UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED
SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21852
Columbia Funds Series Trust II
(Exact name of registrant as specified in charter)
225 Franklin
Street
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip code)
Christopher
O. Petersen, Esq.
c/o Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, Massachusetts 02110
Ryan C.
Larrenaga, Esq.
c/o Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
(Name
and address of agent for service)
Registrants telephone number, including area code: (800) 345-6611
Date of fiscal year end: July 31
Date of reporting period: July 31, 2019
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to
stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose
the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (OMB) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any
suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
Annual
Report
July 31, 2019
Columbia Government Money Market Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
5
|
|
6
|
|
8
|
|
9
|
|
10
|
|
12
|
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16
|
|
25
|
|
26
|
|
31
|
|
34
|
Columbia Government Money Market Fund | Annual Report
2019
Investment objective
Columbia Government Money Market Fund
(the Fund) seeks to provide shareholders with maximum current income consistent with liquidity and stability of principal.
Portfolio
management
John McColley
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
10/06/75
|
1.83
|
0.56
|
0.29
|
Class
C
|
06/26/00
|
1.83
|
0.57
|
0.29
|
Institutional
Class*
|
04/30/10
|
1.83
|
0.57
|
0.29
|
Institutional
2 Class
|
12/11/06
|
1.96
|
0.66
|
0.34
|
Institutional
3 Class*
|
03/01/17
|
2.02
|
0.67
|
0.35
|
Class
R*
|
08/03/09
|
1.82
|
0.57
|
0.31
|
The Fund’s share classes are
not subject to sales charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in fees associated with each share class.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. The performance of different share classes may
vary from that shown because of differences in fees and expenses. The Fund’s returns reflect the effect of fee waivers/expense reimbursements, if any. Without such waivers/reimbursements, the Fund’s returns would be lower. Current
performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or
calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related
operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
Prior to October 1, 2016, the Fund operated as a prime money
market fund and invested in certain types of securities that the Fund is no longer permitted to hold to any significant extent (i.e., over 0.5% of total assets). Consequently, the performance information may have been different if the current
investment limitations had been in effect during the period prior to the Fund’s conversion to a government money market fund.
The Fund is neither insured nor guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other government agency. Although the Fund seeks to maintain the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
Columbia
Government Money Market Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Portfolio
breakdown (%) (at July 31, 2019)
|
Repurchase
Agreements
|
11.5
|
U.S.
Government & Agency Obligations
|
80.8
|
U.S.
Treasury Obligations
|
7.7
|
Total
|
100.0
|
Percentages indicated are based
upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
4
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses. The following information is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs
were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,009.40
|
1,022.36
|
2.44
|
2.46
|
0.49
|
Class
C
|
1,000.00
|
1,000.00
|
1,009.40
|
1,022.36
|
2.44
|
2.46
|
0.49
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,009.40
|
1,022.36
|
2.44
|
2.46
|
0.49
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,009.80
|
1,023.01
|
1.79
|
1.81
|
0.36
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,010.30
|
1,023.26
|
1.55
|
1.56
|
0.31
|
Class
R
|
1,000.00
|
1,000.00
|
1,009.30
|
1,022.36
|
2.44
|
2.46
|
0.49
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
Columbia
Government Money Market Fund | Annual Report 2019
|
5
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Repurchase
Agreements 11.2%
|
Issuer
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
Tri-party
Royal Bank of Canada
|
dated
07/31/2019, matures 08/01/2019,
|
repurchase
price $30,002,092
(collateralized by U.S. Treasury Securities, Total Market Value $30,600,095)
|
|
2.510%
|
|
30,000,000
|
30,000,000
|
Tri-party
TD Securities (USA) LLC
|
dated
07/31/2019, matures 08/01/2019,
|
repurchase
price $30,002,100
(collateralized by U.S. Treasury Securities, Total Market Value $30,600,076)
|
|
2.520%
|
|
30,000,000
|
30,000,000
|
Total
Repurchase Agreements
(Cost $60,000,000)
|
60,000,000
|
|
U.S.
Government & Agency Obligations 79.1%
|
|
|
|
|
|
Federal
Agricultural Mortgage Corp. Discount Notes
|
08/01/2019
|
2.180%
|
|
27,500,000
|
27,500,000
|
Federal
Farm Credit Banks(a)
|
1-month
USD LIBOR + 0.000%
05/26/2020
|
2.260%
|
|
7,000,000
|
6,995,507
|
SOFR
+ 0.080%
06/10/2021
|
2.470%
|
|
3,000,000
|
3,000,000
|
Federal
Farm Credit Banks Discount Notes
|
10/02/2019
|
2.090%
|
|
17,000,000
|
16,938,809
|
Federal
Home Loan Banks(a)
|
SOFR
+ 0.010%
12/20/2019
|
2.400%
|
|
3,000,000
|
3,000,000
|
SOFR
+ 0.025%
04/22/2020
|
2.410%
|
|
4,000,000
|
4,000,000
|
SOFR
+ 0.035%
05/08/2020
|
2.430%
|
|
10,000,000
|
9,999,677
|
SOFR
+ 0.035%
06/19/2020
|
2.420%
|
|
4,000,000
|
4,000,000
|
SOFR
+ 0.030%
07/17/2020
|
2.420%
|
|
4,000,000
|
4,000,000
|
SOFR
+ 0.075%
07/08/2021
|
2.460%
|
|
3,000,000
|
3,000,000
|
Federal
Home Loan Banks
|
05/28/2020
|
2.510%
|
|
6,000,000
|
6,000,000
|
07/30/2020
|
2.150%
|
|
4,500,000
|
4,500,000
|
Federal
Home Loan Banks(a),(b)
|
SOFR
+ 0.050%
01/28/2021
|
3.000%
|
|
4,000,000
|
4,000,000
|
Federal
Home Loan Banks Discount Notes
|
08/02/2019
|
1.100%
|
|
12,000,000
|
11,999,274
|
08/05/2019
|
1.730%
|
|
2,000,000
|
1,999,526
|
08/07/2019
|
1.960%
|
|
18,000,000
|
17,993,235
|
08/08/2019
|
1.930%
|
|
19,000,000
|
18,991,966
|
08/09/2019
|
2.150%
|
|
16,000,000
|
15,991,520
|
U.S.
