Alternatives Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Adaptive
Risk Allocation Fund
|
E
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
AMT-Free
CT Intermediate Muni Bond Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
AMT-Free
Intermediate Muni Bond Fund
|
A
|
A
|
A
|
A
|
A
|
E
|
A
|
A
|
A
|
AMT-Free
MA Intermediate Muni Bond Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
AMT-Free
NY Intermediate Muni Bond Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
AMT-Free
OR Intermediate Muni Bond Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Statement
of Additional Information – January 28, 2015
|
134
|
Fund
|
Hacker
|
Kelly
|
Lukitsh
|
Mayer
|
Moffett
|
Nelson
|
Neuhauser
|
Simpson
|
Verville
|
AP
– Alternative Strategies Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
AP
– Core Plus Bond Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
AP
– Growth Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
AP
– Small Cap Equity Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Balanced
Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
D
|
E
(a)
|
Bond
Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
C
(a)
|
CA
Tax-Exempt Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Contrarian
Core Fund
|
A
|
E
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Corporate
Income Fund
|
A
|
D
(a)
|
A
|
A
|
A
|
E
|
A
|
A
|
A
|
Diversified
Absolute Return Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Diversified
Real Return Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Dividend
Income Fund
|
A
|
E
(a)
|
A
|
A
|
A
|
A
|
A
|
E
(a)
|
E
(a)
|
Emerging
Markets Fund
|
E
|
A
|
A
|
A
|
A
|
A
|
A
|
E
(a)
|
A
|
Global
Dividend Opportunity Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Global
Energy and Natural Resources Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
D
(a)
|
A
|
Global
ILB Plus Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Global
Technology Growth Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Greater
China Fund
|
E
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
High
Yield Municipal Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Intermediate
Bond Fund
|
A
|
A
|
A
|
A
|
A
|
E
|
A
|
E
(a)
|
A
|
International
Bond Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Large
Cap Growth Fund
|
A
|
D
|
A
|
A
|
A
|
E
|
A
|
E
(a)
|
E
(a)
|
Mid
Cap Growth Fund
|
A
|
A
|
A
|
A
|
A
|
E
|
A
|
B
|
A
|
NY
Tax-Exempt Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Pacific/Asia
Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Real
Estate Equity Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
E
(a)
|
A
|
Select
Large Cap Growth Fund
|
E
|
D
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Small
Cap Core Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Small
Cap Growth Fund I
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
E
(a)
|
A
|
Small
Cap Value Fund I
|
A
|
A
|
A
|
A
|
A
|
A
|
D
|
E
(a)
|
A
|
Strategic
Income Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
D
(a)
|
Tax-Exempt
Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
E
|
A
|
A
|
U.S.
Treasury Index Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Ultra
Short Term Bond Fund
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
A
|
Value
and Restructuring Fund
|
A
|
A
|
A
|
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
(a)
|
A
|
A
|
A
|
E
|
E
|
E
(a)
|
E
(a)
|
(a)
|
Includes the value of
compensation payable under a 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
the Trustee.
|
Interested Trustee
Ownership
Fund
|
Truscott
|
Adaptive
Alternatives Fund
|
A
|
Adaptive
Risk Allocation Fund
|
E
|
AMT-Free
CT Intermediate Muni Bond Fund
|
A
|
Statement
of Additional Information – January 28, 2015
|
135
|
Fund
|
Truscott
|
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
(a)
|
Corporate
Income Fund
|
A
|
Diversified
Absolute Return Fund
|
A
|
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
|
E
|
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
|
Select
Large Cap Growth Fund
|
E
|
Small
Cap Core Fund
|
A
|
Small
Cap Growth Fund I
|
A
|
Small
Cap Value Fund I
|
A
|
Strategic
Income Fund
|
E
|
Tax-Exempt
Fund
|
A
|
U.S.
Treasury Index Fund
|
A
|
Ultra
Short Term Bond 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
(a)
|
(a)
|
Includes notional investments
through a deferred compensation account. Mr. Truscott’s deferred compensation plan is separate from that of the Independent Trustees.
|
Statement
of Additional Information – January 28, 2015
|
136
|
Compensation
Total compensation.
The following table shows the total compensation paid to Independent Trustees for their services from all the Funds in the Columbia Fund Family overseen by the Trustee for the fiscal year ended August
31, 2014.
Mr. Truscott is not
compensated for his services on the Board.
Trustee
Name
|
Total
Cash Compensation
from Fund Complex
Paid to Trustee
(a)
|
Amount
Deferred
from Total
Compensation
(b)
|
Rodman
Drake
(c)
|
$272,000
|
$58,500
|
Douglas
A. Hacker
|
$291,563
|
$0
|
Janet
L. Kelly
|
$249,750
|
$249,750
|
Nancy
T. Lukitsh
|
$267,250
|
$0
|
William
E. Mayer
|
$249,750
|
$0
|
David
M. Moffett
|
$258,250
|
$0
|
Charles
R. Nelson
|
$252,250
|
$0
|
John
J. Neuhauser
|
$297,250
|
$0
|
Patrick
J. Simpson
|
$253,582
|
$33,500
|
Anne-Lee
Verville
|
$261,750
|
$0
|
(a)
|
Includes any portion of cash
compensation Trustees elected to defer during the fiscal period.
|
(b)
|
The Trustees may elect to
defer a portion of the total cash compensation payable. Additional information regarding the Deferred Compensation Plan is described below.
|
(c)
|
Mr. Drake served as Trustee
until June 24, 2014.
|
In
addition to the above compensation, 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.
Trustees did not accrue any pension or retirement
benefits as part of Fund expenses, nor will they receive any annual benefits upon retirement.
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 Trustee’s 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 Trustee’s 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 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.
Compensation from each Fund
.
The following table shows the compensation paid to Independent Trustees from each Fund during its last fiscal period, as well as the amount deferred from each
Fund, which is included in the total.
Statement
of Additional Information – January 28, 2015
|
137
|
Fund
|
Aggregate
Compensation from Fund
Independent Trustees
|
Rodman
Drake
(a)
|
Douglas
A.
Hacker
|
Janet
L.
Kelly
(b)
|
Nancy
T.
Lukitsh
|
William
E.
Mayer
|
David
M.
Moffett
|
Charles
R.
Nelson
|
John
J.
Neuhauser
|
Patrick
J.
Simpson
(c)
|
Anne-Lee
Verville
(d)
|
For
Funds with fiscal period ending January 31
|
Diversified
Real Return Fund
(e)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Amount
Deferred
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
For
Funds with fiscal period 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
|
$0
|
$4,459
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,436
|
$0
|
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
|
$0
|
$2,184
|
$0
|
$0
|
$0
|
$0
|
$0
|
$703
|
$0
|
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
|
$0
|
$14,693
|
$0
|
$0
|
$0
|
$0
|
$0
|
$4,617
|
$0
|
For
Funds with fiscal period 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
|
$0
|
$3,789
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,244
|
$0
|
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
|
$0
|
$4,743
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,486
|
$0
|
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
|
$0
|
$12,130
|
$0
|
$0
|
$0
|
$0
|
$0
|
$3,984
|
$0
|
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
|
$0
|
$4,870
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,554
|
$0
|
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
|
$0
|
$2,260
|
$0
|
$0
|
$0
|
$0
|
$0
|
$710
|
$0
|
For
Funds with fiscal period ending May 31
|
Adaptive
Alternatives Fund
(f)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Amount
Deferred
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Adaptive
Risk Allocation Fund
|
$2,241
|
$1,718
|
$1,571
|
$1,652
|
$1,571
|
$1,643
|
$1,570
|
$1,701
|
$1,587
|
$1,650
|
Amount
Deferred
|
$250
|
$0
|
$1,571
|
$0
|
$0
|
$0
|
$0
|
$0
|
$488
|
$0
|
Diversified
Absolute Return Fund
(g)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Amount
Deferred
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Dividend
Income Fund
|
$30,256
|
$23,205
|
$21,225
|
$22,316
|
$21,225
|
$22,179
|
$21,215
|
$22,978
|
$21,451
|
$22,307
|
Amount
Deferred
|
$3,331
|
$0
|
$21,225
|
$0
|
$0
|
$0
|
$0
|
$0
|
$6,673
|
$0
|
HY
Municipal Fund
|
$4,745
|
$3,642
|
$3,332
|
$3,497
|
$3,332
|
$3,500
|
$3,327
|
$3,606
|
$3,367
|
$3,506
|
Amount
Deferred
|
$492
|
$0
|
$3,332
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,075
|
$0
|
For
Funds with fiscal period ending July 31
|
AMT-Free
OR Intermediate Muni Bond Fund
|
$3,048
|
$2,833
|
$2,584
|
$2,710
|
$2,584
|
$2,675
|
$2,582
|
$3,035
|
$2,611
|
$2,711
|
Amount
Deferred
|
$600
|
$0
|
$2,584
|
$0
|
$0
|
$0
|
$0
|
$0
|
$579
|
$0
|
Global
ILB Plus Fund
(h)
|
$162
|
$452
|
$396
|
$435
|
$396
|
$405
|
$411
|
$592
|
$396
|
$401
|
Amount
Deferred
|
$162
|
$0
|
$396
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Large
Cap Growth Fund
|
$9,836
|
$9,170
|
$8,361
|
$8,784
|
$8,361
|
$8,638
|
$8,361
|
$9,857
|
$8,446
|
$8,767
|
Amount
Deferred
|
$1,975
|
$0
|
$8,361
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,830
|
$0
|
Tax-Exempt
Fund
|
$12,831
|
$11,903
|
$10,863
|
$11,372
|
$10,863
|
$11,258
|
$10,847
|
$12,739
|
$10,980
|
$11,403
|
Amount
Deferred
|
$2,476
|
$0
|
$10,863
|
$0
|
$0
|
$0
|
$0
|
$0
|
$2,510
|
$0
|
Ultra
Short Term Bond Fund
|
$6,846
|
$6,320
|
$5,768
|
$6,052
|
$5,768
|
$5,966
|
$5,763
|
$6,759
|
$5,828
|
$6,050
|
Amount
Deferred
|
$1,339
|
$0
|
$5,768
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,292
|
$0
|
For
Funds with fiscal period ending August 31
|
AP
Alternative Strategies Fund
|
$3,544
|
$3,785
|
$3,244
|
$3,471
|
$3,244
|
$3,351
|
$3,276
|
$3,853
|
$3,294
|
$3,400
|
Amount
Deferred
|
$764
|
$0
|
$3,244
|
$0
|
$0
|
$0
|
$0
|
$0
|
$440
|
$0
|
AP
Core Plus Bond Fund
|
$12,032
|
$12,714
|
$10,917
|
$11,682
|
$10,917
|
$11,294
|
$11,023
|
$12,934
|
$11,087
|
$11,457
|
Amount
Deferred
|
$2,506
|
$0
|
$10,917
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,515
|
$0
|
AP
Small Cap Equity Fund
|
$3,379
|
$3,599
|
$3,084
|
$3,300
|
$3,084
|
$3,186
|
$3,114
|
$3,667
|
$3,131
|
$3,232
|
Amount
Deferred
|
$726
|
$0
|
$3,084
|
$0
|
$0
|
$0
|
$0
|
$0
|
$417
|
$0
|
Statement
of Additional Information – January 28, 2015
|
138
|
Fund
|
Aggregate
Compensation from Fund
Independent Trustees
|
Rodman
Drake
(a)
|
Douglas
A.
Hacker
|
Janet
L.
Kelly
(b)
|
Nancy
T.
Lukitsh
|
William
E.
Mayer
|
David
M.
Moffett
|
Charles
R.
Nelson
|
John
J.
Neuhauser
|
Patrick
J.
Simpson
(c)
|
Anne-Lee
Verville
(d)
|
Balanced
Fund
|
$6,122
|
$6,681
|
$5,711
|
$6,109
|
$5,711
|
$5,901
|
$5,770
|
$6,814
|
$5,798
|
$5,978
|
Amount
Deferred
|
$1,359
|
$0
|
$5,711
|
$0
|
$0
|
$0
|
$0
|
$0
|
$744
|
$0
|
Contrarian
Core Fund
|
$11,013
|
$12,260
|
$10,455
|
$11,180
|
$10,455
|
$10,803
|
$10,565
|
$12,520
|
$10,613
|
$10,931
|
Amount
Deferred
|
$2,505
|
$0
|
$10,455
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,321
|
$0
|
Emerging
Markets Fund
|
$4,985
|
$5,355
|
$4,588
|
$4,907
|
$4,588
|
$4,743
|
$4,633
|
$5,457
|
$4,660
|
$4,813
|
Amount
Deferred
|
$1,055
|
$0
|
$4,588
|
$0
|
$0
|
$0
|
$0
|
$0
|
$636
|
$0
|
Global
Dividend Opportunity Fund
|
$3,981
|
$4,250
|
$3,641
|
$3,897
|
$3,641
|
$3,766
|
$3,678
|
$4,326
|
$3,698
|
$3,818
|
Amount
Deferred
|
$854
|
$0
|
$3,641
|
$0
|
$0
|
$0
|
$0
|
$0
|
$498
|
$0
|
Global
Energy and Natural Resources Fund
|
$2,684
|
$2,848
|
$2,442
|
$2,613
|
$2,442
|
$2,526
|
$2,466
|
$2,899
|
$2,480
|
$2,562
|
Amount
Deferred
|
$569
|
$0
|
$2,442
|
$0
|
$0
|
$0
|
$0
|
$0
|
$336
|
$0
|
Global
Technology Growth Fund
|
$2,190
|
$2,334
|
$2,000
|
$2,141
|
$2,000
|
$2,068
|
$2,020
|
$2,374
|
$2,031
|
$2,096
|
Amount
Deferred
|
$472
|
$0
|
$2,000
|
$0
|
$0
|
$0
|
$0
|
$0
|
$268
|
$0
|
Greater
China Fund
|
$2,111
|
$2,206
|
$1,895
|
$2,029
|
$1,895
|
$1,964
|
$1,914
|
$2,243
|
$1,925
|
$1,991
|
Amount
Deferred
|
$435
|
$0
|
$1,895
|
$0
|
$0
|
$0
|
$0
|
$0
|
$265
|
$0
|
Mid
Cap Growth Fund
|
$8,404
|
$8,720
|
$7,499
|
$8,027
|
$7,499
|
$7,771
|
$7,570
|
$8,873
|
$7,619
|
$7,879
|
Amount
Deferred
|
$1,711
|
$0
|
$7,499
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,075
|
$0
|
Small
Cap Core Fund
|
$4,748
|
$5,029
|
$4,313
|
$4,616
|
$4,313
|
$4,463
|
$4,355
|
$5,120
|
$4,380
|
$4,523
|
Amount
Deferred
|
$1,003
|
$0
|
$4,313
|
$0
|
$0
|
$0
|
$0
|
$0
|
$593
|
$0
|
Small
Cap Growth Fund I
|
$5,260
|
$5,362
|
$4,621
|
$4,948
|
$4,621
|
$4,787
|
$4,665
|
$5,443
|
$4,694
|
$4,856
|
Amount
Deferred
|
$1,057
|
$0
|
$4,621
|
$0
|
$0
|
$0
|
$0
|
$0
|
$675
|
$0
|
Value
and Restructuring Fund
|
$7,052
|
$7,334
|
$6,306
|
$6,750
|
$6,306
|
$6,530
|
$6,366
|
$7,461
|
$6,407
|
$6,626
|
Amount
Deferred
|
$1,436
|
$0
|
$6,306
|
$0
|
$0
|
$0
|
$0
|
$0
|
$907
|
$0
|
For
Funds with fiscal period 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
|
$0
|
$1,649
|
$0
|
$0
|
$0
|
$0
|
$0
|
$792
|
$0
|
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
|
$0
|
$6,300
|
$0
|
$0
|
$0
|
$0
|
$0
|
$3,059
|
$0
|
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
|
$0
|
$1,953
|
$0
|
$0
|
$0
|
$0
|
$0
|
$940
|
$0
|
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
|
$0
|
$1,863
|
$0
|
$0
|
$0
|
$0
|
$0
|
$897
|
$0
|
CA
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
|
$0
|
$2,293
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,106
|
$0
|
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
|
$0
|
$1,377
|
$0
|
$0
|
$0
|
$0
|
$0
|
$662
|
$0
|
NY
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
|
$0
|
$1,620
|
$0
|
$0
|
$0
|
$0
|
$0
|
$781
|
$0
|
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
|
$0
|
$6,426
|
$0
|
$0
|
$0
|
$0
|
$0
|
$3,148
|
$0
|
For
Funds with fiscal period ending 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
|
Amount
Deferred
|
$0
|
$0
|
$2,662
|
$0
|
$0
|
$0
|
$0
|
$0
|
$1,206
|
$0
|
(a)
|
Mr. Drake served as Trustee
until June 24, 2014.
|
(b)
|
As of December 31, 2014, the
value of Ms. Kelly’s account under the deferred compensation plan was $675,246.
|
(c)
|
As of December 31, 2014, the
value of Mr. Simpson’s account under the deferred compensation plan was $1,967,388.
|
(d)
|
As of December 31, 2014, the
value of Ms. Verville’s account under the deferred compensation plan was $819,699.
|
(e)
|
The Fund commenced operations
on March 11, 2014, and therefore has no reporting information for periods prior to such date.
|
(f)
|
The Fund commenced operations
on January 27, 2015, and therefore has no reporting information for periods prior to such date.
|
(g)
|
The Fund is expected to
commence operations on or about February 19, 2015, and therefore has no reporting information for periods prior to such date.
|
(h)
|
For the period from March 12,
2014 (commencement of operations) to July 31, 2014.
|
Statement
of Additional Information – January 28, 2015
|
139
|
BROKERAGE ALLOCATION AND RELATED
PRACTICES
General Brokerage Policy, Brokerage
Transactions and Broker Selection
Subject to
policies established by the Board, as well as the terms of the Investment Management Services Agreement and Sub-Advisory Agreement, as applicable, the Investment Manager (and/or the investment subadviser(s) who makes the day-to-day investment
decisions for a Fund) is responsible for decisions to buy and sell securities for a Fund, for the selection of broker-dealers, for the execution of a Fund’s securities transactions and for the allocation of brokerage commissions in connection
with such transactions. The Investment Manager effects security transactions for the Fund consistent with its duty to seek the best execution of client (including the Funds) orders under the circumstances of the particular transaction. 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 and by the policies and
procedures of the Investment Manager and/or any investment subadvisers.
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 underwriter’s “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.
The Investment Manager effects security transactions
for the Funds consistent with its duty to seek the best execution of client (including the Funds) orders under the circumstances of the particular transaction. 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 Manager’s 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 funds. Such information may be communicated electronically, orally or in written form.
Broker-dealers may, from time to time, arrange
meetings with management of companies and the provide 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 Manager’s staff follow. In addition, this research provides the Investment Manager with a different perspective on investment matters, 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. Broker-dealer research typically supplements rather than replaces the Investment Manager’s own research, tending 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
Funds by improving the quality of the Investment Manager’s investment advice. The advisory fees paid by the Funds 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 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
Statement
of Additional Information – January 28, 2015
|
140
|
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 Manager’s clients, including the Funds.
The Investment Manager does not consider sales of
shares of the Funds as a factor in the selection of broker-dealers through which to execute securities transactions on behalf of 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.
The Investment Manager or a subadviser, if
applicable, may use step-out transactions. A “step-out” is an arrangement in which the Investment Manager or subadviser executes a trade through one broker-dealer but instructs that broker-dealer to step-out all or a part of the trade to
another broker-dealer. The second broker-dealer will clear and settle, and receive commissions for, the stepped-out portion. The Investment Manager or subadviser may receive research products and services in connection with step-out
transactions.
Use of Fund commissions may
create potential conflicts of interest between the Investment Manager or subadviser and a Fund. However, the Investment Manager and each subadviser has policies and procedures in place intended to mitigate these conflicts and ensure that the use of
fund commissions falls within the “safe harbor” of Section 28(e) of the 1934 Act. Some products and services may be used for both investment decision-making and non-investment decision-making purposes (“mixed use” items). The
Investment Manager and each subadviser, to the extent it has mixed use items, has procedures in place to assure that fund commissions pay only for the investment decision-making portion of a mixed-use item.
Some broker-dealers with whom the Investment
Manager’s Fixed Income Department executes trades provide the Fixed Income Department with proprietary research products and services, though the Fixed Income Department does not put in place any client commission arrangements with such
broker-dealers. However, such research may be considered by the Fixed Income Department when determining which broker-dealers to include on its approved broker-dealer list. It is the Investment Manager’s policy not to execute a fixed income
trade with a broker-dealer at a lower bid/higher offer than that provided by another broker-dealer in consideration of the value of research products and services received by the Fixed Income Department.
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 Manager’s 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 Investment Manager operates several separate
trading desks in different geographic locations in the United States. The trading desks support different portfolio management teams managing a variety of accounts and products. Nevertheless, the equity desks are functionally and operationally
integrated so as to operate as one virtual desk. The fixed income desks, however, function and operate separately but can provide support to each other to assure the continuation of services if necessary. By operating the fixed income trading desks
in this manner, the Funds may forego certain opportunities including the aggregation of trades across accounts that trade on different trading desks, which could result in one trading desk competing with another in the market for similar trades. In
addition, it is possible that the separate fixed income trading desks may be on opposite sides of a trade at the same time. While the trading desks operate in several locations, the desks do have linkages in oversight and reporting lines and are
generally conducted under similar policies and procedures. In addition, certain fixed income portfolio managers currently have the authority to execute trades themselves.
As the Investment Manager seeks to enhance its
investment capabilities and services to its clients, including the Funds, the Investment Manager may engage certain of its non-U.S. investment advisory affiliates (“Advisory Affiliates”) around the world to provide a variety of services.
For example, the Investment Manager may engage Advisory Affiliates and their personnel to provide (jointly or in coordination with the Investment Manager) services relating to client relations, investment monitoring, account administration, trading
and discretionary investment management (including portfolio management and risk
Statement
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|
141
|
management) to certain accounts the Investment Manager manages,
including the Funds, other pooled vehicles and separately managed accounts. In some circumstances, an Advisory Affiliate may delegate responsibility for providing those services to another Advisory Affiliate. In addition, the Investment Manager may
provide certain similar services to its Advisory Affiliates for accounts they manage.
The Investment Manager believes that harnessing the
collective expertise of the firm and its Advisory Affiliates will benefit its clients. In this regard, the Investment Manager has certain portfolio management and client servicing teams at both the firm and at Advisory Affiliates (through
subadvisory or other intercompany arrangements) operating jointly to provide a better client experience. These joint teams use expanded and shared capabilities that the Investment Manager and its Advisory Affiliates provide, including the sharing of
research and other information by investment personnel (
e.g.
, portfolio managers and analysts) across the firm and at its Advisory Affiliates relating to economic perspectives, market analysis and equity and
fixed income securities analysis.
Advisory
Affiliates may provide certain advisory and trading-related services to certain of the Investment Manager’s accounts, including the Funds. The Investment Manager may also provide similar services to certain accounts of Advisory Affiliates. The
Investment Manager believes that local trading in certain local markets will benefit its clients, including the Funds. However, such services may result in potential conflicts of interest to such accounts.
The Investment Manager has portfolio management
teams in its multiple geographic locations that may share research information regarding leveraged loans. The Investment Manager operates separate and independent trading desks in these locations for the purpose of purchasing and selling leveraged
loans. As a result, the Investment Manager does not aggregate orders in leveraged loans across portfolio management teams. For example, funds and other client accounts being managed by these portfolio management teams may purchase and sell the same
leveraged loan in the secondary market on the same day at different times and at different prices. There is also the potential for a particular account or group of accounts, including a Fund, to forego an opportunity or to receive a different
allocation (either larger or smaller) than might otherwise be obtained if the Investment Manager were to aggregate trades in leveraged loans across the portfolio management teams. Although the Investment Manager does not aggregate orders in
leveraged loans across its portfolio management teams in the multiple geographic locations, it operates in this structure subject to its duty to seek best execution.
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 Fund’s interests.
The Funds 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 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 Funds have adopted procedures pursuant to Rule 10f-3 under the 1940 Act, and intend 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 Manager’s
investment management activities, investment decisions for the Funds are not always made independently from those other investment companies and accounts advised or managed by 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 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
Statement
of Additional Information – January 28, 2015
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142
|
and such other 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 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.
Brokerage Commissions
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 chart reflects 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. The table is organized by fiscal year end.
Total Brokerage Commissions
|
Total
Brokerage Commissions
|
Fund
|
2014
|
2013
|
2012
|
For
Funds with fiscal period ending January 31
|
Diversified
Real Return Fund
(a)
|
N/A
|
N/A
|
N/A
|
For
Funds with fiscal period ending March 31
|
AP
– Growth Fund
|
$603,846
|
$408,004
(b)
|
N/A
|
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 ending April 30
|
Bond
Fund
|
14,153
|
21,942
|
10,809
(c)
|
Corporate
Income Fund
|
18,989
|
23,676
|
12,744
(c)
|
Intermediate
Bond Fund
|
62,945
|
80,619
|
53,399
(c)
|
Small
Cap Value Fund I
|
2,220,756
|
2,478,374
|
1,748,075
(d)
|
U.S.
Treasury Index Fund
|
0
|
0
|
0
(c)
|
For
Funds with fiscal period ending May 31
|
Adaptive
Alternatives Fund
(e)
|
N/A
|
N/A
|
N/A
|
Adaptive
Risk Allocation Fund
|
38,958
|
3,356
(f)
|
N/A
|
Diversified
Absolute Return Fund
(g)
|
N/A
|
N/A
|
N/A
|
Dividend
Income Fund
|
2,025,676
|
1,853,861
|
2,176,548
(h)
|
HY
Municipal Fund
|
0
|
0
|
0
(i)
|
For
Funds with fiscal period ending July 31
|
AMT-Free
OR Intermediate Muni Bond Fund
|
0
|
0
|
0
(j)
|
Global
ILB Plus Fund
|
161
(k)
|
N/A
|
N/A
|
Large
Cap Growth Fund
|
2,033,118
|
2,900,260
|
3,500,338
(l)
|
Tax-Exempt
Fund
|
0
|
0
|
0
(m)
|
Ultra
Short Term Bond Fund
|
0
|
0
|
0
|
Statement
of Additional Information – January 28, 2015
|
143
|
|
Total
Brokerage Commissions
|
Fund
|
2014
|
2013
|
2012
|
For
Funds with fiscal period ending August 31
|
AP
– Alternative Strategies Fund
|
$922,515
|
$544,925
|
$264,107
(n)
|
AP
– Core Plus Bond Fund
|
176,614
|
149,453
|
54,942
(o)
|
AP
– Small Cap Equity Fund
|
1,184,871
|
965,684
|
4,440,156
(o)
|
Balanced
Fund
|
710,397
|
524,505
|
587,880
|
Contrarian
Core Fund
|
2,340,216
|
1,494,935
|
1,516,809
(p)
|
Emerging
Markets Fund
|
4,414,146
|
3,805,177
|
3,789,468
(q)
|
Global
Dividend Opportunity Fund
|
1,393,143
|
890,272
|
1,570,568
|
Global
Energy and Natural Resources Fund
|
188,876
|
373,043
|
2,465,946
(q)
|
Global
Technology Growth Fund
|
238,290
|
347,976
|
869,734
|
Greater
China Fund
|
372,496
|
390,131
|
225,863
|
Mid
Cap Growth Fund
|
2,780,196
|
3,171,321
|
3,638,725
|
Small
Cap Core Fund
|
638,076
|
800,017
|
669,303
(p)
|
Small
Cap Growth Fund I
|
3,823,650
|
2,759,776
|
2,781,535
|
Value
and Restructuring Fund
|
1,112,941
|
1,328,880
|
5,937,219
(q)
|
Fund
|
2013
|
2012
|
2011
|
For
Funds with fiscal period ending October 31
|
AMT-Free
CT Intermediate Muni Bond Fund
|
0
|
0
|
0
|
AMT-Free
Intermediate Muni Bond Fund
|
0
|
0
|
0
|
AMT-Free
MA Intermediate Muni Bond Fund
|
0
|
0
|
0
|
AMT-Free
NY Intermediate Muni Bond Fund
|
0
|
0
|
0
|
CA
Tax-Exempt Fund
|
0
|
0
|
0
|
International
Bond Fund
|
445
|
354
(r)
|
60
|
New
York Tax-Exempt Fund
|
0
|
0
|
0
|
Strategic
Income Fund
|
143,363
|
137,974
(r)
|
86,139
|
For
Funds with fiscal period ending December 31
|
Real
Estate Equity Fund
|
816,359
|
640,257
|
1,099,715
|
(a)
|
The Fund commenced operations
on March 11, 2014, and therefore has no reporting information for periods prior to such date.
|
(b)
|
For the period from April 20,
2012 (commencement of operations) to March 31, 2013.
|
(c)
|
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.
|
(d)
|
The Fund 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.
|
(e)
|
The Fund commenced operations
on January 27, 2015, and therefore has no reporting information for periods prior to such date.
|
(f)
|
For the period from June 19,
2012 (commencement of operations) to May 31, 2013.
|
(g)
|
The Fund is expected to
commence operations on or about February 19, 2015, and therefore has no reporting information for periods prior to such date.
|
(h)
|
The 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.
|
(i)
|
The 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.
|
(j)
|
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.
|
(k)
|
For the period from March 12,
2014 (commencement of operations) to July 31, 2014.
|
(l)
|
The 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.
|
(m)
|
The 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.
|
Statement
of Additional Information – January 28, 2015
|
144
|
(n)
|
For the period from April 23,
2012 (commencement of operations) to August 31, 2012.
|
(o)
|
For the period from April 20,
2012 (commencement of operations) to August 31, 2012.
|
(p)
|
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.
|
(q)
|
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.
|
(r)
|
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 $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.
|
Brokerage Commissions Paid to Brokers Affiliated with
the Investment Manager
Affiliates of the Investment Manager
may engage in brokerage and other securities transactions on behalf of a Fund according to procedures adopted by the Board and to the extent consistent with applicable provisions of the federal securities laws. Subject to approval by the Board, the
same conditions apply to transactions with broker-dealer affiliates of any Fund subadviser. The Investment Manager will use an affiliate only
if
(i) the Investment Manager determines that the Fund will receive
prices and executions at least as favorable as those offered by qualified independent brokers performing similar brokerage and other services for the Fund and (ii) the affiliate charges the Fund commission rates consistent with those the affiliate
charges comparable unaffiliated customers in similar transactions and if such use is consistent with terms of the Investment Management Services Agreement.
No brokerage commissions were paid by the Funds in
the last three fiscal periods to brokers affiliated with the Funds’ Investment Manager or any subadvisers.
Directed Brokerage
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.
Reported numbers include third party soft dollar
commissions and portfolio manager directed commissions directed for research. The Investment Manager also receives proprietary research from brokers, but these amounts have not been included in the table.
During each Fund’s 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
|
Brokerage
directed for research
|
Fund
|
Amount
of Transactions
|
Amount
of Commissions Imputed or Paid
|
For
Funds with fiscal period ending January 31
|
Diversified
Real Return Fund
|
N/A
(a)
|
N/A
(a)
|
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
|
0
|
0
|
Corporate
Income Fund
|
0
|
0
|
Intermediate
Bond Fund
|
0
|
0
|
Small
Cap Value Fund I
|
600,734,088
|
894,590
|
U.S.
Treasury Index Fund
|
0
|
0
|
Statement
of Additional Information – January 28, 2015
|
145
|
|
Brokerage
directed for research
|
Fund
|
Amount
of Transactions
|
Amount
of Commissions Imputed or Paid
|
For
Funds with fiscal period ending May 31
|
Adaptive
Alternatives Fund
|
N/A
(b)
|
N/A
(b)
|
Adaptive
Risk Allocation Fund
|
$972,805
|
$1,200
|
Diversified
Absolute Return Fund
|
N/A
(c)
|
N/A
(c)
|
Dividend
Income Fund
|
1,549,498,040
|
814,656
|
HY
Municipal Fund
|
0
|
0
|
For
Funds with fiscal period ending July 31
|
AMT-Free
OR Intermediate Muni Bond Fund
|
0
|
0
|
Global
ILB Plus Fund
|
0
(d)
|
0
(d)
|
Large
Cap Growth Fund
|
2,290,266,700
|
992,317
|
Tax-Exempt
Fund
|
0
|
0
|
Ultra
Short Term Bond Fund
|
0
|
0
|
For
Funds with fiscal period ending August 31
|
AP
– Alternative Strategies Fund
|
1,659,621,155
|
191,977
|
AP
– Core Plus Bond Fund
|
0
|
0
|
AP
– Small Cap Equity Fund
|
147,199,850
|
233,360
|
Balanced
Fund
|
1,369,786,345
|
575,222
|
Contrarian
Core Fund
|
3,948,491,033
|
1,543,875
|
Emerging
Markets Fund
|
341,200,304
|
501,740
|
Global
Dividend Opportunity Fund
|
324,771,955
|
301,033
|
Global
Energy and Natural Resources Fund
|
83,623,319
|
43,027
|
Global
Technology Growth Fund
|
16,480,991
|
13,389
|
Greater
China Fund
|
31,227,940
|
42,768
|
Mid
Cap Growth Fund
|
652,223,025
|
347,422
|
Small
Cap Core Fund
|
115,677,000
|
111,494
|
Small
Cap Growth Fund I
|
339,207,845
|
321,846
|
Value
and Restructuring Fund
|
2,071,491,960
|
893,108
|
For
Funds with fiscal period ending October 31
|
AMT-Free
CT Intermediate Muni Bond Fund
|
0
|
0
|
AMT-Free
Intermediate Muni Bond Fund
|
0
|
0
|
AMT-Free
MA Intermediate Muni Bond Fund
|
0
|
0
|
AMT-Free
NY Intermediate Muni Bond Fund
|
0
|
0
|
CA
Tax-Exempt Fund
|
0
|
0
|
International
Bond Fund
|
0
|
0
|
New
York Tax-Exempt Fund
|
0
|
0
|
Strategic
Income Fund
|
0
|
0
|
For
Funds with fiscal period ending December 31
|
Real
Estate Equity Fund
|
89,725,633
|
72,805
|
(a)
|
The Fund commenced operations
on March 11, 2014, and therefore has no reporting information for periods prior to such date.
|
(b)
|
The Fund commenced operations
on January 27, 2015, and therefore has no reporting information for periods prior to such date.
|
(c)
|
The Fund is expected to
commence operations on or about February 19, 2015, and therefore has no reporting information for periods prior to such date.
|
(d)
|
For the period from March 12,
2014 (commencement of operations) to July 31, 2014.
|
Statement
of Additional Information – January 28, 2015
|
146
|
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.
As of each Fund’s 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
Funds with fiscal period ending January 31, 2014
|
Diversified
Real Return
(a)
|
N/A
|
N/A
|
For
Funds with fiscal period ending March 31, 2014
|
AP
– Growth Fund
|
None
|
N/A
|
Pacific/Asia
Fund
|
None
|
N/A
|
Select
Large Cap Growth Fund
|
None
|
N/A
|
For
Funds with fiscal period ending April 30, 2014
|
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
|
Statement
of Additional Information – January 28, 2015
|
147
|
Fund
|
Issuer
|
Value
of securities owned
at end of fiscal period
|
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
|
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, 2014
|
Adaptive
Alternatives Fund
(b)
|
N/A
|
N/A
|
Adaptive
Risk Allocation Fund
|
None
|
N/A
|
Diversified
Absolute Return Fund
(c)
|
N/A
|
N/A
|
Dividend
Income Fund
|
JPMorgan
Chase & Co.
|
$211,166,000
|
PNC
Financial Services Group, Inc. (The)
|
$89,533,500
|
High
Yield Municipal Fund
|
None
|
N/A
|
For
Funds with fiscal period ending July 31, 2014
|
AMT-Free
OR Intermediate Muni Bond Fund
|
None
|
N/A
|
Global
ILB Plus Fund
(d)
|
None
|
N/A
|
Large
Cap Growth Fund
|
TD
Ameritrade Holding Corp.
|
$22,037,532
|
The
Goldman Sachs Group, Inc.
|
$21,885,342
|
Tax-Exempt
Fund
|
None
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
148
|
Fund
|
Issuer
|
Value
of securities owned
at end of fiscal period
|
Ultra
Short Term Bond Fund
|
The
Bear Stearns Companies LLC
|
$5,074,135
|
Bear
Stearns Commercial Mortgage Trust
|
$23,924,718
|
Citigroup,
Inc.
|
$17,784,251
|
Credit
Suisse Mortgage Capital Certificates
|
$315,971
|
Credit
Suisse First Boston Mortgage Securities Corp.
|
$3,272,197
|
GS
Mortgage Securities Corp. II
|
$15,436,348
|
The
Goldman Sachs Group, Inc.
|
$10,000,580
|
JPMorgan
Chase & Co.
|
$10,020,200
|
JPMorgan
Chase Commercial Mortgage Securities Trust
|
$27,800,063
|
JPMorgan
Resecuritization Trust
|
$296,967
|
LB-UBS
Commercial Mortgage Trust
|
$31,133,467
|
Merrill
Lynch Mortgage Trust
|
$16,258,927
|
Banc
of America Merrill Lynch Commercial Mortgage, Inc.
|
$30,951,604
|
Morgan
Stanley
|
$11,698,709
|
Morgan
Stanley Capital I Trust
|
$7,029,318
|
PNC
Funding Corp.
|
$10,166,370
|
For
Funds with fiscal period ending August 31, 2014
|
AP
– Alternative Strategies Fund
|
Citigroup,
Inc.
|
$5,443,290
|
Nuveen
Investments, Inc.
|
$1,751,010
|
PNC
Preferred Funding Trust I
|
$2,424,960
|
Statement
of Additional Information – January 28, 2015
|
149
|
Fund
|
Issuer
|
Value
of securities owned
at end of fiscal period
|
AP
– Core Plus Bond Fund
|
Chase
Issuance Trust
|
$9,367,985
|
Citigroup,
Inc.
|
$43,829,214
|
Citigroup
Commercial Mortgage Trust
|
$2,200,091
|
Citigroup/Deutsche
Bank Commercial Mortgage Trust
|
$815,572
|
Citigroup
Mortgage Loan Trust, Inc.
|
$9,013,813
|
Citigroup
Capital XIII
|
$10,626,188
|
Credit
Suisse Commercial Mortgage Trust
|
$7,605,106
|
Credit
Suisse First Boston Mortgage Securities Corp.
|
$1,659,171
|
Credit
Suisse Mortgage Capital Certificates
|
$7,362,687
|
Credit
Suisse Securities (USA) LLC
|
$3,029,427
|
Credit
Suisse NY
|
$9,999,011
|
E*TRADE
Financial Corp.
|
$199,485
|
GS
Mortgage Securities Trust
|
$9,843,437
|
The
Goldman Sachs Group, Inc.
|
$18,578,724
|
Jefferies
Group LLC
|
$5,249,457
|
Jefferies
Resecuritization Trust
|
$352,958
|
JPMorgan
Chase & Co.
|
$18,837,461
|
JPMorgan
Chase Bank NA
|
$4,445,510
|
JPMorgan
Chase Capital XXI
|
$25,821,980
|
JPMorgan
Chase Capital XXIII
|
$8,525,330
|
JPMorgan
Chase Commercial Mortgage Securities Trust
|
$38,196,417
|
JPMorgan
Mortgage Acquisition Corp.
|
$2,611,383
|
JPMorgan
Mortgage Trust
|
$3,253,307
|
LB-UBS
Commercial Mortgage Trust
|
$11,194,086
|
Lehman
XS Trust
|
$12,204,718
|
Merrill
Lynch/Countrywide Commercial Mortgage Trust
|
$12,521,237
|
Banc
of America Merrill Lynch Commercial Mortgage, Inc.
|
$6,375,967
|
Morgan
Stanley
|
$11,734,961
|
Morgan
Stanley Capital I Trust
|
$35,641,757
|
Morgan
Stanley Mortgage Loan Trust
|
$7,838,485
|
Morgan
Stanley Re-remic Trust
|
$16,780,547
|
Morgan
Stanley Resecuritization Trust
|
$2,383,686
|
Nuveen
Investments, Inc.
|
$382,985
|
PNC
Financial Services Group, Inc.(The)
|
$6,720,583
|
PNC
Funding Corp.
|
$2,896,698
|
Raymond
James Financial, Inc.
|
$3,516,856
|
Stifel
Financial Corp.
|
$763,003
|
UBS-Citigroup
Commercial Mortgage Trust
|
$4,043,797
|
TD
Ameritrade Holding Corp.
|
$1,008,997
|
AP
– Small Cap Equity Fund
|
Piper
Jaffray Companies
|
$2,655,567
|
Westwood
Holdings Group, Inc.
|
$3,176,680
|
Statement
of Additional Information – January 28, 2015
|
150
|
Fund
|
Issuer
|
Value
of securities owned
at end of fiscal period
|
Balanced
Fund
|
Bear
Stearns Commercial Mortgage Securities
|
$5,058,767
|
Bear
Stearns Companies
|
$3,533,793
|
Citigroup,
Inc.
|
$47,831,961
|
Citigroup
Commercial Mortgage Trust
|
$1,508,793
|
Citigroup/Deutsche
Bank Commercial Mortgage Trust
|
$864,703
|
Credit
Suisse Commercial Mortgage Trust
|
$46,920
|
E*TRADE
Financial Corp.
|
$160,875
|
GS
Mortgage Securities Trust
|
$1,057,290
|
The
Goldman Sachs Group, Inc.
|
$34,038,327
|
JPMorgan
Chase & Co.
|
$47,624,979
|
JPMorgan
Chase Commercial Mortgage Securities Trust
|
$7,859,841
|
JPMorgan
Resecuritization Trust
|
$1,590,411
|
LB-UBS
Commercial Mortgage Trust
|
$463,206
|
Morgan
Stanley
|
$2,576,359
|
Morgan
Stanley Capital I, Inc.
|
$1,952,387
|
Morgan
Stanley Re-Remic Trust
|
$785,031
|
Nuveen
Investments, Inc.
|
$134,110
|
PNC
Financial Services Group, Inc.(The)
|
$2,146,388
|
Contrarian
Core Fund
|
Citigroup,
Inc.
|
$151,468,067
|
The
Goldman Sachs Group, Inc.
|
$106,346,562
|
JPMorgan
Chase & Co.
|
$163,368,481
|
Emerging
Markets Fund
|
None
|
N/A
|
Global
Dividend Opportunity Fund
|
JPMorgan
Chase & Co.
|
$2,947,115
|
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.
|
$37,381,996
|
Small
Cap Core Fund
|
Investment
Technology Group, Inc.
|
$3,255,813
|
Small
Cap Growth Fund I
|
None
|
N/A
|
Value
and Restructuring Fund
|
Citigroup,
Inc.
|
$64,725,198
|
The
Goldman Sachs Group, Inc.
|
$40,340,050
|
JPMorgan
Chase & Co.
|
$73,566,402
|
For
Funds with fiscal period ending October 31, 2013
|
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,
Inc.
|
$15,902
|
Citigroup
Mortgage Loan Trust, Inc.
|
$27,333,244
|
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, 2013
|
Real
Estate Equity Fund
|
None
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
151
|
(a)
|
The Fund commenced operations
on March 11, 2014, and therefore has no reporting information for periods prior to such date.
|
(b)
|
The Fund commenced operations
on January 27, 2015, and therefore has no reporting information for periods prior to such date.
|
(c)
|
The Fund is expected to
commence operations on or about February 19, 2015, and therefore has no reporting information for periods prior to such date.
|
(d)
|
For the period from March 12,
2014 (commencement of operations) to July 31, 2014.
|
Statement
of Additional Information – January 28, 2015
|
152
|
OTHER PRACTICES
Performance Disclosure
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 Fund’s 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 Fund’s 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 Fund’s newer share classes would have been substantially similar to the performance of the Fund’s 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 (and any 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
|
U.S.
Treasury Index Fund
|
|
Galaxy
II U.S. Treasury Index Fund, a series of The Galaxy Fund
|
|
November
25, 2002
|
Statement
of Additional Information – January 28, 2015
|
153
|
Fund
|
|
Predecessor
Fund
|
|
For
periods prior to:
|
Value
and Restructuring Fund
|
|
Excelsior
Value and Restructuring Fund, a series of Excelsior Funds, Inc.
|
|
March
31, 2008
|
Portfolio Turnover
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 Fund’s shareholders. The trading costs and tax effects associated with portfolio turnover may adversely affect a Fund’s performance. For each Fund’s 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 Fund’s turnover may vary significantly from time to time depending on, among other factors, economic, market and other conditions.
See below for an explanation of any significant
variation in a Fund’s portfolio turnover rates over the two most recently completed fiscal years:
For the Adaptive Risk Allocation Fund, during the
fiscal year ended May 31, 2014, the Fund experienced a higher rate of portfolio turnover than during the previous fiscal year. This was largely due to change in portfolio management and the resultant principal investment strategy changes. The
investment strategy changes allow the Investment Manager to identify distinct market environments and adjust the strategic risk allocation according. Allocations of risk to asset classes may differ significantly across market environments. As a
result, portfolio turnover may be higher. Additionally, the fiscal year ended May 31, 2014 was the fund’s first full fiscal year end.
A significant portion of the increase in portfolio
turnover rate for Bond Fund for the fiscal year ended April 30, 2014, was due to strategic investment decisions based on market factors and maintenance of liquidity.
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 fund’s first full fiscal year end.
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 selective disclosure of a Fund’s portfolio holdings can, under appropriate circumstances, be made for purposes beneficial to the Fund and its shareholders or for other purposes
under conditions that are designed to protect the interests of the Fund and its shareholders.
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 Fund’s
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 Fund’s 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 funds-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.
|
Statement
of Additional Information – January 28, 2015
|
154
|
■
|
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, together with a link to an
SEC webpage where a user of the website may obtain access to the Fund’s 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 the
Investment Manager or its affiliates are not disclosed on the website. A complete schedule of each Fund’s 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 Fund’s Form N-CSR and N-Q filings on the
SEC’s website at www.sec.gov. In addition, each Fund’s Form N-CSR and N-Q filings may be reviewed and copied at the SEC’s public reference room in Washington, D.C. You may call the SEC at 202.551.8090 for information about the
SEC’s website or the operation of the public reference room.
In addition, the Investment Manager makes publicly
available information regarding certain Fund’s 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.
Fund complete portfolio holdings may be disclosed
between and among the following persons (collectively, Affiliates and Agents) for legitimate business purposes within the scope of their official duties and responsibilities, subject to Fund policies and procedures designed to prevent the misuse of
inside information, by agreement, or under applicable laws, rules, and regulations: (1) persons who are subject to the Code of Ethics or policies and procedures designed to prevent the misuse of inside information; (2) an investment adviser,
distributor, administrator, transfer agent, or custodian to the Fund; (3) an accounting firm, an auditing firm, or outside legal counsel retained by the Investment Manager or its affiliates, or the Fund;
Statement
of Additional Information – January 28, 2015
|
155
|
(4) an investment adviser to whom complete portfolio holdings are
disclosed for due diligence purposes when the adviser is in merger or acquisition talks with a the Investment Manager or its parent company; and (5) a newly hired subadviser to whom complete portfolio holdings are disclosed prior to the time it
commences its duties.