Government & Agency Obligations (continued)
|
Issuer
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
08/12/2019
|
2.020%
|
|
18,100,000
|
18,087,969
|
08/13/2019
|
2.060%
|
|
18,000,000
|
17,986,800
|
08/14/2019
|
2.090%
|
|
18,000,000
|
17,985,570
|
08/15/2019
|
2.060%
|
|
18,000,000
|
17,984,740
|
08/16/2019
|
2.250%
|
|
12,000,000
|
11,988,175
|
08/19/2019
|
2.100%
|
|
4,000,000
|
3,995,630
|
08/20/2019
|
2.090%
|
|
16,100,000
|
16,081,571
|
08/22/2019
|
2.120%
|
|
7,000,000
|
6,991,058
|
08/23/2019
|
2.270%
|
|
7,000,000
|
6,990,011
|
08/26/2019
|
2.080%
|
|
12,000,000
|
11,982,083
|
08/27/2019
|
2.140%
|
|
17,000,000
|
16,973,112
|
09/03/2019
|
2.120%
|
|
11,600,000
|
11,577,170
|
09/06/2019
|
2.140%
|
|
6,000,000
|
5,987,010
|
09/10/2019
|
2.150%
|
|
6,000,000
|
5,985,533
|
09/13/2019
|
2.130%
|
|
5,000,000
|
4,987,219
|
09/16/2019
|
2.140%
|
|
18,000,000
|
17,950,550
|
10/16/2019
|
2.110%
|
|
28,000,000
|
27,876,162
|
10/25/2019
|
2.110%
|
|
16,000,000
|
15,920,667
|
Federal
Home Loan Mortgage Corp.
|
05/29/2020
|
2.530%
|
|
9,000,000
|
9,000,000
|
06/04/2020
|
2.490%
|
|
6,000,000
|
6,000,340
|
06/04/2020
|
2.510%
|
|
6,000,000
|
6,000,000
|
Total
U.S. Government & Agency Obligations
(Cost $422,240,884)
|
422,240,884
|
|
U.S.
Treasury Obligations 7.6%
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
U.S.
Treasury(a)
|
3-month
U.S. Treasury index + 0.048%
10/31/2019
|
2.099%
|
|
14,500,000
|
14,500,568
|
3-month
U.S. Treasury index + 0.012%
01/31/2020
|
2.051%
|
|
15,000,000
|
14,998,490
|
3-month
U.S. Treasury index + 0.045%
10/31/2020
|
2.096%
|
|
3,000,000
|
2,996,793
|
3-month
U.S. Treasury index + 0.115%
01/31/2021
|
2.166%
|
|
8,000,000
|
7,996,678
|
Total
U.S. Treasury Obligations
(Cost $40,492,529)
|
40,492,529
|
Total
Investments in Securities
(Cost: $522,733,413)
|
522,733,413
|
Other
Assets & Liabilities, Net
|
|
11,098,556
|
Net
Assets
|
533,831,969
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
6
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Notes to Portfolio of Investments
(a)
|
Variable
rate security. The interest rate shown was the current rate as of July 31, 2019.
|
(b)
|
Represents a
security purchased on a when-issued basis.
|
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Short-term securities are valued using amortized cost, as
permitted under Rule 2a-7 of the Investment Company Act of 1940, as amended. Generally, amortized cost approximates the current fair value of these securities, but because the value is not obtained from a quoted price in an active market, such
securities are reflected as Level 2.
Investments falling
into the Level 3 category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and
corroboration to support these quoted prices. Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or
significant assumptions by the Investment Manager. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
The following table is a summary of
the inputs used to value the Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Repurchase
Agreements
|
—
|
60,000,000
|
—
|
60,000,000
|
U.S.
Government & Agency Obligations
|
—
|
422,240,884
|
—
|
422,240,884
|
U.S.
Treasury Obligations
|
—
|
40,492,529
|
—
|
40,492,529
|
Total
Investments in Securities
|
—
|
522,733,413
|
—
|
522,733,413
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
represent certain short-term obligations which are valued using amortized cost, an income approach which converts future cash flows to a present value based upon the discount or premium at purchase.
The accompanying Notes
to Financial Statements are an integral part of this statement.
Columbia
Government Money Market Fund | Annual Report 2019
|
7
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $462,733,413)
|
$462,733,413
|
Repurchase
agreements (cost $60,000,000)
|
60,000,000
|
Cash
|
17,061,905
|
Receivable
for:
|
|
Capital
shares sold
|
1,527,305
|
Interest
|
272,889
|
Expense
reimbursement due from Investment Manager
|
1,875
|
Prepaid
expenses
|
4,991
|
Other
assets
|
3,719
|
Total
assets
|
541,606,097
|
Liabilities
|
|
Payable
for:
|
|
Investments
purchased on a delayed delivery basis
|
4,000,000
|
Capital
shares purchased
|
2,616,453
|
Distributions
to shareholders
|
836,292
|
Management
services fees
|
5,716
|
Transfer
agent fees
|
68,393
|
Compensation
of board members
|
157,702
|
Other
expenses
|
89,572
|
Total
liabilities
|
7,774,128
|
Net
assets applicable to outstanding capital stock
|
$533,831,969
|
Represented
by
|
|
Paid
in capital
|
533,718,042
|
Total
distributable earnings (loss) (Note 2)
|
113,927
|
Total
- representing net assets applicable to outstanding capital stock
|
$533,831,969
|
Class
A
|
|
Net
assets
|
$380,308,874
|
Shares
outstanding
|
379,956,909
|
Net
asset value per share
|
$1.00
|
Class
C
|
|
Net
assets
|
$7,540,521
|
Shares
outstanding
|
7,537,598
|
Net
asset value per share
|
$1.00
|
Institutional
Class
|
|
Net
assets
|
$69,330,568
|
Shares
outstanding
|
69,305,521
|
Net
asset value per share
|
$1.00
|
Institutional
2 Class
|
|
Net
assets
|
$4,673,947
|
Shares
outstanding
|
4,670,703
|
Net
asset value per share
|
$1.00
|
Institutional
3 Class
|
|
Net
assets
|
$69,061,426
|
Shares
outstanding
|
69,028,739
|
Net
asset value per share
|
$1.00
|
Class
R
|
|
Net
assets
|
$2,916,633
|
Shares
outstanding
|
2,913,920
|
Net
asset value per share
|
$1.00
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
8
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Interest
|
$13,879,038
|
Total
income
|
13,879,038
|
Expenses:
|
|
Management
services fees
|
2,309,142
|
Transfer
agent fees
|
|
Class
A
|
813,250
|
Class
C
|
16,585
|
Institutional
Class
|
156,080
|
Institutional
2 Class
|
13,285
|
Institutional
3 Class
|
5,238
|
Class
R
|
7,250
|
Class
T
|
15
|
Compensation
of board members
|
24,513
|
Custodian
fees
|
10,513
|
Printing
and postage fees
|
174,991
|
Registration
fees
|
106,153
|
Audit
fees
|
31,250
|
Legal
fees
|
12,368
|
Compensation
of chief compliance officer
|
122
|
Other
|
25,703
|
Total
expenses
|
3,706,458
|
Fees
waived or expenses reimbursed by Investment Manager and its affiliates
|
(876,983)
|
Total
net expenses
|
2,829,475
|
Net
investment income
|
11,049,563
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
166,953
|
Net
realized gain
|
166,953
|
Net
realized and unrealized gain
|
166,953
|
Net
increase in net assets resulting from operations
|
$11,216,516
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Government Money Market Fund | Annual Report 2019
|
9
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$11,049,563
|
$5,419,573
|
Net
realized gain
|
166,953
|
—
|
Net
increase in net assets resulting from operations
|
11,216,516
|
5,419,573
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(7,550,968)
|
|
Class
C
|
(156,673)
|
|
Institutional
Class
|
(1,433,092)
|
|
Institutional
2 Class
|
(458,443)
|
|
Institutional
3 Class
|
(1,259,864)
|
|
Class
R
|
(67,647)
|
|
Class
T
|
(120)
|
|
Net
investment income
|
|
|
Class
A
|
|
(4,355,364)
|
Class
C
|
|
(124,100)
|
Institutional
Class
|
|
(853,305)
|
Institutional
2 Class
|
|
(19,215)
|
Institutional
3 Class
|
|
(44,887)
|
Class
R
|
|
(42,401)
|
Class
T
|
|
(199)
|
Total
distributions to shareholders (Note 2)
|
(10,926,807)
|
(5,439,471)
|
Decrease
in net assets from capital stock activity
|
(17,081,808)
|
(220,978,501)
|
Total
decrease in net assets
|
(16,792,099)
|
(220,998,399)
|
Net
assets at beginning of year
|
550,624,068
|
771,622,467
|
Net
assets at end of year
|
$533,831,969
|
$550,624,068
|
Excess
of distributions over net investment income
|
$(53,026)
|
$(175,782)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
10
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
117,585,935
|
117,585,934
|
68,283,466
|
68,300,627
|
Distributions
reinvested
|
7,416,717
|
7,416,717
|
4,287,420
|
4,287,420
|
Redemptions
|
(178,229,763)
|
(178,226,142)
|
(271,049,525)
|
(271,074,733)
|
Net
decrease
|
(53,227,111)
|
(53,223,491)
|
(198,478,639)
|
(198,486,686)
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(10,000)
|
(9,372)
|
Net
decrease
|
—
|
—
|
(10,000)
|
(9,372)
|
Class
C
|
|
|
|
|
Subscriptions
|
10,067,517
|
10,067,518
|
6,574,574
|
6,574,573
|
Distributions
reinvested
|
148,402
|
148,402
|
116,913
|
116,913
|
Redemptions
|
(9,721,655)
|
(9,721,338)
|
(17,113,501)
|
(17,112,321)
|
Net
increase (decrease)
|
494,264
|
494,582
|
(10,422,014)
|
(10,420,835)
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
55,944,902
|
55,944,902
|
79,552,935
|
79,552,934
|
Distributions
reinvested
|
1,380,047
|
1,380,047
|
810,050
|
810,051
|
Redemptions
|
(82,273,160)
|
(82,269,116)
|
(101,125,704)
|
(101,120,061)
|
Net
decrease
|
(24,948,211)
|
(24,944,167)
|
(20,762,719)
|
(20,757,076)
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
57,740,579
|
57,740,579
|
2,528,666
|
2,528,667
|
Distributions
reinvested
|
432,139
|
432,139
|
18,959
|
18,959
|
Redemptions
|
(55,420,639)
|
(55,429,676)
|
(2,067,440)
|
(2,067,440)
|
Net
increase
|
2,752,079
|
2,743,042
|
480,185
|
480,186
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
79,471,937
|
79,471,936
|
11,981,878
|
11,981,878
|
Distributions
reinvested
|
1,259,653
|
1,259,653
|
44,772
|
44,772
|
Redemptions
|
(22,014,626)
|
(22,014,626)
|
(2,379,293)
|
(2,379,293)
|
Net
increase
|
58,716,964
|
58,716,963
|
9,647,357
|
9,647,357
|
Class
R
|
|
|
|
|
Subscriptions
|
5,363,964
|
5,363,963
|
6,079,967
|
6,079,966
|
Distributions
reinvested
|
65,961
|
65,961
|
41,574
|
41,574
|
Redemptions
|
(6,279,855)
|
(6,278,804)
|
(7,542,445)
|
(7,541,854)
|
Net
decrease
|
(849,930)
|
(848,880)
|
(1,420,904)
|
(1,420,314)
|
Class
T
|
|
|
|
|
Distributions
reinvested
|
52
|
52
|
109
|
109
|
Redemptions
|
(19,911)
|
(19,909)
|
(11,871)
|
(11,870)
|
Net
decrease
|
(19,859)
|
(19,857)
|
(11,762)
|
(11,761)
|
Total
net decrease
|
(17,081,804)
|
(17,081,808)
|
(220,978,496)
|
(220,978,501)
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Government Money Market Fund | Annual Report 2019
|
11
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any, and is not annualized for periods of less
than one year.