The frequency with which
complete portfolio holdings may be disclosed between and among Affiliates and Agents, and the length of the lag, if any, between the date of the information and the date on which the information is disclosed between and among the Affiliates and
Agents, is determined by such Affiliates and Agents based on the facts and circumstances, including, without limitation, the nature of the portfolio holdings information to be disclosed, the risk of harm to the Funds and their shareholders, and the
legitimate business purposes served by such disclosure. The frequency of disclosure between and among Affiliates and Agents varies and may be as frequent as daily, with no lag. Any disclosure of Fund complete portfolio holdings to any Affiliates and
Agents as previously described may also include a list of the other investment positions that make up the Fund, such as cash investments and derivatives.
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.
In certain limited situations, the Funds may provide
portfolio holdings to an institutional client (or its custodian or other agent) when the client is effecting a redemption in-kind from a Fund and the Investment Manager believes that such disclosure will not be harmful to the Fund. In these
situations, the Investment Manager makes it clear through non-disclosure agreements or other means that the recipient must ensure that the confidential information is used only as necessary to effect the redemption-in-kind and will maintain the
information in a manner designed to protect against unauthorized access or misuse.
The Board has adopted policies to ensure that the
Fund’s 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 Manager’s legal department and 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. 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 Fund’s 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 Fund’s custodians, subcustodians, Administrator, Investment Manager and subadvisers, the following disclosure arrangements are in place:
Identity
of Recipient
|
|
Conditions/restrictions
on use of information
|
|
Frequency
of
Disclosure
|
Recipients
under arrangements with the Funds or Investment Manager:
|
|
|
Barclays
Capital
|
|
Used
for analytics including risk and attribution assessment.
|
|
Daily
|
BlackRock
/ Aladdin
|
|
Used
for fixed income trading and decision support.
|
|
Daily
|
Statement
of Additional Information – January 28, 2015
|
156
|
Identity
of Recipient
|
|
Conditions/restrictions
on use of information
|
|
Frequency
of
Disclosure
|
Bloomberg
|
|
Used
for portfolio analytics, statistical analysis and independent research.
|
|
Daily
|
Capital
Markets Services (“CMS”) Group
|
|
Used
for intraday post-trade information when equity exposures (either via futures or options trades) are modified beyond certain limits for Columbia Variable Portfolio – Managed Volatility Funds.
|
|
As
Needed
|
Catapult
|
|
Used
to provide Edgar filing and typesetting services, as well as printing of prospectuses, factsheets, annual and semi-annual reports.
|
|
As
Needed
|
Cenveo,
Inc.
|
|
Used
for printing of prospectuses, factsheets, annual and semi-annual reports.
|
|
As
Needed
|
Citigroup
|
|
Used
for mortgage decision support.
|
|
Daily
|
Cogent
Commission Management
|
|
Used
to facilitate the evaluation of commission rates and to provide flexible commission reporting.
|
|
Daily
|
Equifax
|
|
Used
to ensure that Columbia does not violate the Office of Foreign Assets Control (OFAC) sanction requirements.
|
|
Daily
|
Ernst
& Young, LLP
|
|
Used
to analyze PFIC investments.
|
|
Monthly
|
FactSet
Research Systems, Inc.
|
|
Used
for provision of quantitative analytics, charting and fundamental data and for portfolio analytics.
|
|
Daily
|
Fiserv
(Frontier & GIM)
|
|
Used
for accounting and reconciliation of positions.
|
|
Daily
|
Fundtech
Financial Messaging
|
|
Used
to send trade messages via SWIFT, to custodians.
|
|
Daily
|
Harte-Hanks
|
|
Used
for printing of prospectuses, factsheets, annual and semi-annual reports.
|
|
As
Needed
|
Index
Universe
|
|
Used
to cover product and marketing developments related to index funds, ETFs, index derivatives, and other sophisticated investment strategies.
|
|
Monthly
|
Institutional
Shareholder Services Inc. (“ISS”)
|
|
Used
for proxy voting administration and research on proxy matters.
|
|
Daily
|
Intex
Solutions Inc.
|
|
Used
to provide mortgage analytics.
|
|
Periodic
|
Investment
Technology Group, Inc.
|
|
Used
to evaluate and assess trading activity, execution and practices.
|
|
Quarterly
|
Investor
Tools
|
|
Used
for municipal bond analytics, research and decision support.
|
|
As
Needed
|
JDP
Marketing Services
|
|
Used
to write or edit Columbia Fund shareholder reports, quarterly fund commentaries, and communications, including shareholder letters and management’s discussion of Columbia Fund performance.
|
|
Monthly,
as needed
|
Kynex
|
|
Used
to provide portfolio attribution reports for the Columbia Convertible Securities Fund.
|
|
Daily
|
Lipper
/ Thomson Reuters
|
|
Used
for statistical analysis.
|
|
Monthly
|
Statement
of Additional Information – January 28, 2015
|
157
|
Identity
of Recipient
|
|
Conditions/restrictions
on use of information
|
|
Frequency
of
Disclosure
|
Malaspina
Communications
|
|
Used
to facilitate writing management’s discussion of Columbia Fund performance for Columbia Fund shareholder reports and periodic marketing communications.
|
|
Monthly
|
Markit
/ Wall Street Office
|
|
Used
for an asset database for analytics and investor reporting.
|
|
As
Needed
|
Merrill
Corporation
|
|
Used
to provide Edgar filing and typesetting services, as well as printing of prospectuses, factsheets, annual and semi-annual reports.
|
|
As
Needed
|
MoneyMate
|
|
Used
to report returns and analytics to client facing materials.
|
|
Monthly
|
Morningstar
|
|
Used
for independent research and ranking of funds, and to fulfill role as investment consultant for fund-of-funds product. Used also for statistical analysis
|
|
Monthly,
Quarterly or As Needed
|
MSCI
Inc./ Barra Aegis
|
|
Used
for risk analysis and reporting.
|
|
Daily
|
MSCI
Inc./ BarraOne
|
|
Used
as a hosted portfolio management platform designed for research, reporting, strategy development, portfolio construction, and performance and risk attribution.
|
|
Daily
|
Print
Craft
|
|
Used
to assemble kits and mailing that include the fact sheets.
|
|
As
Needed
|
R.R.
Donnelley & Sons Company
|
|
Used
to provide Edgar filing and typesetting services, and printing of prospectuses, factsheets, annual and semi-annual reports.
|
|
As
Needed
|
SEI
Investment Company
|
|
Used
for model portfolios for wrap accounts
|
|
Daily
|
StoneRiver
RegEd, In.c
|
|
Used
to review external and certain internal communications prior to dissemination.
|
|
Daily
|
SunGard
Investment Systems LLC / Invest One
|
|
Used
as portfolio accounting system.
|
|
Daily
|
Threadneedle
Investments
|
|
Used
by portfolio managers and research analysts in supporting certain management strategies, and by shared support partners (legal, operations, compliance, risk, etc.) to provide Fund maintenance and development.
|
|
As
Needed
|
Universal
Wilde
|
|
Used
to provide printing and mailing services for prospectuses, annual and semi-annual reports, and supplements.
|
|
As
Needed
|
Wilshire
Associates, Inc.
|
|
Used
to provide daily performance attribution reporting based on daily holdings to the investment and investment analytics teams.
|
|
Daily
|
Wolters
Kluwer / Gainskeeper tax product
|
|
Used
to perform tax calculations specific to wash sales.
|
|
Monthly
|
Wolters
Kluwer / Straddles
|
|
Used
to analyze tax straddles (diminution of risk).
|
|
Monthly
|
Identity
of Recipient
|
|
Conditions/restrictions
on use of information
|
|
Frequency
of
Disclosure
|
Recipients
under arrangements with subadvisers:
|
|
|
Statement
of Additional Information – January 28, 2015
|
158
|
Identity
of Recipient
|
|
Conditions/restrictions
on use of information
|
|
Frequency
of
Disclosure
|
Advent
Software Inc.
|
|
Used
by certain subadvisers for portfolio management information systems.
|
|
Daily
|
Advisory
Compliance Associates Group
|
|
Used
by certain subadvisers for best execution analysis.
|
|
Quarterly
|
Barclays
Capital
|
|
Used
by certain subadvisers for analytics and modeling.
|
|
Daily
|
Bloomberg
|
|
Used
by certain subadvisers for internal reporting and portfolio analysis, for trade order management, and for analytical and statistical information.
|
|
Daily
|
Capital
IQ
|
|
Used
by certain subadvisers for internal reporting and portfolio analysis.
|
|
Daily
|
Charles
River
|
|
Used
by certain subadvisers for order management.
|
|
Daily
|
Electra
Information Systems, Inc.
|
|
Used
by certain subadvisers for portfolio holdings reconciliation.
|
|
Daily
|
Ernst
and Young
|
|
Used
by certain subadvisers to provide general audit services.
|
|
Semi-Annually
|
EVARE/SS&C
|
|
Used
by certain subadvisers for reconciliation and custodian purposes.
|
|
Daily
|
FactSet
Research Systems, Inc.
|
|
Used
by certain subadvisers for analytical and statistical information, and for internal reporting and portfolio analysis.
|
|
Daily
|
Financial
Recovery Technologies Services
|
|
Used
by certain subadvisers for class action monitoring.
|
|
Quarterly
|
Glass
Lewis
|
|
Used
by certain subadvisers for proxy voting services.
|
|
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 services.
|
|
Daily
|
Market
ClearPar
|
|
Used
by certain subadvisers to confirm and settle bank loan trades.
|
|
Monthly
|
MarkitSERV
|
|
Used
by certain subadvisers to upload derivatives trades (CDS, IRS) for matching and confirmation.
|
|
Monthly
|
MSCI
Barra
|
|
Used
by certain subadvisers for analytical and statistical information.
|
|
Daily
|
Northern
Trust
|
|
Used
by certain subadvisers for settlement, accounting, reconciliation and performance.
|
|
Daily
|
Omgeo,
LLC
|
|
Used
by certain subadvisers for trade settlement and trade order management.
|
|
Daily
|
SmartStream
|
|
Used
by certain subadvisers for back office transactions and holdings reconciliation.
|
|
Daily
|
SunGard
Data Systems, Inc.
|
|
Used
by certain subadvisers for corporate actions.
|
|
Daily
|
Sustainalytics
|
|
Used
by certain subadvisers for internal reporting and portfolio analysis.
|
|
Daily
|
Statement
of Additional Information – January 28, 2015
|
159
|
Identity
of Recipient
|
|
Conditions/restrictions
on use of information
|
|
Frequency
of
Disclosure
|
The
Yield Book
|
|
Used
by certain subadvisers for analytics and modeling.
|
|
Daily
|
William
O’Neil
|
|
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 Funds 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 fund’s 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 Fund’s shares on an annual basis.
The Board has authorized each Fund to pay up to
0.20% of the average aggregate value of each Fund’s 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 and/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 Agent’s 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
■
|
ADP Broker-Dealer,
Inc.
|
■
|
American Century
Investment Management, Inc.
|
■
|
American
Enterprise Investment Services*
|
■
|
American United
Life Insurance Co.
|
■
|
Ameriprise
Financial Services, Inc.*
|
■
|
AXA Equitable Life
Insurance
|
■
|
Benefit Plan
Administrators
|
■
|
Charles Schwab
& Co., Inc.
|
■
|
Charles Schwab
Trust Co.
|
■
|
Clearview
Correspondent Services/BB&T Securities
|
■
|
Davenport &
Company City National Bank
|
■
|
CPI Qualified Plan
Consultants, Inc.
|
■
|
Daily Access
Concepts, Inc.
|
■
|
Digital Retirement
Solutions
|
■
|
Edward D. Jones
& Co., LP
|
■
|
Fidelity Brokerage
Services, Inc.
|
■
|
Fidelity
Investments Institutional Operations Co.
|
■
|
First Mercantile
Trust Co.
|
■
|
Guardian Insurance
and Annuity Company Inc.
|
■
|
Genworth Life and
Annuity Insurance Company
|
■
|
Genworth Life
Insurance Co. of New York
|
■
|
Hartford Life
Insurance Company
|
■
|
Hartford
Securities Distribution
|
Statement
of Additional Information – January 28, 2015
|
160
|
■
|
ICMA Retirement
Corporation
|
■
|
ING Life Insurance
and Annuity Company
|
■
|
ING Institutional
Plan Services, LLP
|
■
|
ING Investments
Distributor, LLC
|
■
|
Janney Montgomery
Scott, Inc.
|
■
|
John Hancock Life
Insurance Company (USA)
|
■
|
John Hancock Life
Insurance Company of New York
|
■
|
JP Morgan
Retirement Plan Services LLC
|
■
|
Lincoln Life &
Annuity Company of New York
|
■
|
Lincoln National
Life Insurance Company
|
■
|
Lincoln Retirement
Services
|
■
|
LPL Financial
Corporation
|
■
|
BMO Harris Bank
(f/k/a Marshall & Illsley Trust Company)
|
■
|
Massachusetts
Mutual Life Insurance Company
|
■
|
Mercer HR
Services, LLC
|
■
|
Merrill Lynch,
Pierce, Fenner & Smith Incorporated
|
■
|
Mid Atlantic
Capital Corporation
|
■
|
Minnesota Life
Insurance Co.
|
■
|
Morgan Stanley
Smith Barney
|
■
|
MSCS Financial
Services Division of Broadridge Business Process Outsourcing LLC
|
■
|
National Financial
Services
|
■
|
Nationwide
Investment Services
|
■
|
Newport Retirement
Services, Inc.
|
■
|
New York State
Deferred Compensation Plan
|
■
|
NYLife
Distributors LLC
|
■
|
Oppenheimer &
Co., Inc.
|
■
|
Plan
Administrators, Inc.
|
■
|
Principal Life
Insurance Company of America
|
■
|
Prudential
Insurance Company of America
|
■
|
Prudential
Retirement Insurance & Annuity Company
|
■
|
Raymond James
& Associates
|
■
|
Robert W. Baird
& Co., Inc.
|
■
|
Sammons Retirement
Solutions
|
■
|
Standard Insurance
Company
|
■
|
TD Ameritrade
Clearing, Inc.
|
■
|
TD Ameritrade
Trust Company
|
■
|
The Retirement
Plan Company
|
■
|
Teachers Insurance
and Annuity Association of America
|
■
|
Transamerica
Advisors Life Insurance Company
|
■
|
Transamerica
Financial Life Insurance Company
|
■
|
T. Rowe Price
Group, Inc.
|
■
|
UBS Financial
Services, Inc.
|
■
|
Unified Trust
Company, N.A.
|
■
|
Upromise
Investments, Inc.
|
■
|
USAA Investment
Management Co
|
■
|
VALIC Retirement
Services Company
|
■
|
Wells Fargo
Advisors, LLC
|
■
|
Wilmington Trust
Retirement & Institutional Services Company
|
*
|
Ameriprise Financial
affiliate
|
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
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 under
Other 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 Fund’s
prospectuses.
Statement
of Additional Information – January 28, 2015
|
161
|
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 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 intermediary’s 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 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 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 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
■
|
Ameriprise
Financial Services, Inc.*
|
■
|
Cetera Financial
Group, Inc.
|
■
|
Citigroup Global
Markets Inc./Citibank
|
■
|
Commonwealth
Financial Network
|
■
|
J.J.B. Hilliard,
W.L. Lyons, Inc.
|
■
|
Lincoln Financial
Advisors Corp.
|
■
|
Linsco/Private
Ledger Corp.
|
■
|
Merrill Lynch,
Pierce, Fenner & Smith Incorporated
|
■
|
Morgan Stanley
Smith Barney
|
■
|
Northwestern
Mutual Investment Services, LLC
|
■
|
Oppenheimer &
Co., Inc.
|
■
|
Raymond James
& Associates, Inc.
|
■
|
Raymond James
Financial Services, Inc.
|
■
|
Securities
America, Inc.
|
■
|
UBS Financial
Services Inc.
|
■
|
US Bancorp
Investments, Inc.
|
■
|
U.S. Trust/Bank of
America
|
■
|
Wells Fargo
Advisors, LLC
|
■
|
Wells Fargo
Advisors Financial Network, LLC
|
■
|
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 Distributor’s 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
Statement
of Additional Information – January 28, 2015
|
162
|
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.
Statement
of Additional Information – January 28, 2015
|
163
|
CAPITAL STOCK AND OTHER
SECURITIES
Description of the Trust's
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. A Fund offers only those classes of shares listed on the cover of its prospectuses. 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 Fund’s 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 or any class of shares of 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.
Shareholder Liability
The Trust is organized as a business trust under Massachusetts law.
Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Trust. However, the Trust’s Declaration of Trust disclaims any shareholder liability for acts or obligations of the
Funds and the Trust and requires that notice of such disclaimer be given in each agreement, obligation, or instrument entered into or executed by a Fund or the Trustees. The Declaration of Trust provides for indemnification out of Fund property for
all loss and expense of any shareholder held personally liable for the obligations of a Fund. Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances (which are considered remote) in
which a Fund would be unable to meet its obligations and the disclaimer was inoperative. The risk of a Fund incurring financial loss on account of another series of the Trust also is believed to be remote, because it would be limited to
circumstances in which the disclaimer was inoperative and the other series of the Trust was unable to meet its obligations.
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 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 a 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
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the matter involved only affects one Fund. For example, a change in
a Fund’s 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 or, if shareholder approval is required under exemptive
relief, 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 has no present intention of holding, annual meetings of shareholders. Special meetings may be called for certain purposes.
Previously, the Trust had voluntarily undertaken to
adhere to certain governance measures contemplated by an SEC settlement order with respect to the Trust prior investment adviser in 2005. Over the past several years, the SEC has adopted many rules under the 1940 Act and the Investment Advisers Act
of 1940 to strengthen fund governance and compliance oversight of funds and their investment advisers.
Accordingly, although the Trust
may continue to follow certain
governance practices noted in the 2005 settlement order, it will do so as the Board deems appropriate and not pursuant to any voluntary undertakings. In this regard, the Board has determined that it is unnecessary to commit to holding a meeting of
shareholders to elect trustees at least every five years. Instead, the Board will convene meetings of shareholders to elect trustees as required by the 1940 Act or as deemed appropriate by the Board.
Liquidation Rights
In the event of the liquidation or dissolution of the Trust or a
Fund, all shares have equal rights and shareholders of a Fund are entitled to a proportionate share of the assets of the Fund that are available for distribution and to a distribution of any general assets not attributable to a particular Fund 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, if applicable, are
described in the Funds’ prospectuses and Appendix S to this SAI.
Redemptions
Each Fund’s dividend, distribution and redemption policies
can be found in its prospectuses. 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 its Trust.
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Purchase, Redemption and Pricing of
Shares
Purchase and Redemption
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 supplements information in the Funds’ prospectuses.
Purchases of shares of the Funds may be effected on
days on which the NYSE is open for business (a “Business Day”). The Trust and the Distributor reserve the right to reject any purchase order. The issuance of shares is recorded on the books of the Trust, and share certificates are not
issued. Purchase orders for shares in the Funds that are received by the Distributor or by the Transfer Agent before the close of regular trading hours on the NYSE (currently 4:00 p.m., Eastern time) on any Business Day are priced according to the
net asset value determined on that day but are not executed until 4:00 p.m., Eastern time, on the Business Day on which immediately available funds in payment of the purchase price are received by the Fund’s Custodian.
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-dealer’s authorized designee, accepts the order. Customer orders will be priced at each Fund’s net asset value next computed after they are accepted by an authorized
broker-dealer or the broker’s 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 Trust’s 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 Fund’s 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 Fund’s 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 Fund’s transaction costs,
which would detract from Fund performance.
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 shareholder’s account. The Funds also may be required to provide a governmental agency with information about transactions that have occurred in a shareholder’s
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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.
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.
Offering Price
The share price of each Fund is based on each
Fund’s 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 Fund’s portfolio securities is determined in accordance with the Trust’s valuation procedures, which are approved by the Board. Except as described below under “Fair
Valuation of Portfolio Securities,” the Fund’s 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 Manager’s 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
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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.
Fair Valuation of Portfolio Securities.
Rather than using the methods described above, the Investment Manager’s valuation committee will, in accordance with valuation procedures, which are
approved by the Board, determine in good faith a security’s 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 security’s 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 Fund’s 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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TAXATION
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 U.S. 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 shareholder’s 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, variable annuity contracts or
variable life insurance contracts), 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 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 under the Code, 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 (generally, 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 income requirement under Code section 7704(c)(2). Certain of a Fund’s 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 Fund’s 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, 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 Fund’s 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 Fund’s 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 Fund’s 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 and certain commodity-linked ETFs.
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 Fund’s
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 shareholder’s 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 any net capital loss attributable to the portion of the taxable year after October 31 or, if there is no such loss, the net long-term capital loss or net short-term capital loss attributable to such portion
of the taxable year) or late-year ordinary loss (generally, the sum of its (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, if any, and its (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 in January of the following calendar year, however, the Fund and its shareholders will be treated as if the Fund paid the distribution on December
31 of the earlier year.
If a 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 Fund’s 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 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
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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, a 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 Carryovers
Capital losses in excess of capital gains (“net capital
losses”) are not permitted to be deducted against a Fund’s 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 carryover 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 over, 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 carryover 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 (defined as deductions and ordinary losses in excess of ordinary income).
The total capital loss carryovers below include
post-October losses, if applicable.
Capital Loss
Carryovers
Fund
|
Total
Capital Loss
Carryovers
|
Amount
Expiring in
|
|
Amount
not Expiring
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
Short-term
|
Long-term
|
For
Funds with fiscal period ending January 31
|
Diversified
Real Return Fund
(a)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
N/A
|
N/A
|
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
|
Adaptive
Alternatives Fund
(b)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
N/A
|
N/A
|
Adaptive
Risk Allocation Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
$0
|
$0
|
Diversified
Absolute Return Fund
(c)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|
N/A
|
N/A
|
Dividend
Income Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
$0
|
$0
|
HY
Municipal Fund
|
$82,107,134
|
$0
|
$1,471,699
|
$5,694,295
|
$17,741,445
|
$35,721,468
|
$4,244,605
|
|
$1,233,382
|
$16,000,240
|
For
Funds with fiscal period ending July 31
|
AMT-Free
OR Intermediate Muni Bond Fund
|
$2,500,118
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
$1,396,925
|
$1,103,193
|
Global
ILB Plus Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
$0
|
$0
|
Large
Cap Growth Fund
|
$97,477,526
|
$0
|
$89,356,296
|
$8,121,230
|
$0
|
$0
|
$0
|
|
$0
|
$0
|
Tax-Exempt
Fund
|
$71,867,306
|
$0
|
$0
|
$49,408,912
|
$1,455,576
|
$6,621,391
|
$14,381,427
|
|
$0
|
$0
|
Statement
of Additional Information – January 28, 2015
|
171
|
Fund
|
Total
Capital Loss
Carryovers
|
Amount
Expiring in
|
Amount
not Expiring
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
Short-term
|
Long-term
|
Ultra
Short Term Bond Fund
|
$25,604,221
|
$0
|
$685,751
|
$213,699
|
$2,249,159
|
$1,023,617
|
$11,369,928
|
$3,656,370
|
$6,405,697
|
For
Funds with fiscal period ending August 31
|
AP
Alternative Strategies Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
AP
Core Plus Bond Fund
|
$10,235,782
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$10,235,782
|
AP
Small Cap Equity Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Balanced
Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Contrarian
Core Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Emerging
Markets Fund
|
$6,941,797
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$6,941,797
|
$0
|
Global
Dividend Opportunity Fund
|
$13,204,583
|
$0
|
$0
|
$0
|
$13,204,583
|
$0
|
$0
|
$0
|
$0
|
Global
Energy and Natural Resources Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Global
Technology Growth Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Greater
China Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Mid
Cap Growth Fund
|
$57,409,354
|
$0
|
$13,701,986
|
$43,707,368
|
$0
|
$0
|
$0
|
$0
|
$0
|
Small
Cap Core Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Small
Cap Growth Fund I
|
$4,067,520
|
$0
|
$0
|
$4,067,520
|
$0
|
$0
|
$0
|
$0
|
$0
|
Value
and Restructuring Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
For
Funds with fiscal period ending October 31
|
AMT-Free
CT Intermediate Muni Bond Fund
|
$520,214
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$520,214
|
$0
|
AMT-Free
Intermediate Muni Bond Fund
|
$25,519,127
|
$0
|
$0
|
$0
|
$832,773
|
$62,558
|
$0
|
$17,008,274
|
$7,615,523
|
AMT-Free
MA Intermediate Muni Bond Fund
|
$920,854
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$920,854
|
$0
|
AMT-Free
NY Intermediate Muni Bond Fund
|
$1,827,610
|
$0
|
$0
|
$0
|
$946,916
|
$0
|
$0
|
$880,694
|
$0
|
CA
Tax-Exempt Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
International
Bond Fund
|
$356,702
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$298,597
|
$58,115
|
NY
Tax-Exempt Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Strategic
Income Fund
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
For
Funds with fiscal period ending December 31
|
Real
Estate Equity Fund
|
$28,782,277
|
$0
|
$13,260,397
|
$10,496,317
|
$5,025,563
|
$0
|
$0
|
$0
|
$0
|
(a)
|
The Fund commenced operations
on March 11, 2014, and therefore has no reporting information for periods prior to such date.
|
(b)
|
The Fund commenced operations
on January 27, 2015, and therefore has no reporting information for periods prior to such date.
|
(c)
|
The Fund is expected to
commence operations on or about February 19, 2015, and therefore has no reporting information for periods prior to such date.
|
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 Fund’s 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 Fund’s 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
Fund’s 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
Statement
of Additional Information – January 28, 2015
|
172
|
of the obligation, and depending
on market conditions and the credit quality of the bond, might not ever receive cash for such discount. OID on tax exempt bonds is generally not subject to U.S. federal income tax (but may be subject to the U.S. federal alternative minimum tax or
"AMT," as that term is defined below).
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 include 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, and depending on market conditions and the credit quality of the bond, might not ever be received. 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. 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: (1) whether a Fund should recognize market discount on a debt obligation and, if so, (2) the amount of market discount the Fund should recognize, (3) when a Fund may cease to accrue interest, OID or market discount, (4) when and to
what extent deductions may be taken for bad debts or worthless securities and (5) 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 is irrevocable without consent of the IRS, the Fund reduces the current interest taxable income from the bond by the amortized premium and reduces its tax 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 and the tax-exempt
interest available for exempt-interest dividends to shareholders 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, unless the option is subject to section 1256 of the Code, described below. 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 granted 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.
Statement
of Additional Information – January 28, 2015
|
173
|
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 Fund’s income. Under future U.S. Treasury
Regulations, any such transactions that are not directly related to a Fund’s 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 Fund’s 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 carryover 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 Fund’s 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 “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 U.S. Treasury Regulations. The character of the gain from constructive sales will depend upon a Fund’s 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 Fund’s 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 Fund’s 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 Code’s 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.
Statement
of Additional Information – January 28, 2015
|
174
|
In addition, a Fund’s 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 Fund’s 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 Fund’s 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 Fund’s 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 Fund’s 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 recipient’s basis in its shares, and (iii) thereafter, as gain from the sale or exchange of a capital asset. If a Fund’s 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 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 or commodity-linked 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 Fund’s 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 Fund’s
distributions to shareholders.
As described above, the Adaptive
Alternatives Fund expects to invest a substantial portion of its assets in the Columbia Intermediary Alternatives Fund (the Intermediary Fund). The Intermediary Fund, in turn, expects to invest substantially all of its assets in the Blackstone Fund.
If in any year the Blackstone Fund were to fail to qualify as a regulated investment company, such failure would likewise cause the Intermediary Fund, and, in turn, the Adaptive Alternatives Fund, to fail to so qualify. Please see
Qualification as a Regulated Investment Company
, above.
Any investment by a Fund in equity securities of a
REIT may result in the Fund’s receipt of cash in excess of the REIT’s 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 a 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 U.S. Treasury Regulations that have yet to be issued but may apply retroactively, a portion of a
Fund’s 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.
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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
Code’s 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 Fund’s investment in that vehicle would be treated as an investment in a
publicly traded partnership subject to taxation as a corporation, which would reduce the amount of income available for distribution by the vehicle to the Fund, and could adversely affect the Fund’s qualification for the asset diversification
test, and thus could adversely affect the Fund’s 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 Fund’s investments in one or more vehicles that are qualified publicly traded partnerships to 25% of the Fund’s total assets as of the end of each quarter of the Fund’s 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 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 PFIC’s 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 Fund’s 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 Fund’s 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. 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
Adaptive Alternatives Fund, AP – Alternative Strategies Fund and Diversified Absolute Return Fund are expected to be CFCs in which the Fund owning the Subsidiary will be a U.S. Shareholder. As a U.S. Shareholder, such a Fund is required to
include in gross income for U.S. federal income tax purposes all of a CFC’s “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 CFC’s 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 Fund’s 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
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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 a 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, a Subsidiary were to earn ECI in connection with its direct investment
activities, a portion or all of the Subsidiary’s income would be subject to these U.S. taxes. The Funds that own one or more Subsidiaries expect that, in general, the activities of the Subsidiaries will be conducted in such a manner that they
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 a Fund owning a Subsidiary subject to such taxes. The Fund does not expect that income from any Subsidiary will be eligible to be treated as qualified dividend income. In addition, the Fund does not expect that distributions
from any Subsidiary will be eligible for the dividends-received deduction.
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 Fund’s total return.
Taxation of Distributions
Except for exempt-interest dividends (defined below) paid by a
Fund, distributions paid out of a Fund’s 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 distributions on a Fund’s shares are generally subject to U.S. federal income tax as described herein to the extent they do not exceed the Fund’s realized income and gains, even though
such dividends and distributions may economically represent a return of a particular shareholder’s investment. Such distributions are likely to occur in respect of shares purchased at a time when the Fund’s 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 Fund’s net asset value also reflects unrealized losses. For U.S. federal income tax
purposes, a Fund’s earnings and profits, described above, are determined at the end of the Fund’s taxable year. Distributions in excess of a Fund’s current and accumulated earnings and profits will first be treated as a return of
capital up to the amount of a shareholder’s tax basis in his or her Fund shares and then as capital gain. A return of capital is not taxable, but it reduces a shareholder’s 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 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 Fund’s 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 state’s 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.
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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 Fund’s 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 the sale, redemption or exchange of Fund shares. In addition, for shares purchased, including shares purchased through dividend reinvestment, on or after January 1, 2012 the Funds (or the shareholder’s 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 Fund’s 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 Fund’s 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
Fund’s 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.
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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 Fund’s 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 company’s 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 Fund’s 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 shareholder’s income reported as tax-exempt for any particular distribution may be substantially different from the percentage of the Tax-Exempt Fund’s 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 Fund’s exempt-interest dividends received by the shareholder to all of the Tax-Exempt Fund’s dividends received by the shareholder
(excluding Capital Gain Dividends and any capital gains required to be included in the shareholder’s 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 state’s 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 Fund’s 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 shareholder’s “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 issuer’s bond counsel that interest on the issuer’s 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 Fund’s 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.
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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
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 within the period beginning 30 days before and ending 30 days 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 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
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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.
Special Tax Considerations
Pertaining to Adaptive Alternatives Fund’s Investment in the Intermediary Fund
Because the Adaptive Alternatives Fund invests a substantial
portion of its assets in shares of the Intermediary Fund, and the Intermediary Fund invests substantially all of its assets in shares of the Blackstone Fund, the Adaptive Alternatives Fund’s distributable income and gains will normally consist
substantially of distributions from the Intermediary Fund and income arising in respect of the disposition of shares of the Intermediary Fund; the Intermediary Fund’s distributable income and gains will in turn normally consist substantially
of dividend distributions from, and net gains on the disposition of shares of the Blackstone Fund. To the extent that the Intermediary Fund realizes net capital loss on its investment therein for a given taxable year, the Adaptive Alternatives Fund
will not be able to benefit from that loss until the Intermediary Fund realizes capital gain on its disposition of shares in the Blackstone Fund that can be reduced by that loss.
Because the Intermediary Fund will not be a
“publicly offered” regulated investment company within the meaning of the Code, for so long as the Adaptive Alternatives Fund will own all the shares of the Intermediary Fund, instead of being treated as realizing capital gain (or loss)
on its disposition of shares of the Intermediary Fund, the disposition will potentially cause the Adaptive Alternatives Fund to be treated as receiving a dividend taxable as ordinary income on up to the full amount of the proceeds thereof. If the
Adaptive Alternatives Fund disposes of fewer than all of its Intermediary Fund shares, the Adaptive Alternatives Fund will be treated as having received a Section 301 distribution upon the disposition of its shares. A Section 301 distribution is not
treated as a sale or exchange giving rise to capital gain or loss, but rather is treated as a dividend to the extent supported by the Intermediary Fund’s current and accumulated earnings and profits, with the excess treated as a return of
capital reducing the Adaptive Alternatives Fund’s tax basis in its shares, and thereafter as capital gain. Such treatment of the Adaptive Alternatives Fund’s disposition of Intermediary Fund shares will affect the amount and character of
income required to be distributed by both the Adaptive Alternatives Fund and the Intermediary Fund for the year in which the disposition occurs. It is possible that any such dividend will qualify as qualified dividend income taxable at long-term
capital gain rates; otherwise, it will be taxable as ordinary income and could cause shareholders of the Adaptive Alternatives Fund to recognize higher amounts of ordinary income than if it held shares of the Blackstone Fund directly.
As a result of the foregoing rules, and certain
other special rules, the amounts of net investment income and net capital gains that the Adaptive Alternatives Fund will be required to distribute to shareholders may be greater than such amounts would have been had it invested directly in the
investment held by the Intermediary Fund, i.e., shares of the Blackstone Fund, rather than investing in shares of the Intermediary Fund. For similar reasons, the character of distributions from the Adaptive Alternatives Fund (e.g., long-term capital
gain, eligibility for the dividends-received deduction, etc.) will not necessarily be the same as it would have been had it invested directly in the investments held by the Intermediary Fund.
The Intermediary Fund invests substantially all of
its assets in the Blackstone Fund. This will potentially affect the timing and character of the Intermediary Fund’s income and gains, and thus distributions to the Adaptive Alternatives Fund. For example, to the extent that the Blackstone Fund
realizes net capital loss in a given taxable year, the Intermediary Fund will not be able to benefit from that loss until (i) the Blackstone Fund realizes capital gain that can be reduced by that loss, or (ii) the Intermediary Fund recognizes its
share of that loss when it disposes of shares of the Blackstone Fund, and can thus offset distributions of net income or capital gains therefrom. Moreover, even in the latter case, a portion of the loss the Intermediary Fund recognizes may be
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. The Intermediary Fund also will not be able to offset any capital loss realized from its
disposition of Blackstone Fund shares against its ordinary income (including distributions of any net short-term capital gains realized by the Blackstone Fund). The Intermediary Fund’s ability to avail itself of losses, if any, it realizes on
the disposition of Blackstone Fund shares will also potentially be limited by the operation of the “wash sale” rules in certain circumstances. As discussed above, a wash sale occurs if the Intermediary Fund disposes of Blackstone Fund
shares at a loss and the Intermediary Fund acquires additional shares thereof within the period beginning 30 days before and ending 30 days after the date of the disposition. The wash-sale rules could defer losses in the Intermediary Fund’s
hands on sales of Blackstone Fund shares (to the extent such sales are wash sales) for extended periods of time.
Given the Adaptive Alternatives Fund’s
significant indirect investment in the Blackstone Fund through its investment in the Intermediary Fund, the tax characteristics of the Blackstone Fund and its investments will bear significantly on the tax characteristics, including the amount,
character and timing of the income, gain and loss resulting from the Adaptive Alternatives Fund’s investment therein. Among other things, it is not anticipated that a significant portion of the income Adaptive Alternatives Fund receives from
Intermediary Fund will qualify as qualified dividend income.
If, at the close of each quarter of the Adaptive
Alternatives Fund’s taxable year, at least 50% of its total assets consists of interests in regulated investment companies, including the Intermediary Fund, it will be a “qualified fund of funds.” Because the Intermediary Fund will
invest substantially all of its assets in the Blackstone Fund, so long as the Blackstone Fund qualifies as a
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regulated investment company, the Intermediary Fund and, in turn,
the Adaptive Alternatives Fund will be qualified funds of funds. In such case, each of the Intermediary Fund and Adaptive Alternatives Fund is permitted to elect to pass through to its shareholders foreign income and other similar taxes paid by it
in respect of non-U.S. investments held by it or by any regulated investment company in which it invests that itself elected to pass such taxes through to shareholders, so that shareholders of the Adaptive Alternatives Fund will be eligible to claim
a credit or deduction for such taxes. Even if the Adaptive Alternatives Fund or Intermediary Fund qualifies to make such election for any year, it may, in its sole discretion, determine not to do so. See
Foreign Taxes
above for more information.
Other Tax Considerations Pertaining
to Adaptive Alternatives Fund’s Investment in Underlying Funds and Certain Listed Private Equity Funds
The amounts of net investment income and net capital gains that the
Adaptive Alternatives Fund will be required to distribute to shareholders may be greater than such amounts would have been had it invested directly in the investments held by the Underlying Funds or certain listed private equity funds. For similar
reasons, the character of distributions from the Adaptive Alternatives Fund (e.g., long-term capital gain, eligibility for the dividends-received deduction, etc.) will not necessarily be the same as it would have been had it invested directly in the
investments held by the Underlying Funds or certain listed private equity funds.
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% net investment income 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 corporation’s stock and by
the shareholders with respect to the Fund’s shares. If 95% or more of a Fund’s 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
Fund’s 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
Fund’s gross income is attributable to qualified dividend income, then only the portion of the Fund’s 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. 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% net investment
income 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 taxpayer’s modified adjusted gross income exceeds certain threshold amounts or (2)
the taxpayer’s “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 shareholder’s 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
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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, 2015, distributions made to foreign shareholders and properly reported by a Fund as “interest-related dividends” are exempt from U.S.
federal income tax withholding. The exemption for interest-related dividends does not apply to any distribution to a foreign shareholder (i) to the extent that the dividend is attributable to certain interest on an obligation if the foreign
shareholder is the issuer or is a 10% shareholder of the issuer, (ii) that is within certain foreign countries that have inadequate information exchange with the United States, or (iii) to the extent the dividend is attributable to interest paid by
a person that is a related person of the foreign shareholder and the foreign shareholder is a controlled foreign corporation. Interest-related dividends are generally dividends attributable to the Fund’s 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 is 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 shareholder’s 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
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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, 2015, a distribution to a foreign shareholder attributable to the Fund’s 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”) is generally not subject to U.S. federal income or withholding tax unless clause (i),
(ii) or (iii) above applies to such distributions.
The 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, 2015. 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, 2015, 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, 2015, 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 corporation’s 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 Fund’s foreign shareholders. 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, 2015, 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, 2015, 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, 2015, 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, 2015, and what the terms of any such extension would be,
including whether any such extension would have retroactive effect.
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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, W-8BEN-E 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 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 shareholder’s distributions for the year by the amount of the tax that relates to such shareholder’s 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.
Tax Shelter Reporting Regulations
Under U.S. 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 taxpayer’s treatment of the loss is proper. Shareholders should consult with their tax advisors
to determine the applicability of these regulations in light of their individual circumstances.
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 Fund’s “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
Sections 1471-1474 of the Code,
and the U.S. Treasury Regulations and IRS guidance issued thereunder (collectively, “FATCA”), generally require a Fund to obtain information sufficient to identify the status of each of its shareholders under FATCA or under an applicable
intergovernmental agreement (“IGA”) between the United States and a foreign government, as described more fully below. If a shareholder fails to provide the requested information or otherwise fails to comply with FATCA or an IGA, the
Fund may be required to withhold under FATCA at a rate of 30% with respect to that shareholder on ordinary dividends it pays after June 30, 2014 (or, in certain cases, after later dates), and 30% of certain Capital Gain Dividends and gross
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proceeds of the sale, redemption or exchange of Fund shares it pays
after December 31, 2016. 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 shareholder’s direct
and indirect owners, to establish the shareholder’s 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 IGA 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 applicable IGAs 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 investor’s own situation, including investments through an intermediary.
The Subsidiary
Adaptive Alternatives Fund, AP
– Alternative Strategies Fund and Diversified Absolute Return Fund (for purposes of this section, the “Fund”) intends to invest a portion of its assets in one or more of its wholly-owned subsidiaries (previously defined
collectively as the “Subsidiary”), which will be classified as a corporation for U.S. federal tax purposes. Foreign corporations, such as the Subsidiary, will generally not be subject to U.S. federal income tax unless it is deemed to be
engaged in a United States trade or business. The Subsidiary intends to conduct its activities in a manner that is expected to meet the requirements of a safe harbor under Section 864(b)(2) of the Code under which the Subsidiary may engage in
trading in stocks or securities or certain commodities for its own account without being deemed to be engaged in a United States trade or business. However, if certain of the Subsidiary’s activities were deemed not to be of the type described
in the safe harbor, the activities of the Subsidiary may constitute a United States trade or business.
Even if the Subsidiary is not engaged in a United
States trade or business, it may be subject to a U.S. withholding tax at a rate of 30% on all or a portion of its United States source gross income that is not effectively connected with a United States trade or business.
The Subsidiary will be treated as a CFC. The Fund
will be treated as a “U.S. Shareholder” of the Subsidiary. As a result, the Fund will be required to include in its gross income all of the Subsidiary’s “subpart F income”. It is expected that all of the
Subsidiary’s income will be “subpart F income”. “Subpart F income” is generally treated as ordinary income. If a net loss is realized by the Subsidiary, such loss is not generally available to offset the income of the
Fund. The recognition by the Fund of the Subsidiary’s “subpart F income” will increase the Fund’s tax basis in the Subsidiary. Distributions by the Subsidiary to the Fund will not be taxable to the extent of its previously
undistributed “subpart F income”, and will reduce the Fund’s tax basis in the subsidiary.
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CONTROL PERSONS AND PRINCIPAL HOLDERS
OF SECURITIES
Management
Ownership
As of
December 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
|
Adaptive
Risk Allocation
|
Class
A
|
1.08%
|
Adaptive
Risk Allocation
|
Class
Z
|
18.77%
|
Balanced
Fund
|
Class
K
|
3.50%
|
Greater
China Fund
|
Class
Z
|
2.59%
|
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 Fund’s outstanding shares (Principal Holders) or 25% or more of a Fund’s outstanding
shares (Control Persons). A shareholder who beneficially owns more than 25% of a Fund’s 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 Fund’s 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, if any, 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 Trust’s registration
statement with respect to such Fund.