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$1.00
|
0.02
|
0.00
(b)
|
0.02
|
(0.02)
|
—
|
(0.02)
|
Year
Ended 7/31/2018
|
$1.00
|
0.01
|
0.00
(b)
|
0.01
|
(0.01)
|
—
|
(0.01)
|
Year
Ended 7/31/2017
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
(0.00)
(b)
|
(0.00)
(b)
|
Year
Ended 7/31/2016
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
Year
Ended 7/31/2015
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
Class
C
|
Year
Ended 7/31/2019
|
$1.00
|
0.02
|
0.00
(b)
|
0.02
|
(0.02)
|
—
|
(0.02)
|
Year
Ended 7/31/2018
|
$1.00
|
0.01
|
0.00
(b)
|
0.01
|
(0.01)
|
—
|
(0.01)
|
Year
Ended 7/31/2017
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
(0.00)
(b)
|
(0.00)
(b)
|
Year
Ended 7/31/2016
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
Year
Ended 7/31/2015
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$1.00
|
0.02
|
0.00
(b)
|
0.02
|
(0.02)
|
—
|
(0.02)
|
Year
Ended 7/31/2018
|
$1.00
|
0.01
|
0.00
(b)
|
0.01
|
(0.01)
|
—
|
(0.01)
|
Year
Ended 7/31/2017
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
(0.00)
(b)
|
(0.00)
(b)
|
Year
Ended 7/31/2016
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
Year
Ended 7/31/2015
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$1.00
|
0.02
|
0.00
(b)
|
0.02
|
(0.02)
|
—
|
(0.02)
|
Year
Ended 7/31/2018
|
$1.00
|
0.01
|
0.00
(b)
|
0.01
|
(0.01)
|
—
|
(0.01)
|
Year
Ended 7/31/2017
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
(0.00)
(b)
|
(0.00)
(b)
|
Year
Ended 7/31/2016
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
Year
Ended 7/31/2015
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$1.00
|
0.02
|
0.00
(b)
|
0.02
|
(0.02)
|
—
|
(0.02)
|
Year
Ended 7/31/2018
|
$1.00
|
0.01
|
0.00
(b)
|
0.01
|
(0.01)
|
—
|
(0.01)
|
Year
Ended 7/31/2017(d)
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
12
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets
|
Total
net
expense
ratio to
average
net assets(a)
|
Net
investment
income
ratio to
average
net assets
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$1.00
|
1.83%
|
0.65%
|
0.50%
|
1.83%
|
$380,309
|
Year
Ended 7/31/2018
|
$1.00
|
0.90%
|
0.66%
|
0.51%
(c)
|
0.86%
|
$433,330
|
Year
Ended 7/31/2017
|
$1.00
|
0.06%
|
0.67%
|
0.52%
(c)
|
0.03%
|
$631,833
|
Year
Ended 7/31/2016
|
$1.00
|
0.01%
|
0.67%
|
0.31%
(c)
|
0.01%
|
$1,329,247
|
Year
Ended 7/31/2015
|
$1.00
|
0.01%
|
0.71%
|
0.11%
(c)
|
0.01%
|
$1,423,534
|
Class
C
|
Year
Ended 7/31/2019
|
$1.00
|
1.83%
|
0.65%
|
0.50%
|
1.85%
|
$7,541
|
Year
Ended 7/31/2018
|
$1.00
|
0.90%
|
0.66%
|
0.51%
(c)
|
0.85%
|
$7,042
|
Year
Ended 7/31/2017
|
$1.00
|
0.09%
|
0.67%
|
0.52%
(c)
|
0.05%
|
$17,463
|
Year
Ended 7/31/2016
|
$1.00
|
0.01%
|
0.67%
|
0.31%
(c)
|
0.01%
|
$24,137
|
Year
Ended 7/31/2015
|
$1.00
|
0.01%
|
0.71%
|
0.11%
(c)
|
0.01%
|
$25,847
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$1.00
|
1.83%
|
0.65%
|
0.50%
|
1.82%
|
$69,331
|
Year
Ended 7/31/2018
|
$1.00
|
0.90%
|
0.65%
|
0.51%
(c)
|
0.90%
|
$94,239
|
Year
Ended 7/31/2017
|
$1.00
|
0.10%
|
0.67%
|
0.52%
(c)
|
0.06%
|
$114,998
|
Year
Ended 7/31/2016
|
$1.00
|
0.01%
|
0.67%
|
0.32%
(c)
|
0.01%
|
$163,069
|
Year
Ended 7/31/2015
|
$1.00
|
0.01%
|
0.71%
|
0.11%
(c)
|
0.01%
|
$141,674
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$1.00
|
1.96%
|
0.52%
|
0.36%
|
2.06%
|
$4,674
|
Year
Ended 7/31/2018
|
$1.00
|
1.07%
|
0.49%
|
0.34%
|
1.12%
|
$1,919
|
Year
Ended 7/31/2017
|
$1.00
|
0.28%
|
0.44%
|
0.35%
|
0.26%
|
$1,439
|
Year
Ended 7/31/2016
|
$1.00
|
0.01%
|
0.43%
|
0.31%
|
0.01%
|
$1,197
|
Year
Ended 7/31/2015
|
$1.00
|
0.01%
|
0.43%
|
0.10%
|
0.01%
|
$645
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$1.00
|
2.02%
|
0.47%
|
0.31%
|
2.06%
|
$69,061
|
Year
Ended 7/31/2018
|
$1.00
|
1.08%
|
0.46%
|
0.33%
|
1.38%
|
$10,312
|
Year
Ended 7/31/2017(d)
|
$1.00
|
0.21%
|
0.45%
(e)
|
0.33%
(e)
|
0.55%
(e)
|
$664
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Government Money Market Fund | Annual Report 2019
|
13
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class
R
|
Year
Ended 7/31/2019
|
$1.00
|
0.02
|
0.00
(b)
|
0.02
|
(0.02)
|
—
|
(0.02)
|
Year
Ended 7/31/2018
|
$1.00
|
0.01
|
0.00
(b)
|
0.01
|
(0.01)
|
—
|
(0.01)
|
Year
Ended 7/31/2017
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
(0.00)
(b)
|
(0.00)
(b)
|
Year
Ended 7/31/2016
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
Year
Ended 7/31/2015
|
$1.00
|
0.00
(b)
|
0.00
(b)
|
0.00
(b)
|
(0.00)
(b)
|
—
|
(0.00)
(b)
|
Notes
to Financial Highlights
|
(a)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(b)
|
Rounds to
zero.
|
(c)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
(d)
|
Institutional
3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date.
|
(e)
|
Annualized.
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
14
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets
|
Total
net
expense
ratio to
average
net assets(a)
|
Net
investment
income
ratio to
average
net assets
|
Net
assets,
end of
period
(000’s)
|
Class
R
|
Year
Ended 7/31/2019
|
$1.00
|
1.82%
|
0.65%
|
0.50%
|
1.84%
|
$2,917
|
Year
Ended 7/31/2018
|
$1.00
|
0.90%
|
0.65%
|
0.51%
(c)
|
0.87%
|
$3,763
|
Year
Ended 7/31/2017
|
$1.00
|
0.10%
|
0.66%
|
0.52%
(c)
|
0.08%
|
$5,184
|
Year
Ended 7/31/2016
|
$1.00
|
0.01%
|
0.67%
|
0.30%
(c)
|
0.01%
|
$5,905
|
Year
Ended 7/31/2015
|
$1.00
|
0.01%
|
0.71%
|
0.11%
(c)
|
0.01%
|
$6,655
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Government Money Market Fund | Annual Report 2019
|
15
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Government Money Market Fund (the Fund), a series
of Columbia Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business
trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Institutional Class, Institutional 2 Class, Institutional 3 Class and Class R shares are available for purchase through authorized investment professionals to omnibus retirement plans or to
institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years. Effective December 14, 2018, Class T shares merged, in a tax-free transaction, into
Class A shares of the Fund and are no longer offered for sale.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Certain securities in the Fund are valued utilizing the
amortized cost valuation method permitted in accordance with Rule 2a-7 under the 1940 Act provided certain conditions are met, including that the Board of Trustees continues to believe that the amortized cost valuation method fairly reflects the
market-based net asset value per share of the Fund. This method involves valuing a portfolio security initially at its cost and thereafter assuming a constant accretion or amortization to maturity of any discount or premium, respectively. The Board
of Trustees has established procedures intended to stabilize the Fund’s net asset value for purposes of purchases and redemptions of Fund shares at $1.00 per share. These procedures include determinations, at such intervals as the Board of
Trustees deems appropriate and reasonable in light of current market conditions, of the extent, if any, to which the Fund’s market-based net asset value deviates from $1.00 per share. In the event such deviation exceeds 1/2 of 1%, the Board of
Trustees will promptly consider what action, if any, should be initiated.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Repurchase agreements
The Fund may invest in repurchase agreement transactions with
institutions that management has determined are creditworthy. The Fund, through the custodian, receives delivery of the underlying securities collateralizing a repurchase agreement. Management is responsible for determining that the collateral is at
least equal, at all times, to the value of the
16
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
repurchase
obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays in or restrictions on the Fund’s ability to dispose of the
underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights.
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Offsetting of assets and liabilities
The following table presents the Fund’s gross and net
amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Fund as of July 31, 2019:
|
RBC
Capital
Markets ($)
|
TD
Securities ($)
|
Total
($)
|
Assets
|
|
|
|
Repurchase
agreements
|
30,000,000
|
30,000,000
|
60,000,000
|
Total
financial and derivative net assets
|
30,000,000
|
30,000,000
|
60,000,000
|
Total
collateral received (pledged) (a)
|
30,000,000
|
30,000,000
|
60,000,000
|
Net
amount (b)
|
-
|
-
|
-
|
(a)
|
In some
instances, the actual collateral received and/or pledged may be more than the amount shown due to overcollateralization.
|
(b)
|
Represents the
net amount due from/(to) counterparties in the event of default.
|
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income, including amortization of premium and
discount, is recognized daily.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Columbia
Government Money Market Fund | Annual Report 2019
|
17
|
Notes to Financial Statements (continued)
July 31, 2019
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually after the fiscal year in which the capital gains were earned or more frequently to seek to maintain a net asset value of $1.00 per share, unless such
capital gains are offset by any available capital loss carryforward. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods beginning after December 15, 2019 and interim periods within
those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a result of the amendments, management implemented disclosure
changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the level 3 valuation
processes, as well as modifications to the measurement uncertainty disclosure.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting
18
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
services. The
management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.39% to 0.18% as the Fund’s net assets increase. The effective management services fee rate for the year ended July
31, 2019 was 0.39% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
For the year ended July 31, 2019, the Fund’s effective
transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.20
|
Class
C
|
0.19
|
Institutional
Class
|
0.20
|
Institutional
2 Class
|
0.06
|
Institutional
3 Class
|
0.01
|
Class
R
|
0.19
|
Class
T
|
0.08
(a)
|
The Fund and certain other
associated investment companies have severally, but not jointly, guaranteed the performance and observance of all the terms and conditions of a lease entered into by Seligman Data Corp. (SDC), the former transfer agent, including the payment of rent
by SDC (the Guaranty). SDC was the legacy Seligman funds’ former transfer agent.
Columbia
Government Money Market Fund | Annual Report 2019
|
19
|
Notes to Financial Statements (continued)
July 31, 2019
The
lease and the Guaranty expired on January 31, 2019. SDC is owned by six associated investment companies, including the Fund. The Fund’s ownership interest in SDC at July 31, 2019 is recorded as a part of other assets in the Statement of Assets
and Liabilities at a cost of $3,719, which approximates the fair value of the ownership interest.
An annual minimum account balance fee of $20 may apply to
certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to the Fund and recorded
as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at an annual rate of up to 0.10% of the Fund’s average daily net assets attributable to Class A and Class T shares, and a fee at an annual rate of up to 0.75% and 0.50% of the Fund’s average daily net assets attributable to
Class C and Class R shares, respectively. For the year ended July 31, 2019, the Fund did not pay fees for Class A, Class C, Class R and Class T shares. Effective December 1, 2018 this fee suspension on Class A, Class C and Class R shares became
contractual through November 30, 2019 and for Class T, through December 14, 2018. Class T shares of the Fund were redeemed or converted to Class A shares on December 14, 2018.