Funds with
Fiscal Period 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
of fund
(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
|
100.00%
|
99.98%
(a)
|
Class
R4
|
100.00%
|
Class
R5
|
100.00%
|
Class
Z
|
100.00%
|
Funds with Fiscal Period
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
|
24.26%
|
N/A
|
Class
C
|
48.02%
|
|
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
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN AKSHAY RAJPUT
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
R4
|
71.27%
|
82.19%
(a)
|
Class
W
|
100.00%
|
Statement
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187
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
JPMCB
NA CUST FOR SC529 PLAN
COLUMBIA AGGRESSIVE GROWTH
529 PORTFOLIO
14201N 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%
|
N/A
|
|
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
|
|
NORTHERN
TRUST AS TRUSTEE
FBO GRAND TRUNK WESTERN RR CO
PO BOX 92956
CHICAGO IL 60675-2956
|
Class
Z
|
8.29%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
188
|
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
A
|
14.67%
|
N/A
|
Class
C
|
9.51%
|
Class
R4
|
28.73%
|
|
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
|
35.60%
|
N/A
|
Class
C
|
6.02%
|
Class
W
|
99.99%
|
|
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
|
|
JPMCB
NA CUST FOR
COLUMBIA LIFEGOAL GROWTH
PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
27.73%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
189
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
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, 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
|
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
|
14.70%
|
N/A
|
Class
C
|
17.53%
|
Class
Z
|
8.03%
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
34.46%
|
N/A
|
Class
C
|
24.47%
|
Class
R4
|
60.41%
|
Class
R5
|
68.87%
|
Class
Y
|
49.34%
|
|
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
|
37.87%
|
N/A
|
Class
R5
|
16.60%
|
|
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
|
Funds with Fiscal Period
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
|
10.85%
|
N/A
|
Class
B
|
13.41%
|
Class
C
|
11.16%
|
Statement
of Additional Information – January 28, 2015
|
190
|
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
|
89.66%
|
N/A
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
I
|
100.00%
|
N/A
(a)
|
Class
R4
|
35.90%
|
Class
W
|
100.00%
|
|
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
|
19.78%
|
N/A
|
Class
C
|
9.38%
|
|
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
|
|
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
|
26.05%
|
77.50%
|
Class
B
|
34.93%
|
Class
T
|
23.49%
|
Class
Y
|
99.96%
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
10.63%
|
N/A
|
Class
Z
|
5.40%
|
Statement
of Additional Information – January 28, 2015
|
191
|
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
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
|
7.62%
|
N/A
|
Class
B
|
5.23%
|
Corporate
Income Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
38.52%
|
N/A
|
Class
B
|
17.18%
|
Class
C
|
23.27%
|
Class
W
|
99.99%
|
|
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
|
35.42%
|
N/A
|
Class
Z
|
5.43%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
N/A
|
N/A
|
44.16%
(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
|
25.32%
|
N/A
|
Class
C
|
9.71%
|
|
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
|
|
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
|
Statement
of Additional Information – January 28, 2015
|
192
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
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
|
25.72%
|
N/A
|
Class
A
|
6.05%
|
Class
C
|
14.91%
|
Class
Z
|
49.15%
|
|
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
|
6.00%
|
N/A
|
Class
C
|
7.40%
|
Class
R5
|
40.27%
|
Class
Z
|
6.65%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
B
|
8.42%
|
N/A
|
Class
C
|
9.18%
|
Class
R4
|
65.97%
|
Class
R5
|
12.64%
|
|
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
|
30.95%
|
25.33%
|
Class
B
|
27.42%
|
Class
C
|
14.51%
|
Class
W
|
100.00%
|
|
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
|
|
CHARLES
SCHWAB & CO INC
SPECIAL CUSTODY A/C
FBO CUSTOMERS
ATTN MUTUAL FUND DEPT
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
|
Class
R5
|
15.98%
|
N/A
|
Class
Z
|
11.77%
|
|
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
|
Statement
of Additional Information – January 28, 2015
|
193
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
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
|
7.57%
|
N/A
|
Class
C
|
12.91%
|
Class
Z
|
58.59%
|
|
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
|
12.15%
|
N/A
|
Class
R4
|
6.64%
|
|
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
|
5.40%
|
N/A
|
Class
Y
|
8.30%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
C
|
7.33%
|
N/A
|
Class
R4
|
51.57%
|
Class
R5
|
55.22%
|
|
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
|
Statement
of Additional Information – January 28, 2015
|
194
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
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
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
9.18%
|
N/A
|
Class
B
|
16.15%
|
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
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
B
|
19.54%
|
N/A
|
Class
C
|
10.13%
|
|
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
|
54.46%
|
N/A
|
Class
Z
|
6.35%
|
|
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
|
Statement
of Additional Information – January 28, 2015
|
195
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
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
|
7.89%
|
N/A
|
Class
B
|
5.52%
|
Class
C
|
17.03%
|
|
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
|
12.35%
|
N/A
|
Class
Z
|
18.42%
|
|
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
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
5.68%
|
N/A
|
Class
B
|
15.20%
|
Class
C
|
6.11%
|
Class
R4
|
25.09%
|
Class
R5
|
21.90%
|
Class
Z
|
6.37%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
B
|
14.82%
|
N/A
|
Class
C
|
8.13%
|
Class
R4
|
21.02%
|
|
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
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
8.09%
|
N/A
|
Class
C
|
9.74%
|
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
|
98.11%
|
N/A
|
Class
Z
|
9.97%
|
Statement
of Additional Information – January 28, 2015
|
196
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
N/A
|
N/A
|
31.27%
(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
|
38.37%
|
N/A
|
Class
C
|
28.21%
|
|
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
|
|
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
|
16.12%
|
N/A
|
Class
B
|
40.05%
|
Class
Z
|
27.23%
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
C
|
5.06%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
197
|
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
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
|
9.05%
|
N/A
|
Class
C
|
8.08%
|
Funds with Fiscal Period
Ending May 31:
Except as otherwise indicated, the information
below is as of August 31, 2014:
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
|
33.17%
|
N/A
|
Class
B
|
33.71%
|
Class
C
|
15.12%
|
Class
W
|
98.58%
|
|
CHARLES
SCHWAB & CO INC
SPECIAL CUSTODY
FBO CUSTOMERS
ATTN MUTUAL FUND DEPT
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
|
Class
R5
|
29.12%
|
N/A
|
Class
Z
|
8.84%
|
Class
T
|
16.23%
|
|
COLUMBIA
THERMOSTAT FUND
C/O PAULA RYAN
227 W MONROE ST
STE 3000
CHICAGO IL 60606-5018
|
Class
I
|
22.81%
|
N/A
|
|
DCGT
AS TTEE AND /OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
|
Class
R
|
5.91%
|
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
|
40.59%
|
N/A
|
|
FIIOC
FBO RADNET 401K PLAN
100 MAGELLAN WAY
COVINGTON KY 41015-1987
|
Class
R4
|
5.36%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
B
|
13.77%
|
N/A
|
Class
C
|
8.23%
|
|
JPMCB
NA CUST FOR
COLUMBIA INCOME BUILDER FUND
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
31.36%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
198
|
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
|
45.83%
|
N/A
|
|
JPMORGAN
CHASE AS TRUSTEE
FBO THE BNA 401 K PLAN
11500 OUTLOOK ST
OVERLAND PARK KS 66211-1804
|
Class
Y
|
21.49%
|
N/A
|
|
JP
MORGAN CHASE BANK TTEE
FBO TIAA-CREF RETIREMENT PLAN PROGRAM
3 METROTECH CENTER 5TH FLOOR
BROOKLYN NY 11201-8401
|
Class
Y
|
41.81%
|
N/A
|
|
LPL
FINANCIAL
FBO CUSTOMER ACCOUNTS
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
C
|
6.75%
|
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
A
|
7.53%
|
30.90%
|
Class
B
|
19.59%
|
Class
C
|
18.86%
|
Class
R
|
12.15%
|
Class
R4
|
7.71%
|
Class
T
|
16.63%
|
Class
Z
|
48.39%
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
C
|
8.71%
|
N/A
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
13.27%
|
N/A
|
Class
C
|
8.47%
|
Class
R
|
5.32%
|
Class
R4
|
33.87%
|
Class
R5
|
38.69%
|
Class
Y
|
26.85%
|
Class
Z
|
17.05%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
B
|
8.49%
|
N/A
|
Class
C
|
7.37%
|
Class
R4
|
20.86%
|
|
PIMS/PRUDENTIAL
RETIREMENT
AS NOMINEE FOR THE TTEE/CUST PL
MIAMI CHILDREN'S HEALTH SYSTEM
3100 SW 62ND AVE
MIAMI FL 33155-3009
|
Class
R4
|
8.22%
|
N/A
|
|
RAYMOND
JAMES
FBO OMNIBUS FOR MUTUAL FUNDS
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
|
Class
C
|
9.30%
|
N/A
|
|
TD
AMERITRADE INC FOR THE
EXCLUSIVE BENEFIT OF OUR CLIENTS
PO BOX 2226
OMAHA NE 68103-2226
|
Class
R5
|
9.94%
|
N/A
|
|
UBS
WM USA
OMNI ACCOUNT M/F
ATTN: DEPARTMENT MANAGER
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
Class
C
|
6.46%
|
N/A
|
HY
Municipal Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
32.65%
|
N/A
|
Class
B
|
5.17%
|
Class
C
|
15.21%
|
Statement
of Additional Information – January 28, 2015
|
199
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
CHARLES
SCHWAB & CO INC
SPECIAL CUSTODY
FBO CUSTOMERS
ATTN MUTUAL FUND DEPT
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
|
Class
R5
|
48.53%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
A
|
16.24%
|
N/A
|
Class
B
|
42.02%
|
Class
C
|
11.24%
|
|
LPL
FINANCIAL
FBO CUSTOMER ACCOUNTS
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
C
|
7.61%
|
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
|
49.07%
|
62.68%
|
Class
C
|
21.10%
|
Class
A
|
8.45%
|
Class
Z
|
76.13%
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
A
|
5.09%
|
N/A
|
Class
C
|
18.53%
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
9.23%
|
N/A
|
Class
R4
|
34.38%
|
Class
R5
|
10.19%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
R4
|
65.30%
|
N/A
|
Class
R5
|
40.60%
|
|
RAYMOND
JAMES
FBO OMNIBUS FOR MUTUAL FUNDS
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
|
Class
C
|
6.38%
|
N/A
|
|
UBS
WM USA
OMNI ACCOUNT M/F
ATTN: DEPARTMENT MANAGER
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
Class
C
|
8.69%
|
N/A
|
Adaptive
Risk Allocation Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
80.57%
|
97.90%
|
Class
C
|
87.87%
|
Class
W
|
100.00%
|
|
CHARLES
SCHWAB & CO INC
SPECIAL CUSTODY
FBO CUSTOMERS
ATTN MUTUAL FUND DEPT
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
|
Class
A
|
12.21%
|
N/A
|
Class
R5
|
91.60%
|
Class
Z
|
22.41%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
K
|
100.00%
|
N/A
(a)
|
Class
R
|
100.00%
|
Class
R5
|
8.40%
|
|
DONNA
C KNIGHT & JEFFREY L KNIGHT
TTEES DONNA C KNIGHT LIVING TRUST
15 SYLVAN LN
WESTON MA 02493-1027
|
Class
Z
|
49.60%
|
N/A
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
C
|
7.52%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
200
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
STATE
STREET BK & TR IRA
DOUGLAS A HACKER
18172 LAGOS WAY
NAPLES FL 34110-2762
|
Class
Z
|
23.72%
|
N/A
|
Funds with Fiscal Period
Ending July 31:
Except as otherwise indicated, the
information below is as of October 31, 2014:
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
AMT-Free
OR Intermediate Muni Bond Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
32.88%
|
N/A
|
Class
C
|
13.22%
|
|
CHARLES
SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUND DEPT
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
|
Class
R5
|
43.58%
|
N/A
|
Class
Z
|
16.77%
|
Class
A
|
5.91%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
B
|
94.75%
|
N/A
(a)
|
Class
R4
|
9.31%
|
|
EDWARD
D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3729
|
Class
A
|
21.40%
|
N/A
|
Class
B
|
5.25%
|
Class
C
|
10.09%
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
A
|
16.04%
|
N/A
|
Class
C
|
32.69%
|
|
MERRILL
LYNCH PIERCE FENNER &
SMITH INC
FOR THE SOLE BENEFIT OF IT S CUSTOM
4800 DEER LAKE DR E
JACKSONVILLE FL 32246-6484
|
Class
Z
|
7.87%
|
N/A
|
Class
C
|
8.05%
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
C
|
21.47%
|
N/A
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
R5
|
21.33%
|
N/A
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
R4
|
90.69%
|
N/A
|
|
RAYMOND
JAMES
FBO OMNIBUS FOR MUTUAL FUNDS
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
|
Class
A
|
6.00%
|
N/A
|
Class
C
|
5.32%
|
|
TD
AMERITRADE INC FOR THE
EXCLUSIVE BENEFIT OF OUR CLIENTS
PO BOX 2226
OMAHA NE 68103-2226
|
Class
R5
|
33.81%
|
N/A
|
Global
ILB Plus Fund
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
W
|
100.00%
|
99.78%
(a)
|
Class
Z
|
100.00%
|
Statement
of Additional Information – January 28, 2015
|
201
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
CONSERVATIVE PORTFOLIO
14201 DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
28.05%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE CONSERVATIVE PORTFOLIO
14201 DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
33.33%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA DIVERSIFIED
REAL RETURN FUND
14201 DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
38.40%
|
N/A
|
Large
Cap Growth Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
7.66%
|
N/A
|
Class
B
|
8.05%
|
Class
C
|
7.07%
|
Class
W
|
100.00%
|
|
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
|
15.78%
|
N/A
|
|
ASCENSUS
TRUST COMPANY FBO
FINANCIAL NETWORK AUDIT, LLC 401(K)
PO BOX 10758
FARGO ND 58106-0758
|
Class
R
|
18.33%
|
N/A
|
|
BRIDGET
NEUMANN
ADVANTAGE PLAN TRUST
END DATE 11/17/2026
C/0 CHRISTOPHER M NEUMANN
101 RAMBLE WOOD DR
SKANEATELES NY 13152-2275
|
Class
F
|
15.78%
|
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
|
58.24%
|
N/A
|
Class
R5
|
16.40%
|
Class
Z
|
6.50%
|
|
CLAIRE
NEUMANN
ADVANTAGE PLAN TRUST
TRUST END DATE 09/01/2030
ROBERT S NEUMANN
101 RAMBLE WOOD DR
SKANEATELES NY 13152-2275
|
Class
F
|
15.65%
|
N/A
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
Y
|
100.00%
|
N/A
(a)
|
|
FIIOC
FBO
HYUNDAI 401(K) PLAN
100 MAGELLAN WAY # KW1C
COVINGTON KY 41015-1987
|
Class
R4
|
42.39%
|
N/A
|
|
FIRST
CLEARING LLC
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
C
|
7.15%
|
N/A
|
Class
K
|
37.03%
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
AGGRESSIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
12.53%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
202
|
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
|
45.68%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE CONSERVATIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
10.48%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
15.57%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA LIFEGOAL GROWTH
PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
15.74%
|
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
|
15.69%
|
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
|
15.65%
|
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
R
|
42.85%
|
N/A
|
Class
T
|
24.89%
|
Class
C
|
21.45%
|
Class
Z
|
30.19%
|
|
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
|
15.71%
|
N/A
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
C
|
6.24%
|
N/A
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
R4
|
11.66%
|
N/A
|
Class
Z
|
5.66%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
R4
|
39.00%
|
N/A
|
Class
R5
|
21.70%
|
|
STATE
STREET CORPORATION
FBO ADP ACCESS
1 LINCOLN ST
BOSTON MA 02111-2901
|
Class
R
|
21.11%
|
N/A
|
|
TD
AMERITRADE INC FOR THE
EXCLUSIVE BENEFIT OF OUR CLIENTS
PO BOX 2226
OMAHA NE 68103-2226
|
Class
R5
|
60.48%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
203
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
UBS
WM USA
OMNI ACCOUNT M/F
ATTN: DEPARTMENT MANAGER
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
Class
C
|
5.08%
|
N/A
|
Tax-Exempt
Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
5.71%
|
N/A
|
Class
B
|
14.09%
|
Class
C
|
17.98%
|
|
EDWARD
D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3729
|
Class
A
|
10.11%
|
N/A
|
Class
B
|
5.86%
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
B
|
13.55%
|
N/A
|
Class
C
|
9.85%
|
|
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
|
12.94%
|
N/A
|
Class
C
|
16.14%
|
Class
Z
|
50.27%
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
C
|
8.47%
|
N/A
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
ATTN MUTUAL FUNDS DEPT 5TH FL
499 WASHINGTON BLVD
JERSEY CITY NJ 07310-2010
|
Class
R5
|
5.92%
|
N/A
|
Class
R4
|
19.16%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
R4
|
80.15%
|
N/A
|
Class
R5
|
46.73%
|
|
TD
AMERITRADE INC FOR THE
EXCLUSIVE BENEFIT OF OUR CLIENTS
PO BOX 2226
OMAHA NE 68103-2226
|
Class
R5
|
44.29%
|
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
|
Shares
|
93.41%
|
N/A
|
Funds with Fiscal Period
Ending August 31:
Except as otherwise indicated, the
information below is as of November 30, 2014:
Fund
|
Shareholder
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%
|
100.00%
|
AP
Core Plus Bond Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
100.00%
|
100.00%
|
AP
Small Cap Equity Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
100.00%
|
100.00%
|
Statement
of Additional Information – January 28, 2015
|
204
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
Balanced
Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE
MINNEAPOLIS MN 55402-2405
|
Class
C
|
34.76%
|
N/A
|
Class
A
|
22.82%
|
Class
B
|
23.57%
|
|
CHARLES
SCHWAB & CO INC
SPECIAL CUSTODY ACCT FOR EXCLUSIVE
OF CUSTOMERS
ATTN:MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
|
Class
Z
|
5.16%
|
N/A
|
|
DCGT
AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
|
Class
R
|
17.35%
|
N/A
|
|
FIIOC
FBO
CAMBRIDGE ISOTOPE LABORATORIES INC
401(K) PLAN & TRUST
100 MAGELLAN WAY
COVINGTON KY 41015-1987
|
Class
R4
|
8.89%
|
N/A
|
|
FIIOC
FBO
HELIX ENERGY SOLUTIONS GROUP INC
EMPLOYEES 401(K) SAVINGS PLAN
100 MAGELLAN WAY # KW1C
COVINGTON KY 41015-1987
|
Class
R4
|
6.78%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
C
|
11.07%
|
N/A
|
Class
Z
|
7.84%
|
|
ING
FUND OPERATIONS TTEE
FBO ING NATIONAL TRUST
1 ORANGE WAY
WINDSOR CT 06095-4773
|
Class
Y
|
7.18%
|
N/A
|
|
LPL
FINANCIAL
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
Z
|
6.69%
|
N/A
|
|
MERRILL
LYNCH PIERCE FENNER &
SMITH INC
FOR THE SOLE BENEFIT OF IT S CUSTOM
4800 DEER LAKE DR E
JACKSONVILLE FL 32246-6484
|
Class
Z
|
16.48%
|
N/A
|
Class
B
|
7.35%
|
Class
C
|
10.37%
|
Class
R
|
26.34%
|
Class
R4
|
16.75%
|
|
MG
TRUST COMPANY TRUSTEE
VIRGINIA HEALTH SERVICES INC
717 17TH ST STE 1300
DENVER CO 80202-3304
|
Class
R
|
5.28%
|
N/A
|
|
MID
ATLANTIC TRUST COMPANY
CUST FBO
HODGE COMPANY
1251 WATERFRONT PL STE 525
PITTSBURGH PA 15222-4228
|
Class
Y
|
7.02%
|
N/A
|
|
MID-ATLANTIC
TRUST COMPANY CUST
FBO HEARTLAND FINANCIAL RETIREMENT
PLAN
1251 WATERFRONT PL STE 525
PITTSBURGH PA 15222-4228
|
Class
Y
|
22.65%
|
N/A
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
C
|
8.81%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
205
|
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
R5
|
15.89%
|
N/A
|
Class
Y
|
10.89%
|
Class
Z
|
7.21%
|
Class
R4
|
19.13%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
C
|
6.46%
|
N/A
|
Class
R4
|
30.97%
|
Class
R5
|
11.38%
|
|
RAYMOND
JAMES
FBO OMNIBUS FOR MUTUAL FUNDS
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
|
Class
C
|
5.26%
|
N/A
|
|
TAYNIK
& CO
C/O INVESTORS BANK & TRUST CO
200 CLARENDON ST FL 17
BOSTON MA 02116-5097
|
Class
R4
|
10.83%
|
N/A
|
Class
R5
|
52.15%
|
|
WELLS
FARGO BANK FBO
1525 W W T HARRIS BLVD
CHARLOTTE NC 28262-8522
|
Class
K
|
94.65%
|
N/A
|
Contrarian
Core Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
45.66%
|
N/A
|
Class
B
|
20.27%
|
Class
C
|
15.65%
|
Class
W
|
100.00%
|
|
ASCENSUS
TRUST COMPANY FBO
PATHOLOGY CONSULTANTS OF SOUTH BROW
PO BOX 10758
FARGO ND 58106-0758
|
Class
Y
|
5.71%
|
N/A
|
|
ASCENSUS
TRUST COMPANY FBO
ZAIS GROUP, LLC PROFIT SHARING PLAN
PO BOX 10758
FARGO ND 58106-0758
|
Class
Y
|
7.42%
|
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
R4
|
13.00%
|
N/A
|
Class
R5
|
19.71%
|
Class
K
|
97.32%
|
|
FIIOC
FBO
MAZAK CORPORATION
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
|
Class
R4
|
8.03%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
C
|
6.42%
|
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
|
60.74%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
AGGRESSIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
13.22%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE AGGRESSIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
35.86%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
206
|
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
|
5.68%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
23.65%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA LIFEGOAL GROWTH
PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
13.46%
|
N/A
|
|
LPL
FINANCIAL
FBO CUSTOMER ACCOUNTS
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
C
|
5.88%
|
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
|
29.73%
|
N/A
|
Class
Z
|
35.19%
|
Class
C
|
19.42%
|
Class
R
|
35.85%
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
C
|
10.40%
|
N/A
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
5.04%
|
N/A
|
Class
C
|
10.16%
|
Class
R5
|
57.95%
|
Class
Z
|
7.70%
|
Class
R4
|
20.82%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
C
|
5.99%
|
N/A
|
Class
R4
|
6.01%
|
Class
R5
|
9.54%
|
|
PIMS/PRUDENTIAL
RETIREMENT
AS NOMINEE FOR THE TTEE
NEXCOM 401(K) PLAN
3280 VIRGINIA BEACH BLVD
VIRGINIA BCH VA 23452-5724
|
Class
R4
|
20.36%
|
N/A
|
|
RAYMOND
JAMES
FBO OMNIBUS FOR MUTUAL FUNDS
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
|
Class
C
|
7.39%
|
N/A
|
|
SAMMONS
FINANCIAL NETWORK LLC
4546 CORPORATE DR STE 100
WEST DES MOINES IA 50266-5911
|
Class
R
|
13.54%
|
N/A
|
|
SAXON
& CO
VI OMNIBUS ACCOUNT VICA
P O BOX 7780-1888
PHILADELPHIA PA 19182-0001
|
Class
Y
|
25.91%
|
N/A
|
|
STANDARD
INSURANCE COMPANY
1100 SW 6TH AVE
ATTN: SEP ACCT
PORTLAND OR 97204-1093
|
Class
R4
|
5.45%
|
N/A
|
|
STIFEL
NICOLAUS & CO INC
EXCLUSIVE BENEFIT OF CUSTOMERS
501 N BROADWAY
SAINT LOUIS MO 63102-2188
|
Class
Z
|
5.47%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
207
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
TODD
REACH TRUSTEE FBO
KAB LABS INC 401K RETIREMENT PLAN
C/O FASCORE LLC
8515 E ORCHARD RD # 2T2
GREENWOOD VLG CO 80111-5002
|
Class
R
|
6.46%
|
N/A
|
Emerging
Markets Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
21.81%
|
N/A
|
Class
B
|
30.58%
|
Class
C
|
15.71%
|
Class
W
|
97.63%
|
|
ASCENSUS
TRUST COMPANY FBO
CONCUR TECHNOLOGIES, INC. 401(K) PL
PO BOX 10758
FARGO ND 58106-0758
|
Class
Y
|
81.53%
|
N/A
|
|
ASCENSUS
TRUST COMPANY FBO
MARSHALL WACE NORTH AMERICA LP 401(k)
PO BOX 10758
FARGO ND 58106-0758
|
Class
R5
|
9.55%
|
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
|
50.62%
|
N/A
|
Class
R5
|
9.13%
|
|
FIIOC
FBO
RGM ADVISORS, LLC 401K P/S PLAN
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
|
Class
Y
|
14.35%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
K
|
47.85%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
AGGRESSIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
19.61%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE AGGRESSIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
40.64%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
11.67%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA LIFEGOAL GROWTH
PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
27.12%
|
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
|
91.38%
|
62.90%
|
Class
C
|
16.52%
|
Class
R5
|
6.09%
|
Class
R
|
58.74%
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
R4
|
7.58%
|
N/A
|
Class
R5
|
41.76%
|
Statement
of Additional Information – January 28, 2015
|
208
|
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
R4
|
91.20%
|
N/A
|
|
RAYMOND
JAMES
FBO OMNIBUS FOR MUTUAL FUNDS
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
|
Class
C
|
6.83%
|
N/A
|
|
TD
AMERITRADE TRUST COMPANY
ATTN: HOUSE
P.O. BOX 17748
DENVER CO 80217-0748
|
Class
R5
|
12.70%
|
N/A
|
|
TD
AMERITRADE TRUST COMPANY
PO BOX 17748
DENVER CO 80217-0748
|
Class
R
|
9.26%
|
N/A
|
Global
Dividend Opportunity Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
10.26%
|
N/A
|
Class
B
|
12.66%
|
Class
C
|
10.00%
|
|
CHARLES
SCHWAB & CO INC
SPECIAL CUSTODY A/C FOR BENFT CUST
ATTN MUTUAL FUND
101 MONTGOMERY STREET
SAN FRANCISCO CA 94104-4151
|
Class
A
|
5.88%
|
N/A
|
Class
B
|
12.71%
|
Class
C
|
6.62%
|
Class
Z
|
6.81%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
R5
|
7.87%
|
N/A
(a)
|
Class
W
|
100.00%
|
Class
Y
|
100.00%
|
|
FIIOC
FBO
CORD MOVING & STORAGE 401(K) PLAN
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
|
Class
R
|
8.88%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
A
|
5.42%
|
N/A
|
Class
B
|
14.93%
|
Class
C
|
6.64%
|
|
JPMCB
NA CUST FOR
COLUMBIA INCOME BUILDER FUND
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
65.64%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA LIFEGOAL GROWTH
PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
34.36%
|
N/A
|
|
LPL
FINANCIAL
FBO CUSTOMER ACCOUNTS
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
C
|
9.45%
|
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
|
7.73%
|
N/A
|
Class
B
|
15.57%
|
Class
C
|
14.66%
|
|
MG
TRUST COMPANY CUST FBO
CREATIVE CONCEPTS OF ORLANDO INC 4
717 17TH ST STE 1300
DENVER CO 80202-3304
|
Class
R
|
6.69%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
209
|
Fund
|
Shareholder
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
|
8.08%
|
N/A
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
7.23%
|
N/A
|
Class
B
|
6.06%
|
Class
R4
|
23.60%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
A
|
5.53%
|
N/A
|
Class
R4
|
73.33%
|
|
RELIANCE
TRUST CO CUST
FBO MASSMUTUAL OMNIBUS PLL/SMF
PO BOX 48529
ATLANTA GA 30362-1529
|
Class
R
|
75.41%
|
N/A
|
|
TD
AMERITRADE INC FOR THE
EXCLUSIVE BENEFIT OF OUR CLIENTS
PO BOX 2226
OMAHA NE 68103-2226
|
Class
R5
|
92.13%
|
N/A
|
|
UBS
WM USA
OMNI ACCOUNT M/F
ATTN: DEPARTMENT MANAGER
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
Class
C
|
13.60%
|
N/A
|
Global
Energy and Natural Resources Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
23.72%
|
N/A
|
Class
B
|
24.20%
|
Class
C
|
24.49%
|
|
BAILEY
REHABILITATION SERVICES TTEE
BAILEY REHABILITATION SERVICES INC
C/O FASCORE LLC
8515 E ORCHARD RD # 2T2
GREENWOOD VLG CO 80111-5002
|
Class
R
|
5.60%
|
N/A
|
|
CAPITAL
BANK & TRUST CO TTEE FBO
ATS AUTOMATION INC 401K
C/O FASCORE LLC
8515 E ORCHARD RD # 2T2
GREENWOOD VLG CO 80111-5002
|
Class
R
|
6.28%
|
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
|
12.60%
|
N/A
|
Class
Z
|
37.04%
|
Class
K
|
8.94%
|
|
FIRST
CLEARING LLC
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
K
|
87.41%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
B
|
7.57%
|
N/A
|
Class
C
|
11.82%
|
|
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
|
6.95%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA LIFEGOAL GROWTH
PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
99.99%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
210
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
LPL
FINANCIAL
FBO CUSTOMER ACCOUNTS
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
C
|
8.81%
|
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
C
|
8.72%
|
N/A
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
R5
|
83.15%
|
N/A
|
Class
Z
|
17.42%
|
Class
R4
|
6.47%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
C
|
7.77%
|
N/A
|
Class
R4
|
93.18%
|
|
RAYMOND
JAMES
FBO OMNIBUS FOR MUTUAL FUNDS
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
|
Class
C
|
10.49%
|
N/A
|
|
WILL
FISCHER DIST CO INC TTEE FBO
WILL FISCHER DISTRIBUTING CO INC 40
C/O FASCORE LLC
8515 E ORCHARD RD # 2T2
GREENWOOD VLG CO 80111-5002
|
Class
R
|
7.13%
|
N/A
|
Global
Technology Growth Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
22.45%
|
N/A
|
Class
B
|
11.26%
|
|
CHARLES
SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUND DEPT
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
|
Class
R5
|
67.64%
|
N/A
|
Class
B
|
7.42%
|
Class
Z
|
7.08%
|
|
FIIOC
FBO
WHITNEY BRADLEY & BROWN INC
401(K) PLAN & TRUST
100 MAGELLAN WAY # KW1C
COVINGTON KY 41015-1987
|
Class
R4
|
30.77%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
B
|
22.26%
|
N/A
|
Class
C
|
8.12%
|
|
LPL
FINANCIAL
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
A
|
7.53%
|
N/A
|
Class
Z
|
12.25%
|
|
LPL
FINANCIAL
FBO CUSTOMER ACCOUNTS
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
C
|
8.29%
|
N/A
|
|
MATRIX
TRUST COMPANY CUST. FBO
PORTLAND ENERGY CONSERVATION, INC.
717 17TH ST STE 1300
DENVER CO 80202-3304
|
Class
R5
|
5.69%
|
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
|
8.61%
|
N/A
|
Class
C
|
37.45%
|
Class
Z
|
33.63%
|
Statement
of Additional Information – January 28, 2015
|
211
|
Fund
|
Shareholder
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
B
|
11.27%
|
N/A
|
Class
C
|
12.03%
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
7.82%
|
N/A
|
Class
B
|
7.21%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
A
|
10.53%
|
N/A
|
Class
B
|
12.20%
|
Class
C
|
5.75%
|
Class
R4
|
59.54%
|
|
RAYMOND
JAMES
FBO OMNIBUS FOR MUTUAL FUNDS
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
|
Class
Z
|
8.00%
|
N/A
|
|
UBS
WM USA
OMNI ACCOUNT M/F
ATTN: DEPARTMENT MANAGER
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
Class
C
|
5.39%
|
N/A
|
|
WILMINGTON
TRUST RISC AS CUST FBO
BSBP & A LLP 401(K) PLAN I
PO BOX 52129
PHOENIX AZ 85072-2129
|
Class
R5
|
19.64%
|
N/A
|
Greater
China Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
B
|
6.26%
|
N/A
|
|
CHARLES
SCHWAB & CO INC
SPECIAL CUSTODY ACCT FBO
CUSTOMERS
ATTN MUTUAL FUNDS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
|
Class
B
|
6.01%
|
N/A
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
I
|
100.00%
|
N/A
(a)
|
Class
R4
|
9.68%
|
Class
W
|
100.00%
|
|
EDWARD
D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3729
|
Class
B
|
6.16%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
A
|
8.51%
|
N/A
|
Class
B
|
8.33%
|
Class
C
|
16.39%
|
Class
Z
|
10.54%
|
|
GREAT-WEST
TRUST COMPANY LLC TTEE F
EMPLOYEE BENEFITS CLIENTS 401K
8515 E ORCHARD RD # 2T2
GREENWOOD VLG CO 80111-5002
|
Class
R5
|
50.52%
|
N/A
|
|
LPL
FINANCIAL
FBO CUSTOMER ACCOUNTS
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
B
|
5.47%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
212
|
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 ADMINISTRATION
4800 DEER LAKE DR E FL 2
JACKSONVILLE FL 32246-6484
|
Class
A
|
9.31%
|
N/A
|
Class
B
|
19.51%
|
Class
C
|
24.85%
|
Class
Z
|
27.90%
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
A
|
10.14%
|
N/A
|
Class
B
|
7.11%
|
Class
C
|
12.38%
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
11.91%
|
N/A
|
Class
B
|
12.05%
|
Class
C
|
10.29%
|
Class
R4
|
18.37%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
A
|
8.98%
|
N/A
|
Class
B
|
9.76%
|
Class
C
|
8.83%
|
Class
R4
|
71.94%
|
Class
R5
|
19.49%
|
|
RBC
CAPITAL MARKETS, LLC
MUTUAL FUND OMNIBUS PROCESSING
OMNIBUS
ATTN MUTUAL FUND OPS MANAGER
510 MARQUETTE AVE S
MINNEAPOLIS MN 55402-1110
|
Class
Z
|
16.05%
|
N/A
|
|
TD
AMERITRADE INC FOR THE
EXCLUSIVE BENEFIT OF OUR CLIENTS
PO BOX 2226
OMAHA NE 68103-2226
|
Class
R5
|
28.03%
|
N/A
|
|
UBS
WM USA
OMNI ACCOUNT M/F
ATTN: DEPARTMENT MANAGER
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
Class
C
|
5.32%
|
N/A
|
Mid
Cap Growth Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
7.87%
|
N/A
|
Class
B
|
11.62%
|
Class
C
|
6.64%
|
Class
W
|
98.95%
|
|
CAPITAL
BANK & TRUST CO
TTEE F EVO 401K PSP
8515 E ORCHARD RD # 2T2
GREENWOOD VLG CO 80111-5002
|
Class
R
|
6.80%
|
N/A
|
|
CAPITAL
BANK & TRUST COMPANY TTEE F
SMITHGROUP RA 401K
8515 E ORCHARD RD # 2T2
GREENWOOD VLG CO 80111-5002
|
Class
R5
|
20.01%
|
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
|
40.33%
|
N/A
|
Class
Z
|
10.09%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
Y
|
100.00%
|
N/A
(a)
|
|
COUNSEL
TRUST DBA MATC FBO
ANDERSON & VREELAND INC PSP
1251 WATERFRONT PL STE 525
PITTSBURGH PA 15222-4228
|
Class
R
|
5.09%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
213
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
DCGT
AS TTEE AND /OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
|
Class
R
|
18.25%
|
N/A
|
|
FIIOC
FBO
ARBELLA 401(K) SAVINGS
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
|
Class
R4
|
41.19%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
C
|
10.22%
|
N/A
|
Class
K
|
10.43%
|
|
JPMCB
NA CUST FOR
COLUMBIA LIFEGOAL GROWTH
PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
99.99%
|
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
|
11.06%
|
N/A
|
|
MERRILL
LYNCH PIERCE FENNER &
SMITH INC
FOR THE SOLE BENEFIT OF IT S CUSTOM
4800 DEER LAKE DR E
JACKSONVILLE FL 32246-6484
|
Class
Z
|
29.43%
|
N/A
|
Class
C
|
13.53%
|
Class
R
|
26.64%
|
Class
T
|
15.29%
|
|
MID
ATLANTIC TRUST COMPANY FBO
I C S INC 401(K) PROFIT SHARING
PLAN & TRUST
1251 WATERFRONT PL STE 525
PITTSBURGH PA 15222-4228
|
Class
R4
|
14.60%
|
N/A
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
C
|
7.27%
|
N/A
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
R5
|
71.43%
|
N/A
|
Class
T
|
5.33%
|
Class
Z
|
13.26%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
C
|
9.48%
|
N/A
|
Class
R4
|
26.44%
|
|
STATE
STREET CORPORATION
FBO ADP ACCESS
1 LINCOLN ST
BOSTON MA 02111-2901
|
Class
K
|
19.28%
|
N/A
|
Small
Cap Core Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
52.08%
|
N/A
|
Class
B
|
27.73%
|
Class
C
|
16.01%
|
Class
W
|
99.51%
|
|
ASCENSUS
TRUST COMPANY FBO
EVERENCE SERVICES, LLC 401(K) PLAN
PO BOX 10758
FARGO ND 58106-0758
|
Class
R4
|
13.19%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
214
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
ASCENSUS
TRUST COMPANY FBO
SPARTAN CHEMICAL COMPANY INC EE P
PO BOX 10758
FARGO ND 58106-0758
|
Class
R5
|
7.12%
|
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
|
16.10%
|
N/A
|
|
DCGT
AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
|
Class
A
|
5.94%
|
N/A
|
Class
R4
|
18.96%
|
|
FIIOC
FBO
AEGIS TECHNOLOGIES GROUP INC
100 MAGELLAN WAY # KW1C
COVINGTON KY 41015-1987
|
Class
R4
|
25.10%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
B
|
12.79%
|
N/A
|
Class
C
|
13.76%
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
AGGRESSIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
17.10%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE AGGRESSIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
20.60%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE CONSERVATIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
18.89%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
40.29%
|
N/A
|
|
LPL
FINANCIAL
FBO CUSTOMER ACCOUNTS
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
B
|
12.22%
|
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
|
29.42%
|
26.86%
|
Class
A
|
11.79%
|
Class
B
|
9.95%
|
Class
C
|
18.44%
|
Class
R4
|
9.74%
|
Class
Z
|
48.75%
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
C
|
10.22%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
215
|
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
C
|
10.21%
|
N/A
|
Class
R4
|
18.28%
|
Class
Y
|
70.56%
|
Class
Z
|
12.62%
|
|
NORTHERN
TRUST CO TTEE
FBO APOLLO DV
PO BOX 92994
CHICAGO IL 60675-2994
|
Class
Z
|
5.87%
|
N/A
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
B
|
6.05%
|
N/A
|
Class
C
|
7.73%
|
|
STATE
STREET BANK & TRUST CO
ANDREW P CAPARELLI
SEP IRA
107 STONEWALL CIR
WEST HARRISON NY 10604-1119
|
Class
B
|
6.01%
|
N/A
|
|
TAYNIK
& CO
C/O INVESTORS BANK & TRUST CO
200 CLARENDON ST FL 17
BOSTON MA 02116-5097
|
Class
R5
|
69.51%
|
N/A
|
Class
Y
|
28.94%
|
|
UBS
WM USA
OMNI ACCOUNT M/F
ATTN: DEPARTMENT MANAGER
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
Class
B
|
8.00%
|
N/A
|
Small
Cap Growth Fund I
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
6.93%
|
N/A
|
Class
B
|
11.27%
|
|
ASCENSUS
TRUST CO FBO
ACTIGRAPH LLC 401K PLAN
PO BOX 10758
FARGO ND 58106-0758
|
Class
R
|
10.24%
|
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
|
83.28%
|
N/A
|
Class
Z
|
8.61%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
K
|
5.70%
|
N/A
(a)
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
B
|
13.03%
|
N/A
|
Class
C
|
15.46%
|
Class
K
|
11.02%
|
|
HEI
HOSPITALITY LLC
FBO EXEC EXCESS OF HEI HOSPITALITY
ATTN ERNIE FREEDMAN
101 MERRITT 7 STE 1
NORWALK CT 06851-1060
|
Class
R
|
5.37%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
AGGRESSIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
5.68%
|
N/A
|
|
JPMCB
NA CUST FOR
COLUMBIA CAPITAL ALLOCATION
MODERATE AGGRESSIVE PORTFOLIO
14201 N DALLAS PKWY FL 13
DALLAS TX 75254-2916
|
Class
I
|
23.62%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
216
|
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
|
70.69%
|
N/A
|
|
MERRILL
LYNCH PIERCE FENNER &
SMITH INC
FOR THE SOLE BENEFIT OF IT S CUSTOM
4800 DEER LAKE DR E
JACKSONVILLE FL 32246-6484
|
Class
Z
|
30.02%
|
N/A
|
Class
A
|
13.79%
|
Class
B
|
11.55%
|
Class
C
|
18.26%
|
Class
R
|
5.38%
|
|
MG
TRUST COMPANY TRUSTEE
EMAK HOLDINGS INC 401 K PLAN
717 17TH ST STE 1300
DENVER CO 80202-3304
|
Class
Y
|
9.73%
|
N/A
|
|
MG
TRUST COMPANY TRUSTEE
SANGER & EBY DESIGN PS & 401K PL
717 17TH ST STE 1300
DENVER CO 80202-3304
|
Class
R
|
5.46%
|
N/A
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
C
|
6.12%
|
N/A
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
5.70%
|
N/A
|
Class
B
|
7.97%
|
Class
R4
|
70.45%
|
Class
R5
|
5.73%
|
Class
Y
|
22.71%
|
Class
Z
|
23.50%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
B
|
6.08%
|
N/A
|
Class
C
|
6.57%
|
Class
R4
|
27.59%
|
|
RELIANCE
TRUST CO CUST
FBO MASSMUTUAL OMNIBUS PLL/SMF
PO BOX 48529
ATLANTA GA 30362-1529
|
Class
R
|
52.57%
|
N/A
|
|
T
ROWE PRICE TRUST CO TTEE
FBO RETIREMENT PLAN CLIENTS
PO BOX 17215
BALTIMORE MD 21297-1215
|
Class
Y
|
67.50%
|
N/A
|
|
WELLS
FARGO BANK FBO
YAZAKI EMPLOYEE SAV & RET PLAN
1525 WEST WT HARRIS BLVD
CHARLOTTE NC 28288-1076
|
Class
R5
|
92.19%
|
N/A
|
Value
and Restructuring Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
37.08%
|
N/A
|
Class
C
|
11.87%
|
|
CHARLES
SCHWAB & CO INC
SPECIAL CUSTODY A/C FBO CUSTOMERS
ATTN MUTUAL FUND DEPT
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4151
|
Class
R5
|
37.44%
|
32.07%
|
Class
A
|
6.55%
|
Class
Z
|
34.23%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN KATRINA MACBAIN
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
I
|
100.00%
|
N/A
(a)
|
Class
W
|
100.00%
|
|
DCGT
AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS
OMNIBUS
ATTN NPIO TRADE DESK
711 HIGH ST
DES MOINES IA 50392-0001
|
Class
R
|
41.66%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
217
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
FIIOC
FBO
HARDEL MUTUAL PLYWOOD CORPORATION
401(K) PROFIT SHARING PLAN
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
|
Class
R
|
7.27%
|
N/A
|
|
FIIOC
FBO
STAGGS & FISHER 401(K) PLAN
100 MAGELLAN WAY (KW1C)
COVINGTON KY 41015-1987
|
Class
R
|
8.05%
|
N/A
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
C
|
6.65%
|
N/A
|
|
GREAT-WEST
TRUST COMPANY LLC TTEE F
EMPLOYEE BENEFITS CLIENTS 401K – FG
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111-5002
|
Class
R
|
5.77%
|
N/A
|
|
LPL
FINANCIAL
9785 TOWNE CENTRE DR
SAN DIEGO CA 92121-1968
|
Class
A
|
5.65%
|
N/A
|
Class
C
|
8.46%
|
|
MERRILL
LYNCH PIERCE FENNER & SMITH
FOR THE SOLE BENEFIT OF IT CUSTOMER
4800 DEER LAKE DR E
JACKSONVILLE FL 32246-6484
|
Class
Z
|
13.23%
|
N/A
|
Class
C
|
13.26%
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
C
|
12.13%
|
N/A
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
5.80%
|
N/A
|
Class
C
|
7.15%
|
Class
R4
|
33.44%
|
Class
R5
|
38.30%
|
Class
Z
|
18.21%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
A
|
12.17%
|
N/A
|
Class
C
|
15.72%
|
Class
R4
|
12.31%
|
Class
Y
|
60.92%
|
|
RAYMOND
JAMES
FBO OMNIBUS FOR MUTUAL FUNDS
ATTN: COURTNEY WALLER
880 CARILLON PKWY
ST PETERSBURG FL 33716-1100
|
Class
A
|
5.98%
|
N/A
|
Class
C
|
9.45%
|
|
RELIANCE
TRUST CO CUST
FBO MASSMUTUAL OMNIBUS PLL/SMF
PO BOX 48529
ATLANTA GA 30362-1529
|
Class
R
|
8.73%
|
N/A
|
|
TAYNIK
& CO
C/O INVESTORS BANK & TRUST CO
200 CLARENDON ST FL 17
BOSTON MA 02116-5097
|
Class
R4
|
54.10%
|
N/A
|
|
TD
AMERITRADE INC FOR THE
EXCLUSIVE BENEFIT OF OUR CLIENTS
PO BOX 2226
OMAHA NE 68103-2226
|
Class
R5
|
22.75%
|
N/A
|
|
UBS
WM USA
OMNI ACCOUNT M/F
ATTN: DEPARTMENT MANAGER
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
Class
C
|
7.88%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
218
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
VANGUARD
FDUCIARY TRUST CO
PO BOX 2600 VM 613
ATTN: OUTSIDE FUNDS
VALLEY FORGE PA 19482-2600
|
Class
Y
|
38.82%
|
N/A
|
Funds with Fiscal Period
Ending October 31:
Except as otherwise indicated, the
information below is as of January 31, 2014:
Fund
|
Shareholder
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
|
7.87%
|
N/A
|
Class
B
|
24.05%
|
Class
C
|
6.02%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN AKSHAY RAJPUT
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
R4
|
100.00%
|
N/A
(a)
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
A
|
7.41%
|
N/A
|
Class
B
|
11.18%
|
Class
C
|
12.44%
|
|
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
|
9.51%
|
N/A
|
Class
B
|
8.52%
|
Class
C
|
46.35%
|
|
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
|
5.76%
|
N/A
|
Class
C
|
12.78%
|
Class
Z
|
14.88%
|
|
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
|
8.17%
|
N/A
|
Class
C
|
5.17%
|
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
|
Statement
of Additional Information – January 28, 2015
|
219
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
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
|
12.14%
|
N/A
|
Class
B
|
22.86%
|
Class
C
|
34.81%
|
|
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%
|
|
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
|
5.02%
|
N/A
|
Class
B
|
77.14%
|
|
PERSHING
LLC
1 PERSHING PLZ
JERSEY CITY NJ 07399-0002
|
Class
A
|
5.13%
|
N/A
|
Class
R4
|
99.50%
|
|
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
|
16.61%
|
N/A
|
Class
B
|
6.53%
|
Class
C
|
20.19%
|
|
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
|
5.76%
|
N/A
|
Class
B
|
14.21%
|
Class
C
|
11.72%
|
|
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
|
Statement
of Additional Information – January 28, 2015
|
220
|
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 ADMINISTRATION
4800 DEER LAKE DR E FL 2
JACKSONVILLE FL 32246-6484
|
Class
T
|
10.29%
|
80.46%
|
Class
A
|
15.60%
|
Class
B
|
33.31%
|
Class
C
|
23.90%
|
Class
Z
|
89.86%
|
|
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
|
5.87%
|
N/A
|
Class
R4
|
98.83%
|
|
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
|
6.18%
|
N/A
|
Class
C
|
5.22%
|
International
Bond Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
67.14%
|
N/A
|
Class
C
|
42.66%
|
Class
W
|
94.16%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN AKSHAY RAJPUT
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
C
|
8.16%
|
76.45%
(a)
|
Class
W
|
5.84%
|
|
EDWARD
D JONES & CO
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER RD
SAINT LOUIS MO 63131-3729
|
Class
A
|
6.32%
|
N/A
|
Class
C
|
9.80%
|
|
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%
|
N/A
|
|
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%
|
N/A
|
|
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
|
95.49%
|
N/A
|
Class
A
|
6.84%
|
Class
C
|
28.26%
|
AMT-Free
MA Intermediate Muni Bond Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
32.43%
|
N/A
|
Class
B
|
99.29%
|
Class
C
|
14.33%
|
Statement
of Additional Information – January 28, 2015
|
221
|
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
A
|
26.60%
|
N/A
|
Class
C
|
22.32%
|
|
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
|
12.19%
|
N/A
|
Class
C
|
28.66%
|
|
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
|
44.78%
|
81.66%
|
Class
Z
|
95.57%
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
A
|
8.74%
|
N/A
|
Class
C
|
8.98%
|
Class
R4
|
96.01%
|
|
UBS
WM USA
OMNI ACCOUNT M/F
ATTN: DEPARTMENT MANAGER
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
Class
A
|
12.16%
|
N/A
|
Class
C
|
12.98%
|
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
(a)
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
A
|
6.81%
|
N/A
|
Class
C
|
10.30%
|
|
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
|
14.28%
|
N/A
|
Class
B
|
26.81%
|
Class
C
|
52.44%
|
|
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
|
23.71%
|
68.03%
|
Class
Z
|
81.65%
|
|
MORGAN
STANLEY SMITH BARNEY
HARBORSIDE FINANCIAL CENTER
PLAZA 2, 3RD FLOOR
JERSEY CITY NJ 07311
|
Class
A
|
8.65%
|
N/A
|
Class
C
|
11.82%
|
|
NATIONAL
FINANCIAL SERVICES LLC
FEBO CUSTOMERS
MUTUAL FUNDS
200 LIBERTY STREET 1WFC
NEW YORK NY 10281-1003
|
Class
R4
|
30.30%
|
N/A
|
Statement
of Additional Information – January 28, 2015
|
222
|
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
A
|
6.46%
|
N/A
|
Class
B
|
5.34%
|
Class
C
|
5.09%
|
Class
R4
|
56.40%
|
|
UBS
WM USA
OMNI ACCOUNT M/F
ATTN: DEPARTMENT MANAGER
1000 HARBOR BLVD
WEEHAWKEN NJ 07086-6761
|
Class
A
|
7.28%
|
N/A
|
Class
B
|
65.25%
|
Class
C
|
5.16%
|
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
|
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
10.58%
|
N/A
|
Class
C
|
6.24%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN AKSHAY RAJPUT
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
R4
|
100.00%
|
N/A
(a)
|
Class
R5
|
100.00%
|
|
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
|
5.16%
|
N/A
|
Class
B
|
11.03%
|
Class
C
|
11.75%
|
|
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
|
5.47%
|
N/A
|
Class
B
|
41.36%
|
Class
C
|
34.92%
|
|
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
|
6.73%
|
N/A
|
Class
C
|
8.67%
|
|
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
|
Statement
of Additional Information – January 28, 2015
|
223
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
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
|
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
35.28%
|
N/A
|
Class
B
|
24.28%
|
Class
C
|
21.42%
|
|
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
|
54.54%
|
N/A
|
Class
R5
|
23.07%
|
|
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
|
40.99%
|
N/A
|
Class
B
|
17.71%
|
Class
C
|
9.58%
|
|
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%
|
Statement
of Additional Information – January 28, 2015
|
224
|
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 ADMINISTRATION
4800 DEER LAKE DR E FL 2
JACKSONVILLE FL 32246-6484
|
Class
A
|
6.05%
|
N/A
|
Class
C
|
22.38%
|
|
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
|
20.27%
|
N/A
|
Class
R4
|
47.61%
|
|
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
|
5.14%
|
N/A
|
Class
R4
|
17.49%
|
Class
R5
|
51.08%
|
|
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 Period
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 fund
(if greater than 25%)
|
Real
Estate Equity Fund
|
AMERICAN
ENTERPRISE INVESTMENT SVC
707 2ND AVE S
MINNEAPOLIS MN 55402-2405
|
Class
A
|
26.54%
|
N/A
|
Class
B
|
27.47%
|
Class
C
|
12.61%
|
Class
W
|
84.92%
|
Statement
of Additional Information – January 28, 2015
|
225
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(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
|
32.01%
|
N/A
|
Class
R5
|
59.22%
|
Class
Z
|
18.70%
|
|
COLUMBIA
MGMT INVESTMENT ADVSR LLC
ATTN AKSHAY RAJPUT
50807 AMERIPRISE FINANCIAL CTR
MINNEAPOLIS MN 55474-0508
|
Class
K
|
34.38%
|
N/A
(a)
|
Class
W
|
15.08%
|
|
FIRST
CLEARING LLC
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET ST
SAINT LOUIS MO 63103-2523
|
Class
K
|
33.61%
|
N/A
|
Class
C
|
10.19%
|
|
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 DR E
JACKSONVILLE FL 32246-6484
|
Class
Z
|
40.93%
|
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
C
|
20.60%
|
N/A
|
Class
R
|
30.94%
|
|
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
|
Statement
of Additional Information – January 28, 2015
|
226
|
Fund
|
Shareholder
Name and Address
|
Share
Class
|
Percentage
of Class
|
Percentage
of fund
(if greater than 25%)
|
|
TD
AMERITRADE TRUST COMPANY
ATTN HOUSE
PO BOX 17748
DENVER CO 80217-0748
|
Class
R5
|
10.28%
|
N/A
|
(a)
|
Combination of all share
classes of Columbia Management initial capital and/or affiliated funds-of-funds’ investments.
|
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 – January 28, 2015
|
227
|
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 1940 Act, 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.
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 SEC-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 – January 28, 2015
|
228
|
APPENDIX A — DESCRIPTION OF
RATINGS
The ratings of S&P,
Moody’s 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&P’s Debt Ratings
Long-Term Issue Credit Ratings
An obligation rated ‘AAA’ has the highest rating
assigned by S&P. The obligor’s 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 obligor’s 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 obligor’s 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 obligor’s 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 obligor’s 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. The ‘CC’ rating is used when a default has not yet occurred, but S&P expects default to be a virtual certainty, regardless of the anticipated time to default.
An obligation rated 'C' is currently highly
vulnerable to nonpayment, and the obligation is expected to have lower relative seniority or lower ultimate recovery compared to obligations that are rated higher.
An obligation rated ‘D’ is in default or
in breach of an imputed promise. For non-hybrid capital instruments, 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 in the absence of a stated grace period or within the earlier of the stated grace period or 30 calendar days. The ‘D’ rating also will be used upon the filing of a bankruptcy petition or the taking of similar action and
where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation’s rating is lowered to ‘D’ if it is subject to a distressed exchange offer.
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 obligor’s 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
obligor’s capacity to meet its financial commitment on these obligations is extremely strong.
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 obligor’s 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.
Statement
of Additional Information – January 28, 2015
|
A-1
|
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 obligor’s 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 default or in breach of an imputed promise. For non-hybrid capital instruments, 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 and where default on an obligation is a virtual certainty, for example due to automatic stay provisions. An obligation's rating is lowered to 'D' if it is subject to a distressed exchange offer.
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.
Moody’s 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 municipality’s 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).
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 issuer’s long-term rating is only one consideration in assigning the MIG rating. MIG ratings are divided into three levels — MIG 1 through MIG 3 — while speculative grade short-term
obligations are designated SG.
Statement
of Additional Information – January 28, 2015
|
A-2
|
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 Moody’s evaluation of risk associated with scheduled principal and interest payments. The second element
represents Moody’s 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 issuer’s 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.
Fitch’s 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.
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.
Statement
of Additional Information – January 28, 2015
|
A-3
|
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. This approach better aligns
obligations that have comparable overall expected loss but varying vulnerability to default and loss.
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.
Statement
of Additional Information – January 28, 2015
|
A-4
|
APPENDIX B — PROXY VOTING
GUIDELINES
Effective January 1, 2012
Set forth on the following pages are guidelines
adopted and used by the Investment Manager 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 Investment Manager may, in exercising
its fiduciary discretion, determine to vote any proxy in a manner contrary to these Guidelines.
Directors, Boards, Committees
Elect Directors
In a routine election of directors, the Investment Manager
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 Investment Manager generally
will WITHHOLD support from a nominee who fails to meet one or more of the following criteria:
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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.
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Attendance
— A nominee who failed to attend at least 75% of the board’s meetings.
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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.
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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.
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Audit Committee
Chair
— A nominee who serves as audit committee chair where the committee failed to put forth shareholder proposals for ratification of auditors.
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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.
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Interlocking
Directorship
— A nominee who is an executive officer of another company on whose board one of the company’s executive officers sits.
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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.
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The Investment Manager 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 Investment
Manager 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 Investment Manager 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 Investment Manager uses to evaluate nominees.
Shareholder Nominations for Director — Special
Criteria
The Investment Manager 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 Investment Manager generally will vote FOR proposals that
require all members of a board’s key committees (audit, compensation, nominating or governance) be independent from management.
Statement
of Additional Information – January 28, 2015
|
B-1
|
Independent Board Chair/Lead Director
The Investment Manager 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.
Removal of Directors
The Investment Manager 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 Investment Manager will vote on a CASE-BY-CASE basis on proposals
calling for removal of specific directors.
Board
Vacancies
The Investment Manager 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
Investment Manager generally will vote FOR the restoration or provision for cumulative voting and AGAINST its elimination.
Majority Voting
The Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager will generally vote AGAINST
proposals to eliminate the right of shareholders to call special meetings.
Lead Independent Director Right to Call Special
Meeting
The Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager 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 – January 28, 2015
|
B-2
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Vote Unmarked Proxies
The Investment Manager generally will vote FOR proposals
prohibiting voting of unmarked proxies in favor of management.
Proxy Contest Advance Notice
The Investment Manager 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 Investment Manager will vote on a CASE-BY-CASE basis on
proposals regarding minimum stock ownership levels.
Director and Officer Indemnification
The Investment Manager 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 Investment Manager 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 Investment Manager supports the proposal to minimize pressure on shareholders, particularly employee
shareholders.
Miscellaneous Governing Document
Amendments
The Investment Manager generally will vote FOR
bylaw or charter changes that are of a housekeeping nature (
e.g.
, updates or corrections).
Change Company Name
The Investment Manager will generally vote FOR routine business
matters such as changing the company’s name.
Approve Minutes
The Investment Manager will generally vote FOR routine procedural
matters such as approving the minutes of a prior meeting.
Change Date/Time/Location of Annual Meeting
The Investment Manager will vote in accordance with the
recommendation of the third-party research provider on proposals to change the date, time or location of the company’s annual meeting of shareholders.
Approve Annual, Financial and Statutory Reports
The Investment Manager 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 Investment Manager 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 Investment Manager 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.
Approve or Amend Employee Stock
Purchase Plan
The Investment Manager generally votes in
accordance with recommendations made by its third party research provider, which are typically based on factors including the plan’s cost to shareholders, whether those costs are in line with the company’s peer’s plans, and whether
the plan requires shareholder approval within five years.
Statement
of Additional Information – January 28, 2015
|
B-3
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Approve or Amend Performance-Based 162(m) Compensation
Plan
The Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager generally will vote FOR proposals to put stock option repricings to a
shareholder vote.
Performance-Based Stock
Options
The Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager will vote on a CASE-BY-CASE basis regarding
proposals seeking to align executive compensation with shareholders’ interests.
Say on Pay
The Investment Manager generally votes in accordance with
recommendations made by its third party research provider, taking into consideration the company’s pay for performance results and certain elements of the Compensation Discussion and Analysis disclosure.
Executive Severance Agreements
The Investment Manager 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.
Approve or Amend Deferred Compensation Plans for
Directors
The Investment Manager 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 Investment Manager 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 Investment Manager 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.
Statement
of Additional Information – January 28, 2015
|
B-4
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Business Entity and Capitalization
Common or Preferred Stock — Increase in
Authorized Shares or Classes
The Investment Manager 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 company’s 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 Investment Manager will vote on a CASE-BY-CASE basis on the grounds that such actions may be connected to a shareholder rights’ plan that the Investment Manager also will consider on a CASE-BY-CASE
basis.
Common or Preferred Stock –
Decrease in Authorized Shares or Classes
The Investment
Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager
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 Investment Manager 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 Investment
Manager 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 Investment Manager generally will vote AGAINST any proposal where dilution exceeds 20 percent of the
company’s outstanding capital.
Recapitalization
The Investment Manager 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 Investment Manager generally will vote AGAINST recapitalization plans that would result in the
diminution of rights for existing shareholders.
Merger Agreement
The Investment Manager 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 Investment Manager 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.
Statement
of Additional Information – January 28, 2015
|
B-5
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Reincorporation
The Investment Manager 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 Investment Manager will generally vote AGAINST the proposal unless the long-term business reasons for doing so are valid. The Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager generally will vote FOR proposals to adopt
anti-greenmail governing document amendments or to otherwise restrict a company’s ability to make greenmail payments.
Classification of Board of Directors
The Investment Manager 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.
Auditors
Ratify or Appoint Auditors
The Investment Manager 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 Auditor’s Non-Audit
Services
The Investment Manager 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 Investment Manager 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 Investment Manager will generally vote FOR the indemnification
of internal auditors, unless the costs associated with the approval are not disclosed.
Statement
of Additional Information – January 28, 2015
|
B-6
|
Social and Environmental
Disclose Environmental or Social Agenda
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, animal welfare or other environmental and social issues, will be reviewed and, if after considering the proposal the
Investment Manager believes the matter may bear on the long-term value creation or sustainability of the company, a vote FOR or AGAINST may be cast, otherwise the Investment Manager generally will ABSTAIN from voting.
Socially Responsible Investing
Proposals that seek to have a company take a position on social or
environmental issues will be reviewed and, if after considering the proposal the Investment Manager believes the matter may bear on the long-term value creation or sustainability of the company, a vote FOR or AGAINST may be cast, otherwise the
Investment Manager generally will ABSTAIN from voting.
Prohibit or Disclose Contributions and Lobbying
Expenses
The Investment Manager generally
votes in accordance with recommendations made by its third party research provider, which typically considers the proposal in the context of the company’s current disclosures, Federal and state laws, and whether the proposal is in
shareholders’ best interests.
Disclose
Prior Government Service
Proposals seeking a company to
furnish a list of high-ranking employees who served in any governmental capacity over the last five years will be reviewed and, if after considering the proposal the Investment Manager believes the matter may bear on the long-term value creation or
sustainability of the company, a vote FOR or AGAINST may be cast, otherwise the Investment Manager generally will ABSTAIN from voting.
Change in Operations or Products Manufactured or
Sold
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.) will be reviewed and, if after considering the proposal the Investment Manager believes the matter may bear on
the long-term value creation or sustainability of the company, a vote FOR or AGAINST may be cast, otherwise the Investment Manager generally will ABSTAIN from voting.
Executive Compensation Report
The Investment Manager 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 company’s board to consider.
Pay Equity
The Investment Manager 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 Investment Manager 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 Investment Manager generally will vote FOR
proposals requesting shareholder approval to announce vacancies on the board, as is required under Dutch law.
Approve Director Fees
The Investment Manager generally votes in accordance with
recommendations made by its third party research provider on proposals seeking approval of director fees.
Statement
of Additional Information – January 28, 2015
|
B-7
|
Foreign Issues — General Corporate
Governance
Digitalization of Certificates
The Investment Manager generally will vote FOR proposals seeking
shareholder approval to amend a company’s 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 Investment Manager
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 Investment Manager generally will vote FOR proposals requesting
shareholders approve the designation of a newspaper as the medium to publish the company’s meeting notice, as is common in Chile and other countries.
Clarify Articles of Association or Incorporation
The Investment Manager generally will vote FOR proposals seeking
shareholder approval of routine housekeeping of the company’s articles, including clarifying items and deleting obsolete items.
Update Articles of Association or Incorporation with
Proxy Results
The Investment Manager generally will vote FOR
proposals requesting shareholders approve changes to the company’s articles of association or incorporation to reflect the results of a proxy vote by shareholders, which is a routine proposal in certain country’s proxies.
Conform Articles of Association or Incorporation to
Law or Stock Exchange
The Investment Manager 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.
Authorize Board to Ratify and Execute Approved
Resolutions
The Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager will
vote in accordance with the recommendation of the third-party research provider on proposals to change the date, time or location of the company’s annual meeting of shareholders.
Elect Chairman of the Meeting
The Investment Manager 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 Investment Manager generally will vote FOR proposals requesting
shareholder approval to amend the company’s articles to allow the company to expand into new lines of business.
Statement
of Additional Information – January 28, 2015
|
B-8
|
Approve Financial Statements, Directors’ Reports
and Auditors’ Reports
The Investment Manager 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 Investment Manager 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
Director’s/Statutory Auditor’s Family
The
Investment Manager 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 Investment Manager generally will vote FOR proposals requesting
shareholders approve the dividend rate set by management.
Approve Allocation of Income and Dividends
The Investment Manager generally will vote FOR proposals requesting
shareholders approve a board’s allocation of income for the current fiscal year, as well as the dividend rate.
Approve Scrip (Stock) Dividend Alternative
The Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager 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 Investment Manager generally will vote FOR
proposals requesting shareholder approval to increase issued capital in order to offer a rights issue to current registered shareholders, which provides shareholders the option of purchasing additional shares of the company’s 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 Investment Manager 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 Investment Manager generally will vote FOR proposals requesting
shareholder approval to reissue shares of the company’s stock that had been repurchased by the company at an earlier date.
Statement
of Additional Information – January 28, 2015
|
B-9
|
Approve Payment of Corporate Income Tax
The Investment Manager 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 Investment Manager 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 Investment Manager generally will vote FOR proposals requesting
that shareholders give the board the authority to allot or issue unissued shares.
Authority to Allot Shares for Cash
The Investment Manager 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 Investment Manager 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 Investment Manager generally will vote FOR proposals that
present shareholders of French companies, as required by French law, with a special auditor’s 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 Investment Manager 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 Investment Manager 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 – January 28, 2015
|
B-10
|
APPENDIX C — 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 state’s 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 Fund’s 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 state’s 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 issuer’s 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.
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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
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 California’s 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
Governor’s Budget, California’s 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 Governor’s Proposed
Budget for fiscal year 2014-15, released on January 9, 2014 (the “2014-15 Governor’s Budget”) now projects that California will end fiscal year 2013-14 with a reserve of $3.257 billion. The 2014-15 Governor’s 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 California’s financial condition, including the need to repay billions of dollars of obligations which were deferred to balance budgets during the economic
downturn. In addition, California’s 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 California’s 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 state’s 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, Moody’s
Investors Service, Inc. (“Moody’s”), Standard and Poor’s Ratings Services (“S&P”), and Fitch Ratings (“Fitch”), assigned ratings to the California 2014 Bonds, as follows: Moody’s 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, Moody’s, 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.
Connecticut’s 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). Connecticut’s 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 state’s 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, Connecticut’s 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 Connecticut’s 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. Miscellaneous fees, receipts, transfers and unrestricted federal grants account for most of the other General Fund revenue. Connecticut expends
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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,
Connecticut’s 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 Connecticut’s General Fund; special tax obligation debt, which is payable
from specified taxes and other funds which are maintained outside Connecticut’s General Fund; and special obligation and revenue debt, which is payable from specified revenues or other funds which are maintained outside Connecticut’s
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 Connecticut’s
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. Connecticut’s 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
fund’s 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 Connecticut, with certain exceptions. While establishing salary schedules for teachers, municipalities do not provide contributions to the
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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 fund’s 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, Moody’s
Investors Service, Inc. (“Moody’s”), Standard and Poor’s Ratings Services (“S&P”) and Fitch Ratings (“Fitch”), assign ratings to the Connecticut’s long-term general obligation bonds. As of
February 2012, Connecticut’s general obligation bonds were rated Aa3 by Moody’s, AA by S&P and AA by Fitch. It is not possible to determine whether, or the extent to which, Moody’s, 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 Commonwealth’s control.
Massachusetts has established a number of
independent authorities and agencies, the budgets of which are not included in the Commonwealth’s 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 Commonwealth’s 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 Commonwealth’s 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 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.
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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 Massachusetts’s 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 Commonwealth’s 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, Moody’s
Investors Service, Inc. (“Moody’s”), Standard and Poor’s Ratings Services (“S&P”) and Fitch Ratings (“Fitch”), assign ratings to Massachusetts long-term general obligation bonds.
Massachusetts’s general obligation bonds have been assigned long-term ratings of “Aa1” by Moody’s Investors Service, Inc., “AA+” by Standard & Poor’s Ratings Services and “AA+” by Fitch. It
is not possible to determine whether, or the extent to which, Moody’s, 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 York’s
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 nation’s financial capital, New York is also especially sensitive to credit and equity market volatility, which pose a high degree of uncertainty for New York’s fiscal condition and recovery
outlook.
In its report from May 2012 (updated
through August 2012), New York’s 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 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 York’s 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
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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 York’s 2010 population was 19.4 million, an increase from 19 million in 2000.
As of May 2012, New York’s 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 York’s 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 York’s 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 York’s 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 York’s current financial
plan is dependent on the state’s 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 York’s inability to sell bonds at the levels or on the timetable expected may adversely affect the state’s overall cash position and capital funding plan. The success of projected public sales will be dependent on prevailing
market conditions.
Local Considerations.
New York’s 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 York’s 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.
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 York’s
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
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New York itself and may issue bonds and notes within the amounts
and restrictions set forth in legislative authorization. New York’s 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 York’s
general obligation bonds were rated “Aa2” by Moody’s Investors Service, Inc. (“Moody’s”), “AA” by Standard & Poor’s Ratings Services (“S&P”), and “AA” by Fitch
Ratings (“Fitch”). It is not possible to determine whether, or the extent to which, Moody’s, S&P or Fitch will change such ratings in the future. Ratings assigned to individual Municipal Obligations may vary.
Statement
of Additional Information – January 28, 2015
|
C-8
|
APPENDIX D — 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 AMT-Free California Intermediate Muni Bond Fund
Columbia AMT-Free Georgia Intermediate Muni Bond Fund
Columbia AMT-Free Maryland Intermediate Muni Bond Fund
Columbia AMT-Free North Carolina Intermediate Muni Bond Fund
Columbia AMT-Free South Carolina Intermediate Muni Bond Fund
Columbia AMT-Free Virginia Intermediate Muni Bond Fund
Columbia Capital Allocation Moderate Aggressive Portfolio
Columbia Capital Allocation Moderate Conservative Portfolio
Columbia Convertible Securities 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 Masters International Equity Portfolio
Columbia Mid Cap Index Fund
Columbia Mid Cap
Value Fund
Columbia Multi-Advisor International Equity 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 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 Adaptive Alternatives Fund
Columbia Adaptive Risk Allocation
Fund
Columbia AMT-Free Connecticut Intermediate Muni Bond Fund
Columbia AMT-Free Intermediate Muni Bond Fund
Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund
Columbia AMT-Free New York Intermediate Muni Bond Fund
Columbia AMT-Free Oregon Intermediate Muni Bond Fund
Columbia Balanced Fund
Columbia Bond Fund
Columbia California Tax-Exempt Fund
Columbia Contrarian Core Fund
Columbia Corporate Income
Fund
Columbia Diversified Absolute Return 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 Global Technology Growth Fund
Columbia Greater China Fund
Columbia High Yield Municipal Fund
Columbia Intermediate Bond Fund
Columbia International Bond
Fund
Columbia Large Cap Growth Fund
Columbia Mid Cap Growth Fund
Columbia New York Tax-Exempt Fund
Columbia Pacific/Asia Fund
Columbia Real Estate Equity 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 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
Emerging Markets Macro Fund
Columbia Absolute Return Enhanced Multi-Strategy Fund
Columbia Absolute Return Multi-Strategy 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 European Equity Fund
Columbia Flexible Capital Income Fund
Columbia Floating Rate Fund
Columbia Global Bond Fund
Columbia Global Equity Value Fund
Columbia Global
Infrastructure Fund
Columbia Global Opportunities Fund
Columbia High Yield Bond Fund
Columbia Income Builder Fund
Columbia Income Opportunities Fund
Statement
of Additional Information – January 28, 2015
|
D-1
|
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 Minnesota Tax-Exempt Fund
Columbia
Money Market Fund
Columbia Mortgage Opportunities Fund
Columbia Multi-Advisor Small Cap
Value Fund
Columbia Select Global Equity 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 Small/Mid Cap Value Fund
Columbia U.S. Government Mortgage Fund
Statement
of Additional Information – January 28, 2015
|
D-2
|
APPENDIX S — 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:
■
|
Individual or
joint accounts;
|
■
|
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);
|
■
|
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;
|
■
|
Revocable trust
accounts for which you or an immediate family member, individually, is the beneficial owner/grantor;
|
■
|
Accounts held in
the name of your, your spouse’s, or your domestic partner’s sole proprietorship or single owner limited liability company or S corporation;
|
■
|
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
|
■
|
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:
■
|
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);
|
■
|
Accounts invested
in Class I, Class K, Class R, Class R4, Class R5 and/or Class Y shares of the Funds;
|
■
|
Investments in 529
plans, donor advised funds, variable annuities, variable life insurance products, or managed separate accounts;
|
■
|
Charitable and
irrevocable trust accounts;
|
■
|
Accounts holding
shares of money market Funds that used the Columbia brand before May 1, 2010; and
|
■
|
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.)
|
Statement
of Additional Information – January 28, 2015
|
S-1
|
Your “Immediate Family” and Account Value
Aggregation
For purposes of obtaining a breakpoint discount
for Class A shares or Class T shares the value of your account will be deemed to include the value of all applicable shares in eligible Fund accounts that are held by you and your “immediate family,” which includes your spouse, domestic
partner, parent, step-parent, legal guardian, child under 21, step-child under 21, father-in-law and mother-in-law, provided that you and your immediate family members share the same mailing address. Any Fund accounts linked together for account
value aggregation purposes as of the close of business on September 3, 2010 will be permitted to remain linked together. Group plan accounts are valued at the plan level.
Sales Charge Waivers
Front-End Sales Charge Waivers
The following categories of investors may buy Class A, Class E and
Class T shares at net asset value, without payment of any front-end sales charge that would otherwise apply:
■
|
Current or retired
fund Board members, officers or employees of the funds or Columbia Management or its affiliates
(a)
;
|
■
|
Current or retired
Ameriprise Financial Services, Inc. (Ameriprise Financial Services) financial advisors and employees of such financial advisors
(a)
;
|
■
|
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
(a)
;
|
■
|
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;
|
■
|
Portfolio managers
employed by subadvisers of the funds
(a)
;
|
■
|
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;
|
■
|
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;
|
■
|
Employees of Bank
of America, its affiliates and subsidiaries;
|
■
|
Employees or
partners of Columbia Wanger Asset Management, LLC and Marsico Capital Management, LLC (or their successors);
|
■
|
(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;
|
■
|
Separate accounts
established and maintained by an insurance company which are exempt from registration under Section 3(c)(11);
|
■
|
At a fund’s
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;
|
■
|
In the
Distributor’s 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; and
|
■
|
Purchases by
registered representatives and employees (and their immediate family members and related trusts or other entities owned by the foregoing (referred to as “Related Persons”)) of Ameriprise Financial Services and its affiliates; provided
that with respect to employees (and their Related Persons) of an affiliate of Ameriprise, such persons must make purchases through an account held at Ameriprise or its affiliates.
|
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:
■
|
Participants of
“eligible employee benefit plans” including 403(b) plans for which 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.
|
Statement
of Additional Information – January 28, 2015
|
S-2
|
Purchases of Class A, Class E and Class T shares may
be made at net asset value if they are made as follows:
■
|
With dividend or
capital gain distributions from a fund or from the same class of another fund
(b)
;
|
■
|
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;
|
■
|
Through state
sponsored college savings plans established under Section 529 of the Internal Revenue Code;
|
■
|
Through banks,
trust companies and thrift institutions, acting as fiduciaries; and
|
■
|
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.
|
(a)
|
Including their spouses or
domestic partners, children or step-children, parents, step-parents or legal guardians, and their spouse’s or domestic partner’s parents, step-parents, or legal guardians.
|
(b)
|
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 won’t pay a CDSC on redemption of
Class A, Class C and Class T shares:
■
|
In the event of
the shareholder’s death;
|
■
|
For which no sales
commission or transaction fee was paid to an authorized selling agent at the time of purchase;
|
■
|
Purchased through
reinvestment of dividend and capital gain distributions;
|
■
|
In an account that
has been closed because it falls below the minimum account balance;
|
■
|
That result from
required minimum distributions taken from retirement accounts upon the shareholder’s attainment of age 70½;
|
■
|
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;
|
■
|
Of Class A shares
of a fund initially purchased by an employee benefit plan;
|
■
|
Other than Class A
shares of a fund initially purchased by an employee benefit plan that are not connected with a plan level termination;
|
■
|
In connection with
the fund’s Small Account Policy (as described in the applicable prospectus); and
|
Statement
of Additional Information – January 28, 2015
|
S-3
|
■
|
At a fund’s
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 won’t pay a CDSC on redemption of
Class B or Class F shares:
■
|
In the event of
the shareholder’s death; and
|
■
|
That result from
required minimum distributions taken from retirement accounts upon the shareholder’s attainment of age 70½.
|
Shareholders won’t pay a CDSC on the following
categories of redemptions of Class B or Class F shares purchased prior to September 7, 2010:
■
|
By health savings
accounts sponsored by third party platforms, including those sponsored by Bank of America affiliates.*
|
■
|
For medical
payments that exceed 7.5% of income.*
|
■
|
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.*
|
■
|
Occurring 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 account’s value as long as distributions are reinvested. Otherwise, a CDSC will be charged on
SWP sales until this requirement is met.
|
■
|
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.*
|
■
|
Shares redeemed in
connection with loans from qualified retirement plans to shareholders.*
|
■
|
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 or Class F shares of a series of CFST or CFST I purchased prior to September 7, 2010:
■
|
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 59½.**
|
*
|
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 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 won’t pay a CDSC on the following
categories of redemptions of Class B shares of a series of CFST II:
■
|
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.
|
■
|
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 59½ 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.
|
■
|
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 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.
|
Statement
of Additional Information – January 28, 2015
|
S-4
|
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. In addition to the categories of Class Z investors described in the prospectuses, the minimum initial investments in Class Z shares are as
follows:
There is no minimum initial
investment in Class Z shares for any health savings account sponsored by a third party platform.
The minimum initial investment in Class Z shares for
the following eligible investors is $1,000:
■
|
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:
■
|
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.
|
■
|
Any employee (or
family member of an employee) of Bank of America or one of its subsidiaries.
|
■
|
Any investor
buying shares through a Columbia Management state tuition plan organized under Section 529 of the Internal Revenue Code.
|
■
|
Any trustee or
director (or family member of a trustee or director) of a fund distributed by the Distributor.
|
■
|
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, 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 a series of CFST II on or after June 13, 2009 automatically convert to Class A shares after you’ve 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.
The following rules apply to the conversion of Class
B shares to Class A shares:
■
|
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.
|
■
|
Any shares you
received from reinvested distributions on these shares generally will convert to Class A shares at the same time.
|
■
|
You’ll
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.
|
Statement
of Additional Information – January 28, 2015
|
S-5
|
■
|
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:
■
|
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.
|
■
|
Any shares you
received from reinvested distributions on these shares generally will convert to Class E shares at the same time.
|
■
|
You’ll
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.
|
■
|
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 CDSC.
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 in the Fund’s prospectus(es).
Additional Information About Minimum Initial
Investments
The Distributor, in its sole discretion, may also
waive minimum initial investment requirements. Minimum investment and related requirements may be modified at any time, with or without prior notice.
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 changing legal ownership of your account.
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.
Statement
of Additional Information – January 28, 2015
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S-6
|
Statement
of Additional Information – January 28, 2015
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S-7
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PART C. OTHER INFORMATION
Item 28. Exhibits.
(a)(1)
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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.
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(a)(2)
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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.
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(b)
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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.
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(d)(1)
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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.
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(d)(2)(i)
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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.
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(d)(2)(ii)
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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)
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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.
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(d)(2)(iv)
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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)
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Restated Schedule A, dated December 19, 2014, to the Multi-Fund Investment Management Services Agreement, dated May 1, 2010, is filed herewith as Exhibit (d)(2)(v) to Post-Effective Amendment No. 219 to
Registration Statement No. 2-99356 of the Registrant on Form N-1A.
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(d)(3)
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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.
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(d)(3)(1)
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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.
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(d)(4)
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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.
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(d)(5)
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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. 99356 of the Registrant on Form N-1A (Exhibit (d)(5)), filed on May 30, 2014.
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(d)(6)
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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.
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(d)(7)
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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.
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(d)(7)(1)
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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.
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(d)(8)
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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.
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(d)(9)
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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.
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(d)(10)
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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.
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(d)(11)
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Subadvisory Agreement between Columbia Management Investment Advisers, LLC and Conestoga Capital Advisors, LLC dated June 11, 2014, is incorporated by reference to Post-Effective Amendment No. 205 to
Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (d)(11), filed on August 28, 2014.
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(d)(12)
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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.
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(d)(13)
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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.
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(d)(14)
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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.
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(d)(15)
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Investment Management Services Agreement between Columbia Management Investment Advisers, LLC and CAAF Offshore Fund, Ltd., a subsidiary of Columbia Adaptive Alternatives Fund, dated December 19, 2014, is filed
herewith as Exhibit (d)(15) to Post-Effective Amendment No. 219 to Registration Statement No. 2-99356 of the Registrant on
Form N-1A.
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(d)(16)
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Investment Management Services Agreement between Columbia Management Investment Advisers, LLC and CDARF1 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014, is
filed herewith as Exhibit (d)(16) to Post-Effective Amendment No. 219 to Registration Statement No. 2-99356 of the Registrant on Form N-1A.
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(d)(17)
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Investment Management Services Agreement between Columbia Management Investment Advisers, LLC and CDARF2 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014, is
filed herewith as Exhibit (d)(17) to Post-Effective Amendment No. 219 to Registration Statement No. 2-99356 of the Registrant on Form N-1A.
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(d)(18)
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Investment Management Services Agreement between Columbia Management Investment Advisers, LLC and CDARF3 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014, is
filed herewith as Exhibit (d)(18) to Post-Effective Amendment No. 219 to Registration Statement No. 2-99356 of the Registrant on Form N-1A.
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(e)(1)
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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.
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(e)(2)
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Restated Schedule I, dated as of December 19, 2014, to Distribution Agreement by and between the Registrant and Columbia Management Investment Distributors, Inc., dated as of September 7, 2010, is filed herewith as
Exhibit (e)(2) to Post-Effective Amendment No. 219 to Registration Statement No.2-99356 of the Registrant on Form N-1A.
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(e)(3)
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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.
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(f)
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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.
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(g)(1)
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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.
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(g)(2)
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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.
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(h)(1)(i)
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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 to Registration 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)
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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.
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(h)(1)(iii)
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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.
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(h)(1)(iv)
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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.
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(h)(1)(v)
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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.
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(h)(1)(vi)
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Restated Schedule A and Schedule B, effective December 19, 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, are filed herewith as Exhibit (h)(1)(vi) to Post-Effective Amendment No. 219 to Registration Statement No.2-99356 of the Registrant on Form N-1A.
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(h)(2)(i)
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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.
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(h)(2)(ii)
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Schedule A, as of December 19, 2014, and Schedule B, as of November 1, 2014, 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 filed herewith as Exhibit (h)(2)(ii) to Post-Effective Amendment No. 219 to Registration Statement No. 2-99356 of the Registrant on Form N-1A.
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(h)(3)
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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.
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(h)(4)
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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)
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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.
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(h)(5)(ii)
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Restated Schedule A, effective December 19, 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 filed herewith as Exhibit (h)(5)(ii) to Post-Effective Amendment No. 219 to Registration Statement No.2-99356 of the Registrant on Form N-1A.
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(h)(6)
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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.
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(h)(7)
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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.
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(h)(8)
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Administrative Services Agreement between Columbia Management Investment Advisers, LLC and, CAAF Offshore Fund, Ltd., a subsidiary of Columbia Adaptive Alternatives Fund, dated December 19, 2014, is filed herewith
as Exhibit (h)(8) to Post-Effective Amendment No. 219 to Registration Statement No. 2-99356 of the Registrant on Form N-1A.
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(h)(9)
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Administrative Services Agreement between Columbia Management Investment Advisers, LLC and, CDARF1 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014, is filed
herewith as Exhibit (h)(9) to Post-Effective Amendment No. 219 to Registration Statement No. 2-99356 of the Registrant on
Form N-1A.
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(h)(10)
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Administrative Services Agreement between Columbia Management Investment Advisers, LLC and, CDARF2 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014, is filed
herewith as Exhibit (h)(10) to Post-Effective Amendment No. 219 to Registration Statement No. 2-99356 of the Registrant on
Form N-1A.
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(h)(11)
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Administrative Services Agreement between Columbia Management Investment Advisers, LLC and, CDARF3 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014, is filed
herewith as Exhibit (h)(11) to Post-Effective Amendment No. 219 to Registration Statement No. 2-99356 of the Registrant on
Form N-1A.
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(h)(12)
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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.
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(h)(13)
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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.
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(i)(1)
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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.
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(i)(2)
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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.
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(i)(3)
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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.
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(i)(4)
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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.
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(i)(5)
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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.
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(i)(6)
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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.
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(i)(7)
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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.
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(i)(8)
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Opinion of Counsel of Ropes & Gray LLP, with respect to Columbia Adaptive Alternatives Fund and Columbia Diversified Absolute Return Fund, is filed herewith as Exhibit (i)(8) to Post-Effective Amendment
No. 219 to Registration Statement No. 2-99356 of the Registrant on Form N-1A.
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(j)(1)
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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.
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(j)(2)
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Consent of PricewaterhouseCoopers LLP: Not Applicable.
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(k)
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Omitted Financial Statements: Not Applicable.
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(l)
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Initial Capital Agreement: Not Applicable.
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(m)(1)
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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.
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(m)(2)
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Amended and Restated Shareholder Servicing Plan, as of December 19, 2014, for certain Fund share classes of the Registrant, is filed herewith as Exhibit (m)(2) to Post-Effective Amendment No. 219 to Registration
Statement No. 2-99356 of the Registrant on Form N-1A.
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(m)(3)
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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.
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(m)(4)
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Restated Schedule I, effective October 1, 2014, to 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. 207 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (m)(5)), filed on September 26, 2014.
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(m)(5)
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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.
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(m)(6)
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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.
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(n)
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Rule 18f 3 Multi-Class Plan, amended and restated as of November 1, 2014, is incorporated by reference to Post-Effective Amendment No. 213 to Registration Statement No. 2-99356 of the Registrant on
Form N-1A (Exhibit (n)), filed on November 25, 2014.
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(p)(1)
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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.
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(p)(2)
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Columbia Management Investment Advisers, LLC, Columbia Management Investment Distributors, Inc. and Threadneedle International Ltd Code of Ethics, effective December 8, 2014, is incorporated by reference to
Post-Effective Amendment No. 120 to Registration Statement No. 333-131683 of Columbia Funds Series Trust II on Form N-1A (Exhibit (p)(2)), filed on November 25, 2014.
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(p)(3)
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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.
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(p)(4)
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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.
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(p)(5)
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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.
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(p)(6)
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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.
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(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 July 1, 2014, is incorporated by reference to Post-Effective Amendment
No. 211 to Registration Statement No. 2-99356 of the Registrant on Form N-1A (Exhibit (p)(9), filed on October 24, 2014.
|
(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 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)(5)
|
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)(6)
|
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 the 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
|
|
|
|
Joseph Kringdon
|
|
President and Head of Intermediary Distribution
|
|
None
|
|
|
|
Amy Unckless
|
|
Managing Director, Head of Private Wealth Management and Investment Only
|
|
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, Chief Legal Officer and Assistant Secretary
|
|
|
|
Stephen O. Buff
|
|
Vice President, Chief Compliance Officer
|
|
None
|
|
|
|
Hector DeMarchena
|
|
Vice President Institutional Asset Management Product Administration and Assistant Treasurer
|
|
None
|
|
|
|
Joe Feloney
|
|
Vice President National Sales Manager U.S. Trust/Private Wealth Management
|
|
None
|
|
|
|
Thomas A. Jones
|
|
Vice President and head of 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
|
|
|
|
James L. Hamalainen
|
|
Treasurer
|
|
|
|
|
|
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.
|
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 former 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 and Company, L.P., 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., 505 Wakara Way, 3
rd
Floor, Salt Lake City, UT 84108;
|
|
|
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 of the requirements for effectiveness of this Amendment to its Registration Statement under Rule 485(b) under the Securities Act 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
27
th
day of January, 2015.
|
|
|
COLUMBIA FUNDS SERIES TRUST I
|
|
|
By:
|
|
/s/ Christopher O. Petersen
|
|
|
Christopher O. Petersen
|
|
|
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
27
th
day of January, 2015.
|
|
|
|
|
|
|
Signature
|
|
Capacity
|
|
Signature
|
|
Capacity
|
|
|
|
|
/s/ Christopher O. Petersen
Christopher O. Petersen
|
|
President
(Principal Executive
Officer)
|
|
/s/ David M. Moffett*
David M. Moffett
|
|
Trustee
|
|
|
|
|
/s/ Michael G. Clarke
Michael G. Clarke
|
|
Chief Financial Officer
(Principal Financial
Officer)
|
|
/s/ Charles R. Nelson*
Charles R. Nelson
|
|
Trustee
|
|
|
|
|
/s/ Joseph F. DiMaria
Joseph F. DiMaria
|
|
Chief Accounting Officer
(Principal Accounting
Officer)
|
|
/s/ John J. Neuhauser*
John J. Neuhauser
|
|
Trustee
|
|
|
|
|
/s/ Douglas A. Hacker*
Douglas A. Hacker
|
|
Chair of the Board
|
|
/s/ Patrick J. Simpson*
Patrick J. Simpson
|
|
Trustee
|
|
|
|
|
/s/ Janet Langford Kelly*
Janet Langford Kelly
|
|
Trustee
|
|
/s/ William F. Truscott*
William F. Truscott
|
|
Trustee
|
|
|
|
|
/s/ Nancy T. Lukitsh*
Nancy T. Lukitsh
|
|
Trustee
|
|
/s/ Anne-Lee Verville*
Anne-Lee Verville
|
|
Trustee
|
|
|
|
|
/s/ William E. Mayer*
William E. Mayer
|
|
Trustee
|
|
|
|
|
|
|
|
|
|
* 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.
|
SIGNATURES
CAAF Offshore Fund, Ltd. has duly caused this Amendment to the Registration Statement for Columbia Adaptive Alternatives Fund, with respect only to
information that specifically relates to CAAF Offshore Fund, Ltd., to be signed on its behalf by the undersigned, duly authorized, on the 27
th
day of January, 2015.
|
|
|
CAAF OFFSHORE FUND, LTD.
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
|
|
Amy K. Johnson
|
|
|
Director
|
This Amendment to the Registration Statement for Columbia Adaptive Alternatives Fund, with respect only to
information that specifically relates to CAAF Offshore Fund, Ltd., has been signed below by the following persons in the capacities indicated on the 27
th
day of January, 2015.
|
|
|
|
|
Signature
|
|
Capacity
|
|
|
|
|
|
/s/ Amy K. Johnson
|
|
Director, CAAF Offshore Fund, Ltd.
|
|
|
Amy K. Johnson
|
|
|
|
|
|
|
|
/s/ Anthony P. Haugen
|
|
Director, CAAF Offshore Fund, Ltd.
|
|
|
Anthony P. Haugen
|
|
|
|
|
|
|
|
/s/ Christopher O. Petersen
|
|
Director, CAAF Offshore Fund, Ltd.
|
|
|
Christopher O. Petersen
|
|
|
|
|
SIGNATURES
CDARF1 Offshore Fund, Ltd. has duly caused this Amendment to the Registration Statement for Columbia Diversified Absolute Return Fund, with respect only to
information that specifically relates to CDARF1 Offshore Fund, Ltd., to be signed on its behalf by the undersigned, duly authorized, on the 27
th
day of January, 2015.
|
|
|
CDARF1 OFFSHORE FUND, LTD.
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
|
|
Amy K. Johnson
|
|
|
Director
|
This Amendment to the Registration Statement for Columbia Diversified Absolute Return Fund, with respect only
to information that specifically relates to CDARF1 Offshore Fund, Ltd., has been signed below by the following persons in the capacities indicated on the 27
th
day of January, 2015.
|
|
|
|
|
Signature
|
|
Capacity
|
|
|
|
|
|
/s/ Amy K. Johnson
|
|
Director, CDARF1 Offshore Fund, Ltd.
|
|
|
Amy K. Johnson
|
|
|
|
|
|
|
|
/s/ Anthony P. Haugen
|
|
Director, CDARF1 Offshore Fund, Ltd.
|
|
|
Anthony P. Haugen
|
|
|
|
|
|
|
|
/s/ Christopher O. Petersen
|
|
Director, CDARF1 Offshore Fund, Ltd.
|
|
|
Christopher O. Petersen
|
|
|
|
|
SIGNATURES
CDARF2 Offshore Fund, Ltd. has duly caused this Amendment to the Registration Statement for Columbia Diversified Absolute Return Fund, with respect only to
information that specifically relates to CDARF2 Offshore Fund, Ltd., to be signed on its behalf by the undersigned, duly authorized, on the 27
th
day of January, 2015.
|
|
|
CDARF2 OFFSHORE FUND, LTD.
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
|
|
Amy K. Johnson
|
|
|
Director
|
This Amendment to the Registration Statement for Columbia Diversified Absolute Return Fund, with respect only
to information that specifically relates to CDARF2 Offshore Fund, Ltd., has been signed below by the following persons in the capacities indicated on the 27
th
day of January, 2015.
|
|
|
|
|
Signature
|
|
Capacity
|
|
|
|
|
|
/s/ Amy K. Johnson
|
|
Director, CDARF2 Offshore Fund, Ltd.
|
|
|
Amy K. Johnson
|
|
|
|
|
|
|
|
/s/ Anthony P. Haugen
|
|
Director, CDARF2 Offshore Fund, Ltd.
|
|
|
Anthony P. Haugen
|
|
|
|
|
|
|
|
/s/ Christopher O. Petersen
|
|
Director, CDARF2 Offshore Fund, Ltd.
|
|
|
Christopher O. Petersen
|
|
|
|
|
SIGNATURES
CDARF3 Offshore Fund, Ltd. has duly caused this Amendment to the Registration Statement for Columbia Diversified Absolute Return Fund, with respect only to
information that specifically relates to CDARF3 Offshore Fund, Ltd., to be signed on its behalf by the undersigned, duly authorized, on the 27
th
day of January, 2015.
|
|
|
CDARF3 OFFSHORE FUND, LTD.