The amount of distribution and shareholder services expenses
incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $751,000 for Class C shares. These amounts are based on the most recent information available as of March 31, 2019, and may be recovered from future payments
under the distribution plan or CDSC. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
CDSCs received by the Distributor for distributing Fund shares
for the year ended July 31, 2019, if any, are listed below. These CDSCs are from sale of shares issued by the Fund in exchange for shares of a non-money market fund subject to a CDSC that were subsequently redeemed within the CDSC timeframe imposed
from the original purchase.
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
—
|
—
|
632
|
Class
C
|
—
|
—
|
2,048
|
Class
T
|
2.50
|
—
|
—
|
The Fund’s other share
classes are not subject to sales charges.
20
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Expenses waived/reimbursed by the Investment Manager and its
affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of Trustees, 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 following annual rate(s) as a percentage of the
class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to
December 1, 2018
|
Class
A
|
0.60%
|
0.62%
|
Class
C
|
1.25
|
1.27
|
Institutional
Class
|
0.50
|
0.52
|
Institutional
2 Class
|
0.36
|
0.34
|
Institutional
3 Class
|
0.31
|
0.34
|
Class
R
|
1.00
|
0.77
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), 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, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. In addition, from time to time, the Investment Manager and its
affiliates may waive or absorb expenses of the Fund for the purposes of allowing the Fund to avoid a negative net yield or to increase the Fund’s positive net yield. The Fund’s yield would be negative if Fund expenses exceed Fund income.
Any such expense limitation is voluntary and may be revised or terminated at any time without notice. In addition to the contractual agreement, the Investment Manager and certain of its affiliates have voluntarily agreed to waive fees and/or
reimburse Fund expenses (excluding certain fees and expenses described above) so that Fund level expenses (expenses directly attributable to the Fund and not to a specific share class) are waived proportionately across all share classes, but the
Fund’s net operating expenses shall not exceed the contractual annual rates listed in the table above. This arrangement may be revised or discontinued at any time. Any fees waived and/or expenses reimbursed under the expense reimbursement
arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods. The contractual expense cap includes distribution and shareholder services fees. As discussed above, the distribution and/or shareholder
services fee is not charged to Class A, Class C and Class R shares.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for trustees’ deferred compensation and distributions. To the extent these differences were permanent, reclassifications were made among the components of the Fund’s net assets. Temporary differences do not require
reclassifications.
The Fund did not have any permanent
differences; therefore, no reclassifications were made.
The tax character of distributions paid during the years
indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
10,926,807
|
—
|
10,926,807
|
5,439,471
|
—
|
5,439,471
|
Columbia
Government Money Market Fund | Annual Report 2019
|
21
|
Notes to Financial Statements (continued)
July 31, 2019
Short-term capital gain distributions, if any, are considered
ordinary income distributions for tax purposes.
At July
31, 2019, the components of distributable earnings on a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
appreciation ($)
|
1,107,336
|
—
|
—
|
—
|
At July 31, 2019, the cost of all
investments for federal income tax purposes was $522,733,413. Tax cost of investments may also include timing differences that do not constitute adjustments to tax basis.
Management of the Fund has concluded that there are no
significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors including, but not limited
to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue
Service.
Note 5. Interfund lending
Pursuant to an exemptive order granted by the Securities and
Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds, borrow money
directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
As noted above, the Fund may only participate in the Interfund
Program as a lending fund. The Fund did not lend money under the Interfund Program during the year ended July 31, 2019.
Note 6. Line of credit
The Fund has access to a revolving credit facility with a
syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility, which is
a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion. Interest is charged to each
participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit
facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other
expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
Note 7. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer 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 debt instruments to indicate their credit risk. Lower rated or unrated debt instruments held by the Fund may present increased credit risk as compared to higher-rated debt instruments.
22
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Government money market fund risk
Although government money market funds (such as the Fund) may
seek to preserve the value of shareholders’ investment at $1.00 per share, the net asset values of such money market fund shares can fall, and in infrequent cases in the past have fallen, below $1.00 per share, potentially causing shareholders
who redeem their shares at such net asset values to lose money from their original investment.
At times of (i) significant redemption activity by
shareholders, including, for example, when a single investor or a few large investors make a significant redemption of Fund shares, (ii) insufficient levels of cash in the Fund’s portfolio to satisfy redemption activity, and (iii) disruption
in the normal operation of the markets in which the Fund buys and sells portfolio securities, the Fund could be forced to sell portfolio securities at unfavorable prices in order to generate sufficient cash to pay redeeming shareholders. Sales of
portfolio securities at such times could result in losses to the Fund and cause the net asset value of Fund shares to fall below $1.00 per share. Additionally, in some cases, the default of a single portfolio security could cause the net asset value
of Fund shares to fall below $1.00 per share. In addition, neither the Investment Manager nor any of its affiliates has a legal obligation to provide financial support to the Fund, and you should not expect that they or any person will provide
financial support to the Fund at any time. The Fund may suspend redemptions or the payment of redemption proceeds when permitted by applicable regulations.
It is possible that, during periods of low prevailing interest
rates or otherwise, the income from portfolio securities may be less than the amount needed to pay ongoing Fund operating expenses and may prevent payment of any dividends or distributions to Fund shareholders or cause the net asset value of Fund
shares to fall below $1.00 per share. In such cases, the Fund may reduce or eliminate the payment of such dividends or distributions or seek to reduce certain of its operating expenses. There is no guarantee that such actions would enable the Fund
to maintain a constant net asset value of $1.00 per share.
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 interest rates may also affect the liquidity of
the Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, 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. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the longer the maturity or duration of a
debt security, the greater its sensitivity to changes in interest rates.
Shareholder concentration risk
At July 31, 2019, affiliated shareholders of record owned
61.8% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced
to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased
operating expenses for non-redeeming Fund shareholders.