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
|
|
Amy K. Johnson
|
|
|
Director
|
This Amendment to the Registration Statement for Columbia Diversified Absolute Return Fund, with respect only
to information that specifically relates to CDARF3 Offshore Fund, Ltd., has been signed below by the following persons in the capacities indicated on the 27
th
day of January, 2015.
|
|
|
|
|
Signature
|
|
Capacity
|
|
|
|
|
|
/s/ Amy K. Johnson
|
|
Director, CDARF3 Offshore Fund, Ltd.
|
|
|
Amy K. Johnson
|
|
|
|
|
|
|
|
/s/ Anthony P. Haugen
|
|
Director, CDARF3 Offshore Fund, Ltd.
|
|
|
Anthony P. Haugen
|
|
|
|
|
|
|
|
/s/ Christopher O. Petersen
|
|
Director, CDARF3 Offshore Fund, Ltd.
|
|
|
Christopher O. Petersen
|
|
|
|
|
Exhibit Index
|
|
|
(d)(2)(v)
|
|
Restated Schedule A, dated December 19, 2014, to the Multi-Fund Investment Management Services Agreement, dated May 1, 2010.
|
|
|
(d)(15)
|
|
Investment Management Services Agreement between Columbia Management Investment Advisers, LLC and CAAF Offshore Fund, Ltd., a subsidiary of Columbia Adaptive Alternatives Fund, dated December 19, 2014.
|
|
|
(d)(16)
|
|
Investment Management Services Agreement between Columbia Management Investment Advisers, LLC and CDARF1 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014.
|
|
|
(d)(17)
|
|
Investment Management Services Agreement between Columbia Management Investment Advisers, LLC and CDARF2 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014.
|
|
|
(d)(18)
|
|
Investment Management Services Agreement between Columbia Management Investment Advisers, LLC and CDARF3 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014.
|
|
|
(e)(2)
|
|
Restated Schedule I, dated as of December 19, 2014, to Distribution Agreement by and between the Registrant and Columbia Management Investment Distributors, Inc., dated as of September 7, 2010.
|
|
|
(h)(1)(vi)
|
|
Restated Schedule A and Schedule B, effective December 19, 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.
|
|
|
(h)(2)(ii)
|
|
Schedule A, as of December 19, 2014, and Schedule B, as of November 1, 2014, 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.
|
|
|
(h)(5)(ii)
|
|
Restated Schedule A, effective December 19, 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.
|
|
|
(h)(8)
|
|
Administrative Services Agreement between Columbia Management Investment Advisers, LLC and, CAAF Offshore Fund, Ltd., a subsidiary of Columbia Adaptive Alternatives Fund, dated December 19, 2014.
|
|
|
(h)(9)
|
|
Administrative Services Agreement between Columbia Management Investment Advisers, LLC and, CDARF1 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014.
|
|
|
(h)(10)
|
|
Administrative Services Agreement between Columbia Management Investment Advisers, LLC and, CDARF2 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014.
|
|
|
(h)(11)
|
|
Administrative Services Agreement between Columbia Management Investment Advisers, LLC and, CDARF3 Offshore Fund, Ltd., a subsidiary of Columbia Diversified Absolute Return Fund, dated December 19, 2014.
|
|
|
(i)(8)
|
|
Opinion of Counsel of Ropes & Gray LLP, with respect to Columbia Adaptive Alternatives Fund and Columbia Diversified Absolute Return Fund.
|
|
|
(m)(2)
|
|
Amended and Restated Shareholder Servicing Plan, as of December 19, 2014, for certain Fund share classes of the Registrant.
|
Schedule A
Effective as of December 19, 2014
The following fund shall not pay the Investment Manager a direct fee for services rendered hereunder:
|
|
|
Columbia Intermediary Alternatives Fund
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
|
|
Effective Date of
Fee Rate
|
Active Portfolios Multi-Manager Alternative Strategies Fund
(2)
|
|
$0 - $500
|
|
|
1.020
|
%
|
|
March 14, 2012
|
|
|
>$500 - $1,000
|
|
|
0.975
|
%
|
|
|
|
|
>$1,000 - $3,000
|
|
|
0.950
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.930
|
%
|
|
|
|
|
>$6,000
|
|
|
0.900
|
%
|
|
|
|
|
|
|
Active Portfolios Multi-Manager Core Plus Bond Fund
|
|
$0 - $1,000
|
|
|
0.430
|
%
|
|
March 14, 2012
|
|
|
>$1,000 - $2,000
|
|
|
0.420
|
%
|
|
|
|
|
>$2,000 - $6,000
|
|
|
0.400
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.380
|
%
|
|
|
|
|
>$7,500 - $9,000
|
|
|
0.365
|
%
|
|
|
|
|
>$9,000 - $12,000
|
|
|
0.360
|
%
|
|
|
|
|
>$12,000 - $20,000
|
|
|
0.350
|
%
|
|
|
|
|
>$20,000 - $24,000
|
|
|
0.340
|
%
|
|
|
|
|
>$24,000 - $50,000
|
|
|
0.320
|
%
|
|
|
|
|
>$50,000
|
|
|
0.300
|
%
|
|
|
|
|
|
|
Active Portfolios Multi-Manager Growth Fund
|
|
$0 - $500
|
|
|
0.710
|
%
|
|
March 14, 2012
|
|
|
>$500 - $1,000
|
|
|
0.665
|
%
|
|
|
|
|
>$1,000 - $1,500
|
|
|
0.620
|
%
|
|
|
|
|
>$1,500 - $3,000
|
|
|
0.570
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.560
|
%
|
|
|
|
|
>$6,000
|
|
|
0.540
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
|
|
Effective Date of
Fee Rate
|
Active Portfolios Multi-Manager Small Cap Equity Fund
|
|
$0 - $250
|
|
|
0.900
|
%
|
|
March 14, 2012
|
|
|
>$250 - $500
|
|
|
0.850
|
%
|
|
|
|
|
>$500
|
|
|
0.800
|
%
|
|
|
|
|
|
|
Columbia Adaptive Alternatives Fund
(2)
|
|
All
|
|
|
1.25
|
%
|
|
December 19, 2014
|
|
|
|
|
Columbia AMT-Free Connecticut Intermediate Muni Bond Fund
|
|
$0 - $500
|
|
|
0.400
|
%
|
|
March 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.350
|
%
|
|
|
|
|
>$1,000 - $3,000
|
|
|
0.320
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.290
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.280
|
%
|
|
|
|
|
>$7,500
|
|
|
0.270
|
%
|
|
|
|
|
|
|
Columbia AMT-Free Intermediate Muni Bond Fund
|
|
$0 - $1,000
|
|
|
0.410
|
%
|
|
March 1, 2011
|
|
|
>$1,000 - $2,000
|
|
|
0.385
|
%
|
|
|
|
|
>$2,000 - $3,000
|
|
|
0.360
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.335
|
%
|
|
|
|
|
>$6,000 - $9,000
|
|
|
0.310
|
%
|
|
|
|
|
>$9,000 - $10,000
|
|
|
0.300
|
%
|
|
|
|
|
>$10,000 - $15,000
|
|
|
0.290
|
%
|
|
|
|
|
>$15,000 - $24,000
|
|
|
0.280
|
%
|
|
|
|
|
>$24,000 - $50,000
|
|
|
0.260
|
%
|
|
|
|
|
>$50,000
|
|
|
0.250
|
%
|
|
|
|
|
|
|
Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund
|
|
$0 - $500
|
|
|
0.400
|
%
|
|
March 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.350
|
%
|
|
|
|
|
>$1,000 - $3,000
|
|
|
0.320
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.290
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.280
|
%
|
|
|
|
|
>$7,500
|
|
|
0.270
|
%
|
|
|
|
|
|
|
Columbia AMT-Free New York Intermediate Muni Bond Fund
|
|
$0 - $500
|
|
|
0.400
|
%
|
|
March 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.350
|
%
|
|
|
|
|
>$1,000 - $3,000
|
|
|
0.320
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.290
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.280
|
%
|
|
|
|
|
>$7,500
|
|
|
0.270
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
|
|
Effective Date of
Fee Rate
|
Columbia AMT-Free Oregon Intermediate Muni Bond Fund
|
|
$0 - $500
|
|
|
0.400
|
%
|
|
July 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.350
|
%
|
|
|
|
|
>$1,000 - $3,000
|
|
|
0.320
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.290
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.280
|
%
|
|
|
|
|
>$7,500
|
|
|
0.270
|
%
|
|
|
|
|
|
|
Columbia Balanced Fund
|
|
$0 - $500
|
|
|
0.660
|
%
|
|
March 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.615
|
%
|
|
|
|
|
>$1,000 - $1,500
|
|
|
0.570
|
%
|
|
|
|
|
>$1,500 - $3,000
|
|
|
0.520
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.510
|
%
|
|
|
|
|
>$6,000
|
|
|
0.490
|
%
|
|
|
|
|
|
|
Columbia Bond Fund
|
|
$0 - $1,000
|
|
|
0.430
|
%
|
|
March 1, 2011
|
|
|
>$1,000 - $2,000
|
|
|
0.420
|
%
|
|
|
|
|
>$2,000 - $6,000
|
|
|
0.400
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.380
|
%
|
|
|
|
|
>$7,500 - $9,000
|
|
|
0.365
|
%
|
|
|
|
|
>$9,000 - $12,000
|
|
|
0.360
|
%
|
|
|
|
|
>$12,000 - $20,000
|
|
|
0.350
|
%
|
|
|
|
|
>$20,000 - $24,000
|
|
|
0.340
|
%
|
|
|
|
|
>$24,000 - $50,000
|
|
|
0.320
|
%
|
|
|
|
|
>$50,000
|
|
|
0.300
|
%
|
|
|
|
|
|
|
Columbia California Tax-Exempt Fund
|
|
$0 - $500
|
|
|
0.400
|
%
|
|
March 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.350
|
%
|
|
|
|
|
>$1,000 - $3,000
|
|
|
0.320
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.290
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.280
|
%
|
|
|
|
|
>$7,500
|
|
|
0.270
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
|
|
Effective Date of
Fee Rate
|
Columbia Contrarian Core Fund
|
|
$0 - $500
|
|
|
0.710
|
%
|
|
March 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.665
|
%
|
|
|
|
|
>$1,000 - $1,500
|
|
|
0.620
|
%
|
|
|
|
|
>$1,500 - $3,000
|
|
|
0.570
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.560
|
%
|
|
|
|
|
>$6,000
|
|
|
0.540
|
%
|
|
|
|
|
|
|
Columbia Corporate Income Fund
|
|
$0 - $1,000
|
|
|
0.430
|
%
|
|
July 1, 2011
|
|
|
>$1,000 - $2,000
|
|
|
0.420
|
%
|
|
|
|
|
>$2,000 - $6,000
|
|
|
0.400
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.380
|
%
|
|
|
|
|
>$7,500 - $9,000
|
|
|
0.365
|
%
|
|
|
|
|
>$9,000 - $12,000
|
|
|
0.360
|
%
|
|
|
|
|
>$12,000 - $20,000
|
|
|
0.350
|
%
|
|
|
|
|
>$20,000 - $24,000
|
|
|
0.340
|
%
|
|
|
|
|
>$24,000 - $50,000
|
|
|
0.320
|
%
|
|
|
|
|
>$50,000
|
|
|
0.300
|
%
|
|
|
|
|
|
|
Columbia Diversified Absolute Return Fund
(2)
|
|
$0 - $500
|
|
|
1.10
|
%
|
|
December 19, 2014
|
|
|
>$500 - $1,000
|
|
|
1.055
|
%
|
|
|
|
|
>$1,000 - $3,000
|
|
|
1.03
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
1.01
|
%
|
|
|
|
|
>$6,000
|
|
|
0.98
|
%
|
|
|
|
|
|
|
Columbia Dividend Income Fund
|
|
$0 - $500
|
|
|
0.660
|
%
|
|
July 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.615
|
%
|
|
|
|
|
>$1,000 - $1,500
|
|
|
0.570
|
%
|
|
|
|
|
>$1,500 - $3,000
|
|
|
0.520
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.510
|
%
|
|
|
|
|
>$6,000
|
|
|
0.490
|
%
|
|
|
|
|
|
|
Columbia Emerging Markets Fund
|
|
$0 - $250
|
|
|
1.100
|
%
|
|
March 16, 2013
|
|
|
>$250 - $500
|
|
|
1.080
|
%
|
|
|
|
|
>$500 - $750
|
|
|
1.060
|
%
|
|
|
|
|
>$750 - $1,000
|
|
|
1.040
|
%
|
|
|
|
|
>$1,000 - $1,500
|
|
|
0.800
|
%
|
|
|
|
|
>$1,500 - $3,000
|
|
|
0.750
|
%
|
|
|
|
|
$3,000 - $6,000
|
|
|
0.710
|
%
|
|
|
|
|
> $6,000
|
|
|
0.660
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
|
|
Effective Date of
Fee Rate
|
Columbia Global Dividend Opportunity Fund
|
|
$0 - $500
|
|
|
0.710
|
%
|
|
March 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.665
|
%
|
|
|
|
|
>$1,000 - $1,500
|
|
|
0.620
|
%
|
|
|
|
|
>$1,500 - $3,000
|
|
|
0.570
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.560
|
%
|
|
|
|
|
>$6,000
|
|
|
0.540
|
%
|
|
|
|
|
|
|
Columbia Global Energy and Natural Resources Fund
|
|
$0 - $1,000
|
|
|
0.690
|
%
|
|
May 1, 2011
|
|
|
>$1,000 - $1,500
|
|
|
0.620
|
%
|
|
|
|
|
>$1,500 - $3,000
|
|
|
0.570
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.560
|
%
|
|
|
|
|
>$6,000
|
|
|
0.540
|
%
|
|
|
|
|
|
|
Columbia Global Inflation-Linked Bond Plus Fund
|
|
All
|
|
|
0.620
|
%
|
|
March 10, 2014
|
|
|
|
|
Columbia Global Technology Fund
|
|
$0 - $500
|
|
|
0.870
|
%
|
|
May 1, 2010
|
|
|
>$500 - $1,000
|
|
|
0.820
|
%
|
|
|
|
|
>$1,000
|
|
|
0.770
|
%
|
|
|
|
|
|
|
Columbia High Yield Municipal Fund
|
|
$0 - $1,000
|
|
|
0.470
|
%
|
|
July 1, 2011
|
|
|
>$1,000 - $2,000
|
|
|
0.445
|
%
|
|
|
|
|
>$2,000 - $3,000
|
|
|
0.420
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.395
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.370
|
%
|
|
|
|
|
>$7,500 - $10,000
|
|
|
0.360
|
%
|
|
|
|
|
>$10,000 - $15,000
|
|
|
0.350
|
%
|
|
|
|
|
>$15,000 - $24,000
|
|
|
0.340
|
%
|
|
|
|
|
>$24,000 - $50,000
|
|
|
0.320
|
%
|
|
|
|
|
>$50,000
|
|
|
0.300
|
%
|
|
|
|
|
|
|
Columbia Intermediate Bond Fund
|
|
$0 - $1,000
|
|
|
0.430
|
%
|
|
March 1, 2011
|
|
|
>$1,000 - $2,000
|
|
|
0.420
|
%
|
|
|
|
|
>$2,000 - $6,000
|
|
|
0.400
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.380
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
|
|
Effective Date of
Fee Rate
|
|
|
>$7,500 - $9,000
|
|
|
0.365
|
%
|
|
|
|
|
>$9,000 - $12,000
|
|
|
0.360
|
%
|
|
|
|
|
>$12,000 - $20,000
|
|
|
0.350
|
%
|
|
|
|
|
>$20,000 - $24,000
|
|
|
0.340
|
%
|
|
|
|
|
>$24,000 - $50,000
|
|
|
0.320
|
%
|
|
|
|
|
>$50,000
|
|
|
0.300
|
%
|
|
|
|
|
|
|
Columbia International Bond Fund
|
|
$0 - $1,000
|
|
|
0.570
|
%
|
|
July 1, 2011
|
|
|
>$1,000 - $2,000
|
|
|
0.525
|
%
|
|
|
|
|
>$2,000 - $3,000
|
|
|
0.520
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.515
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.510
|
%
|
|
|
|
|
>$7,500 - $12,000
|
|
|
0.500
|
%
|
|
|
|
|
>$12,000 - $20,000
|
|
|
0.490
|
%
|
|
|
|
|
>$20,000 - $50,000
|
|
|
0.480
|
%
|
|
|
|
|
>$50,000
|
|
|
0.470
|
%
|
|
|
|
|
|
|
Columbia Large Cap Growth Fund
|
|
$0 - $500
|
|
|
0.710
|
%
|
|
April 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.665
|
%
|
|
|
|
|
>$1,000 - $1,500
|
|
|
0.620
|
%
|
|
|
|
|
>$1,500 - $3,000
|
|
|
0.570
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.560
|
%
|
|
|
|
|
>$6,000
|
|
|
0.540
|
%
|
|
|
|
|
|
|
Columbia Mid Cap Growth Fund
|
|
$0 - $500
|
|
|
0.760
|
%
|
|
April 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.715
|
%
|
|
|
|
|
>$1,000 - $1,500
|
|
|
0.670
|
%
|
|
|
|
|
>$1,500
|
|
|
0.620
|
%
|
|
|
|
|
|
|
Columbia New York Tax-Exempt Fund
|
|
$0 - $500
|
|
|
0.400
|
%
|
|
March 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.350
|
%
|
|
|
|
|
>$1,000 - $3,000
|
|
|
0.320
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.290
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.280
|
%
|
|
|
|
|
>$7,500
|
|
|
0.270
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
|
|
Effective Date of
Fee Rate
|
Columbia Pacific/Asia Fund
|
|
$0 - $1,000
|
|
|
0.870
|
%
|
|
July 1, 2011
|
|
|
>$1,000 - $1,500
|
|
|
0.800
|
%
|
|
|
|
|
>$1,500 - $3,000
|
|
|
0.750
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.710
|
%
|
|
|
|
|
>$6,000
|
|
|
0.660
|
%
|
|
|
|
|
|
|
Columbia Real Estate Equity Fund
|
|
$0 - $1,000
|
|
|
0.690
|
%
|
|
March 1, 2011
|
|
|
>$1,000 - $1,500
|
|
|
0.670
|
%
|
|
|
|
|
>$1,500
|
|
|
0.620
|
%
|
|
|
|
|
|
|
Columbia Select Large Cap Growth Fund
|
|
$0 - $500
|
|
|
0.710
|
%
|
|
July 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.665
|
%
|
|
|
|
|
>$1,000 - $1,500
|
|
|
0.620
|
%
|
|
|
|
|
>$1,500 - $3,000
|
|
|
0.570
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.560
|
%
|
|
|
|
|
>$6,000
|
|
|
0.540
|
%
|
|
|
|
|
|
|
Columbia Small Cap Core Fund
|
|
$0 - $500
|
|
|
0.790
|
%
|
|
July 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.745
|
%
|
|
|
|
|
>$1,000
|
|
|
0.700
|
%
|
|
|
|
|
|
|
Columbia Small Cap Growth Fund I
|
|
$0 - $500
|
|
|
0.790
|
%
|
|
March 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.745
|
%
|
|
|
|
|
>$1,000
|
|
|
0.700
|
%
|
|
|
|
|
|
|
Columbia Small Cap Value Fund I
|
|
$0 - $500
|
|
|
0.790
|
%
|
|
April 30, 2011
|
|
|
>$500 - $1,000
|
|
|
0.745
|
%
|
|
|
|
|
>$1,000
|
|
|
0.700
|
%
|
|
|
|
|
|
|
Columbia Strategic Income Fund
|
|
$0 - $500
|
|
|
0.530
|
%
|
|
May 1, 2011
|
|
|
>$500 - $1,000
|
|
|
0.525
|
%
|
|
|
|
|
>$1,000 - $2,000
|
|
|
0.515
|
%
|
|
|
|
|
>$2,000 - $3,000
|
|
|
0.495
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.480
|
%
|
|
|
|
|
>$6,000 - $7,500
|
|
|
0.455
|
%
|
|
|
|
|
>$7,500 - $9,000
|
|
|
0.440
|
%
|
|
|
|
|
>$9,000 - $10,000
|
|
|
0.431
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
|
|
Effective Date of
Fee Rate
|
|
|
>$10,000 - $15,000
|
|
|
0.419
|
%
|
|
|
|
|
>$15,000 - $20,000
|
|
|
0.409
|
%
|
|
|
|
|
>$20,000 - $24,000
|
|
|
0.393
|
%
|
|
|
|
|
>$24,000 - $50,000
|
|
|
0.374
|
%
|
|
|
|
|
>$50,000
|
|
|
0.353
|
%
|
|
|
|
|
|
|
Columbia Tax-Exempt Fund
|
|
$0 - $1,000
|
|
|
0.410
|
%
|
|
March 1, 2011
|
|
|
>$1,000 - $2,000
|
|
|
0.385
|
%
|
|
|
|
|
>$2,000 - $3,000
|
|
|
0.360
|
%
|
|
|
|
|
>$3,000 - $6,000
|
|
|
0.335
|
%
|
|
|
|
|
>$6,000 - $9,000
|
|
|
0.310
|
%
|
|
|
|
|
>$9,000 - $10,000
|
|
|
0.300
|
%
|
|
|
|
|
>$10,000 - $15,000
|
|
|
0.290
|
%
|
|
|
|
|
>$15,000 - $24,000
|
|
|
0.280
|
%
|
|
|
|
|
>$24,000 - $50,000
|
|
|
0.260
|
%
|
|
|
|
|
>$50,000
|
|
|
0.250
|
%
|
|
|
|
|
|
|
Columbia U.S. Treasury Index Fund
|
|
All Assets
|
|
|
0.100
|
%
|
|
May 1, 2010
|
|
|
|
|
Columbia Value and Restructuring Fund
|
|
$0 - $3,000
|
|
|
0.690
|
%
|
|
August 1, 2012
|
|
|
>$3,000 - $6,000
|
|
|
0.560
|
%
|
|
|
|
|
>$6,000
|
|
|
0.540
|
%
|
|
|
(1)
|
Annual rates based on a percentage of the Funds average daily net assets.
|
(2)
|
When calculating asset levels for purposes of determining fee breakpoints, asset levels are based on net assets of the Fund, including assets invested in any wholly-owned subsidiary advised by the Investment Manager
(Subsidiaries). Fees payable by the Fund under this agreement shall be reduced by any investment management service fees paid to the Investment Manager by any Subsidiaries under separate investment management services agreements with the
Subsidiaries.
|
Fee Schedule for Columbia Adaptive Risk Allocation Fund Effective June 18, 2012:
|
|
|
|
|
Category of Portfolio Investment
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
Category 1:
Assets invested in affiliated mutual funds, exchange-traded funds and closed-end funds that pay an investment management services fee to the Investment Manager
|
|
N/A
|
|
0.00%
|
|
|
|
Category 2:
Assets invested in exchange-traded funds and mutual funds that are not managed by the Investment Manager or its affiliates
|
|
All
|
|
0.10%
|
|
|
|
Category 3:
Securities, instruments and other assets not described above, including without limitation affiliated mutual funds, exchange-traded funds 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
|
|
$0 - $500
>$500 - $1,000
>$1,000 - $1,5000
>$1,500 - $3,000
>$3,000 - $6,000
>$6,000 - $12,000
>
$12,000
|
|
0.70%
0.69%
0.68%
0.67%
0.65%
0.625%
0.60%
|
Fee Schedule for Columbia Diversified Real Return Fund Effective March 10, 2014:
|
|
|
|
|
Category of Portfolio Investment
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
Category 1:
Assets invested in affiliated mutual funds, exchange-traded funds and closed-end funds that pay an investment management services fee to the Investment Manager
|
|
N/A
|
|
0.00%
|
|
|
|
Category 2:
Assets invested in exchange traded funds and mutual funds that are not management by the Investment Manager or its affiliates. Securities, instruments and other assets not described above, including
without limitation affiliated mutual funds, exchange-traded funds 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
|
|
All
|
|
0.70%
|
(1)
|
Annual rates based on a percentage of the Funds average daily net assets. In no event shall the advisory fee be negative (even if the portfolio investments in a particular category have a negative net value).
|
IN WITNESS THEREOF, the parties hereto have executed the foregoing Schedule A as of December 19, 2014.
COLUMBIA FUNDS SERIES TRUST I
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
Name:
|
|
Michael G. Clarke
|
Title:
|
|
Chief Financial Officer
|
COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
Name:
|
|
Amy K. Johnson
|
|
|
|
Title:
|
|
Managing Director and Head of U.S. Operations and Mutual Fund Services
|
INVESTMENT MANAGEMENT SERVICES AGREEMENT
This Agreement, dated as of December 19, 2014, is by and between Columbia Management Investment Advisers, LLC (the Investment
Manager), a Minnesota limited liability company, and CAAF Offshore Fund, Ltd. (Subsidiary or Fund), a wholly-owned subsidiary of Columbia Adaptive Alternatives Fund (Parent Fund), a series of Columbia Funds
Series Trust I.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1)
|
The Fund hereby retains the Investment Manager, and the Investment Manager hereby agrees, for the period of this Agreement and under the terms and
conditions hereinafter set forth, to furnish the Fund continuously with investment advice; to determine, consistent with the Funds Memorandum and Articles of Association and the Funds investment objectives, strategies and policies as
from time to time set forth in the Parent Funds then-current prospectus or statement of additional information, or as otherwise established by the Board of the Subsidiary (the Board), which investments, in the Investment
Managers discretion, shall be purchased, held or sold, and to execute or cause the execution of purchase or sell orders; to recommend changes to investment objectives, strategies and policies to the Board, as the Investment Manager deems
appropriate; to perform investment research and prepare and make available to the Fund research and statistical data in connection therewith; and to furnish all other services of whatever nature that the Investment Manager from time to time
reasonably determines to be necessary or useful in connection with the investment management of the Fund as provided under this Agreement; subject always to oversight by the Board and the authorized officers of the Fund. The Investment Manager
agrees: (a) to maintain an adequate organization of competent persons to provide the services and to perform the functions herein mentioned (to the extent that such services and functions have not been delegated to a subadviser); and
(b) to maintain adequate oversight over any subadvisers hired to provide services and to perform the functions herein mentioned. The Investment Manager agrees to meet with any persons at such times as the Board deems appropriate for the purpose
of reviewing the Investment Managers performance under this Agreement and will prepare and furnish to the Board such reports, statistical data and other information relating to the investment management of the Fund in such form and at such
intervals as the Board may reasonably request. The Fund agrees that the Investment Manager may, at its own expense, subcontract for certain of the services described under this Agreement (including with affiliates of the Investment Manager) with the
understanding that the quality and scope of services required to be provided under this Agreement shall not be diminished thereby, and also with the understanding that the Investment Manager shall obtain such approval from the Board and/or Fund
shareholders as is required by applicable law, rules and regulations promulgated thereunder, terms of this Agreement, resolutions of the Board and commitments of the Investment Manager. The Investment Manager agrees that, in the event it
subcontracts with another party for some or all of the investment management services contemplated by this Agreement with respect to the Fund, the Investment Manager will retain overall supervisory responsibility for the general management and
investment of the Fund and, subject to review and approval by the Board, will set the Funds overall investment strategies (consistent with the Parent Funds then-
|
|
current prospectus and statement of additional information); evaluate, select and recommend one or more subadvisers to manage all or a portion of the Funds assets; when appropriate,
allocate and reallocate the Funds assets among multiple subadvisers; monitor and evaluate the investment performance of subadvisers; and implement procedures reasonably designed to ensure that the subadvisers comply with the Funds
investment objectives, policies and restrictions.
|
(2)
|
The Investment Manager shall comply (or cause the Fund to comply, as applicable) with all applicable law, and shall manage the Fund so as to ensure that the operations of the Fund and Parent Fund, taken as a whole,
comply with all applicable law, including but not limited to the following, to the extent applicable, the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder (the 1940 Act), the Investment
Advisers Act of 1940, as amended, and the rules and regulations promulgated thereunder, the 1933 Act, and the provisions of the Internal Revenue Code of 1986, as amended.
|
(3)
|
The Investment Manager shall allocate investment opportunities among its clients, including the Fund, in a fair and equitable manner, consistent with its fiduciary obligations to clients. The Fund recognizes that the
Investment Manager and its affiliates may from time to time acquire information about issuers or securities that it may not share with, or act upon for the benefit of, the Fund.
|
(4)
|
The Investment Manager agrees to vote proxies and to provide or withhold consents, or to provide such support as is required or requested by the Board in conjunction with voting proxies and providing or withholding
consents, solicited by or with respect to the issuers of securities in which the Fund
s assets may be invested from time to time, as directed by the Board from time to time.
|
(5)
|
The Investment Manager agrees that it will maintain all required records, memoranda, instructions or authorizations relating to the management of the assets for the Fund, including with respect to the acquisition or
disposition of securities. The Investment Manager hereby agrees that all records that it maintains for the Fund under this Agreement are the property of the Subsidiary and further agrees to surrender promptly to the Subsidiary any of such records
upon request.
|
(6)
|
The Fund agrees that it will furnish to the Investment Manager any information that the latter may reasonably request with respect to the services performed or to be performed by the Investment Manager under this
Agreement.
|
(7)
|
In selecting broker-dealers for execution, the Investment Manager will seek to obtain best execution for securities transactions on behalf of the
Fund, except where otherwise directed by the Board. In selecting broker-dealers to execute transactions, the Investment Manager may consider not only available prices (including commissions or mark-up), but also other relevant factors such as,
without limitation, the characteristics of the security being traded, the size and difficulty of the transaction, the execution, clearance and settlement capabilities as well as the reputation, reliability, and financial soundness of the
broker-dealer selected,
|
Page 2
|
the broker-dealers risk in positioning a block of securities, the broker-dealers execution service rendered on a continuing basis and in other transactions, the broker-dealers
expertise in particular markets, and the broker-dealers ability to provide research services. To the extent permitted by law, and consistent with its obligation to seek best execution, the Investment Manager may, except where otherwise
directed by the Board, execute transactions or pay a broker-dealer a commission or markup in excess of that which another broker-dealer might have charged for executing a transaction provided that the Investment Manager determines, in good faith,
that the execution is appropriate or the commission 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 the Investment Managers overall
responsibilities with respect to the Fund and other clients for which it acts as investment adviser. The Investment Manager shall not consider the sale or promotion of shares of the Fund, or other affiliated products, as a factor in the selection of
broker dealers through which transactions are executed.
|
(8)
|
Except for willful misfeasance, bad faith or negligence on the part of the Investment Manager in the performance of its duties, or reckless disregard by the Investment Manager of its obligations and duties, under this
Agreement, 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 loss suffered by the Fund or its shareholders or creditors. To
the extent permitted by applicable law, each of the Investment Manager, and its respective directors, officers, partners, principals, employees and agents, shall be entitled to rely, and shall be protected from liability in reasonably relying, upon
any information or instructions furnished to it (or any of them as individuals) by the Fund or its agents which is believed in good faith to be accurate and reliable. The Fund understands and acknowledges that the Investment Manager does not warrant
any rate of return, market value or performance of any assets in the Fund. Notwithstanding the foregoing, the federal securities laws impose liabilities under certain circumstances on persons who act in good faith and, therefore, nothing herein
shall constitute a waiver of any right which the Fund may have under such laws or regulations.
|
Part Two: COMPENSATION TO THE INVESTMENT
MANAGER
(1)
|
The Fund agrees to pay to the Investment Manager, in full payment for the services furnished, a fee as set forth in
Schedule A
.
|
(2)
|
The fee shall be accrued daily (unless otherwise directed by the Board consistent with the prospectus and statement of additional information of the Parent Fund) and paid on a monthly basis and, in the event of the
effectiveness or termination of this Agreement, in whole or in part with respect to the Fund, during any month, the fee paid to the Investment Manager shall be prorated on the basis of the number of days that this Agreement is in effect during the
month with respect to which such payment is made.
|
(3)
|
The fee provided for hereunder shall be paid in cash to the Investment Manager within five business days after the last day of each month.
|
Page 3
Part Three: ALLOCATION OF EXPENSES
(1)
|
The Investment Manager shall (a) furnish at its expense such office space, supplies, facilities, equipment, clerical help and other personnel and services as are required to render the services contemplated to be
provided by it pursuant to this Agreement and (b) pay the compensation of the directors or officers of the Fund who are directors, officers or employees of the Investment Manager (except to the extent the Board of the Fund shall have
specifically approved the payment by the Fund of all or a portion of the compensation of one or more of the Funds officer(s)). 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 shall have no duty to pay any Fund operating expenses incurred in the organization and operation of the Fund.
|
Part Four: MISCELLANEOUS
(1)
|
The Investment Manager shall be deemed to be an independent contractor and, except as expressly provided or authorized in this Agreement or otherwise, shall have no authority to act for or represent the Fund.
|
(2)
|
The Fund acknowledges that the Investment Manager and its affiliates may perform investment advisory services for other clients, so long as the Investment Managers services to the Fund under this Agreement are not
impaired thereby. The Investment Manager and its affiliates may give advice or take action in the performance of duties to other clients that may differ from advice given, or the timing and nature of action taken, with respect to the Fund, and the
Investment Manager and its affiliates and their respective clients may trade and have positions in securities of issuers where the Fund may own equivalent or related securities, and where action may or may not be taken or recommended for the Fund.
Nothing in this Agreement shall be deemed to impose upon the Investment Manager or any of its affiliates any obligation to purchase or sell, or recommend for purchase or sale for the Fund, any security or any other property that the Investment
Manager or any of its affiliates may purchase, sell or hold for its own account or the account of any other client.
|
(3)
|
Neither this Agreement nor any transaction pursuant hereto shall be invalidated or in any way affected by the fact that Board members, officers, agents and/or shareholders of the Fund are or may be interested in the
Investment Manager or any successor or assignee thereof, as directors, officers, stockholders or otherwise; that directors, officers, stockholders or agents of the Investment Manager are or may be interested in the Fund as Board members, officers,
shareholders or otherwise; or that the Investment Manager or any successor or assignee is or may be interested in the Fund as shareholder or otherwise, provided, however, that neither the Investment Manager, nor any officer, Board member or employee
thereof or of the Fund, shall knowingly sell to or buy from the Fund any property or security other than shares issued by the Fund, except in accordance with applicable regulations, United States Securities and Exchange Commission (SEC)
orders or published SEC staff guidance.
|
Page 4
(4)
|
Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed postpaid, to the party to this Agreement entitled to receive such, at such partys principal place of business, or to
such other address as either party may designate in writing mailed to the other in accordance with this Paragraph (4).
|
(5)
|
All information and advice furnished by the Investment Manager to the Fund under this Agreement shall be confidential and shall not be disclosed to unaffiliated third parties, except as required by law, order, judgment,
decree, or pursuant to any rule, regulation or request of or by any government, court, administrative or regulatory agency or commission, other governmental or regulatory authority or any self-regulatory organization. All information furnished by
the Fund to the Investment Manager under this Agreement shall be confidential and shall not be disclosed to any unaffiliated third party, except as permitted or required by the foregoing, where it is necessary to effect transactions or provide other
services to the Fund, or where the Fund requests or authorizes the Investment Manager to do so. The Investment Manager may share information with its affiliates in accordance with its privacy and other relevant policies in effect from time to time.
|
(6)
|
This Agreement shall be governed by the internal substantive laws of the Commonwealth of Massachusetts without regard to the conflicts of laws principles thereof.
|
(7)
|
Notice is hereby given that this Agreement is executed on behalf of the Subsidiary by an officer of the Subsidiary in his or her capacity as an officer of the Subsidiary and not individually, and that the obligations of
or arising out of this Agreement are not binding upon any of the trustees, directors, officers or shareholders of the Subsidiary individually, but are binding only upon the assets and property of the Subsidiary.
|
(8)
|
If any term, provision, agreement, covenant or restriction of this Agreement is held by a court or other authority of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the terms, provisions,
agreements, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party hereto. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a reasonably
acceptable manner in order that the transactions contemplated hereby may be consummated as originally contemplated to the fullest extent possible.
|
(9)
|
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes and all of which, taken together, shall constitute one and the same instrument.
|
Part Five: RENEWAL AND TERMINATION
(1)
|
This Agreement shall continue in effect for two years from the date of its execution, and from year to year thereafter, unless and until terminated by either party as hereinafter provided.
|
Page 5
(2)
|
This Agreement may be terminated by either the Fund or the Investment Manager at any time by giving the other party 60 days written notice of such intention to terminate, provided that any termination shall be
made without the payment of any penalty, and provided further that termination may be effected either by the Board or by a vote of the majority of the outstanding voting securities of the Fund.
|
(3)
|
This Agreement shall terminate in the event of its assignment, the term assignment for this purpose having the same meaning as set forth in the 1940 Act, unless the SEC issues an order exempting such
assignment from the provisions of the 1940 Act requiring such termination, in which case this Agreement shall remain in full force and effect, subject to the terms of such order. This Agreement shall terminate in the event the Investment Manager
ceases to be the investment adviser of the Parent Fund.
|
(4)
|
Except as prohibited by applicable law, this Agreement may be amended upon written agreement of the Investment Manager and the Subsidiary.
|
Part Six: Use of Name
(1)
|
At such time as this Agreement or any extension, renewal or amendment hereof, or any similar agreement with any organization which shall have succeeded to the business of the Investment Manager, shall no longer be in
effect, the Fund will cease to use any name derived from the name of the Investment Manager or of any organization which shall have succeeded to the Investment Managers business as investment adviser.
|
Page 6
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as of the day and year first above
written.
CAAF OFFSHORE FUND, LTD.
|
|
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
Name:
|
|
Michael G. Clarke
|
|
|
Authorized Person
|
COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
|
|
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
|
|
Name:
|
|
Amy K. Johnson
|
|
|
Title:
|
|
Managing Director and Head of U.S. Operations and Mutual Fund Services
|
Schedule A
Effective as of December 19, 2014
|
|
|
|
|
Assets (in Millions)
|
|
Rate of Fee
(1)
|
|
All Assets
|
|
|
1.25
|
%
|
(1)
|
When calculating asset levels for purposes of determining fee rate breakpoints, asset levels are based on aggregate net assets of the Fund and the Parent Fund. When calculating the fee payable under this agreement, the
annual rates are based on a percentage of the average daily net assets of the Fund.
|
INVESTMENT MANAGEMENT SERVICES AGREEMENT
This Agreement, dated as of December 19, 2014, is by and between Columbia Management Investment Advisers, LLC (the Investment
Manager), a Minnesota limited liability company, and CDARF1 Offshore Fund, Ltd. (Subsidiary or Fund), a wholly-owned subsidiary of Columbia Diversified Absolute Return Fund (Parent Fund), a series of
Columbia Funds Series Trust I.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1)
|
The Fund hereby retains the Investment Manager, and the Investment Manager hereby agrees, for the period of this Agreement and under the terms and
conditions hereinafter set forth, to furnish the Fund continuously with investment advice; to determine, consistent with the Funds Memorandum and Articles of Association and the Funds investment objectives, strategies and policies as
from time to time set forth in the Parent Funds then-current prospectus or statement of additional information, or as otherwise established by the Board of the Subsidiary (the Board), which investments, in the Investment
Managers discretion, shall be purchased, held or sold, and to execute or cause the execution of purchase or sell orders; to recommend changes to investment objectives, strategies and policies to the Board, as the Investment Manager deems
appropriate; to perform investment research and prepare and make available to the Fund research and statistical data in connection therewith; and to furnish all other services of whatever nature that the Investment Manager from time to time
reasonably determines to be necessary or useful in connection with the investment management of the Fund as provided under this Agreement; subject always to oversight by the Board and the authorized officers of the Fund. The Investment Manager
agrees: (a) to maintain an adequate organization of competent persons to provide the services and to perform the functions herein mentioned (to the extent that such services and functions have not been delegated to a subadviser); and
(b) to maintain adequate oversight over any subadvisers hired to provide services and to perform the functions herein mentioned. The Investment Manager agrees to meet with any persons at such times as the Board deems appropriate for the purpose
of reviewing the Investment Managers performance under this Agreement and will prepare and furnish to the Board such reports, statistical data and other information relating to the investment management of the Fund in such form and at such
intervals as the Board may reasonably request. The Fund agrees that the Investment Manager may, at its own expense, subcontract for certain of the services described under this Agreement (including with affiliates of the Investment Manager) with the
understanding that the quality and scope of services required to be provided under this Agreement shall not be diminished thereby, and also with the understanding that the Investment Manager shall obtain such approval from the Board and/or Fund
shareholders as is required by applicable law, rules and regulations promulgated thereunder, terms of this Agreement, resolutions of the Board and commitments of the Investment Manager. The Investment Manager agrees that, in the event it
subcontracts with another party for some or all of the investment management services contemplated by this Agreement with respect to the Fund, the Investment Manager will retain overall supervisory responsibility for the general management and
investment of the Fund and, subject to review and approval by the Board, will set the Funds overall investment strategies (consistent with the Parent Funds then-
|
|
current prospectus and statement of additional information); evaluate, select and recommend one or more subadvisers to manage all or a portion of the Funds assets; when appropriate,
allocate and reallocate the Funds assets among multiple subadvisers; monitor and evaluate the investment performance of subadvisers; and implement procedures reasonably designed to ensure that the subadvisers comply with the Funds
investment objectives, policies and restrictions.
|
(2)
|
The Investment Manager shall comply (or cause the Fund to comply, as applicable) with all applicable law, and shall manage the Fund so as to ensure that the operations of the Fund and Parent Fund, taken as a whole,
comply with all applicable law, including but not limited to the following, to the extent applicable, the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder (the 1940 Act), the Investment
Advisers Act of 1940, as amended, and the rules and regulations promulgated thereunder, the 1933 Act, and the provisions of the Internal Revenue Code of 1986, as amended.
|
(3)
|
The Investment Manager shall allocate investment opportunities among its clients, including the Fund, in a fair and equitable manner, consistent with its fiduciary obligations to clients. The Fund recognizes that the
Investment Manager and its affiliates may from time to time acquire information about issuers or securities that it may not share with, or act upon for the benefit of, the Fund.
|
(4)
|
The Investment Manager agrees to vote proxies and to provide or withhold consents, or to provide such support as is required or requested by the Board in conjunction with voting proxies and providing or withholding
consents, solicited by or with respect to the issuers of securities in which the Fund
s assets may be invested from time to time, as directed by the Board from time to time.
|
(5)
|
The Investment Manager agrees that it will maintain all required records, memoranda, instructions or authorizations relating to the management of the assets for the Fund, including with respect to the acquisition or
disposition of securities. The Investment Manager hereby agrees that all records that it maintains for the Fund under this Agreement are the property of the Subsidiary and further agrees to surrender promptly to the Subsidiary any of such records
upon request.
|
(6)
|
The Fund agrees that it will furnish to the Investment Manager any information that the latter may reasonably request with respect to the services performed or to be performed by the Investment Manager under this
Agreement.
|
(7)
|
In selecting broker-dealers for execution, the Investment Manager will seek to obtain best execution for securities transactions on behalf of the
Fund, except where otherwise directed by the Board. In selecting broker-dealers to execute transactions, the Investment Manager may consider not only available prices (including commissions or mark-up), but also other relevant factors such as,
without limitation, the characteristics of the security being traded, the size and difficulty of the transaction, the execution, clearance and settlement capabilities as well as the reputation, reliability, and financial soundness of the
broker-dealer selected,
|
Page 2
|
the broker-dealers risk in positioning a block of securities, the broker-dealers execution service rendered on a continuing basis and in other transactions, the broker-dealers
expertise in particular markets, and the broker-dealers ability to provide research services. To the extent permitted by law, and consistent with its obligation to seek best execution, the Investment Manager may, except where otherwise
directed by the Board, execute transactions or pay a broker-dealer a commission or markup in excess of that which another broker-dealer might have charged for executing a transaction provided that the Investment Manager determines, in good faith,
that the execution is appropriate or the commission 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 the Investment Managers overall
responsibilities with respect to the Fund and other clients for which it acts as investment adviser. The Investment Manager shall not consider the sale or promotion of shares of the Fund, or other affiliated products, as a factor in the selection of
broker dealers through which transactions are executed.
|
(8)
|
Except for willful misfeasance, bad faith or negligence on the part of the Investment Manager in the performance of its duties, or reckless disregard by the Investment Manager of its obligations and duties, under this
Agreement, 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 loss suffered by the Fund or its shareholders or creditors. To
the extent permitted by applicable law, each of the Investment Manager, and its respective directors, officers, partners, principals, employees and agents, shall be entitled to rely, and shall be protected from liability in reasonably relying, upon
any information or instructions furnished to it (or any of them as individuals) by the Fund or its agents which is believed in good faith to be accurate and reliable. The Fund understands and acknowledges that the Investment Manager does not warrant
any rate of return, market value or performance of any assets in the Fund. Notwithstanding the foregoing, the federal securities laws impose liabilities under certain circumstances on persons who act in good faith and, therefore, nothing herein
shall constitute a waiver of any right which the Fund may have under such laws or regulations.
|
Part Two: COMPENSATION TO THE INVESTMENT
MANAGER
(1)
|
The Fund agrees to pay to the Investment Manager, in full payment for the services furnished, a fee as set forth in
Schedule A
.
|
(2)
|
The fee shall be accrued daily (unless otherwise directed by the Board consistent with the prospectus and statement of additional information of the Parent Fund) and paid on a monthly basis and, in the event of the
effectiveness or termination of this Agreement, in whole or in part with respect to the Fund, during any month, the fee paid to the Investment Manager shall be prorated on the basis of the number of days that this Agreement is in effect during the
month with respect to which such payment is made.
|
(3)
|
The fee provided for hereunder shall be paid in cash to the Investment Manager within five business days after the last day of each month.
|
Page 3
Part Three: ALLOCATION OF EXPENSES
(1)
|
The Investment Manager shall (a) furnish at its expense such office space, supplies, facilities, equipment, clerical help and other personnel and services as are required to render the services contemplated to be
provided by it pursuant to this Agreement and (b) pay the compensation of the directors or officers of the Fund who are directors, officers or employees of the Investment Manager (except to the extent the Board of the Fund shall have
specifically approved the payment by the Fund of all or a portion of the compensation of one or more of the Funds officer(s)). 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 shall have no duty to pay any Fund operating expenses incurred in the organization and operation of the Fund.
|
Part Four: MISCELLANEOUS
(1)
|
The Investment Manager shall be deemed to be an independent contractor and, except as expressly provided or authorized in this Agreement or otherwise, shall have no authority to act for or represent the Fund.
|
(2)
|
The Fund acknowledges that the Investment Manager and its affiliates may perform investment advisory services for other clients, so long as the Investment Managers services to the Fund under this Agreement are not
impaired thereby. The Investment Manager and its affiliates may give advice or take action in the performance of duties to other clients that may differ from advice given, or the timing and nature of action taken, with respect to the Fund, and the
Investment Manager and its affiliates and their respective clients may trade and have positions in securities of issuers where the Fund may own equivalent or related securities, and where action may or may not be taken or recommended for the Fund.
Nothing in this Agreement shall be deemed to impose upon the Investment Manager or any of its affiliates any obligation to purchase or sell, or recommend for purchase or sale for the Fund, any security or any other property that the Investment
Manager or any of its affiliates may purchase, sell or hold for its own account or the account of any other client.
|
(3)
|
Neither this Agreement nor any transaction pursuant hereto shall be invalidated or in any way affected by the fact that Board members, officers, agents and/or shareholders of the Fund are or may be interested in the
Investment Manager or any successor or assignee thereof, as directors, officers, stockholders or otherwise; that directors, officers, stockholders or agents of the Investment Manager are or may be interested in the Fund as Board members, officers,
shareholders or otherwise; or that the Investment Manager or any successor or assignee is or may be interested in the Fund as shareholder or otherwise, provided, however, that neither the Investment Manager, nor any officer, Board member or employee
thereof or of the Fund, shall knowingly sell to or buy from the Fund any property or security other than shares issued by the Fund, except in accordance with applicable regulations, United States Securities and Exchange Commission (SEC)
orders or published SEC staff guidance.
|
Page 4
(4)
|
Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed postpaid, to the party to this Agreement entitled to receive such, at such partys principal place of business, or to
such other address as either party may designate in writing mailed to the other in accordance with this Paragraph (4).
|
(5)
|
All information and advice furnished by the Investment Manager to the Fund under this Agreement shall be confidential and shall not be disclosed to unaffiliated third parties, except as required by law, order, judgment,
decree, or pursuant to any rule, regulation or request of or by any government, court, administrative or regulatory agency or commission, other governmental or regulatory authority or any self-regulatory organization. All information furnished by
the Fund to the Investment Manager under this Agreement shall be confidential and shall not be disclosed to any unaffiliated third party, except as permitted or required by the foregoing, where it is necessary to effect transactions or provide other
services to the Fund, or where the Fund requests or authorizes the Investment Manager to do so. The Investment Manager may share information with its affiliates in accordance with its privacy and other relevant policies in effect from time to time.
|
(6)
|
This Agreement shall be governed by the internal substantive laws of the Commonwealth of Massachusetts without regard to the conflicts of laws principles thereof.
|
(7)
|
Notice is hereby given that this Agreement is executed on behalf of the Subsidiary by an officer of the Subsidiary in his or her capacity as an officer of the Subsidiary and not individually, and that the obligations of
or arising out of this Agreement are not binding upon any of the trustees, directors, officers or shareholders of the Subsidiary individually, but are binding only upon the assets and property of the Subsidiary.
|
(8)
|
If any term, provision, agreement, covenant or restriction of this Agreement is held by a court or other authority of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the terms, provisions,
agreements, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party hereto. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a reasonably
acceptable manner in order that the transactions contemplated hereby may be consummated as originally contemplated to the fullest extent possible.
|
(9)
|
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes and all of which, taken together, shall constitute one and the same instrument.
|
Part Five: RENEWAL AND TERMINATION
(1)
|
This Agreement shall continue in effect for two years from the date of its execution, and from year to year thereafter, unless and until terminated by either party as hereinafter provided.
|
Page 5
(2)
|
This Agreement may be terminated by either the Fund or the Investment Manager at any time by giving the other party 60 days written notice of such intention to terminate, provided that any termination shall be
made without the payment of any penalty, and provided further that termination may be effected either by the Board or by a vote of the majority of the outstanding voting securities of the Fund.
|
(3)
|
This Agreement shall terminate in the event of its assignment, the term assignment for this purpose having the same meaning as set forth in the 1940 Act, unless the SEC issues an order exempting such
assignment from the provisions of the 1940 Act requiring such termination, in which case this Agreement shall remain in full force and effect, subject to the terms of such order. This Agreement shall terminate in the event the Investment Manager
ceases to be the investment adviser of the Parent Fund.
|
(4)
|
Except as prohibited by applicable law, this Agreement may be amended upon written agreement of the Investment Manager and the Subsidiary.
|
Part Six: Use of Name
(1)
|
At such time as this Agreement or any extension, renewal or amendment hereof, or any similar agreement with any organization which shall have succeeded to the business of the Investment Manager, shall no longer be in
effect, the Fund will cease to use any name derived from the name of the Investment Manager or of any organization which shall have succeeded to the Investment Managers business as investment adviser.
|
Page 6
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as of the day and year first above
written.
CDARF1 OFFSHORE FUND, LTD.
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
Name:
|
|
Michael G. Clarke
|
|
|
Authorized Person
|
COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
|
|
|
|
|
By:
|
|
Amy K. Johnson
|
|
|
Name:
|
|
Amy K. Johnson
|
|
|
Title:
|
|
Managing Director and Head of U.S. Operations and Mutual Fund Services
|
Schedule A
Effective as of December 19, 2014
|
|
|
|
|
Assets (in Millions)
|
|
Rate of Fee
(1)
|
|
$0 - $500
|
|
|
1.10
|
%
|
>$500 - $1,000
|
|
|
1.055
|
%
|
>$1,000 - $3,000
|
|
|
1.03
|
%
|
>$3,000 - $6,000
|
|
|
1.01
|
%
|
>$6,000
|
|
|
0.98
|
%
|
(1)
|
When calculating asset levels for purposes of determining fee rate breakpoints, asset levels are based on aggregate net assets of the Fund and the Parent Fund. When calculating the fee payable under this agreement, the
annual rates are based on a percentage of the average daily net assets of the Fund.
|
INVESTMENT MANAGEMENT SERVICES AGREEMENT
This Agreement, dated as of December 19, 2014, is by and between Columbia Management Investment Advisers, LLC (the Investment
Manager), a Minnesota limited liability company, and CDARF2 Offshore Fund, Ltd. (Subsidiary or Fund), a wholly-owned subsidiary of Columbia Diversified Absolute Return Fund (Parent Fund), a series of
Columbia Funds Series Trust I.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1)
|
The Fund hereby retains the Investment Manager, and the Investment Manager hereby agrees, for the period of this Agreement and under the terms and
conditions hereinafter set forth, to furnish the Fund continuously with investment advice; to determine, consistent with the Funds Memorandum and Articles of Association and the Funds investment objectives, strategies and policies as
from time to time set forth in the Parent Funds then-current prospectus or statement of additional information, or as otherwise established by the Board of the Subsidiary (the Board), which investments, in the Investment
Managers discretion, shall be purchased, held or sold, and to execute or cause the execution of purchase or sell orders; to recommend changes to investment objectives, strategies and policies to the Board, as the Investment Manager deems
appropriate; to perform investment research and prepare and make available to the Fund research and statistical data in connection therewith; and to furnish all other services of whatever nature that the Investment Manager from time to time
reasonably determines to be necessary or useful in connection with the investment management of the Fund as provided under this Agreement; subject always to oversight by the Board and the authorized officers of the Fund. The Investment Manager
agrees: (a) to maintain an adequate organization of competent persons to provide the services and to perform the functions herein mentioned (to the extent that such services and functions have not been delegated to a subadviser); and
(b) to maintain adequate oversight over any subadvisers hired to provide services and to perform the functions herein mentioned. The Investment Manager agrees to meet with any persons at such times as the Board deems appropriate for the purpose
of reviewing the Investment Managers performance under this Agreement and will prepare and furnish to the Board such reports, statistical data and other information relating to the investment management of the Fund in such form and at such
intervals as the Board may reasonably request. The Fund agrees that the Investment Manager may, at its own expense, subcontract for certain of the services described under this Agreement (including with affiliates of the Investment Manager) with the
understanding that the quality and scope of services required to be provided under this Agreement shall not be diminished thereby, and also with the understanding that the Investment Manager shall obtain such approval from the Board and/or Fund
shareholders as is required by applicable law, rules and regulations promulgated thereunder, terms of this Agreement, resolutions of the Board and commitments of the Investment Manager. The Investment Manager agrees that, in the event it
subcontracts with another party for some or all of the investment management services contemplated by this Agreement with respect to the Fund, the Investment Manager will retain overall supervisory responsibility for the general management and
investment of the Fund and, subject to review and approval by the Board, will set the Funds overall investment strategies (consistent with the Parent Funds then-
|
|
current prospectus and statement of additional information); evaluate, select and recommend one or more subadvisers to manage all or a portion of the Funds assets; when appropriate,
allocate and reallocate the Funds assets among multiple subadvisers; monitor and evaluate the investment performance of subadvisers; and implement procedures reasonably designed to ensure that the subadvisers comply with the Funds
investment objectives, policies and restrictions.
|
(2)
|
The Investment Manager shall comply (or cause the Fund to comply, as applicable) with all applicable law, and shall manage the Fund so as to ensure that the operations of the Fund and Parent Fund, taken as a whole,
comply with all applicable law, including but not limited to the following, to the extent applicable, the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder (the 1940 Act), the Investment
Advisers Act of 1940, as amended, and the rules and regulations promulgated thereunder, the 1933 Act, and the provisions of the Internal Revenue Code of 1986, as amended.
|
(3)
|
The Investment Manager shall allocate investment opportunities among its clients, including the Fund, in a fair and equitable manner, consistent with its fiduciary obligations to clients. The Fund recognizes that the
Investment Manager and its affiliates may from time to time acquire information about issuers or securities that it may not share with, or act upon for the benefit of, the Fund.
|
(4)
|
The Investment Manager agrees to vote proxies and to provide or withhold consents, or to provide such support as is required or requested by the Board in conjunction with voting proxies and providing or withholding
consents, solicited by or with respect to the issuers of securities in which the Fund
s assets may be invested from time to time, as directed by the Board from time to time.
|
(5)
|
The Investment Manager agrees that it will maintain all required records, memoranda, instructions or authorizations relating to the management of the assets for the Fund, including with respect to the acquisition or
disposition of securities. The Investment Manager hereby agrees that all records that it maintains for the Fund under this Agreement are the property of the Subsidiary and further agrees to surrender promptly to the Subsidiary any of such records
upon request.
|
(6)
|
The Fund agrees that it will furnish to the Investment Manager any information that the latter may reasonably request with respect to the services performed or to be performed by the Investment Manager under this
Agreement.
|
(7)
|
In selecting broker-dealers for execution, the Investment Manager will seek to obtain best execution for securities transactions on behalf of the
Fund, except where otherwise directed by the Board. In selecting broker-dealers to execute transactions, the Investment Manager may consider not only available prices (including commissions or mark-up), but also other relevant factors such as,
without limitation, the characteristics of the security being traded, the size and difficulty of the transaction, the execution, clearance and settlement capabilities as well as the reputation, reliability, and financial soundness of the
broker-dealer selected,
|
Page 2
|
the broker-dealers risk in positioning a block of securities, the broker-dealers execution service rendered on a continuing basis and in other transactions, the broker-dealers
expertise in particular markets, and the broker-dealers ability to provide research services. To the extent permitted by law, and consistent with its obligation to seek best execution, the Investment Manager may, except where otherwise
directed by the Board, execute transactions or pay a broker-dealer a commission or markup in excess of that which another broker-dealer might have charged for executing a transaction provided that the Investment Manager determines, in good faith,
that the execution is appropriate or the commission 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 the Investment Managers overall
responsibilities with respect to the Fund and other clients for which it acts as investment adviser. The Investment Manager shall not consider the sale or promotion of shares of the Fund, or other affiliated products, as a factor in the selection of
broker dealers through which transactions are executed.
|
(8)
|
Except for willful misfeasance, bad faith or negligence on the part of the Investment Manager in the performance of its duties, or reckless disregard by the Investment Manager of its obligations and duties, under this
Agreement, 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 loss suffered by the Fund or its shareholders or creditors. To
the extent permitted by applicable law, each of the Investment Manager, and its respective directors, officers, partners, principals, employees and agents, shall be entitled to rely, and shall be protected from liability in reasonably relying, upon
any information or instructions furnished to it (or any of them as individuals) by the Fund or its agents which is believed in good faith to be accurate and reliable. The Fund understands and acknowledges that the Investment Manager does not warrant
any rate of return, market value or performance of any assets in the Fund. Notwithstanding the foregoing, the federal securities laws impose liabilities under certain circumstances on persons who act in good faith and, therefore, nothing herein
shall constitute a waiver of any right which the Fund may have under such laws or regulations.
|
Part Two: COMPENSATION TO THE INVESTMENT
MANAGER
(1)
|
The Fund agrees to pay to the Investment Manager, in full payment for the services furnished, a fee as set forth in
Schedule A
.
|
(2)
|
The fee shall be accrued daily (unless otherwise directed by the Board consistent with the prospectus and statement of additional information of the Parent Fund) and paid on a monthly basis and, in the event of the
effectiveness or termination of this Agreement, in whole or in part with respect to the Fund, during any month, the fee paid to the Investment Manager shall be prorated on the basis of the number of days that this Agreement is in effect during the
month with respect to which such payment is made.
|
(3)
|
The fee provided for hereunder shall be paid in cash to the Investment Manager within five business days after the last day of each month.
|
Page 3
Part Three: ALLOCATION OF EXPENSES
(1)
|
The Investment Manager shall (a) furnish at its expense such office space, supplies, facilities, equipment, clerical help and other personnel and services as are required to render the services contemplated to be
provided by it pursuant to this Agreement and (b) pay the compensation of the directors or officers of the Fund who are directors, officers or employees of the Investment Manager (except to the extent the Board of the Fund shall have
specifically approved the payment by the Fund of all or a portion of the compensation of one or more of the Funds officer(s)). 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 shall have no duty to pay any Fund operating expenses incurred in the organization and operation of the Fund.
|
Part Four: MISCELLANEOUS
(1)
|
The Investment Manager shall be deemed to be an independent contractor and, except as expressly provided or authorized in this Agreement or otherwise, shall have no authority to act for or represent the Fund.
|
(2)
|
The Fund acknowledges that the Investment Manager and its affiliates may perform investment advisory services for other clients, so long as the Investment Managers services to the Fund under this Agreement are not
impaired thereby. The Investment Manager and its affiliates may give advice or take action in the performance of duties to other clients that may differ from advice given, or the timing and nature of action taken, with respect to the Fund, and the
Investment Manager and its affiliates and their respective clients may trade and have positions in securities of issuers where the Fund may own equivalent or related securities, and where action may or may not be taken or recommended for the Fund.
Nothing in this Agreement shall be deemed to impose upon the Investment Manager or any of its affiliates any obligation to purchase or sell, or recommend for purchase or sale for the Fund, any security or any other property that the Investment
Manager or any of its affiliates may purchase, sell or hold for its own account or the account of any other client.
|
(3)
|
Neither this Agreement nor any transaction pursuant hereto shall be invalidated or in any way affected by the fact that Board members, officers, agents and/or shareholders of the Fund are or may be interested in the
Investment Manager or any successor or assignee thereof, as directors, officers, stockholders or otherwise; that directors, officers, stockholders or agents of the Investment Manager are or may be interested in the Fund as Board members, officers,
shareholders or otherwise; or that the Investment Manager or any successor or assignee is or may be interested in the Fund as shareholder or otherwise, provided, however, that neither the Investment Manager, nor any officer, Board member or employee
thereof or of the Fund, shall knowingly sell to or buy from the Fund any property or security other than shares issued by the Fund, except in accordance with applicable regulations, United States Securities and Exchange Commission (SEC)
orders or published SEC staff guidance.
|
Page 4
(4)
|
Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed postpaid, to the party to this Agreement entitled to receive such, at such partys principal place of business, or to
such other address as either party may designate in writing mailed to the other in accordance with this Paragraph (4).
|
(5)
|
All information and advice furnished by the Investment Manager to the Fund under this Agreement shall be confidential and shall not be disclosed to unaffiliated third parties, except as required by law, order, judgment,
decree, or pursuant to any rule, regulation or request of or by any government, court, administrative or regulatory agency or commission, other governmental or regulatory authority or any self-regulatory organization. All information furnished by
the Fund to the Investment Manager under this Agreement shall be confidential and shall not be disclosed to any unaffiliated third party, except as permitted or required by the foregoing, where it is necessary to effect transactions or provide other
services to the Fund, or where the Fund requests or authorizes the Investment Manager to do so. The Investment Manager may share information with its affiliates in accordance with its privacy and other relevant policies in effect from time to time.
|
(6)
|
This Agreement shall be governed by the internal substantive laws of the Commonwealth of Massachusetts without regard to the conflicts of laws principles thereof.
|
(7)
|
Notice is hereby given that this Agreement is executed on behalf of the Subsidiary by an officer of the Subsidiary in his or her capacity as an officer of the Subsidiary and not individually, and that the obligations of
or arising out of this Agreement are not binding upon any of the trustees, directors, officers or shareholders of the Subsidiary individually, but are binding only upon the assets and property of the Subsidiary.
|
(8)
|
If any term, provision, agreement, covenant or restriction of this Agreement is held by a court or other authority of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the terms, provisions,
agreements, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party hereto. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a reasonably
acceptable manner in order that the transactions contemplated hereby may be consummated as originally contemplated to the fullest extent possible.
|
(9)
|
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes and all of which, taken together, shall constitute one and the same instrument.
|
Part Five: RENEWAL AND TERMINATION
(1)
|
This Agreement shall continue in effect for two years from the date of its execution, and from year to year thereafter, unless and until terminated by either party as hereinafter provided.
|
Page 5
(2)
|
This Agreement may be terminated by either the Fund or the Investment Manager at any time by giving the other party 60 days written notice of such intention to terminate, provided that any termination shall be
made without the payment of any penalty, and provided further that termination may be effected either by the Board or by a vote of the majority of the outstanding voting securities of the Fund.
|
(3)
|
This Agreement shall terminate in the event of its assignment, the term assignment for this purpose having the same meaning as set forth in the 1940 Act, unless the SEC issues an order exempting such
assignment from the provisions of the 1940 Act requiring such termination, in which case this Agreement shall remain in full force and effect, subject to the terms of such order. This Agreement shall terminate in the event the Investment Manager
ceases to be the investment adviser of the Parent Fund.
|
(4)
|
Except as prohibited by applicable law, this Agreement may be amended upon written agreement of the Investment Manager and the Subsidiary.
|
Part Six: Use of Name
(1)
|
At such time as this Agreement or any extension, renewal or amendment hereof, or any similar agreement with any organization which shall have succeeded to the business of the Investment Manager, shall no longer be in
effect, the Fund will cease to use any name derived from the name of the Investment Manager or of any organization which shall have succeeded to the Investment Managers business as investment adviser.
|
Page 6
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as of the day and year first above
written.
CDARF2 OFFSHORE FUND, LTD.
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
Name:
|
|
Michael G. Clarke
|
|
|
Authorized Person
|
COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
Name:
|
|
Amy K. Johnson
|
|
|
|
Title:
|
|
Managing Director and Head of U.S. Operations and Mutual Fund Services
|
Page 7
Schedule A
Effective as of December 19, 2014
|
|
|
|
|
Assets (in Millions)
|
|
Rate of Fee
(1)
|
|
$0 - $500
|
|
|
1.10
|
%
|
>$500 - $1,000
|
|
|
1.055
|
%
|
>$1,000 - $3,000
|
|
|
1.03
|
%
|
>$3,000 - $6,000
|
|
|
1.01
|
%
|
>$6,000
|
|
|
0.98
|
%
|
(1)
|
When calculating asset levels for purposes of determining fee rate breakpoints, asset levels are based on aggregate net assets of the Fund and the Parent Fund. When calculating the fee payable under this agreement, the
annual rates are based on a percentage of the average daily net assets of the Fund.
|
INVESTMENT MANAGEMENT SERVICES AGREEMENT
This Agreement, dated as of December 19, 2014, is by and between Columbia Management Investment Advisers, LLC (the Investment
Manager), a Minnesota limited liability company, and CDARF3 Offshore Fund, Ltd. (Subsidiary or Fund), a wholly-owned subsidiary of Columbia Diversified Absolute Return Fund (Parent Fund), a series of
Columbia Funds Series Trust I.
Part One: INVESTMENT MANAGEMENT AND OTHER SERVICES
(1)
|
The Fund hereby retains the Investment Manager, and the Investment Manager hereby agrees, for the period of this Agreement and under the terms and
conditions hereinafter set forth, to furnish the Fund continuously with investment advice; to determine, consistent with the Funds Memorandum and Articles of Association and the Funds investment objectives, strategies and policies as
from time to time set forth in the Parent Funds then-current prospectus or statement of additional information, or as otherwise established by the Board of the Subsidiary (the Board), which investments, in the Investment
Managers discretion, shall be purchased, held or sold, and to execute or cause the execution of purchase or sell orders; to recommend changes to investment objectives, strategies and policies to the Board, as the Investment Manager deems
appropriate; to perform investment research and prepare and make available to the Fund research and statistical data in connection therewith; and to furnish all other services of whatever nature that the Investment Manager from time to time
reasonably determines to be necessary or useful in connection with the investment management of the Fund as provided under this Agreement; subject always to oversight by the Board and the authorized officers of the Fund. The Investment Manager
agrees: (a) to maintain an adequate organization of competent persons to provide the services and to perform the functions herein mentioned (to the extent that such services and functions have not been delegated to a subadviser); and
(b) to maintain adequate oversight over any subadvisers hired to provide services and to perform the functions herein mentioned. The Investment Manager agrees to meet with any persons at such times as the Board deems appropriate for the purpose
of reviewing the Investment Managers performance under this Agreement and will prepare and furnish to the Board such reports, statistical data and other information relating to the investment management of the Fund in such form and at such
intervals as the Board may reasonably request. The Fund agrees that the Investment Manager may, at its own expense, subcontract for certain of the services described under this Agreement (including with affiliates of the Investment Manager) with the
understanding that the quality and scope of services required to be provided under this Agreement shall not be diminished thereby, and also with the understanding that the Investment Manager shall obtain such approval from the Board and/or Fund
shareholders as is required by applicable law, rules and regulations promulgated thereunder, terms of this Agreement, resolutions of the Board and commitments of the Investment Manager. The Investment Manager agrees that, in the event it
subcontracts with another party for some or all of the investment management services contemplated by this Agreement with respect to the Fund, the Investment Manager will retain overall supervisory responsibility for the general management and
investment of the Fund and, subject to review and approval by the Board, will set the Funds overall investment strategies (consistent with the Parent Funds then-
|
|
current prospectus and statement of additional information); evaluate, select and recommend one or more subadvisers to manage all or a portion of the Funds assets; when appropriate,
allocate and reallocate the Funds assets among multiple subadvisers; monitor and evaluate the investment performance of subadvisers; and implement procedures reasonably designed to ensure that the subadvisers comply with the Funds
investment objectives, policies and restrictions.
|
(2)
|
The Investment Manager shall comply (or cause the Fund to comply, as applicable) with all applicable law, and shall manage the Fund so as to ensure that the operations of the Fund and Parent Fund, taken as a whole,
comply with all applicable law, including but not limited to the following, to the extent applicable, the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder (the 1940 Act), the Investment
Advisers Act of 1940, as amended, and the rules and regulations promulgated thereunder, the 1933 Act, and the provisions of the Internal Revenue Code of 1986, as amended.
|
(3)
|
The Investment Manager shall allocate investment opportunities among its clients, including the Fund, in a fair and equitable manner, consistent with its fiduciary obligations to clients. The Fund recognizes that the
Investment Manager and its affiliates may from time to time acquire information about issuers or securities that it may not share with, or act upon for the benefit of, the Fund.
|
(4)
|
The Investment Manager agrees to vote proxies and to provide or withhold consents, or to provide such support as is required or requested by the Board in conjunction with voting proxies and providing or withholding
consents, solicited by or with respect to the issuers of securities in which the Fund
s assets may be invested from time to time, as directed by the Board from time to time.
|
(5)
|
The Investment Manager agrees that it will maintain all required records, memoranda, instructions or authorizations relating to the management of the assets for the Fund, including with respect to the acquisition or
disposition of securities. The Investment Manager hereby agrees that all records that it maintains for the Fund under this Agreement are the property of the Subsidiary and further agrees to surrender promptly to the Subsidiary any of such records
upon request.
|
(6)
|
The Fund agrees that it will furnish to the Investment Manager any information that the latter may reasonably request with respect to the services performed or to be performed by the Investment Manager under this
Agreement.
|
(7)
|
In selecting broker-dealers for execution, the Investment Manager will seek to obtain best execution for securities transactions on behalf of the
Fund, except where otherwise directed by the Board. In selecting broker-dealers to execute transactions, the Investment Manager may consider not only available prices (including commissions or mark-up), but also other relevant factors such as,
without limitation, the characteristics of the security being traded, the size and difficulty of the transaction, the execution, clearance and settlement capabilities as well as the reputation, reliability, and financial soundness of the
broker-dealer selected,
|
Page 2
|
the broker-dealers risk in positioning a block of securities, the broker-dealers execution service rendered on a continuing basis and in other transactions, the broker-dealers
expertise in particular markets, and the broker-dealers ability to provide research services. To the extent permitted by law, and consistent with its obligation to seek best execution, the Investment Manager may, except where otherwise
directed by the Board, execute transactions or pay a broker-dealer a commission or markup in excess of that which another broker-dealer might have charged for executing a transaction provided that the Investment Manager determines, in good faith,
that the execution is appropriate or the commission 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 the Investment Managers overall
responsibilities with respect to the Fund and other clients for which it acts as investment adviser. The Investment Manager shall not consider the sale or promotion of shares of the Fund, or other affiliated products, as a factor in the selection of
broker dealers through which transactions are executed.
|
(8)
|
Except for willful misfeasance, bad faith or negligence on the part of the Investment Manager in the performance of its duties, or reckless disregard by the Investment Manager of its obligations and duties, under this
Agreement, 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 loss suffered by the Fund or its shareholders or creditors. To
the extent permitted by applicable law, each of the Investment Manager, and its respective directors, officers, partners, principals, employees and agents, shall be entitled to rely, and shall be protected from liability in reasonably relying, upon
any information or instructions furnished to it (or any of them as individuals) by the Fund or its agents which is believed in good faith to be accurate and reliable. The Fund understands and acknowledges that the Investment Manager does not warrant
any rate of return, market value or performance of any assets in the Fund. Notwithstanding the foregoing, the federal securities laws impose liabilities under certain circumstances on persons who act in good faith and, therefore, nothing herein
shall constitute a waiver of any right which the Fund may have under such laws or regulations.
|
Part Two: COMPENSATION TO THE INVESTMENT
MANAGER
(1)
|
The Fund agrees to pay to the Investment Manager, in full payment for the services furnished, a fee as set forth in
Schedule A
.
|
(2)
|
The fee shall be accrued daily (unless otherwise directed by the Board consistent with the prospectus and statement of additional information of the Parent Fund) and paid on a monthly basis and, in the event of the
effectiveness or termination of this Agreement, in whole or in part with respect to the Fund, during any month, the fee paid to the Investment Manager shall be prorated on the basis of the number of days that this Agreement is in effect during the
month with respect to which such payment is made.
|
(3)
|
The fee provided for hereunder shall be paid in cash to the Investment Manager within five business days after the last day of each month.
|
Page 3
Part Three: ALLOCATION OF EXPENSES
(1)
|
The Investment Manager shall (a) furnish at its expense such office space, supplies, facilities, equipment, clerical help and other personnel and services as are required to render the services contemplated to be
provided by it pursuant to this Agreement and (b) pay the compensation of the directors or officers of the Fund who are directors, officers or employees of the Investment Manager (except to the extent the Board of the Fund shall have
specifically approved the payment by the Fund of all or a portion of the compensation of one or more of the Funds officer(s)). 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 shall have no duty to pay any Fund operating expenses incurred in the organization and operation of the Fund.
|
Part Four: MISCELLANEOUS
(1)
|
The Investment Manager shall be deemed to be an independent contractor and, except as expressly provided or authorized in this Agreement or otherwise, shall have no authority to act for or represent the Fund.
|
(2)
|
The Fund acknowledges that the Investment Manager and its affiliates may perform investment advisory services for other clients, so long as the Investment Managers services to the Fund under this Agreement are not
impaired thereby. The Investment Manager and its affiliates may give advice or take action in the performance of duties to other clients that may differ from advice given, or the timing and nature of action taken, with respect to the Fund, and the
Investment Manager and its affiliates and their respective clients may trade and have positions in securities of issuers where the Fund may own equivalent or related securities, and where action may or may not be taken or recommended for the Fund.
Nothing in this Agreement shall be deemed to impose upon the Investment Manager or any of its affiliates any obligation to purchase or sell, or recommend for purchase or sale for the Fund, any security or any other property that the Investment
Manager or any of its affiliates may purchase, sell or hold for its own account or the account of any other client.
|
(3)
|
Neither this Agreement nor any transaction pursuant hereto shall be invalidated or in any way affected by the fact that Board members, officers, agents and/or shareholders of the Fund are or may be interested in the
Investment Manager or any successor or assignee thereof, as directors, officers, stockholders or otherwise; that directors, officers, stockholders or agents of the Investment Manager are or may be interested in the Fund as Board members, officers,
shareholders or otherwise; or that the Investment Manager or any successor or assignee is or may be interested in the Fund as shareholder or otherwise, provided, however, that neither the Investment Manager, nor any officer, Board member or employee
thereof or of the Fund, shall knowingly sell to or buy from the Fund any property or security other than shares issued by the Fund, except in accordance with applicable regulations, United States Securities and Exchange Commission (SEC)
orders or published SEC staff guidance.
|
Page 4
(4)
|
Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed postpaid, to the party to this Agreement entitled to receive such, at such partys principal place of business, or to
such other address as either party may designate in writing mailed to the other in accordance with this Paragraph (4).
|
(5)
|
All information and advice furnished by the Investment Manager to the Fund under this Agreement shall be confidential and shall not be disclosed to unaffiliated third parties, except as required by law, order, judgment,
decree, or pursuant to any rule, regulation or request of or by any government, court, administrative or regulatory agency or commission, other governmental or regulatory authority or any self-regulatory organization. All information furnished by
the Fund to the Investment Manager under this Agreement shall be confidential and shall not be disclosed to any unaffiliated third party, except as permitted or required by the foregoing, where it is necessary to effect transactions or provide other
services to the Fund, or where the Fund requests or authorizes the Investment Manager to do so. The Investment Manager may share information with its affiliates in accordance with its privacy and other relevant policies in effect from time to time.
|
(6)
|
This Agreement shall be governed by the internal substantive laws of the Commonwealth of Massachusetts without regard to the conflicts of laws principles thereof.
|
(7)
|
Notice is hereby given that this Agreement is executed on behalf of the Subsidiary by an officer of the Subsidiary in his or her capacity as an officer of the Subsidiary and not individually, and that the obligations of
or arising out of this Agreement are not binding upon any of the trustees, directors, officers or shareholders of the Subsidiary individually, but are binding only upon the assets and property of the Subsidiary.
|
(8)
|
If any term, provision, agreement, covenant or restriction of this Agreement is held by a court or other authority of competent jurisdiction to be invalid, void, or unenforceable, the remainder of the terms, provisions,
agreements, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party hereto. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a reasonably
acceptable manner in order that the transactions contemplated hereby may be consummated as originally contemplated to the fullest extent possible.
|
(9)
|
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes and all of which, taken together, shall constitute one and the same instrument.
|
Part Five: RENEWAL AND TERMINATION
(1)
|
This Agreement shall continue in effect for two years from the date of its execution, and from year to year thereafter, unless and until terminated by either party as hereinafter provided.
|
Page 5
(2)
|
This Agreement may be terminated by either the Fund or the Investment Manager at any time by giving the other party 60 days written notice of such intention to terminate, provided that any termination shall be
made without the payment of any penalty, and provided further that termination may be effected either by the Board or by a vote of the majority of the outstanding voting securities of the Fund.
|
(3)
|
This Agreement shall terminate in the event of its assignment, the term assignment for this purpose having the same meaning as set forth in the 1940 Act, unless the SEC issues an order exempting such
assignment from the provisions of the 1940 Act requiring such termination, in which case this Agreement shall remain in full force and effect, subject to the terms of such order. This Agreement shall terminate in the event the Investment Manager
ceases to be the investment adviser of the Parent Fund.
|
(4)
|
Except as prohibited by applicable law, this Agreement may be amended upon written agreement of the Investment Manager and the Subsidiary.
|
Part Six: Use of Name
(1)
|
At such time as this Agreement or any extension, renewal or amendment hereof, or any similar agreement with any organization which shall have succeeded to the business of the Investment Manager, shall no longer be in
effect, the Fund will cease to use any name derived from the name of the Investment Manager or of any organization which shall have succeeded to the Investment Managers business as investment adviser.
|
Page 6
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as of the day and year first above
written.
CDARF3 OFFSHORE FUND, LTD.
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
Name:
|
|
Michael G. Clarke
|
|
|
Authorized Person
|
COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
Name:
|
|
Amy K. Johnson
|
|
|
|
Title:
|
|
Managing Director and Head of U.S. Operations and Mutual Fund Services
|
Schedule A
Effective as of December 19, 2014
|
|
|
|
|
Assets (in Millions)
|
|
Rate of Fee
(1)
|
|
$0 - $500
|
|
|
1.10
|
%
|
>$500 - $1,000
|
|
|
1.055
|
%
|
>$1,000 - $3,000
|
|
|
1.03
|
%
|
>$3,000 - $6,000
|
|
|
1.01
|
%
|
>$6,000
|
|
|
0.98
|
%
|
(1)
|
When calculating asset levels for purposes of determining fee rate breakpoints, asset levels are based on aggregate net assets of the Fund and the Parent Fund. When calculating the fee payable under this agreement, the
annual rates are based on a percentage of the average daily net assets of the Fund.
|
Schedule I
As of December 19, 2014
|
|
|
Registrant
|
|
FUNDS
|
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
Columbia Adaptive Alternatives Fund
Columbia Adaptive Risk
Allocation Fund
Columbia AMT-Free Connecticut Intermediate Muni Bond Fund
Columbia AMT-Free Intermediate Muni Bond Fund
Columbia AMT-Free
Massachusetts Intermediate Muni Bond Fund
Columbia AMT-Free New York Intermediate Muni Bond Fund
Columbia AMT-Free Oregon Intermediate Muni Bond Fund
CMG Ultra
Short Term Bond Fund
Columbia Balanced Fund
Columbia Bond
Fund
Columbia California Tax-Exempt Fund
Columbia Contrarian
Core Fund
Columbia Corporate Income Fund
Columbia Diversified
Absolute Return 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 Technology Growth Fund
Columbia Global Inflation-Linked Bond Plus Fund
Columbia Greater
China Fund
Columbia High Yield Municipal Fund
Columbia
Intermediary Alternatives Fund
Columbia Intermediate Bond Fund
Columbia International Bond Fund
Columbia Large Cap Growth
Fund
Columbia Mid Cap Growth Fund
Columbia New York
Tax-Exempt Fund
Columbia Pacific/Asia Fund
Columbia Real
Estate Equity 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 U.S. Treasury Index
Fund
Columbia Value and Restructuring Fund
|
|
|
Columbia Funds Variable Insurance Trust
|
|
Columbia Variable Portfolio Asset Allocation Fund
|
|
|
Columbia Variable Portfolio Contrarian Core Fund
|
|
|
|
|
|
Columbia Variable Portfolio Core Bond Fund
|
|
|
Columbia Variable Portfolio Managed Volatility Conservative Fund
|
|
|
Columbia Variable Portfolio Managed Volatility Conservative Growth Fund
|
|
|
Columbia Variable Portfolio Managed Volatility Growth Fund
|
|
|
Columbia Variable Portfolio Multi-Strategy Alternatives Fund
|
|
|
Columbia Variable Portfolio Select Large Cap Growth Fund
|
|
|
Columbia Variable Portfolio Small Cap Value Fund
|
|
|
Columbia Variable Portfolio Small Company Growth Fund
|
|
|
Columbia Variable Portfolio Strategic Income Fund
|
|
|
Variable Portfolio AQR Managed Futures Strategy Fund
|
|
|
Variable Portfolio Goldman Sachs Commodity Strategy Fund
|
|
|
Variable Portfolio Multi-Manager Diversified Income Fund
|
|
|
Variable Portfolio Multi-Manager Interest Rate Adaptive Fund
|
|
|
Variable Portfolio Pyrford International Equity Fund
|
IN WITNESS THEREOF, the parties hereto have executed the foregoing Schedule I as of December 19, 2014.
COLUMBIA FUNDS SERIES TRUST I
COLUMBIA FUNDS VARIABLE INSURANCE
TRUST
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
Name:
|
|
Michael G. Clarke
|
Title:
|
|
Chief Financial Officer
|
COLUMBIA MANAGEMENT INVESTMENT DISTRIBUTORS, INC.
|
|
|
By:
|
|
/s/ Jeffrey F. Peters
|
Name:
|
|
Jeffrey F. Peters
|
|
|
|
Title:
|
|
Managing Director and Head of Global Institutional Distribution
|
Schedule A
List of Series Under each Registrant
Effective as of December 19, 2014
|
|
|
Registrant
|
|
FUNDS
|
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
|
|
Columbia Adaptive Alternatives Fund
|
|
Columbia Adaptive Risk Allocation Fund
|
|
Columbia AMT-Free Connecticut Intermediate Muni Bond Fund
|
|
Columbia AMT-Free Intermediate Muni Bond Fund
|
|
Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund
|
|
Columbia AMT-Free New York Intermediate Muni Bond Fund
|
|
Columbia AMT-Free Oregon Intermediate Muni Bond Fund
|
|
CMG Ultra Short Term Bond Fund
|
|
Columbia Balanced Fund
|
|
Columbia Bond Fund
|
|
Columbia California Tax-Exempt Fund
|
|
Columbia Contrarian Core Fund
|
|
Columbia Corporate Income Fund
|
|
Columbia Diversified Absolute Return 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 Technology Growth Fund
|
|
Columbia Global Inflation-Linked Bond Plus Fund
|
|
Columbia Greater China Fund
|
|
Columbia High Yield Municipal Fund
|
|
Columbia Intermediary Alternatives Fund
|
|
Columbia Intermediate Bond Fund
|
|
Columbia International Bond Fund
|
|
Columbia Large Cap Growth Fund
|
|
Columbia Mid Cap Growth Fund
|
|
Columbia New York Tax-Exempt Fund
|
|
Columbia Pacific/Asia Fund
|
|
Columbia Real Estate Equity 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 U.S. Treasury Index Fund
|
|
Columbia Value and Restructuring Fund
|
|
|
Columbia Funds Variable Insurance Trust
|
|
Columbia Variable Portfolio Asset Allocation Fund
|
|
|
Columbia Variable Portfolio Contrarian Core Fund
|
|
|
Columbia Variable Portfolio Core Bond Fund
|
|
|
Columbia Variable Portfolio Managed Volatility Conservative Fund
|
|
|
Columbia Variable Portfolio Managed Volatility Conservative Growth Fund
|
|
|
Columbia Variable Portfolio Managed Volatility Growth Fund
|
|
|
Columbia Variable Portfolio Multi-Strategy Alternatives Fund
|
|
|
Columbia Variable Portfolio Select Large Cap Growth Fund
|
|
|
Columbia Variable Portfolio Small Cap Value Fund
|
|
|
Columbia Variable Portfolio Small Company Growth Fund
|
|
|
Columbia Variable Portfolio Strategic Income Fund
|
|
|
Variable Portfolio AQR Managed Futures Strategy Fund
|
|
|
Variable Portfolio Multi-Manager Diversified Income Fund
|
|
|
Variable Portfolio Multi-Manager Interest Rate Adaptive Fund
|
|
|
Variable Portfolio Goldman Sachs Commodity Strategy Fund
|
|
|
Variable Portfolio Pyrford International Equity Fund
|
Schedule B
Fee Schedule
Effective as of December 19, 2014
Group I
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS
|
|
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE
FEES
(1)
|
|
|
Effective Date
of Fee Rate
|
|
$0 - $500
|
|
|
>$500 - $1,000
|
|
|
>$1,000 - $3,000
|
|
|
>$3,000 - $12,000
|
|
|
>$12,000
|
|
Active Portfolio Multi Manager Alternative Strategies Fund
(2)
|
|
March 14, 2012
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Active Portfolio Multi-Manager Core Plus Bond Fund
|
|
March 14, 2012
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Active Portfolio Multi-Manager Growth Fund
|
|
March 14, 2012
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Active Portfolio Multi-Manager Small Cap Equity Fund
|
|
March 14, 2012
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Columbia Adaptive Alternatives Fund
(2)
|
|
December 19, 2014
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Columbia Balanced Fund
|
|
March 1, 2011
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Columbia Bond Fund
|
|
March 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia Contrarian Core Fund
|
|
March 1, 2011
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Columbia Corporate Income Fund
|
|
July 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia Diversified Absolute Return Fund
|
|
December 19, 2014
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Columbia Dividend Income Fund
|
|
July 1, 2011
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Columbia Global Dividend Opportunity Fund
|
|
March 1, 2011
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Columbia Global Inflation-Linked Bond Plus Fund
|
|
March 3, 2014
|
|
|
|
|
|
|
|
|
|
|
0.080
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS
|
|
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE
FEES
(1)
|
|
|
Effective Date
of Fee Rate
|
|
$0 - $500
|
|
|
>$500 - $1,000
|
|
|
>$1,000 - $3,000
|
|
|
>$3,000 - $12,000
|
|
|
>$12,000
|
|
Columbia High Yield Municipal Fund
|
|
July 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia Intermediate Bond Fund
|
|
March 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia AMT-Free Intermediate Muni Bond Fund
|
|
March 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia International Bond Fund
|
|
July 1, 2011
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Columbia Large Cap Growth Fund
|
|
April 1, 2011
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Columbia Mid Cap Growth Fund
|
|
April 1, 2011
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Columbia Adaptive Risk Allocation Fund
|
|
June 18, 2012
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Columbia Select Large Cap Growth Fund
|
|
July 1, 2011
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Columbia Small Cap Core Fund
|
|
July 1, 2011
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Columbia Small Cap Growth Fund I
|
|
March 1, 2011
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Columbia Small Cap Value Fund I
|
|
April 30, 2011
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Columbia Strategic Income Fund
|
|
May 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia Tax-Exempt Fund
|
|
March 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia Variable Portfolio Contrarian Core Fund
|
|
March 14, 2012
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Columbia Variable Portfolio Core Bond Fund
|
|
April 10, 2013
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS
|
|
Effective Date
of Fee Rate
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE
FEES
(1)
|
|
|
|
$0 - $500
|
|
|
>$500 - $1,000
|
|
|
>$1,000 - $3,000
|
|
|
>$3,000 - $12,000
|
|
|
>$12,000
|
|
Columbia Variable Portfolio Multi-Strategy Alternatives Fund
(2)
|
|
March 14, 2012
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Columbia Variable Portfolio Select Large Cap Growth Fund
|
|
May 1, 2011
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Columbia Variable Portfolio Small Cap Value Fund
|
|
May 1, 2011
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Columbia Variable Portfolio Small Company Growth Fund
|
|
May 1, 2011
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Columbia Variable Portfolio Strategic Income Fund
|
|
April 30, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Variable Portfolio AQR Managed Futures Strategy Fund
(2)
|
|
March 14, 2012
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Variable Portfolio Goldman Sachs Commodity Strategy Fund
(2)
|
|
March 14, 2012
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Variable Portfolio Pyrford International Equity Fund
|
|
April 10, 2013
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
Group II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS
|
|
Effective Date
of Fee Rate
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE
FEES
(1)
|
|
|
|
$0 - $250
|
|
|
>$250 - $1,000
|
|
|
>$1,000 - $3,000
|
|
|
>$3,000 - $12,000
|
|
|
>$12,000
|
|
Columbia California Tax-Exempt Fund
|
|
March 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia AMT-Free Connecticut Intermediate Muni Bond Fund
|
|
March 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund
|
|
March 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia AMT-Free New York Intermediate Muni Bond Fund
|
|
March 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia New York Tax-Exempt Fund
|
|
March 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia AMT-Free Oregon Intermediate Muni Bond Fund
|
|
July 1, 2011
|
|
|
0.070
|
%
|
|
|
0.065
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Group III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS
|
|
Effective Date
of Fee Rate
|
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE
FEES
(1)
|
|
|
|
$0 - $500
|
|
|
>$500 - $1,000
|
|
|
>$1,000 - $3,000
|
|
|
>$3,000
|
|
Columbia Real Estate Equity Fund
|
|
|
March 1, 2011
|
|
|
|
0.060
|
%
|
|
|
0.055
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Group IV
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS
|
|
Effective Date
of Fee Rate
|
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE
FEES
(1)
|
|
|
|
$0 - $1,000
|
|
|
>$1,000 - $3,000
|
|
|
>$3,000
|
|
Columbia Global Energy and Natural Resources Fund
|
|
|
May 1, 2011
|
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Columbia Pacific/Asia Fund
|
|
|
July 1, 2011
|
|
|
|
0.080
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
Group V
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS
|
|
Effective Date
of Fee Schedule
|
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE
FEES
(1)
|
|
|
|
$0 - $3,000
|
|
|
>$3,000 - $12,000
|
|
|
>$12,000
|
|
Columbia Value and Restructuring Fund
|
|
|
August 1, 2012
|
|
|
|
0.060
|
%
|
|
|
0.040
|
%
|
|
|
0.030
|
%
|
Group VI
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS
|
|
Effective Date
of Fee Schedule
|
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE
FEES
(1)
|
|
|
|
$0 - $750
|
|
|
>$750 - $1,000
|
|
|
>$1 ,000 - $3,000
|
|
|
>$3 ,000
|
|
Columbia Emerging Markets Fund
|
|
|
July 1, 2011
|
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
Group VII
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUNDS
|
|
Effective Date
of Fee Schedule
|
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE
FEES
(1)
|
|
|
|
$0 - $1,000
|
|
|
>$1,000 - $1,500
|
|
|
>$1,500 - $3,000
|
|
|
>$3,000 - $6,000
|
|
|
>$6,000
|
|
Columbia Greater China Fund
|
|
|
July 1, 2011
|
|
|
|
0.080
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
|
|
0.040
|
%
|
Group VIII
|
|
|
|
|
FUNDS
|
|
Effective Date
of Fee Schedule
|
|
All ASSETS
(1)
|
CMG Ultra Short Term Bond Fund
|
|
May 1, 2010
|
|
N/A
|
Columbia Intermediary Alternatives Fund
|
|
December 19, 2014
|
|
N/A
|
Columbia Global Technology Fund
|
|
May 1, 2010
|
|
N/A
|
Columbia U.S. Treasury Index Fund
(3)
|
|
May 1, 2010
|
|
0.300%
|
Columbia Variable Portfolio Asset Allocation Fund
|
|
October 22, 2010
|
|
0.020%
|
(1)
|
Annual rates based on a percentage of the Funds average daily net assets.
|
(2)
|
When calculating asset levels for purposes of determining fee breakpoints, asset levels are based on aggregate net assets of the Fund, including assets invested in any wholly-owned subsidiary advised by the
Administrator (Subsidiaries). Fees payable by the Fund under this agreement shall be reduced by any administrative fees paid to the Administrator by any Subsidiaries under separate administrative services agreements with the
Subsidiaries.
|
(3)
|
The Administrator pays all operating expenses of the Fund with the exception of brokerage fees and expenses, taxes, interest, fees and expenses of Trustees who are not officers, directors or employees of the
Administrator or its affiliates, and any extraordinary non-recurring expenses that may arise, including, but not limited to, litigation expenses.
|
Group IX
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Effective Date
of Fee Schedule
|
|
|
Category of Portfolio Investment
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
|
Columbia Diversified Real Return Fund
|
|
|
March 3, 2014
|
|
|
Category 1:
Assets invested in underlying funds (including ETFs) that pay an investment management fee to the
Administrator or its affiliate
|
|
All such assets
|
|
|
0.020
|
%
|
|
|
|
|
|
|
Category 2:
Assets invested in securities, instruments and other assets not described under Category 1, including without limitation affiliated mutual funds, exchange-traded funds and closed-end funds that do
not pay an investment management fee to the Administrator or its affiliates, third party funds, derivatives and individual securities
|
|
All such assets
|
|
|
0.060
|
%
|
|
|
|
|
|
Columbia Variable Portfolio Managed Volatility Conservative Fund
|
|
|
April 10, 2013
|
|
|
Category 1:
Assets invested in underlying funds (including ETFs) that pay an investment management fee to the Administrator or its affiliate
|
|
All such assets
|
|
|
0.020
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Category 2:
Assets invested in securities, instruments and other assets not described under Category 1, including without limitation affiliated mutual funds, exchange-traded funds and closed-end funds that do
not pay an investment management fee to the Administrator or its affiliates, third party funds, derivatives and individual securities
|
|
$0 - $500
>$500 - $1,000
>$1,000 - $3,000
>$3,000 - $12,000
>$12,000
|
|
|
0.060
0.055
0.050
0.040
0.030
|
%
%
%
%
%
|
|
|
|
|
|
Columbia Variable Portfolio Managed Volatility Conservative Growth Fund
|
|
|
April 10, 2013
|
|
|
Category 1:
Assets invested in underlying funds (including ETFs) that pay an investment management fee to the
Administrator or its affiliate
|
|
All such assets
|
|
|
0.020
|
%
|
|
|
|
|
|
|
Category 2:
Assets invested in securities, instruments and other assets not described under Category 1, including without limitation affiliated mutual funds, exchange-traded funds and closed-end funds that do
not pay an investment management fee to the Administrator or its affiliate, third party funds, derivatives and individual securities
|
|
$0 - $500
>$500 - $1,000
>$1,000 - $3,000
>$3,000 - $12,000
>$12,000
|
|
|
0.060
0.055
0.050
0.040
0.030
|
%
%
%
%
%
|
|
|
|
|
|
Columbia Variable Portfolio Managed Volatility Growth Fund
|
|
|
April 10, 2013
|
|
|
Category 1:
Assets invested in underlying funds (including ETFs) that pay an investment management fee to the Administrator or its affiliate
|
|
All such assets
|
|
|
0.020
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Category 2:
Assets invested in securities, instruments and other assets not described under Category 1, including without limitation affiliated mutual funds, exchange-traded funds and closed-end funds that do
not pay an investment management fee to the Administrator or its affiliate, third party funds, derivatives and individual securities
|
|
$0 - $500
>$500 - $1,000
>$1,000 - $3,000
>$3,000 - $12,000
>$12,000
|
|
|
0.060
0.055
0.050
0.040
0.030
|
%
%
%
%
%
|
|
|
|
|
|
|
|
|
|
|
|
Fund
|
|
Effective Date
of Fee Schedule
|
|
Category of Portfolio Investment
|
|
Assets
(in Millions)
|
|
Rate of Fee
(1)
|
|
Variable Portfolio Multi-Manager Diversified Income Fund
|
|
June 25, 2014
|
|
Category 1:
Assets invested in underlying funds (including ETFs) that pay an investment management fee to the
Administrator or its affiliate
|
|
All such assets
|
|
|
0.020
|
%
|
|
|
|
|
Category 2:
Assets invested in securities, instruments and other assets not described under Category 1, including without limitation affiliated mutual funds, exchange-traded funds and closed-end funds that do
not pay an investment management fee to the Administrator or its affiliate, third party funds, derivatives and individual securities
|
|
$0 - $500
>$500 - $1,000
>$1,000 - $3,000
>$3,000 - $12,000
>$12,000
|
|
|
0.060
0.055
0.050
0.040
0.030
|
%
%
%
%
%
|
|
|
|
|
|
Variable Portfolio Multi-Manager Interest Rate Adaptive Fund
|
|
June 25, 2014
|
|
Category 1:
Assets invested in underlying funds (including ETFs) that pay an investment management fee to the Administrator or its affiliate
|
|
All such assets
|
|
|
0.020
|
%
|
|
|
|
|
|
|
|
|
|
Category 2:
Assets invested in securities, instruments and other assets not described under Category 1, including without limitation affiliated mutual funds, exchange-traded funds and closed-end funds that do
not pay an investment management fee to the Administrator or its affiliate, third party funds, derivatives and individual securities
|
|
$0 - $500
>$500 - $1,000
>$1,000 - $3,000
>$3,000 - $12,000
>$12,000
|
|
|
0.060
0.055
0.050
0.040
0.030
|
%
%
%
%
%
|
(1)
|
Annual rates based on a percentage of the Funds average daily net assets. In no event shall the administrative fee be negative (even if the portfolio investments in a particular category have a negative net
value).
|
IN WITNESS THEREOF, the parties hereto have executed the foregoing Schedule A and Schedule B as of
December 19, 2014.