Note 8. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 9. Information regarding pending and settled
legal proceedings
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
Columbia
Government Money Market Fund | Annual Report 2019
|
23
|
Notes to Financial Statements (continued)
July 31, 2019
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary, 8-K filings with the Securities and Exchange Commission (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 Fund. Further, although we believe proceedings are not 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, 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.
24
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Government Money Market Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Government Money Market Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of
operations for the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
Columbia
Government Money Market Fund | Annual Report 2019
|
25
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
26
|
Columbia Government Money
Market Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
Columbia
Government Money Market Fund | Annual Report 2019
|
27
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
28
|
Columbia Government Money
Market Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
Columbia
Government Money Market Fund | Annual Report 2019
|
29
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
30
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Government Money Market Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management Investment
Distributors, Inc. (collectively, the Funds).
On an
annual basis, the Fund’s Board of Trustees (the Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its
Contracts Committee in November 2018 and January, March, April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive
response to items of information requested by independent legal counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented
at these meetings were first supplied in draft form to designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who
is an Independent Trustee), and the final materials were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets
with portfolio management teams and senior management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the
work, deliberations and conclusions of the various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
Columbia
Government Money Market Fund | Annual Report 2019
|
31
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the percentage ranking of the Fund among its comparison group, and the net assets of the Fund. The Board observed that the
Fund’s investment performance met expectations.
Comparative fees, costs of services provided and the profits
realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability.
The Board considered the reports of its independent fee
consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to industry competitors,
the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of the level of fees is to
achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the "pricing philosophy"
currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s total expense ratio
(after considering proposed expense caps/waivers) was below the peer universe’s median expense ratio shown in the reports. Based on its review, the Board concluded that the Fund’s management fee was fair and reasonable in light of the
extent and quality of services that the Fund receives.
The Board also considered the profitability of Columbia
Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the Profitability Report, discussing the
profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was reasonable and that the 2019 information shows
that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle profitability relative to industry competitors was
reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced ability to offer various other financial products to
Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Fund should permit the Investment Manager to offer competitive compensation to its personnel, make necessary
investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
32
|
Columbia Government Money
Market Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
Columbia
Government Money Market Fund | Annual Report 2019
|
33
|
The
Fund mails one shareholder report to each shareholder address. If you would like more than one report, please call shareholder services at 800.345.6611 and additional reports will be sent to you.
Proxy voting policies and procedures
The policy of the Board of Trustees is to vote the proxies
of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611; contacting your financial
intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC
by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at sec.gov.
Monthly portfolio holdings
The Fund filed a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-Q for periods ended prior to April 30, 2019. The Fund’s Form N-Q is available on the SEC’s website at sec.gov. The Fund’s complete schedule of portfolio
holdings, as filed on Form N-Q, can also be obtained without charge, upon request, by calling 800.345.6611.
The Fund’s portfolio holdings are filed with the SEC
monthly on Form N-MFP. The Fund’s Form N-MFP is available on the SEC’s website at sec.gov and can be obtained without a charge, upon request by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
34
|
Columbia Government Money
Market Fund | Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Government Money Market Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Annual
Report
July 31, 2019
Columbia Strategic Municipal Income Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
5
|
|
8
|
|
9
|
|
32
|
|
33
|
|
34
|
|
36
|
|
40
|
|
51
|
|
52
|
|
53
|
|
58
|
|
61
|
Columbia Strategic Municipal Income Fund | Annual Report
2019
Investment objective
Columbia Strategic Municipal Income
Fund (the Fund) seeks total return, with a focus on income exempt from federal income tax and capital appreciation.
Portfolio
management
Catherine
Stienstra
Lead Portfolio
Manager
Managed Fund
since 2007
Douglas White,
CFA
Portfolio
Manager
Managed Fund
since 2018
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
Excluding
sales charges
|
11/24/76
|
7.05
|
4.57
|
5.49
|
|
Including
sales charges
|
|
3.93
|
3.95
|
5.18
|
Advisor
Class*
|
03/19/13
|
7.06
|
4.83
|
5.66
|
Class
C
|
Excluding
sales charges
|
06/26/00
|
5.98
|
3.79
|
4.71
|
|
Including
sales charges
|
|
4.98
|
3.79
|
4.71
|
Institutional
Class*
|
09/27/10
|
7.06
|
4.83
|
5.70
|
Institutional
2 Class*
|
12/11/13
|
7.06
|
4.83
|
5.64
|
Institutional
3 Class*
|
03/01/17
|
7.38
|
4.72
|
5.57
|
Bloomberg
Barclays Municipal Bond Index
|
|
7.31
|
3.77
|
4.63
|
Bloomberg
Barclays High Yield Municipal Bond Index
|
|
8.08
|
6.35
|
8.13
|
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related
operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
The Bloomberg Barclays Municipal Bond Index is an unmanaged
index considered representative of the broad market for investment-grade, tax-exempt bonds with a maturity of at least one year.
The Bloomberg Barclays High Yield Municipal Bond Index measures
the non-investment-grade and non-rated US dollar-denominated, fixed-rate, tax-exempt bond market within the 50 United States and four other qualifying regions (Washington DC, Puerto Rico, Guam and the Virgin Islands).
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a
hypothetical $10,000 investment (July 31, 2009 — July 31, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Strategic Municipal Income Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the
redemption of Fund shares.
Quality
breakdown (%) (at July 31, 2019)
|
AAA
rating
|
9.8
|
AA
rating
|
23.4
|
A
rating
|
32.5
|
BBB
rating
|
22.7
|
BB
rating
|
1.7
|
B
rating
|
1.7
|
Not
rated
|
8.2
|
Total
|
100.0
|
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the highest and
lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is
designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the
considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage
(repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any
collateral.
Top
Ten States/Territories (%)
(at July 31, 2019)
|
Illinois
|
11.9
|
Texas
|
10.5
|
New
York
|
9.0
|
Pennsylvania
|
6.7
|
California
|
6.6
|
New
Jersey
|
5.1
|
Colorado
|
3.8
|
Michigan
|
3.7
|
District
of Columbia
|
3.4
|
Florida
|
3.2
|
Unknown
State
|
0.8
|
Percentages indicated are based
upon total investments excluding Money Market Funds and investments in derivatives, if any.
For further detail about these holdings, please refer to the
section entitled “Portfolio of Investments.”