COLUMBIA FUNDS SERIES TRUST I
COLUMBIA FUNDS VARIABLE INSURANCE TRUST
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
Name:
|
|
Michael G. Clarke
|
Title:
|
|
Chief Financial Officer
|
COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
Name:
|
|
Amy K. Johnson
|
|
|
|
Title:
|
|
Managing Director and Head of U.S. Operations and Mutual Fund Services
|
SCHEDULE A
Effective December 19, 2014
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
Columbia Adaptive Alternatives Fund
Columbia Adaptive Risk Allocation Fund
Columbia AMT-Free
Connecticut Intermediate Muni Bond Fund
Columbia AMT-Free Intermediate Muni Bond Fund
Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund
Columbia AMT-Free New York Intermediate Muni Bond Fund
Columbia
AMT-Free Oregon Intermediate Muni Bond Fund
CMG Ultra Short Term Bond Fund
Columbia Balanced Fund
Columbia Bond Fund
Columbia California Tax-Exempt Fund
Columbia Contrarian Core
Fund
Columbia Corporate Income Fund
Columbia Diversified
Absolute Return 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 Technology Growth Fund
Columbia Global Inflation-Linked Bond Plus Fund
Columbia Greater
China Fund
Columbia High Yield Municipal Fund
Columbia
Intermediary Alternatives Fund*
Columbia Intermediate Bond Fund
Columbia International Bond Fund
Columbia Large Cap Growth Fund
Columbia Mid Cap Growth Fund
Columbia New York Tax-Exempt
Fund
Columbia Pacific/Asia Fund
Columbia Real Estate Equity
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 U.S. Treasury Index Fund
Columbia Value and Restructuring Fund
*
|
There is no Transfer Agency Services fee for Columbia Intermediary Alternatives Fund
|
IN WITNESS WHEREOF, the parties hereto have caused the forgoing Schedule A and Schedule B to be duly executed as
of December 19, 2014.
COLUMBIA FUNDS SERIES TRUST I,
on behalf of their respective series listed on Schedule A
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
|
|
Name: Michael G. Clarke
|
|
|
Title: Chief Financial Officer
|
COLUMBIA MANAGEMENT INVESTMENT SERVICES CORP.
|
|
|
By:
|
|
/s/ Lyn Kephart-Strong
|
|
|
Name: Lyn Kephart-Strong
|
|
|
Title: President
|
SCHEDULE B
Effective November 1, 2014
Payments
under the Agreement are payable to CMISC monthly.
Transfer agency costs are calculated separately for each of (i) Class Y shares, (ii) Class K
and R5 shares, and (iii) all other classes of shares (except Class I, which pay no transfer agency fees).
Each Fund shall pay to CMISC for the
services to be provided by CMISC under the Agreement an amount equal to the sum of the following:
|
(a)
|
i) Base transfer agency fee paid monthly of:
|
1. an annual fee of $34.25 per account for
accounts established directly with the Fund (direct accounts)*;
2. an annual fee of $11.00 per account for accounts established or
maintained pursuant to the National Securities Clearing Corporations networking system (network accounts)*;
3. an annual rate of
0.014% of the average daily value of accounts of intermediaries established with the Fund through CMISC that represents the combined holdings of, and transactions in, Fund shares of one or more clients of the intermediary (omnibus accounts)*;
*
|
excluding Class I share accounts
|
PLUS
ii) The Funds Allocated Share of CMISC Reimbursable Out-of-Pocket Expenses (allocated among the Funds classes (other than Class I
shares) based on the number of open accounts); PLUS
iii) Sub-transfer agency fees (generally intended to offset amounts paid by CMISC to
intermediaries for services they provide) EITHER
1. (for all classes other than Class I, K, R5 or Y) for each position held in an omnibus
account (i) for which American Enterprise Investment Services, Inc. is the broker of record or with respect to which the beneficial shareholder is a customer of Ameriprise Financial Services, Inc., at the rate of $16 per annum, calculated
monthly based on the total number of positions in such account at the end of such month; and (ii) for all other accounts, at an annual rate of 0.20% of the average aggregate value of the funds shares maintained in each such omnibus
account; OR
2. (for Class K and Class R5 shares) at an annual rate of 0.05% of the average aggregate value of the funds shares
maintained in omnibus accounts.
|
(b)
|
For Class K and Class R5 shares the maximum annual rate for the fees set forth in paragraphs (a)(i) (a)(iii)(2) shall be 0.05%.
|
In addition, CMISC shall be entitled to retain as additional compensation for its services all CMISC revenues for fees for wire, telephone, and redemption
orders, IRA trustee agent fees and account transcripts due CMISC from shareholders of the Fund and interest (net of bank charges) earned with respect to balances in the accounts referred to in paragraph 2 of the Agreement. All determinations
hereunder shall be in accordance with generally accepted accounting principles and subject to audit by the Funds independent accountants.
Definitions
Allocated Share for any
month means that percentage of CMISC Reimbursable Out-of-Pocket Expenses which would be allocated to a Fund for such month in accordance with the methodology described below under the heading Methodology of Allocating CMISC Reimbursable
Out-of-Pocket Expenses.
CMISC Reimbursable Out-of-Pocket Expenses means (i) networking account fees paid to dealer
firms by CMISC on shareholder accounts established or maintained pursuant to the National Securities Clearing Corporations networking system, subject to a maximum annual rate of 0.20% of the month end value of the Funds shares maintained
in networked accounts of each dealer firm, and (ii) out-of-pocket expenses incurred on behalf of the Funds by CMISC for stationery, forms, postage and similar items and those expenses identified as Out-of-Pocket Expenses below.
Out-of-Pocket Expenses also include, but are not limited to, the following items:
|
*
|
Printing, storage and programming costs associated with, but not limited to envelopes, checks, confirmations and stationery
|
|
*
|
Postage bulk, pre-sort, ZIP+4, barcoding, first class
|
|
*
|
Telephone and telecommunication costs, including all lease, maintenance and line costs
|
|
*
|
Proxy solicitations, mailings and tabulations
|
|
*
|
Daily & Distributions advice mailings
|
|
*
|
Implementing, monitoring or processing any Stop Orders
|
|
*
|
Shipping, Certified and Overnight mail and insurance
|
|
*
|
Year-end forms and mailings
|
|
*
|
National Securities Clearing Corporation charges related to fund transactions
|
|
*
|
Record retention costs including but not limited to the storage, movement, destruction, retrieval and handling charges
|
|
*
|
Data processing and storage for anti-market timing omnibus monitoring
|
|
*
|
Creation and maintenance of on-line records including reports, shareholder and dealer statements, year-end forms, and regulatory mailings
|
|
*
|
Third party quality control assessments
|
|
*
|
Compliance items including, but not limited to, lost shareholder review, lost certificate filings and compliance programs
|
|
*
|
Electronic website linkages to third party account management applications
|
|
*
|
Regulatory mailings inclusive of costs related to electronic delivery of such documents.
|
|
*
|
At the request, or with the consent of the Trust, such other miscellaneous expenses reasonably incurred by CMISC in performing its duties and responsibilities under this Agreement.
|
The Funds agree that postage and mailing expenses will be paid on the day of or prior to mailing as agreed with CMISC. In addition, the Funds will promptly
reimburse CMISC for any other unscheduled expenses incurred by CMISC whenever the Funds and CMISC mutually agree that such expenses are not otherwise properly borne by CMISC as part of its duties under the Agreement.
Methodology of Allocating CMISC Reimbursable Out-of-Pocket Expenses
CMISC Reimbursable Out-of-Pocket Expenses are allocated to the Funds as follows:
|
|
|
|
|
A. Identifiable
|
|
Based on actual services performed and invoiced to a Fund.
|
|
|
B. Unidentifiable
|
|
Allocation will be based on three evenly weighted factors.
|
|
|
|
|
number of shareholder accounts
|
|
|
|
|
number of transactions
|
|
|
|
|
average assets
|
S
CHEDULE
A
List of Registrants and Funds
As of December 19, 2014
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
Columbia Adaptive Alternatives Fund
Columbia Adaptive Risk
Allocation Fund
Columbia AMT-Free Connecticut Intermediate Muni Bond Fund
Columbia AMT-Free Intermediate Muni Bond Fund
Columbia AMT-Free
Massachusetts Intermediate Muni Bond Fund
Columbia AMT-Free New York Intermediate Muni Bond Fund
Columbia AMT-Free Oregon Intermediate Muni Bond Fund
CMG Ultra
Short Term Bond Fund
Columbia Balanced Fund
Columbia Bond
Fund
Columbia California Tax-Exempt Fund
Columbia
Contrarian Core Fund
Columbia Corporate Income Fund
Columbia Diversified Absolute Return 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 Technology Growth Fund
Columbia Global Inflation-Linked Bond Plus Fund
Columbia Greater China Fund
Columbia High Yield Municipal Fund
Columbia Intermediary Alternatives Fund
Columbia
Intermediate Bond Fund
Columbia International Bond Fund
Columbia Large Cap Growth Fund
Columbia Mid Cap Growth Fund
Columbia New York Tax-Exempt Fund
Columbia Pacific/Asia Fund
Columbia Real Estate Equity 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
U.S. Treasury Index Fund
Columbia Value and Restructuring Fund
Columbia Funds Variable Insurance Trust
Columbia Variable Portfolio Asset Allocation Fund
Columbia Variable Portfolio Contrarian Core Fund
Columbia
Variable Portfolio Core Bond Fund
Columbia Variable Portfolio Managed Volatility Conservative Fund
Columbia Variable Portfolio Managed Volatility Conservative Growth Fund
Columbia Variable Portfolio Managed Volatility Growth Fund
Columbia Variable Portfolio Multi-Strategy Alternatives Fund
Columbia Variable Portfolio Select Large Cap Growth Fund
Columbia Variable Portfolio Small Cap Value Fund
Columbia
Variable Portfolio Small Company Growth Fund
Columbia Variable Portfolio Strategic Income Fund
Variable Portfolio AQR Managed Futures Strategy Fund
Variable Portfolio Goldman Sachs Commodity Strategy Fund
Variable Portfolio Multi-Manager Diversified Income Fund
Variable Portfolio Multi-Manager Interest Rate Adaptive Fund
Variable Portfolio Pyrford International Equity Fund
IN WITNESS THEREOF, the parties hereto have executed the foregoing Schedule A as of the date set forth above.
|
|
|
COLUMBIA FUNDS SERIES TRUST I
|
COLUMBIA FUNDS VARIABLE INSURANCE TRUST
|
Each for itself and on behalf of its respective series listed on this Schedule A
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
Name:
|
|
Michael G. Clarke
|
Title:
|
|
Chief Financial Officer
|
|
COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
Name:
|
|
Amy K. Johnson
|
Title:
|
|
Managing Director and Head of U.S. Operations and Mutual Fund Services
|
|
COLUMBIA MANAGEMENT INVESTMENT DISTRIBUTORS, INC.
|
|
|
By:
|
|
/s/ Jeffrey F. Peters
|
Name:
|
|
Jeffrey F. Peters
|
Title:
|
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Managing Director and Head of Global Institutional Distribution
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COLUMBIA MANAGEMENT INVESTMENT SERVICES CORP.
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By:
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/s/ Lyn Kephart-Strong
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Name:
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Lyn Kephart-Strong
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Title:
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President
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ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (Agreement), dated as of December 19, 2014, is by and between Columbia Management Investment Advisers,
LLC (Administrator), a Minnesota limited liability company, and CAAF Offshore Fund, Ltd. (Subsidiary or Fund), a wholly-owned subsidiary of Columbia Adaptive Alternatives Fund (Parent Fund), a series
of Columbia Funds Series Trust I.
Part One: SERVICES
(1)
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The Fund hereby retains Administrator, and Administrator hereby agrees, for the period of this Agreement and under the terms and conditions set forth in this Agreement and subject to the oversight of the Board of
Directors of Subsidiary (the Board), any committees thereof and/or authorized officer(s) of the Fund, to provide all of the services and facilities that are necessary for or appropriate to the business and effective operation of the Fund
that are not (a) provided by employees or other agents engaged by the Fund or the Board or (b) required to be provided by any person pursuant to any other agreement or arrangement with the Fund, including but not limited to the following
(unless otherwise directed by the Board or a committee thereof or the Chair):
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(i)
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Providing office space, equipment, office supplies and clerical personnel;
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(ii)
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Overseeing and assisting in the preparation of all general or routine shareholder communications;
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(iii)
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Calculating and arranging for notice and payment of dividend, income, and capital gains distributions to shareholders of the Fund;
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(iv)
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Accumulating information for, preparing and filing (or overseeing and assisting such persons that the Fund or the Parent Fund has retained to prepare and file) shareholder reports and other required regulatory reports
and communications for the Fund or, to the extent the information relates to the Fund or its Portfolio, the Parent Fund;
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(v)
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Preparing and filing of any required tax reports and returns, including the Funds foreign, federal, state, local and excise tax returns, and issuing all tax-related information to shareholders;
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(vi)
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Monitoring and testing the Funds compliance with applicable tax laws and regulations;
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(vii)
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Executing the pricing process, including calculating the Funds net asset value(s), and monitoring the reliability of the valuation information received from the independent third-party pricing services and
brokers;
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(viii)
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Coordinating and supervising relations with, and monitoring the performance of, any custodians, depositories, transfer and pricing agents, accountants, underwriters, brokers and dealers, insurers, printers, Fund
auditors, and other persons serving the Fund, to the extent deemed necessary or desirable by the Board, and reporting to the Board on the same;
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(ix)
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Preparing, maintaining and filing any filings required by state, federal, and local laws and regulations;
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(x)
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If applicable, determining jurisdictions in which shares of the Fund shall be qualified for sale and qualifying and maintaining qualification in the jurisdictions in which shares of the Fund are offered for sale;
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(xi)
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Preparing reports, information, surveys, or statistical or other analyses for third parties as deemed necessary or desirable by the Fund;
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(xii)
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Arranging, if desired by the Fund, for Board Members, officers, and employees of Administrator to serve as Board Members, officers, or agents of the Fund;
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(xiii)
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Coordinating, preparing and distributing materials for Board and committee meetings, including reports, evaluations, information, surveys, statistical analyses or other materials on corporate and legal issues relevant
to the Funds business as the Board may request from time to time;
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(xiv)
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Providing Fund accounting and internal audit services;
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(xv)
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Calculating and providing to the Parent Fund the Funds daily net asset value quotations, pricing, performance and yield information, periodic earnings reports, and other financial data, consistent with federal
securities laws and the Parent Funds current registration statement;
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(xvi)
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Preparing and furnishing to the Fund or the Parent Fund such broker security transaction summaries and security transaction listings as may reasonably be requested and reporting such information to external databases;
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(xvii)
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Assisting the Parent Fund with its obligations under Section 302 and 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2 under the Investment Company Act of 1940 Act, as amended (the 1940 Act);
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(xviii)
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Providing compliance services, as directed by the Parent Funds Chief Compliance Officer, which include monitoring the Funds compliance with its policies and procedures and with applicable laws, and the rules
and regulations thereunder;
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(xix)
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Monitoring the Funds compliance with its investment policies, objectives, and restrictions as set forth in the Funds Memorandum and Articles of Association and the Parent Funds currently effective
Prospectus and Statement of Additional Information;
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(xx)
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Monitoring legal, tax, regulatory, and industry developments relevant to the Fund and assisting in the strategic response to such developments;
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(xxi)
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[Intentionally left blank];
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(xxii)
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Providing internal legal support of all administration services provided by Administrator under this Agreement;
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(xxiii)
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Preparing and filing, or assisting with the preparation and filing, of claims in connection with class actions involving portfolio securities, handling administrative matters in connection with such litigations or
settlements, and, if requested by the Board, reporting to the Board regarding such matters;
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(xxiv)
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Monitoring, budgeting, approving and arranging for payment of Fund expenses;
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(xxv)
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Monitoring Board compliance with personal trading guidelines;
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(xxvi)
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Upon request from the Board, obtaining and maintaining the Funds insurance coverage and administering claims thereunder, and filing any related notices;
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(xxvii)
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Preparing such financial information and reports as may be required by any banks from which the Fund or the Parent Fund borrows;
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(xxviii)
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Maintaining the Funds books and records in accordance with all applicable laws and regulations, provided that all such items maintained by it shall be the property of the Fund, and that Administrator shall
surrender promptly to the Fund or the Parent Fund any such items it maintains upon request, provided that Administrator shall be permitted to retain a copy of all such items;
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(xxix)
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Administering operating policies of the Fund and recommending to the officers and the Board such modifications to such policies as Administrator determines necessary or appropriate to facilitate the protection of
shareholders or market competitiveness of the Fund and to comply with new legal or regulatory requirements;
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(xxx)
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Assisting the Fund and the Parent Fund in regulatory examinations, inspections or investigations of the Fund;
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(xxxi)
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[Intentionally left blank];
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(xxxii)
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[Intentionally left blank];
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(xxxiii)
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Receiving and notifying the Fund of inquiries and complaints from regulators, media and the public;
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(xxxiv)
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Upon request of the Board, implementing and maintaining, together with affiliated companies, including the Parent Fund, a business continuation and disaster recovery program for the Fund;
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(xxxv)
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Arranging for all meetings of the Board and shareholders;
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(xxxvi)
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Maintaining and retaining all charter documents and coordinating the filing of any documents required to maintain the Funds organizational status under applicable law; and
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(xxxvii)
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Supervising the drafting, negotiation and maintenance of any Fund agreements.
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If, as a result of a material
change in applicable law, rules or regulations, Fund policies or the activities undertaken or transactions engaged in by the Fund or otherwise, the type or quantity of administrative services to be provided hereunder changes materially, the Fund and
Administrator shall negotiate in good faith such adjustment, if any, in the fee payable under Part 2 of this Agreement as may be mutually agreed by the parties.
(2)
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Administrator agrees to meet with any persons at such times as the Board or the Board of Trustees of the Parent Fund deems appropriate for the purpose of reviewing Administrators performance under this Agreement.
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(3)
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The Fund agrees that it will furnish to Administrator any information that the latter may reasonably request with respect to the services performed or to be performed by Administrator under this Agreement.
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(4)
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It is understood and agreed that in furnishing the Fund with services under this Agreement, neither Administrator, nor any officer, board member or agent thereof, shall be held liable to the Fund, its shareholders or
its creditors for any action taken or thing done by it or its subcontractors or agents on behalf of the Fund in carrying out the terms and provisions of this Agreement if done in good faith and without negligence or willful misfeasance or reckless
disregard of its obligations and duties under this Agreement on the part of Administrator or its subcontractors or agents. It is further understood and agreed that, to the extent permitted by law, Administrator may rely upon information furnished to
it and reasonably believed to be accurate and reliable.
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(5)
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In performing all services under this Agreement, the Administrator shall: (i) act in conformity with the Funds Memorandum and Articles of Association and applicable laws and regulations, as the same may be
amended from time to time, as well as the Parent Funds registration statement, as such registration statement may be amended from time to time; (ii) consult and coordinate with the Fund, as necessary and appropriate; and (iii) advise
and report to the Fund, as necessary or appropriate, with respect to any compliance matters that come to its attention.
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Part Two:
COMPENSATION FOR SERVICES
(1)
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The Fund agrees to pay to Administrator, in full payment for the services furnished, a fee as described in
Schedule A
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(2)
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The administrative fee shall be accrued daily (unless otherwise directed by the Board consistent with the prospectus and statement of additional information of the Parent Fund) and paid on a monthly basis and, in the
event of the effectiveness or termination of this Agreement, in whole or in part with respect to the Fund, during any month, the administrative fee paid to Administrator shall be prorated on the basis of the number of days that this Agreement is in
effect during the month with respect to which such payment is made.
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(3)
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The administrative fee shall be paid in cash to Administrator within five (5) business days after the last day of each month. A business day shall be any day on which shares of the Parent Fund are
available for purchase.
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Part Three: ALLOCATION OF EXPENSES
(1)
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Except to the extent that such expenses are paid by the Funds investment adviser or its affiliates pursuant to a unitary fee or other arrangement, the Administrator shall not be responsible for paying
(unless it has expressly assumed such responsibility), and shall be reimbursed promptly by the Fund or the Parent Fund if it pays, any costs and expenses incidental to the organization, operations and business of the Fund, including but not limited
to:
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(i)
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Any administrative fees payable to Administrator for its services under this Agreement;
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(ii)
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Any fees and charges for investment advisory services provided to the Fund by any person;
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(iii)
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Any fees payable pursuant to any plan adopted by the Fund under Rule 12b-1 under the 1940 Act;
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(iv)
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[Intentionally left blank];
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(v)
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Any fees and charges for bookkeeping, accounting, financial reporting and tax information services provided to the Fund by any person;
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(vi)
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Any fees and charges for services of the Funds independent auditors and for services provided to the Fund by external legal counsel, including expenses of Fund litigation;
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(vii)
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Any fees and charges of depositories, custodians, and other agencies for the safekeeping and servicing of its cash, securities, and other property;
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(viii)
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Any Fund taxes and fees and charges of any person other than the Administrator or its affiliates for preparation of the Funds tax returns;
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(ix)
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Any fees and expenses payable to federal, state, or other governmental agencies, domestic or foreign, for the maintenance of the Funds legal existence, including the filing of any required reports, charter
document amendments or other documents;
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(x)
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Organizational expenses of the Fund;
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(xi)
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[Intentionally left blank];
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(xii)
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Expenses of maintaining qualification of the Fund and the Funds shares for sale under securities laws of applicable jurisdictions and of registration and qualification of the Fund under all laws applicable to the
Fund or its business activities;
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(xiii)
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Brokerage commissions and other transaction expenses in connection with the Funds purchase and sale of assets;
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(xiv)
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Premium on any bond and other expenses of bond and insurance coverage required by law or deemed advisable by the Board;
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(xv)
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Any fees of consultants employed by the Fund, including the costs of pricing sources for Fund portfolio securities;
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(xvi)
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Any Board Member, officer and employee compensation and expenses, which include fees, salaries, memberships, dues, travel, seminars, pension, profit sharing, all expenses of meetings of the Board and committees, and all
other compensation and benefits paid to or provided for Board Members, officers and employees (including insurance), except the Fund will not pay any compensation, fees or expenses of any person who is an officer or employee of the Administrator or
its affiliates for services as a Board Member, officer or agent of the Fund (except to the extent the Board shall have specifically approved the payment by the Fund of all or a portion of the expenses of the Funds chief compliance officer or
other officer(s));
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(xvii)
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Any expenses incidental to holding meetings of the Board or Fund shareholders;
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(xviii)
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Any expenses incurred in connection with lending portfolio securities of the Fund;
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(xix)
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Any interest on indebtedness and any other costs of borrowing money;
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(xx)
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Any fees, dues, and other expenses incurred by the Fund in connection with membership of the Fund in any trade association or other investment company organization;
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(xxi)
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Any other expenses payable by the Fund pursuant to separate agreements of the Fund; and
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(xxii)
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Any other expenses properly payable by the Fund, as approved by the Board.
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(2)
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Administrator agrees to pay all expenses it incurs in connection with the services it provides under the terms of this Agreement, excluding any expenses contemplated to be borne by the Fund pursuant to paragraph
(1) of this Part Three.
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Part Four: MISCELLANEOUS
(1)
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Administrator shall be deemed to be an independent contractor and, except as expressly provided or authorized in this Agreement or any other agreement approved by the Board, shall have no authority to act for or
represent the Fund.
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(2)
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The Fund recognizes that Administrator and its affiliates, pursuant to separate agreements, now render and may continue to render services to other funds and persons which may or may not have policies similar to those
of the Fund and that Administrator provides services for its own investments and/or those of its affiliates. Administrator shall be free to provide such services and the Fund hereby consents thereto.
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(3)
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Neither this Agreement nor any transaction effected pursuant hereto shall be invalidated or in any way affected by the fact that Board Members, officers, agents and/or shareholders of the Fund are or may be interested
in Administrator or any successor or assignee thereof, as board members, officers, stockholders or otherwise; that board members, officers, stockholders or agents of Administrator are or may be interested in the Fund as Board Members, officers,
shareholders or otherwise; or that Administrator or any successor or assignee is or may be interested in the Fund as shareholder or otherwise, provided, however, that neither Administrator, nor any officer, board member or employee thereof or of the
Fund, shall knowingly sell to or buy from the Fund any property or security other than shares issued by the Fund, except in accordance with applicable regulations or orders of the SEC.
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(4)
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Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed postpaid, to the party to this Agreement entitled to receive such, at such partys principal place of business, or to
such other address as either party may designate in writing mailed to the other in accordance with this Paragraph (4).
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(5)
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In connection with the services to be provided by Administrator under this Agreement, the Fund agrees that Administrator may, subject to compliance with requirements of applicable laws and regulations, and at its own
expense, (i) make use of its affiliated companies and their board members, trustees, officers and employees and (ii) subcontract for certain of the services described under this Agreement with the understanding that the quality and scope
of services required to be provided under this Agreement shall not be diminished thereby and that Administrator remains fully responsible for the services.
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(6)
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This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable without the written consent of the
other party. This Agreement shall be governed by the internal substantive laws of the Commonwealth of Massachusetts, without regard to conflicts of laws principles.
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(7)
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All information furnished by Administrator to the Fund under this Agreement regarding the Administrator, its business or its clients shall be confidential and shall not be disclosed to unaffiliated third parties, except
as required by law, order, judgment, decree, or pursuant to any rule, regulation or request of or by any government, court, administrative or regulatory agency or commission, other governmental or regulatory authority or any self-regulatory
organization. All information furnished by the Fund to Administrator under this Agreement shall be confidential and shall not be disclosed to any unaffiliated third party, except as permitted or required by the foregoing, where necessary to effect
transactions or for the provision by third parties of services to the Fund, or where the Fund requests or authorizes Administrator to do so. Administrator may share information with its affiliates in accordance with its privacy and other relevant
policies in effect from time to time.
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(8)
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Notice is hereby given that this Agreement is executed on behalf of Subsidiary by an officer of Subsidiary in his or her capacity as an officer or trustee of Subsidiary and not individually, and that the obligations of
or arising out of this Agreement are not binding upon any of the trustees, directors, officers or shareholders of Subsidiary individually, but are binding only upon the assets and property of Subsidiary.
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(9)
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This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes and all of which, taken together, shall constitute one and the same instrument.
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Part Five: RENEWAL AND TERMINATION
(1)
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This Agreement shall continue in effect for one year from the date hereof and, thereafter, from year to year as the parties may mutually agree. Notwithstanding the foregoing, either party may terminate this Agreement at
any time, without the payment of a penalty, by giving the other party notice in writing specifying the date of such termination, which shall be not less than 60 days after the date of receipt of such notice. In the event that, in connection with a
termination, a successor to any of the duties or responsibilities of Administrator hereunder is designated by the Fund by written notice to Administrator, upon such termination Administrator shall promptly, and at the expense of the Fund with
respect to which this Agreement is terminated, transfer to such successor all relevant books, records, and data established or maintained by Administrator under this Agreement and shall cooperate in the transfer of such duties and responsibilities.
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(2)
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This Agreement may be amended for any reason (including, for example, to modify the scope of services and/or fees contemplated herein) only upon written agreement of Administrator and the Subsidiary.
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IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as of the day and year first above
written.
CAAF OFFSHORE FUND, LTD.
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By:
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/s/ Michael G. Clarke
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Name:
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Michael G. Clarke
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Authorized Person
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COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
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By:
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/s/ Amy K. Johnson
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Name:
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Amy K. Johnson
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Title:
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Managing Director and Head of U.S. Operations and Mutual Fund Services
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Schedule A
Fee Schedule
Effective as of December 19, 2014
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ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE FEES(1)
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$0-$500
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>$500 - $1,000
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>$1,000 - $3,000
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>$3,000 - $12,000
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>$12,000
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0.080
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%
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0.075
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%
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0.070
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%
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0.060
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%
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0.050
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%
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(1)
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When calculating asset levels for purposes of determining fee rate breakpoints, asset levels are based on aggregate net assets of the Fund and the Parent Fund. When calculating the fee payable under this agreement, the
annual rates are based on a percentage of the average daily net assets of the Fund.
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ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (Agreement), dated as of December 19, 2014, is by and between Columbia Management Investment Advisers,
LLC (Administrator), a Minnesota limited liability company, and CDARF1 Offshore Fund, Ltd. (Subsidiary or Fund), a wholly-owned subsidiary of Columbia Diversified Absolute Return Fund (Parent Fund), a
series of Columbia Funds Series Trust I.
Part One: SERVICES
(1)
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The Fund hereby retains Administrator, and Administrator hereby agrees, for the period of this Agreement and under the terms and conditions set forth in this Agreement and subject to the oversight of the Board of
Directors of Subsidiary (the Board), any committees thereof and/or authorized officer(s) of the Fund, to provide all of the services and facilities that are necessary for or appropriate to the business and effective operation of the Fund
that are not (a) provided by employees or other agents engaged by the Fund or the Board or (b) required to be provided by any person pursuant to any other agreement or arrangement with the Fund, including but not limited to the following
(unless otherwise directed by the Board or a committee thereof or the Chair):
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(i)
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Providing office space, equipment, office supplies and clerical personnel;
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(ii)
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Overseeing and assisting in the preparation of all general or routine shareholder communications;
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(iii)
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Calculating and arranging for notice and payment of dividend, income, and capital gains distributions to shareholders of the Fund;
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(iv)
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Accumulating information for, preparing and filing (or overseeing and assisting such persons that the Fund or the Parent Fund has retained to prepare and file) shareholder reports and other required regulatory reports
and communications for the Fund or, to the extent the information relates to the Fund or its Portfolio, the Parent Fund;
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(v)
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Preparing and filing of any required tax reports and returns, including the Funds foreign, federal, state, local and excise tax returns, and issuing all tax-related information to shareholders;
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(vi)
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Monitoring and testing the Funds compliance with applicable tax laws and regulations;
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(vii)
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Executing the pricing process, including calculating the Funds net asset value(s), and monitoring the reliability of the valuation information received from the independent third-party pricing services and
brokers;
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(viii)
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Coordinating and supervising relations with, and monitoring the performance of, any custodians, depositories, transfer and pricing agents, accountants, underwriters, brokers and dealers, insurers, printers, Fund
auditors, and other persons serving the Fund, to the extent deemed necessary or desirable by the Board, and reporting to the Board on the same;
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(ix)
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Preparing, maintaining and filing any filings required by state, federal, and local laws and regulations;
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(x)
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If applicable, determining jurisdictions in which shares of the Fund shall be qualified for sale and qualifying and maintaining qualification in the jurisdictions in which shares of the Fund are offered for sale;
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(xi)
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Preparing reports, information, surveys, or statistical or other analyses for third parties as deemed necessary or desirable by the Fund;
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(xii)
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Arranging, if desired by the Fund, for Board Members, officers, and employees of Administrator to serve as Board Members, officers, or agents of the Fund;
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(xiii)
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Coordinating, preparing and distributing materials for Board and committee meetings, including reports, evaluations, information, surveys, statistical analyses or other materials on corporate and legal issues relevant
to the Funds business as the Board may request from time to time;
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(xiv)
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Providing Fund accounting and internal audit services;
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(xv)
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Calculating and providing to the Parent Fund the Funds daily net asset value quotations, pricing, performance and yield information, periodic earnings reports, and other financial data, consistent with federal
securities laws and the Parent Funds current registration statement;
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(xvi)
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Preparing and furnishing to the Fund or the Parent Fund such broker security transaction summaries and security transaction listings as may reasonably be requested and reporting such information to external databases;
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(xvii)
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Assisting the Parent Fund with its obligations under Section 302 and 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2 under the Investment Company Act of 1940 Act, as amended (the 1940 Act);
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(xviii)
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Providing compliance services, as directed by the Parent Funds Chief Compliance Officer, which include monitoring the Funds compliance with its policies and procedures and with applicable laws, and the rules
and regulations thereunder;
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(xix)
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Monitoring the Funds compliance with its investment policies, objectives, and restrictions as set forth in the Funds Memorandum and Articles of Association and the Parent Funds currently effective
Prospectus and Statement of Additional Information;
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(xx)
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Monitoring legal, tax, regulatory, and industry developments relevant to the Fund and assisting in the strategic response to such developments;
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(xxi)
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[Intentionally left blank];
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(xxii)
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Providing internal legal support of all administration services provided by Administrator under this Agreement;
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(xxiii)
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Preparing and filing, or assisting with the preparation and filing, of claims in connection with class actions involving portfolio securities, handling administrative matters in connection with such litigations or
settlements, and, if requested by the Board, reporting to the Board regarding such matters;
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(xxiv)
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Monitoring, budgeting, approving and arranging for payment of Fund expenses;
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(xxv)
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Monitoring Board compliance with personal trading guidelines;
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(xxvi)
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Upon request from the Board, obtaining and maintaining the Funds insurance coverage and administering claims thereunder, and filing any related notices;
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(xxvii)
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Preparing such financial information and reports as may be required by any banks from which the Fund or the Parent Fund borrows;
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(xxviii)
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Maintaining the Funds books and records in accordance with all applicable laws and regulations, provided that all such items maintained by it shall be the property of the Fund, and that Administrator shall
surrender promptly to the Fund or the Parent Fund any such items it maintains upon request, provided that Administrator shall be permitted to retain a copy of all such items;
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(xxix)
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Administering operating policies of the Fund and recommending to the officers and the Board such modifications to such policies as Administrator determines necessary or appropriate to facilitate the protection of
shareholders or market competitiveness of the Fund and to comply with new legal or regulatory requirements;
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(xxx)
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Assisting the Fund and the Parent Fund in regulatory examinations, inspections or investigations of the Fund;
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(xxxi)
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[Intentionally left blank];
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(xxxii)
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[Intentionally left blank];
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(xxxiii)
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Receiving and notifying the Fund of inquiries and complaints from regulators, media and the public;
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(xxxiv)
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Upon request of the Board, implementing and maintaining, together with affiliated companies, including the Parent Fund, a business continuation and disaster recovery program for the Fund;
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(xxxv)
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Arranging for all meetings of the Board and shareholders;
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(xxxvi)
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Maintaining and retaining all charter documents and coordinating the filing of any documents required to maintain the Funds organizational status under applicable law; and
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(xxxvii)
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Supervising the drafting, negotiation and maintenance of any Fund agreements.
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If, as a result of a material change in applicable law, rules or regulations, Fund policies or the activities undertaken or transactions engaged in by the Fund
or otherwise, the type or quantity of administrative services to be provided hereunder changes materially, the Fund and Administrator shall negotiate in good faith such adjustment, if any, in the fee payable under Part 2 of this Agreement as may be
mutually agreed by the parties.
(2)
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Administrator agrees to meet with any persons at such times as the Board or the Board of Trustees of the Parent Fund deems appropriate for the purpose of reviewing Administrators performance under this Agreement.
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(3)
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The Fund agrees that it will furnish to Administrator any information that the latter may reasonably request with respect to the services performed or to be performed by Administrator under this Agreement.
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(4)
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It is understood and agreed that in furnishing the Fund with services under this Agreement, neither Administrator, nor any officer, board member or agent thereof, shall be held liable to the Fund, its shareholders or
its creditors for any action taken or thing done by it or its subcontractors or agents on behalf of the Fund in carrying out the terms and provisions of this Agreement if done in good faith and without negligence or willful misfeasance or reckless
disregard of its obligations and duties under this Agreement on the part of Administrator or its subcontractors or agents. It is further understood and agreed that, to the extent permitted by law, Administrator may rely upon information furnished to
it and reasonably believed to be accurate and reliable.
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(5)
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In performing all services under this Agreement, the Administrator shall: (i) act in conformity with the Funds Memorandum and Articles of Association and applicable laws and regulations, as the same may be
amended from time to time, as well as the Parent Funds registration statement, as such registration statement may be amended from time to time; (ii) consult and coordinate with the Fund, as necessary and appropriate; and (iii) advise
and report to the Fund, as necessary or appropriate, with respect to any compliance matters that come to its attention.
|
Part Two:
COMPENSATION FOR SERVICES
(1)
|
The Fund agrees to pay to Administrator, in full payment for the services furnished, a fee as described in
Schedule A
.
|
(2)
|
The administrative fee shall be accrued daily (unless otherwise directed by the Board consistent with the prospectus and statement of additional information of the Parent Fund) and paid on a monthly basis and, in the
event of the effectiveness or termination of this Agreement, in whole or in part with respect to the Fund, during any month, the administrative fee paid to Administrator shall be prorated on the basis of the number of days that this Agreement is in
effect during the month with respect to which such payment is made.
|
(3)
|
The administrative fee shall be paid in cash to Administrator within five (5) business days after the last day of each month. A business day shall be any day on which shares of the Parent Fund are
available for purchase.
|
Part Three: ALLOCATION OF EXPENSES
(1)
|
Except to the extent that such expenses are paid by the Funds investment adviser or its affiliates pursuant to a unitary fee or other arrangement, the Administrator shall not be responsible for paying
(unless it has expressly assumed such responsibility), and shall be reimbursed promptly by the Fund or the Parent Fund if it pays, any costs and expenses incidental to the organization, operations and business of the Fund, including but not limited
to:
|
|
(i)
|
Any administrative fees payable to Administrator for its services under this Agreement;
|
|
(ii)
|
Any fees and charges for investment advisory services provided to the Fund by any person;
|
|
(iii)
|
Any fees payable pursuant to any plan adopted by the Fund under Rule 12b-1 under the 1940 Act;
|
|
(iv)
|
[Intentionally left blank];
|
|
(v)
|
Any fees and charges for bookkeeping, accounting, financial reporting and tax information services provided to the Fund by any person;
|
|
(vi)
|
Any fees and charges for services of the Funds independent auditors and for services provided to the Fund by external legal counsel, including expenses of Fund litigation;
|
|
(vii)
|
Any fees and charges of depositories, custodians, and other agencies for the safekeeping and servicing of its cash, securities, and other property;
|
|
(viii)
|
Any Fund taxes and fees and charges of any person other than the Administrator or its affiliates for preparation of the Funds tax returns;
|
|
(ix)
|
Any fees and expenses payable to federal, state, or other governmental agencies, domestic or foreign, for the maintenance of the Funds legal existence, including the filing of any required reports, charter
document amendments or other documents;
|
|
(x)
|
Organizational expenses of the Fund;
|
|
(xi)
|
[Intentionally left blank];
|
|
(xii)
|
Expenses of maintaining qualification of the Fund and the Funds shares for sale under securities laws of applicable jurisdictions and of registration and qualification of the Fund under all laws applicable to the
Fund or its business activities;
|
|
(xiii)
|
Brokerage commissions and other transaction expenses in connection with the Funds purchase and sale of assets;
|
|
(xiv)
|
Premium on any bond and other expenses of bond and insurance coverage required by law or deemed advisable by the Board;
|
|
(xv)
|
Any fees of consultants employed by the Fund, including the costs of pricing sources for Fund portfolio securities;
|
|
(xvi)
|
Any Board Member, officer and employee compensation and expenses, which include fees, salaries, memberships, dues, travel, seminars, pension, profit sharing, all expenses of meetings of the Board and committees, and all
other compensation and benefits paid to or provided for Board Members, officers and employees (including insurance), except the Fund will not pay any compensation, fees or expenses of any person who is an officer or employee of the Administrator or
its affiliates for services as a Board Member, officer or agent of the Fund (except to the extent the Board shall have specifically approved the payment by the Fund of all or a portion of the expenses of the Funds chief compliance officer or
other officer(s));
|
|
(xvii)
|
Any expenses incidental to holding meetings of the Board or Fund shareholders;
|
|
(xviii)
|
Any expenses incurred in connection with lending portfolio securities of the Fund;
|
|
(xix)
|
Any interest on indebtedness and any other costs of borrowing money;
|
|
(xx)
|
Any fees, dues, and other expenses incurred by the Fund in connection with membership of the Fund in any trade association or other investment company organization;
|
|
(xxi)
|
Any other expenses payable by the Fund pursuant to separate agreements of the Fund; and
|
|
(xxii)
|
Any other expenses properly payable by the Fund, as approved by the Board.
|
(2)
|
Administrator agrees to pay all expenses it incurs in connection with the services it provides under the terms of this Agreement, excluding any expenses contemplated to be borne by the Fund pursuant to paragraph
(1) of this Part Three.
|
Part Four: MISCELLANEOUS
(1)
|
Administrator shall be deemed to be an independent contractor and, except as expressly provided or authorized in this Agreement or any other agreement approved by the Board, shall have no authority to act for or
represent the Fund.
|
(2)
|
The Fund recognizes that Administrator and its affiliates, pursuant to separate agreements, now render and may continue to render services to other funds and persons which may or may not have policies similar to those
of the Fund and that Administrator provides services for its own investments and/or those of its affiliates. Administrator shall be free to provide such services and the Fund hereby consents thereto.
|
(3)
|
Neither this Agreement nor any transaction effected pursuant hereto shall be invalidated or in any way affected by the fact that Board Members, officers, agents and/or shareholders of the Fund are or may be interested
in Administrator or any successor or assignee thereof, as board members, officers, stockholders or otherwise; that board members, officers, stockholders or agents of Administrator are or may be interested in the Fund as Board Members, officers,
shareholders or otherwise; or that Administrator or any successor or assignee is or may be interested in the Fund as shareholder or otherwise, provided, however, that neither Administrator, nor any officer, board member or employee thereof or of the
Fund, shall knowingly sell to or buy from the Fund any property or security other than shares issued by the Fund, except in accordance with applicable regulations or orders of the SEC.
|
(4)
|
Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed postpaid, to the party to this Agreement entitled to receive such, at such partys principal place of business, or to
such other address as either party may designate in writing mailed to the other in accordance with this Paragraph (4).
|
(5)
|
In connection with the services to be provided by Administrator under this Agreement, the Fund agrees that Administrator may, subject to compliance with requirements of applicable laws and regulations, and at its own
expense, (i) make use of its affiliated companies and their board members, trustees, officers and employees and (ii) subcontract for certain of the services described under this Agreement with the understanding that the quality and scope
of services required to be provided under this Agreement shall not be diminished thereby and that Administrator remains fully responsible for the services.
|
(6)
|
This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable without the written consent of the
other party. This Agreement shall be governed by the internal substantive laws of the Commonwealth of Massachusetts, without regard to conflicts of laws principles.
|
(7)
|
All information furnished by Administrator to the Fund under this Agreement regarding the Administrator, its business or its clients shall be confidential and shall not be disclosed to unaffiliated third parties, except
as required by law, order, judgment, decree, or pursuant to any rule, regulation or request of or by any government, court, administrative or regulatory agency or commission, other governmental or regulatory authority or any self-regulatory
organization. All information furnished by the Fund to Administrator under this Agreement shall be confidential and shall not be disclosed to any unaffiliated third party, except as permitted or required by the foregoing, where necessary to effect
transactions or for the provision by third parties of services to the Fund, or where the Fund requests or authorizes Administrator to do so. Administrator may share information with its affiliates in accordance with its privacy and other relevant
policies in effect from time to time.
|
(8)
|
Notice is hereby given that this Agreement is executed on behalf of Subsidiary by an officer of Subsidiary in his or her capacity as an officer or trustee of Subsidiary and not individually, and that the obligations of
or arising out of this Agreement are not binding upon any of the trustees, directors, officers or shareholders of Subsidiary individually, but are binding only upon the assets and property of Subsidiary.
|
(9)
|
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes and all of which, taken together, shall constitute one and the same instrument.
|
Part Five: RENEWAL AND TERMINATION
(1)
|
This Agreement shall continue in effect for one year from the date hereof and, thereafter, from year to year as the parties may mutually agree. Notwithstanding the foregoing, either party may terminate this Agreement at
any time, without the payment of a penalty, by giving the other party notice in writing specifying the date of such termination, which shall be not less than 60 days after the date of receipt of such notice. In the event that, in connection with a
termination, a successor to any of the duties or responsibilities of Administrator hereunder is designated by the Fund by written notice to Administrator, upon such termination Administrator shall promptly, and at the expense of the Fund with
respect to which this Agreement is terminated, transfer to such successor all relevant books, records, and data established or maintained by Administrator under this Agreement and shall cooperate in the transfer of such duties and responsibilities.
|
(2)
|
This Agreement may be amended for any reason (including, for example, to modify the scope of services and/or fees contemplated herein) only upon written agreement of Administrator and the Subsidiary.
|
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as of the day and year first above
written.
CDARF1 OFFSHORE FUND, LTD.
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
Name:
|
|
Michael G. Clarke
|
|
|
Authorized Person
|
COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
Name:
|
|
Amy K. Johnson
|
|
|
|
Title:
|
|
Managing Director and Head of U.S. Operations and Mutual Fund Services
|
Schedule A
Fee Schedule
Effective as of December 19, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE FEES(1)
|
|
$0-$500
|
|
|
>$500 - $1,000
|
|
|
>$1,000 - $3,000
|
|
|
>$3,000 - $12,000
|
|
|
>$12,000
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
(1)
|
When calculating asset levels for purposes of determining fee rate breakpoints, asset levels are based on aggregate net assets of the Fund and the Parent Fund. When calculating the fee payable under this agreement, the
annual rates are based on a percentage of the average daily net assets of the Fund.
|
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (Agreement), dated as of December 19, 2014, is by and between Columbia Management Investment Advisers,
LLC (Administrator), a Minnesota limited liability company, and CDARF2 Offshore Fund, Ltd. (Subsidiary or Fund), a wholly-owned subsidiary of Columbia Diversified Absolute Return Fund (Parent Fund), a
series of Columbia Funds Series Trust I.
Part One: SERVICES
(1)
|
The Fund hereby retains Administrator, and Administrator hereby agrees, for the period of this Agreement and under the terms and conditions set forth in this Agreement and subject to the oversight of the Board of
Directors of Subsidiary (the Board), any committees thereof and/or authorized officer(s) of the Fund, to provide all of the services and facilities that are necessary for or appropriate to the business and effective operation of the Fund
that are not (a) provided by employees or other agents engaged by the Fund or the Board or (b) required to be provided by any person pursuant to any other agreement or arrangement with the Fund, including but not limited to the following
(unless otherwise directed by the Board or a committee thereof or the Chair):
|
|
(i)
|
Providing office space, equipment, office supplies and clerical personnel;
|
|
(ii)
|
Overseeing and assisting in the preparation of all general or routine shareholder communications;
|
|
(iii)
|
Calculating and arranging for notice and payment of dividend, income, and capital gains distributions to shareholders of the Fund;
|
|
(iv)
|
Accumulating information for, preparing and filing (or overseeing and assisting such persons that the Fund or the Parent Fund has retained to prepare and file) shareholder reports and other required regulatory reports
and communications for the Fund or, to the extent the information relates to the Fund or its Portfolio, the Parent Fund;
|
|
(v)
|
Preparing and filing of any required tax reports and returns, including the Funds foreign, federal, state, local and excise tax returns, and issuing all tax-related information to shareholders;
|
|
(vi)
|
Monitoring and testing the Funds compliance with applicable tax laws and regulations;
|
|
(vii)
|
Executing the pricing process, including calculating the Funds net asset value(s), and monitoring the reliability of the valuation information received from the independent third-party pricing services and
brokers;
|
|
(viii)
|
Coordinating and supervising relations with, and monitoring the performance of, any custodians, depositories, transfer and pricing agents, accountants, underwriters, brokers and dealers, insurers, printers, Fund
auditors, and other persons serving the Fund, to the extent deemed necessary or desirable by the Board, and reporting to the Board on the same;
|
|
(ix)
|
Preparing, maintaining and filing any filings required by state, federal, and local laws and regulations;
|
|
(x)
|
If applicable, determining jurisdictions in which shares of the Fund shall be qualified for sale and qualifying and maintaining qualification in the jurisdictions in which shares of the Fund are offered for sale;
|
|
(xi)
|
Preparing reports, information, surveys, or statistical or other analyses for third parties as deemed necessary or desirable by the Fund;
|
|
(xii)
|
Arranging, if desired by the Fund, for Board Members, officers, and employees of Administrator to serve as Board Members, officers, or agents of the Fund;
|
|
(xiii)
|
Coordinating, preparing and distributing materials for Board and committee meetings, including reports, evaluations, information, surveys, statistical analyses or other materials on corporate and legal issues relevant
to the Funds business as the Board may request from time to time;
|
|
(xiv)
|
Providing Fund accounting and internal audit services;
|
|
(xv)
|
Calculating and providing to the Parent Fund the Funds daily net asset value quotations, pricing, performance and yield information, periodic earnings reports, and other financial data, consistent with federal
securities laws and the Parent Funds current registration statement;
|
|
(xvi)
|
Preparing and furnishing to the Fund or the Parent Fund such broker security transaction summaries and security transaction listings as may reasonably be requested and reporting such information to external databases;
|
|
(xvii)
|
Assisting the Parent Fund with its obligations under Section 302 and 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2 under the Investment Company Act of 1940 Act, as amended (the 1940 Act);
|
|
(xviii)
|
Providing compliance services, as directed by the Parent Funds Chief Compliance Officer, which include monitoring the Funds compliance with its policies and procedures and with applicable laws, and the rules
and regulations thereunder;
|
|
(xix)
|
Monitoring the Funds compliance with its investment policies, objectives, and restrictions as set forth in the Funds Memorandum and Articles of Association and the Parent Funds currently effective
Prospectus and Statement of Additional Information;
|
|
(xx)
|
Monitoring legal, tax, regulatory, and industry developments relevant to the Fund and assisting in the strategic response to such developments;
|
|
(xxi)
|
[Intentionally left blank];
|
|
(xxii)
|
Providing internal legal support of all administration services provided by Administrator under this Agreement;
|
|
(xxiii)
|
Preparing and filing, or assisting with the preparation and filing, of claims in connection with class actions involving portfolio securities, handling administrative matters in connection with such litigations or
settlements, and, if requested by the Board, reporting to the Board regarding such matters;
|
|
(xxiv)
|
Monitoring, budgeting, approving and arranging for payment of Fund expenses;
|
|
(xxv)
|
Monitoring Board compliance with personal trading guidelines;
|
|
(xxvi)
|
Upon request from the Board, obtaining and maintaining the Funds insurance coverage and administering claims thereunder, and filing any related notices;
|
|
(xxvii)
|
Preparing such financial information and reports as may be required by any banks from which the Fund or the Parent Fund borrows;
|
|
(xxviii)
|
Maintaining the Funds books and records in accordance with all applicable laws and regulations, provided that all such items maintained by it shall be the property of the Fund, and that Administrator shall
surrender promptly to the Fund or the Parent Fund any such items it maintains upon request, provided that Administrator shall be permitted to retain a copy of all such items;
|
|
(xxix)
|
Administering operating policies of the Fund and recommending to the officers and the Board such modifications to such policies as Administrator determines necessary or appropriate to facilitate the protection of
shareholders or market competitiveness of the Fund and to comply with new legal or regulatory requirements;
|
|
(xxx)
|
Assisting the Fund and the Parent Fund in regulatory examinations, inspections or investigations of the Fund;
|
|
(xxxi)
|
[Intentionally left blank];
|
|
(xxxii)
|
[Intentionally left blank];
|
|
(xxxiii)
|
Receiving and notifying the Fund of inquiries and complaints from regulators, media and the public;
|
|
(xxxiv)
|
Upon request of the Board, implementing and maintaining, together with affiliated companies, including the Parent Fund, a business continuation and disaster recovery program for the Fund;
|
|
(xxxv)
|
Arranging for all meetings of the Board and shareholders;
|
|
(xxxvi)
|
Maintaining and retaining all charter documents and coordinating the filing of any documents required to maintain the Funds organizational status under applicable law; and
|
|
(xxxvii)
|
Supervising the drafting, negotiation and maintenance of any Fund agreements.
|
If, as a result of a material
change in applicable law, rules or regulations, Fund policies or the activities undertaken or transactions engaged in by the Fund or otherwise, the type or quantity of administrative services to be provided hereunder changes materially, the Fund and
Administrator shall negotiate in good faith such adjustment, if any, in the fee payable under Part 2 of this Agreement as may be mutually agreed by the parties.
(2)
|
Administrator agrees to meet with any persons at such times as the Board or the Board of Trustees of the Parent Fund deems appropriate for the purpose of reviewing Administrators performance under this Agreement.
|
(3)
|
The Fund agrees that it will furnish to Administrator any information that the latter may reasonably request with respect to the services performed or to be performed by Administrator under this Agreement.
|
(4)
|
It is understood and agreed that in furnishing the Fund with services under this Agreement, neither Administrator, nor any officer, board member or agent thereof, shall be held liable to the Fund, its shareholders or
its creditors for any action taken or thing done by it or its subcontractors or agents on behalf of the Fund in carrying out the terms and provisions of this Agreement if done in good faith and without negligence or willful misfeasance or reckless
disregard of its obligations and duties under this Agreement on the part of Administrator or its subcontractors or agents. It is further understood and agreed that, to the extent permitted by law, Administrator may rely upon information furnished to
it and reasonably believed to be accurate and reliable.
|
(5)
|
In performing all services under this Agreement, the Administrator shall: (i) act in conformity with the Funds Memorandum and Articles of Association and applicable laws and regulations, as the same may be
amended from time to time, as well as the Parent Funds registration statement, as such registration statement may be amended from time to time; (ii) consult and coordinate with the Fund, as necessary and appropriate; and (iii) advise
and report to the Fund, as necessary or appropriate, with respect to any compliance matters that come to its attention.
|
Part Two:
COMPENSATION FOR SERVICES
(1)
|
The Fund agrees to pay to Administrator, in full payment for the services furnished, a fee as described in
Schedule A
.
|
(2)
|
The administrative fee shall be accrued daily (unless otherwise directed by the Board consistent with the prospectus and statement of additional information of the Parent Fund) and paid on a monthly basis and, in the
event of the effectiveness or termination of this Agreement, in whole or in part with respect to the Fund, during any month, the administrative fee paid to Administrator shall be prorated on the basis of the number of days that this Agreement is in
effect during the month with respect to which such payment is made.
|
(3)
|
The administrative fee shall be paid in cash to Administrator within five (5) business days after the last day of each month. A business day shall be any day on which shares of the Parent Fund are
available for purchase.
|
Part Three: ALLOCATION OF EXPENSES
(1)
|
Except to the extent that such expenses are paid by the Funds investment adviser or its affiliates pursuant to a unitary fee or other arrangement, the Administrator shall not be responsible for paying
(unless it has expressly assumed such responsibility), and shall be reimbursed promptly by the Fund or the Parent Fund if it pays, any costs and expenses incidental to the organization, operations and business of the Fund, including but not limited
to:
|
|
(i)
|
Any administrative fees payable to Administrator for its services under this Agreement;
|
|
(ii)
|
Any fees and charges for investment advisory services provided to the Fund by any person;
|
|
(iii)
|
Any fees payable pursuant to any plan adopted by the Fund under Rule 12b-1 under the 1940 Act;
|
|
(iv)
|
[Intentionally left blank];
|
|
(v)
|
Any fees and charges for bookkeeping, accounting, financial reporting and tax information services provided to the Fund by any person;
|
|
(vi)
|
Any fees and charges for services of the Funds independent auditors and for services provided to the Fund by external legal counsel, including expenses of Fund litigation;
|
|
(vii)
|
Any fees and charges of depositories, custodians, and other agencies for the safekeeping and servicing of its cash, securities, and other property;
|
|
(viii)
|
Any Fund taxes and fees and charges of any person other than the Administrator or its affiliates for preparation of the Funds tax returns;
|
|
(ix)
|
Any fees and expenses payable to federal, state, or other governmental agencies, domestic or foreign, for the maintenance of the Funds legal existence, including the filing of any required reports, charter
document amendments or other documents;
|
|
(x)
|
Organizational expenses of the Fund;
|
|
(xi)
|
[Intentionally left blank];
|
|
(xii)
|
Expenses of maintaining qualification of the Fund and the Funds shares for sale under securities laws of applicable jurisdictions and of registration and qualification of the Fund under all laws applicable to the
Fund or its business activities;
|
|
(xiii)
|
Brokerage commissions and other transaction expenses in connection with the Funds purchase and sale of assets;
|
|
(xiv)
|
Premium on any bond and other expenses of bond and insurance coverage required by law or deemed advisable by the Board;
|
|
(xv)
|
Any fees of consultants employed by the Fund, including the costs of pricing sources for Fund portfolio securities;
|
|
(xvi)
|
Any Board Member, officer and employee compensation and expenses, which include fees, salaries, memberships, dues, travel, seminars, pension, profit sharing, all expenses of meetings of the Board and committees, and all
other compensation and benefits paid to or provided for Board Members, officers and employees (including insurance), except the Fund will not pay any compensation, fees or expenses of any person who is an officer or employee of the Administrator or
its affiliates for services as a Board Member, officer or agent of the Fund (except to the extent the Board shall have specifically approved the payment by the Fund of all or a portion of the expenses of the Funds chief compliance officer or
other officer(s));
|
|
(xvii)
|
Any expenses incidental to holding meetings of the Board or Fund shareholders;
|
|
(xviii)
|
Any expenses incurred in connection with lending portfolio securities of the Fund;
|
|
(xix)
|
Any interest on indebtedness and any other costs of borrowing money;
|
|
(xx)
|
Any fees, dues, and other expenses incurred by the Fund in connection with membership of the Fund in any trade association or other investment company organization;
|
|
(xxi)
|
Any other expenses payable by the Fund pursuant to separate agreements of the Fund; and
|
|
(xxii)
|
Any other expenses properly payable by the Fund, as approved by the Board.
|
(2)
|
Administrator agrees to pay all expenses it incurs in connection with the services it provides under the terms of this Agreement, excluding any expenses contemplated to be borne by the Fund pursuant to paragraph
(1) of this Part Three.
|
Part Four: MISCELLANEOUS
(1)
|
Administrator shall be deemed to be an independent contractor and, except as expressly provided or authorized in this Agreement or any other agreement approved by the Board, shall have no authority to act for or
represent the Fund.
|
(2)
|
The Fund recognizes that Administrator and its affiliates, pursuant to separate agreements, now render and may continue to render services to other funds and persons which may or may not have policies similar to those
of the Fund and that Administrator provides services for its own investments and/or those of its affiliates. Administrator shall be free to provide such services and the Fund hereby consents thereto.
|
(3)
|
Neither this Agreement nor any transaction effected pursuant hereto shall be invalidated or in any way affected by the fact that Board Members, officers, agents and/or shareholders of the Fund are or may be interested
in Administrator or any successor or assignee thereof, as board members, officers, stockholders or otherwise; that board members, officers, stockholders or agents of Administrator are or may be interested in the Fund as Board Members, officers,
shareholders or otherwise; or that Administrator or any successor or assignee is or may be interested in the Fund as shareholder or otherwise, provided, however, that neither Administrator, nor any officer, board member or employee thereof or of the
Fund, shall knowingly sell to or buy from the Fund any property or security other than shares issued by the Fund, except in accordance with applicable regulations or orders of the SEC.
|
(4)
|
Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed postpaid, to the party to this Agreement entitled to receive such, at such partys principal place of business, or to
such other address as either party may designate in writing mailed to the other in accordance with this Paragraph (4).
|
(5)
|
In connection with the services to be provided by Administrator under this Agreement, the Fund agrees that Administrator may, subject to compliance with requirements of applicable laws and regulations, and at its own
expense, (i) make use of its affiliated companies and their board members, trustees, officers and employees and (ii) subcontract for certain of the services described under this Agreement with the understanding that the quality and scope
of services required to be provided under this Agreement shall not be diminished thereby and that Administrator remains fully responsible for the services.
|
(6)
|
This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable without the written consent of the
other party. This Agreement shall be governed by the internal substantive laws of the Commonwealth of Massachusetts, without regard to conflicts of laws principles.
|
(7)
|
All information furnished by Administrator to the Fund under this Agreement regarding the Administrator, its business or its clients shall be confidential and shall not be disclosed to unaffiliated third parties, except
as required by law, order, judgment, decree, or pursuant to any rule, regulation or request of or by any government, court, administrative or regulatory agency or commission, other governmental or regulatory authority or any self-regulatory
organization. All information furnished by the Fund to Administrator under this Agreement shall be confidential and shall not be disclosed to any unaffiliated third party, except as permitted or required by the foregoing, where necessary to effect
transactions or for the provision by third parties of services to the Fund, or where the Fund requests or authorizes Administrator to do so. Administrator may share information with its affiliates in accordance with its privacy and other relevant
policies in effect from time to time.
|
(8)
|
Notice is hereby given that this Agreement is executed on behalf of Subsidiary by an officer of Subsidiary in his or her capacity as an officer or trustee of Subsidiary and not individually, and that the obligations of
or arising out of this Agreement are not binding upon any of the trustees, directors, officers or shareholders of Subsidiary individually, but are binding only upon the assets and property of Subsidiary.
|
(9)
|
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes and all of which, taken together, shall constitute one and the same instrument.
|
Part Five: RENEWAL AND TERMINATION
(1)
|
This Agreement shall continue in effect for one year from the date hereof and, thereafter, from year to year as the parties may mutually agree. Notwithstanding the foregoing, either party may terminate this Agreement at
any time, without the payment of a penalty, by giving the other party notice in writing specifying the date of such termination, which shall be not less than 60 days after the date of receipt of such notice. In the event that, in connection with a
termination, a successor to any of the duties or responsibilities of Administrator hereunder is designated by the Fund by written notice to Administrator, upon such termination Administrator shall promptly, and at the expense of the Fund with
respect to which this Agreement is terminated, transfer to such successor all relevant books, records, and data established or maintained by Administrator under this Agreement and shall cooperate in the transfer of such duties and responsibilities.
|
(2)
|
This Agreement may be amended for any reason (including, for example, to modify the scope of services and/or fees contemplated herein) only upon written agreement of Administrator and the Subsidiary.
|
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as of the day and year first above
written.
CDARF2 OFFSHORE FUND, LTD.
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
Name:
|
|
Michael G. Clarke
|
|
|
Authorized Person
|
COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
Name:
|
|
Amy K. Johnson
|
|
|
|
Title:
|
|
Managing Director and Head of U.S. Operations and Mutual Fund Services
|
Schedule A
Fee Schedule
Effective as of December 19, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE FEES(1)
|
|
$0-$500
|
|
|
>$500 - $1,000
|
|
|
>$1,000 - $3,000
|
|
|
>$3,000 - $12,000
|
|
|
>$12,000
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
(1)
|
When calculating asset levels for purposes of determining fee rate breakpoints, asset levels are based on aggregate net assets of the Fund and the Parent Fund. When calculating the fee payable under this agreement, the
annual rates are based on a percentage of the average daily net assets of the Fund.
|
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (Agreement), dated as of December 19, 2014, is by and between Columbia Management Investment Advisers,
LLC (Administrator), a Minnesota limited liability company, and CDARF3 Offshore Fund, Ltd. (Subsidiary or Fund), a wholly-owned subsidiary of Columbia Diversified Absolute Return Fund (Parent Fund), a
series of Columbia Funds Series Trust I.
Part One: SERVICES
(1)
|
The Fund hereby retains Administrator, and Administrator hereby agrees, for the period of this Agreement and under the terms and conditions set forth in this Agreement and subject to the oversight of the Board of
Directors of Subsidiary (the Board), any committees thereof and/or authorized officer(s) of the Fund, to provide all of the services and facilities that are necessary for or appropriate to the business and effective operation of the Fund
that are not (a) provided by employees or other agents engaged by the Fund or the Board or (b) required to be provided by any person pursuant to any other agreement or arrangement with the Fund, including but not limited to the following
(unless otherwise directed by the Board or a committee thereof or the Chair):
|
|
(i)
|
Providing office space, equipment, office supplies and clerical personnel;
|
|
(ii)
|
Overseeing and assisting in the preparation of all general or routine shareholder communications;
|
|
(iii)
|
Calculating and arranging for notice and payment of dividend, income, and capital gains distributions to shareholders of the Fund;
|
|
(iv)
|
Accumulating information for, preparing and filing (or overseeing and assisting such persons that the Fund or the Parent Fund has retained to prepare and file) shareholder reports and other required regulatory reports
and communications for the Fund or, to the extent the information relates to the Fund or its Portfolio, the Parent Fund;
|
|
(v)
|
Preparing and filing of any required tax reports and returns, including the Funds foreign, federal, state, local and excise tax returns, and issuing all tax-related information to shareholders;
|
|
(vi)
|
Monitoring and testing the Funds compliance with applicable tax laws and regulations;
|
|
(vii)
|
Executing the pricing process, including calculating the Funds net asset value(s), and monitoring the reliability of the valuation information received from the independent third-party pricing services and
brokers;
|
|
(viii)
|
Coordinating and supervising relations with, and monitoring the performance of, any custodians, depositories, transfer and pricing agents, accountants, underwriters, brokers and dealers, insurers, printers, Fund
auditors, and other persons serving the Fund, to the extent deemed necessary or desirable by the Board, and reporting to the Board on the same;
|
|
(ix)
|
Preparing, maintaining and filing any filings required by state, federal, and local laws and regulations;
|
|
(x)
|
If applicable, determining jurisdictions in which shares of the Fund shall be qualified for sale and qualifying and maintaining qualification in the jurisdictions in which shares of the Fund are offered for sale;
|
|
(xi)
|
Preparing reports, information, surveys, or statistical or other analyses for third parties as deemed necessary or desirable by the Fund;
|
|
(xii)
|
Arranging, if desired by the Fund, for Board Members, officers, and employees of Administrator to serve as Board Members, officers, or agents of the Fund;
|
|
(xiii)
|
Coordinating, preparing and distributing materials for Board and committee meetings, including reports, evaluations, information, surveys, statistical analyses or other materials on corporate and legal issues relevant
to the Funds business as the Board may request from time to time;
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|
(xiv)
|
Providing Fund accounting and internal audit services;
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|
(xv)
|
Calculating and providing to the Parent Fund the Funds daily net asset value quotations, pricing, performance and yield information, periodic earnings reports, and other financial data, consistent with federal
securities laws and the Parent Funds current registration statement;
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|
(xvi)
|
Preparing and furnishing to the Fund or the Parent Fund such broker security transaction summaries and security transaction listings as may reasonably be requested and reporting such information to external databases;
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(xvii)
|
Assisting the Parent Fund with its obligations under Section 302 and 906 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2 under the Investment Company Act of 1940 Act, as amended (the 1940 Act);
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|
(xviii)
|
Providing compliance services, as directed by the Parent Funds Chief Compliance Officer, which include monitoring the Funds compliance with its policies and procedures and with applicable laws, and the rules
and regulations thereunder;
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|
(xix)
|
Monitoring the Funds compliance with its investment policies, objectives, and restrictions as set forth in the Funds Memorandum and Articles of Association and the Parent Funds currently effective
Prospectus and Statement of Additional Information;
|
|
(xx)
|
Monitoring legal, tax, regulatory, and industry developments relevant to the Fund and assisting in the strategic response to such developments;
|
|
(xxi)
|
[Intentionally left blank];
|
|
(xxii)
|
Providing internal legal support of all administration services provided by Administrator under this Agreement;
|
|
(xxiii)
|
Preparing and filing, or assisting with the preparation and filing, of claims in connection with class actions involving portfolio securities, handling administrative matters in connection with such litigations or
settlements, and, if requested by the Board, reporting to the Board regarding such matters;
|
|
(xxiv)
|
Monitoring, budgeting, approving and arranging for payment of Fund expenses;
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|
(xxv)
|
Monitoring Board compliance with personal trading guidelines;
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|
(xxvi)
|
Upon request from the Board, obtaining and maintaining the Funds insurance coverage and administering claims thereunder, and filing any related notices;
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(xxvii)
|
Preparing such financial information and reports as may be required by any banks from which the Fund or the Parent Fund borrows;
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(xxviii)
|
Maintaining the Funds books and records in accordance with all applicable laws and regulations, provided that all such items maintained by it shall be the property of the Fund, and that Administrator shall
surrender promptly to the Fund or the Parent Fund any such items it maintains upon request, provided that Administrator shall be permitted to retain a copy of all such items;
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|
(xxix)
|
Administering operating policies of the Fund and recommending to the officers and the Board such modifications to such policies as Administrator determines necessary or appropriate to facilitate the protection of
shareholders or market competitiveness of the Fund and to comply with new legal or regulatory requirements;
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|
(xxx)
|
Assisting the Fund and the Parent Fund in regulatory examinations, inspections or investigations of the Fund;
|
|
(xxxi)
|
[Intentionally left blank];
|
|
(xxxii)
|
[Intentionally left blank];
|
|
(xxxiii)
|
Receiving and notifying the Fund of inquiries and complaints from regulators, media and the public;
|
|
(xxxiv)
|
Upon request of the Board, implementing and maintaining, together with affiliated companies, including the Parent Fund, a business continuation and disaster recovery program for the Fund;
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|
(xxxv)
|
Arranging for all meetings of the Board and shareholders;
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|
(xxxvi)
|
Maintaining and retaining all charter documents and coordinating the filing of any documents required to maintain the Funds organizational status under applicable law; and
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|
(xxxvii)
|
Supervising the drafting, negotiation and maintenance of any Fund agreements.
|
If, as a result of a material
change in applicable law, rules or regulations, Fund policies or the activities undertaken or transactions engaged in by the Fund or otherwise, the type or quantity of administrative services to be provided hereunder changes materially, the Fund and
Administrator shall negotiate in good faith such adjustment, if any, in the fee payable under Part 2 of this Agreement as may be mutually agreed by the parties.
(2)
|
Administrator agrees to meet with any persons at such times as the Board or the Board of Trustees of the Parent Fund deems appropriate for the purpose of reviewing Administrators performance under this Agreement.
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(3)
|
The Fund agrees that it will furnish to Administrator any information that the latter may reasonably request with respect to the services performed or to be performed by Administrator under this Agreement.
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(4)
|
It is understood and agreed that in furnishing the Fund with services under this Agreement, neither Administrator, nor any officer, board member or agent thereof, shall be held liable to the Fund, its shareholders or
its creditors for any action taken or thing done by it or its subcontractors or agents on behalf of the Fund in carrying out the terms and provisions of this Agreement if done in good faith and without negligence or willful misfeasance or reckless
disregard of its obligations and duties under this Agreement on the part of Administrator or its subcontractors or agents. It is further understood and agreed that, to the extent permitted by law, Administrator may rely upon information furnished to
it and reasonably believed to be accurate and reliable.
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(5)
|
In performing all services under this Agreement, the Administrator shall: (i) act in conformity with the Funds Memorandum and Articles of Association and applicable laws and regulations, as the same may be
amended from time to time, as well as the Parent Funds registration statement, as such registration statement may be amended from time to time; (ii) consult and coordinate with the Fund, as necessary and appropriate; and (iii) advise
and report to the Fund, as necessary or appropriate, with respect to any compliance matters that come to its attention.
|
Part Two:
COMPENSATION FOR SERVICES
(1)
|
The Fund agrees to pay to Administrator, in full payment for the services furnished, a fee as described in
Schedule A
.
|
(2)
|
The administrative fee shall be accrued daily (unless otherwise directed by the Board consistent with the prospectus and statement of additional information of the Parent Fund) and paid on a monthly basis and, in the
event of the effectiveness or termination of this Agreement, in whole or in part with respect to the Fund, during any month, the administrative fee paid to Administrator shall be prorated on the basis of the number of days that this Agreement is in
effect during the month with respect to which such payment is made.
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(3)
|
The administrative fee shall be paid in cash to Administrator within five (5) business days after the last day of each month. A business day shall be any day on which shares of the Parent Fund are
available for purchase.
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Part Three: ALLOCATION OF EXPENSES
(1)
|
Except to the extent that such expenses are paid by the Funds investment adviser or its affiliates pursuant to a unitary fee or other arrangement, the Administrator shall not be responsible for paying
(unless it has expressly assumed such responsibility), and shall be reimbursed promptly by the Fund or the Parent Fund if it pays, any costs and expenses incidental to the organization, operations and business of the Fund, including but not limited
to:
|
|
(i)
|
Any administrative fees payable to Administrator for its services under this Agreement;
|
|
(ii)
|
Any fees and charges for investment advisory services provided to the Fund by any person;
|
|
(iii)
|
Any fees payable pursuant to any plan adopted by the Fund under Rule 12b-1 under the 1940 Act;
|
|
(iv)
|
[Intentionally left blank];
|
|
(v)
|
Any fees and charges for bookkeeping, accounting, financial reporting and tax information services provided to the Fund by any person;
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|
(vi)
|
Any fees and charges for services of the Funds independent auditors and for services provided to the Fund by external legal counsel, including expenses of Fund litigation;
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(vii)
|
Any fees and charges of depositories, custodians, and other agencies for the safekeeping and servicing of its cash, securities, and other property;
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(viii)
|
Any Fund taxes and fees and charges of any person other than the Administrator or its affiliates for preparation of the Funds tax returns;
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(ix)
|
Any fees and expenses payable to federal, state, or other governmental agencies, domestic or foreign, for the maintenance of the Funds legal existence, including the filing of any required reports, charter
document amendments or other documents;
|
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(x)
|
Organizational expenses of the Fund;
|
|
(xi)
|
[Intentionally left blank];
|
|
(xii)
|
Expenses of maintaining qualification of the Fund and the Funds shares for sale under securities laws of applicable jurisdictions and of registration and qualification of the Fund under all laws applicable to the
Fund or its business activities;
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|
(xiii)
|
Brokerage commissions and other transaction expenses in connection with the Funds purchase and sale of assets;
|
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(xiv)
|
Premium on any bond and other expenses of bond and insurance coverage required by law or deemed advisable by the Board;
|
|
(xv)
|
Any fees of consultants employed by the Fund, including the costs of pricing sources for Fund portfolio securities;
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(xvi)
|
Any Board Member, officer and employee compensation and expenses, which include fees, salaries, memberships, dues, travel, seminars, pension, profit sharing, all expenses of meetings of the Board and committees, and all
other compensation and benefits paid to or provided for Board Members, officers and employees (including insurance), except the Fund will not pay any compensation, fees or expenses of any person who is an officer or employee of the Administrator or
its affiliates for services as a Board Member, officer or agent of the Fund (except to the extent the Board shall have specifically approved the payment by the Fund of all or a portion of the expenses of the Funds chief compliance officer or
other officer(s));
|
|
(xvii)
|
Any expenses incidental to holding meetings of the Board or Fund shareholders;
|
|
(xviii)
|
Any expenses incurred in connection with lending portfolio securities of the Fund;
|
|
(xix)
|
Any interest on indebtedness and any other costs of borrowing money;
|
|
(xx)
|
Any fees, dues, and other expenses incurred by the Fund in connection with membership of the Fund in any trade association or other investment company organization;
|
|
(xxi)
|
Any other expenses payable by the Fund pursuant to separate agreements of the Fund; and
|
|
(xxii)
|
Any other expenses properly payable by the Fund, as approved by the Board.
|
(2)
|
Administrator agrees to pay all expenses it incurs in connection with the services it provides under the terms of this Agreement, excluding any expenses contemplated to be borne by the Fund pursuant to paragraph
(1) of this Part Three.
|
Part Four: MISCELLANEOUS
(1)
|
Administrator shall be deemed to be an independent contractor and, except as expressly provided or authorized in this Agreement or any other agreement approved by the Board, shall have no authority to act for or
represent the Fund.
|
(2)
|
The Fund recognizes that Administrator and its affiliates, pursuant to separate agreements, now render and may continue to render services to other funds and persons which may or may not have policies similar to those
of the Fund and that Administrator provides services for its own investments and/or those of its affiliates. Administrator shall be free to provide such services and the Fund hereby consents thereto.
|
(3)
|
Neither this Agreement nor any transaction effected pursuant hereto shall be invalidated or in any way affected by the fact that Board Members, officers, agents and/or shareholders of the Fund are or may be interested
in Administrator or any successor or assignee thereof, as board members, officers, stockholders or otherwise; that board members, officers, stockholders or agents of Administrator are or may be interested in the Fund as Board Members, officers,
shareholders or otherwise; or that Administrator or any successor or assignee is or may be interested in the Fund as shareholder or otherwise, provided, however, that neither Administrator, nor any officer, board member or employee thereof or of the
Fund, shall knowingly sell to or buy from the Fund any property or security other than shares issued by the Fund, except in accordance with applicable regulations or orders of the SEC.
|
(4)
|
Any notice under this Agreement shall be given in writing, addressed and delivered, or mailed postpaid, to the party to this Agreement entitled to receive such, at such partys principal place of business, or to
such other address as either party may designate in writing mailed to the other in accordance with this Paragraph (4).
|
(5)
|
In connection with the services to be provided by Administrator under this Agreement, the Fund agrees that Administrator may, subject to compliance with requirements of applicable laws and regulations, and at its own
expense, (i) make use of its affiliated companies and their board members, trustees, officers and employees and (ii) subcontract for certain of the services described under this Agreement with the understanding that the quality and scope
of services required to be provided under this Agreement shall not be diminished thereby and that Administrator remains fully responsible for the services.
|
(6)
|
This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable without the written consent of the
other party. This Agreement shall be governed by the internal substantive laws of the Commonwealth of Massachusetts, without regard to conflicts of laws principles.
|
(7)
|
All information furnished by Administrator to the Fund under this Agreement regarding the Administrator, its business or its clients shall be confidential and shall not be disclosed to unaffiliated third parties, except
as required by law, order, judgment, decree, or pursuant to any rule, regulation or request of or by any government, court, administrative or regulatory agency or commission, other governmental or regulatory authority or any self-regulatory
organization. All information furnished by the Fund to Administrator under this Agreement shall be confidential and shall not be disclosed to any unaffiliated third party, except as permitted or required by the foregoing, where necessary to effect
transactions or for the provision by third parties of services to the Fund, or where the Fund requests or authorizes Administrator to do so. Administrator may share information with its affiliates in accordance with its privacy and other relevant
policies in effect from time to time.
|
(8)
|
Notice is hereby given that this Agreement is executed on behalf of Subsidiary by an officer of Subsidiary in his or her capacity as an officer or trustee of Subsidiary and not individually, and that the obligations of
or arising out of this Agreement are not binding upon any of the trustees, directors, officers or shareholders of Subsidiary individually, but are binding only upon the assets and property of Subsidiary.
|
(9)
|
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes and all of which, taken together, shall constitute one and the same instrument.
|
Part Five: RENEWAL AND TERMINATION
(1)
|
This Agreement shall continue in effect for one year from the date hereof and, thereafter, from year to year as the parties may mutually agree. Notwithstanding the foregoing, either party may terminate this Agreement at
any time, without the payment of a penalty, by giving the other party notice in writing specifying the date of such termination, which shall be not less than 60 days after the date of receipt of such notice. In the event that, in connection with a
termination, a successor to any of the duties or responsibilities of Administrator hereunder is designated by the Fund by written notice to Administrator, upon such termination Administrator shall promptly, and at the expense of the Fund with
respect to which this Agreement is terminated, transfer to such successor all relevant books, records, and data established or maintained by Administrator under this Agreement and shall cooperate in the transfer of such duties and responsibilities.
|
(2)
|
This Agreement may be amended for any reason (including, for example, to modify the scope of services and/or fees contemplated herein) only upon written agreement of Administrator and the Subsidiary.
|
IN WITNESS THEREOF, the parties hereto have executed the foregoing Agreement as of the day and year first above
written.
CDARF3 OFFSHORE FUND, LTD.
|
|
|
By:
|
|
/s/ Michael G. Clarke
|
|
|
Michael G. Clarke
|
|
|
Authorized Person
|
COLUMBIA MANAGEMENT INVESTMENT ADVISERS, LLC
|
|
|
By:
|
|
/s/ Amy K. Johnson
|
Name:
|
|
Amy K. Johnson
|
|
|
|
Title:
|
|
Managing Director and Head of U.S. Operations and Mutual Fund Services
|
Schedule A
Fee Schedule
Effective as of December 19, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSET LEVELS (IN MILLIONS) AND BREAKPOINTS IN APPLICABLE FEES(1)
|
|
$0-$500
|
|
|
>$500 - $1,000
|
|
|
>$1,000 - $3,000
|
|
|
>$3,000 - $12,000
|
|
|
>$12,000
|
|
|
0.080
|
%
|
|
|
0.075
|
%
|
|
|
0.070
|
%
|
|
|
0.060
|
%
|
|
|
0.050
|
%
|
(1)
|
When calculating asset levels for purposes of determining fee rate breakpoints, asset levels are based on aggregate net assets of the Fund and the Parent Fund. When calculating the fee payable under this agreement, the
annual rates are based on a percentage of the average daily net assets of the Fund.
|
|
|
|
|
|
ROPES & GRAY LLP
PRUDENTIAL TOWER
800 BOYLSTON STREET
BOSTON, MA 02199-3600
WWW.ROPESGRAY.COM
|
January 26, 2015
Columbia
Funds Series Trust I
225 Franklin Street
Boston,
Massachusetts 02110
Ladies and Gentlemen:
You have
informed us that you propose to offer and to sell from time to time, in transactions that will not require the filing of a registration statement under the Securities Act of 1933, as amended (the
1933 Act
), shares of beneficial
interest of Columbia Intermediary Alternatives Fund, a series of Columbia Funds Series Trust I (the
Trust
), and to register under the 1933 Act, and to offer and sell from time to time, shares of beneficial interest (together with
shares of beneficial interest of Columbia Intermediary Alternatives Fund, the
Shares
) of Columbia Adaptive Alternatives Fund and Columbia Diversified Absolute Return Fund (each a series of the Trust and, together with Columbia
Intermediary Alternatives Fund, a
Fund
).
We act as counsel for the Trust and have examined the Trusts Agreement and Declaration
of Trust and amendments thereto on file at the office of the Secretary of the Commonwealth of Massachusetts (collectively, the
Agreement and Declaration of Trust
) and the Trusts By-Laws. We have also examined such other
documents as we deem necessary for the purpose of this opinion.
Based on the foregoing, we are of the opinion that the issue and sale by the Trust of an
unlimited number of Shares of each Fund has been duly authorized under Massachusetts law. Upon the original issue and sale of any such authorized but unissued Shares and upon receipt by the Trust of the authorized consideration therefor in an amount
not less than the applicable net asset value, the Shares so issued will be validly issued, fully paid and nonassessable by the Trust.
The Trust is an
entity of the type commonly known as a Massachusetts business trust. Under Massachusetts law, shareholders could, under certain circumstances, be held personally liable for the obligations of the Trust. However, the Agreement and
Declaration of Trust disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or its trustees. The
Agreement and Declaration of Trust provides for indemnification out of the property of each Fund for all loss and expense of any shareholder of that Fund held personally liable solely by reason of his or her being or having been such a shareholder.
Thus, the risk of a shareholder incurring financial loss on account of shareholder liability is limited to circumstances in which the Fund itself would be unable to meet its obligations.
We understand that this opinion is to be used in connection with the registration of an indefinite number of
Shares of Columbia Adaptive Alternatives Fund and Columbia Diversified Absolute Return Fund for offering and sale pursuant to the 1933 Act, and in connection with the filing of Amendment No. 218 to the registration statement of the Trust (File No.
811-04367) relating to the registration of Columbia Intermediary Alternatives Fund under the Investment Company Act of 1940. We consent to the filing of this opinion with and as part of your registration statement on Form N-1A.
Very truly yours,
/s/ Ropes & Gray LLP
Ropes & Gray LLP
- 2 -
AMENDED AND RESTATED SHAREHOLDER SERVICING PLAN
This Shareholder Servicing Plan (the Plan) relating to the shares (collectively, the Shares) of Columbia Funds Series
Trust I (the Trust), on behalf of each series thereof listed on Exhibit I hereto (each a Fund), has been adopted by the trustees of the Trust (the Trustees). The terms and conditions of this Plan shall apply with
respect to the Trust on behalf of each Fund.
Section 1
. The Trust, on behalf of each Fund, will pay to the Distributor (as
defined below) and such persons as may from time to time be engaged and appointed by the Trust or the Distributor to act as a shareholder servicing agent with respect to its Shares, a fee (the Service Fee) as compensation for the
provision of personal services provided to investors in the Shares and/or the maintenance of shareholder accounts, at an aggregate annual rate not to exceed the percentage of the Funds average daily net assets attributable to such Shares set
forth for such Fund on Exhibit II hereto. Subject to such limit and subject to the provisions of Section 6 hereof, the Service Fee shall be as approved from time to time by (a) the Trustees and (b) the Disinterested Trustees (as
defined below). The Service Fee shall be accrued daily and paid monthly or at such other intervals as the Trustees shall determine. All payments under this Service Plan are intended to qualify as service fees as defined in Rule 2830 of
the NASD Manual of the Financial Industry Regulatory Authority (FINRA).
Section 2
. The Service Fee may be used by
the Distributor, or any other recipient, for any purpose, including but not limited to (i) payment of expenses (including overhead expenses) of the Distributor or such other recipient for providing personal services to investors in the Fund
and/or in connection with the maintenance of shareholder accounts, or (ii) payments made (or directed to be made) by the Distributor to any securities dealer or other organization (including, but not limited to, any affiliate of the
Distributor) with which the Distributor has entered into a written agreement for this purpose, for providing personal services to investors in the Fund and/or the maintenance of shareholder accounts. The Service Fee may be in excess of the cost
incurred by the Distributor or any other recipient in connection with the provision of personal services to investors in the Shares and/or the maintenance of shareholder accounts.
Section 3
. Any officer designated by the Trust is authorized to execute and deliver, in the name of and on behalf of the Trust, a
written agreement with the Distributor and one or more shareholder servicing agents in such a form as may be approved by the Trustees from time to time and on such additional forms of agreement as such officer deems appropriate, provided that the
officer determines that the Trusts responsibility or liability to any person under, or on account of any acts or statements of any such shareholder servicing agent under, any such shareholder servicing agreement does not exceed its
responsibility or liability under the form(s) approved by the Trustees, and provided further that such officer determines that the overall terms of any such shareholder servicing agreement are not materially less advantageous to the Trust than the
overall terms of the form(s) approved by the Trustees. In addition, the Trust may, pursuant to an agreement with the Distributor, authorize the Distributor to enter into agreements on behalf of the Trust with one or more shareholder servicing agents
in such a form as may be approved by the Trustees from time to time and on such additional forms of agreement as the
Distributor deems appropriate, provided that the Distributor determines that the Trusts responsibility or liability to any person under, or on account of any acts or statements of any such
shareholder servicing agent under, any such shareholder servicing agreement does not exceed its responsibility or liability under the form(s) approved by the Trustees, and provided further that the Distributor determines that the overall terms of
any such shareholder servicing agreement are not materially less advantageous to the Trust than the overall terms of the form(s) approved by the Trustees.
Section 4
. Any person authorized to direct the disposition of monies paid or payable by the Trust pursuant to this Plan or any
related agreement shall provide to the Trustees of the Trust, and the Trustees shall review, at least quarterly, a written report of the amounts so expended and the purposes for which such expenditures were made.
Section 5
. This Plan shall continue in effect with respect to any class of Shares of a Fund for a period of more than one year
only so long as such continuance is specifically approved at least annually by votes of the majority (or whatever other percentage may, from time to time, be required by Section 12(b) of the Investment Company Act of 1940, as amended (the
Act), or the rules and regulations thereunder) of the Trustees and a majority of the Disinterested Trustees (as defined below), cast in person at a meeting called for the purpose of voting on this Plan.
Section 6
. This Plan may not be amended to increase materially the amount of expenses permitted to be sent with respect to any
class of Shares of a Fund pursuant to Section 1 hereof without approval by a vote of at least a majority of the outstanding Shares of such class, and all material amendments of this Plan shall be approved in the manner provided for continuation
of this Plan in Section 5.
Section 7
. This Plan is terminable at any time with respect to any class of Shares by vote of
a majority of the Disinterested Trustees, or by vote of a majority of the outstanding Shares of such class.
Section 8
. All
agreements with any person relating to implementation of this Plan shall be in writing, and any agreement related to this Plan shall provide:
A. That such agreement may be terminated with respect to any class of Shares of a Fund at any time, without payment of any
penalty, by vote of a majority of the Disinterested Trustees or by vote of a majority of the outstanding Shares of the Fund, on not more than 60 days written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its assignment.
Section 9
. The Trust will preserve copies of this Plan, any agreements, and any written reports regarding this Plan presented to
the Trustees for a period of not less than six years.
Section 10.
As used in this Plan, (a) the term Disinterested
Trustees shall mean those Trustees who are not interested persons of the Trust, and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it, and (b) the terms assignment and
interested person shall have the respective meanings specified in the Act and the rules and regulations thereunder, and the term majority of the outstanding Shares of the Fund shall mean the lesser of the 67% or the 50%
voting requirements specified in clauses (A) and (B), respectively, of the third sentence of Section 2(a)(42) of the Act, all subject to such exemptions as may be granted by the Securities and Exchange Commission, and (c) the term
Distributor shall mean Columbia Management Investment Distributors, Inc. or such other person(s) as may from time to time be appointed to serve as a principal underwriter of a Fund pursuant to Section 15(b) of the 1940 Act.
Section 11
. A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of The Commonwealth of
Massachusetts. This Plan is adopted by the Trustees as Trustees of the Trust, and not individually, and the obligations of the Trust hereunder are not binding upon any of the Trustees, shareholders, officers, representatives or agents of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with the Trust or a Fund or a class of Shares thereof must look solely to the property belonging to the Trust, such Fund or such class of Shares, respectively, for the
enforcement of any claims against the Trust, such Fund or such class of Shares.
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Approved as of:
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September 7, 2010
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Revised:
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March 14, 2012 (to reflect fund reorganizations, fund name changes and share class name changes and to add new funds)
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March 10, 2014 (to reflect name change and add new fund)
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December 19, 2014 (to add new funds)
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EXHIBIT I
FUNDS
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
Columbia Adaptive Alternatives Fund
Columbia Adaptive Risk Allocation Fund
Columbia AMT-Free
Connecticut Intermediate Muni Bond Fund
Columbia AMT-Free Intermediate Muni Bond Fund
Columbia AMT-Free Massachusetts Intermediate Muni Bond Fund
Columbia AMT-Free New York Intermediate Muni Bond Fund
Columbia
AMT-Free Oregon Intermediate Muni 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 Absolute Return 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
Columbia Global
Inflation-Linked Bond Plus Fund
Columbia Greater China Fund
Columbia Global Technology Fund
Columbia High Yield Municipal
Fund
Columbia Intermediate Bond Fund
Columbia International
Bond Fund
Columbia Large Cap Growth Fund
Columbia Mid Cap
Growth Fund
Columbia New York Tax-Exempt Fund
Columbia
Pacific/Asia Fund
Columbia Real Estate Equity 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 U.S. Treasury Index Fund
Columbia Value and
Restructuring Fund
*
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This Plan is being adopted for Columbia Global Dividend Opportunity Fund in the event the Fund issues Class A, C or W shares in the future.
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EXHIBIT II
COMPENSATION
Classes A, B, C, E and F Shares of a
Columbia Fund except as otherwise specifically identified below:
The Service Fee shall be, with respect to each applicable Fund, an annual rate not to
exceed 0.25% of the average daily net assets of such Share classes, other than Shares with respect to which the Fund is paying a shareholder servicing fee directly to a third party. The Service Fee shall be accrued daily and paid monthly in arrears.
Classes A, B and C of Columbia Tax-Exempt Fund, Columbia AMT-Free Intermediate Muni Bond Fund and Columbia High Yield Municipal Fund:
The Service Fee shall be, with respect to each applicable Fund, an annual rate not to exceed 0.20% of the average daily net assets of such Share classes, other
than Shares with respect to which the Fund is paying a shareholder servicing fee directly to a third party. The Service Fee shall be accrued daily and paid monthly in arrears.
Classes A and B of Columbia California Tax-Exempt Fund and Columbia New York Tax- Exempt Fund:
The Service Fee shall be an annual rate not to exceed 0.10% of the average daily net assets attributable to Shares issued prior to December 1, 1994, and
an annual rate not to exceed 0.25% of the average daily net assets attributable to Shares issued thereafter, other than Shares with respect to which the Fund is paying a shareholder servicing fee directly to a third party. The Service Fee shall be
accrued daily and paid monthly in arrears.
Classes A and B of Columbia Strategic Income Fund:
The Service Fee shall be an annual rate not to exceed 0.15% of the average daily net assets attributable to Shares issued prior to January 1, 1993, and an
annual rate not to exceed 0.25% of the average daily net assets attributable to Shares issued thereafter, other than Shares with respect to which the Fund is paying a shareholder servicing fee directly to a third party. The Service Fee shall be
accrued daily and paid monthly in arrears.
Class A of Active Portfolios Multi-Manager Alternative Strategies Fund, Active Portfolios
Multi-Manager Core Plus Bond Fund, Active Portfolios Multi-Manager Growth Fund and Active Portfolios Multi-Manager Small Cap Equity Fund:
The Service
Fee shall be an annual rate not to exceed 0.25% of the average daily net assets attributable to Class A Shares,
provided
, that the Funds combined Service Fee and distribution fee shall not exceed 0.25% of the average daily net
assets attributable to Class A Shares of such Fund.
Classes W Shares of a Columbia Fund:
The Service Fee shall be an annual rate not to exceed 0.25% of the average daily net assets attributable to Class W Shares,
provided
, that the
Funds combined Service Fee and distribution fee shall not exceed 0.25% of the average daily net assets attributable to Class W Shares of such Fund.