Fund holdings are as of the date given, are subject to change
at any time, and are not recommendations to buy or sell any security.
4
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Manager Discussion of Fund Performance
For
the 12-month period that ended July 31, 2019, the Fund’s Class A shares returned 7.05% excluding sales charges. Institutional Class shares of the Fund returned 7.06%. While posting solid absolute gains, the Fund shares modestly underperformed
its benchmark, the Bloomberg Barclays Municipal Bond Index, which returned 7.31% during the same time period. The Fund also underperformed the broader Bloomberg Barclays High Yield Municipal Bond Index, which returned 8.08%. Credit quality
positioning, sector allocation, security selection, and yield curve and duration positioning overall generated mixed results relative to the benchmark during the period.
Tax-exempt bond market gained amid slowing economies and
shifting monetary policies
Municipal bonds generated
healthy gains during the period, with the bulk of the rally occurring from November 2018 onward. Municipal bonds had performed reasonably well from May 2018 through August 2018 on the strength of falling U.S. Treasury yields and the combination of
strong investor demand and reduced new issue supply in the tax-exempt bond market. Conditions became less favorable in September 2018, when U.S. Treasury yields climbed on indications of ongoing strength in the U.S. economy and fears about inflation
pressures that could result from a trade war with China. The negative trend persisted in October, as U.S. Treasury yields continued to rise on concerns the U.S. Federal Reserve (the Fed) would take a more aggressive approach to increasing interest
rates in 2019 than investors had been expecting.
Sentiment again shifted abruptly in early November 2018,
causing U.S. Treasury yields to fall sharply through the end of calendar year 2018. The broad fixed-income markets rallied significantly due to signs of slowing global economic growth, volatility in traditionally higher risk assets, and expectations
the Fed would shift its policy and adopt a more accommodative stance. In addition, various geopolitical factors, including uncertainty surrounding U.S.-China trade disputes, negotiations surrounding Brexit (the U.K.’s exit from the European
Union) and the U.S. federal government shutdown, fueled a “flight to quality” into bonds. Municipal bonds rallied as a result, pushing the major national municipal bond indices into positive territory for calendar year 2018.
The rally continued into early 2019, leading to the largest
first quarter gain for the tax-exempt bond market since 2014. The first calendar quarter was also the sixth best quarter for municipal bonds in the past 30 years. During these months, municipal bonds were well supported by a backdrop of slower
global economic growth and increasingly accommodative monetary policies from the world’s major central banks. Technicals, or supply/demand factors, also remained highly favorable. Record municipal bond mutual fund inflows, fueled by strong
demand as a result of state and local tax deductions capped by the Tax Cuts and Jobs Act of 2017, combined with meager new issue supply to propel municipal bonds to post solid gains through the spring and mid-summer months of 2019.
For the 12-month period overall, longer term AAA-rated
municipal bonds outpaced shorter term AAA-rated municipal issues, mirroring trends in the U.S. Treasury market, and lower quality municipal bonds outperformed their higher rated counterparts. The “risk on” environment of January 2019 to
May 2019 led to robust investor demand for higher risk issues, lifting the returns of higher yielding municipal bonds until June and July 2019, when higher quality issues outperformed.
Positioning in pre-refunded, local general obligation and
special tax sectors detracted
Having an overweighted
allocation to pre-refunded bonds detracted, as pre-refunded bonds tend to be of shorter maturity and higher quality, market segments that underperformed lower quality and longer maturity bonds during the period. Having underweighted allocations to
the stronger performing local general obligation and special tax sectors further detracted from the Fund’s relative performance. Issue selection among resource recovery bonds also dampened the Fund’s results, as we primarily emphasized
shorter maturity bonds within the sector, which, as mentioned, underperformed longer maturity bonds during the period.
Issue selection among bonds rated BBB detracted from the
Fund’s relative results during the period as did selection among below-investment-grade and non-rated issues.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance (continued)
Hospital and housing sector positioning overall boosted
results
During the period, the Fund’s
overweighted allocations to the hospital, housing and transportation sectors, which each significantly outperformed the benchmark during the period, and having an underweighted allocation to the state general obligation sector, which was one of the
weakest performing sectors in the benchmark during the period, contributed positively to the Fund’s results. Issue selection with the transportation, education and hospital sectors proved effective as well.
Alternative minimum tax (AMT) bonds, which we had increased
exposure to during the prior reporting period, outperformed the benchmark during this reporting period, as spreads, or yield differentials, tightened due to the Tax Cut and Jobs Act reducing the amount of filers subject to the AMT tax, thereby
increasing the appeal and demand for the additional yield offered by AMT bonds. Further buoying the Fund’s performance during the period were New Jersey appropriation bonds, as improving economic conditions in the state narrowed spreads of
many in-state credits.
From a credit quality
perspective, having underweighted allocations to bonds rated AAA and AA and overweighted allocations to bonds rated A and BBB contributed positively to the Fund’s relative results, as BBB was the best performing investment-grade ratings
category of the benchmark during the period, followed by A. Issue selection amongst bonds rated AAA, AA and A further boosted relative results.
The Fund’s longer duration than that of the benchmark
and its overweight to bonds with maturities of 15 years and longer detracted from its relative performance through the first three months of the period, as the long-term end of the municipal bond yield curve steepened, meaning yields on longer term
maturities rose more than on those of shorter term maturities. However, once the U.S. Treasury rally ensued in November 2018, municipal bonds followed the trend, and the Fund’s longer duration and yield curve positioning contributed
positively, as rates declined dramatically through July 2019. (Remember, there is usually an inverse relationship between bond prices and yield movements, so that bond prices rise when yields decrease and vice versa.) Additionally, the Fund’s
underweight to bonds with maturities of one to five years helped, though an underweight to bonds with maturities from seven to 15 years detracted. For the period overall, the Fund’s duration and yield curve positioning added value.
Fundamental analysis drove portfolio changes
Equity market volatility and signs of a potential economic
slowdown near the end of 2018 led us to prefer bonds with longer maturities and relatively higher quality issues. Typically, interest rates fall and credit spreads widen during an economic slowdown, and portfolios with greater interest rate
sensitivity and higher quality tend to outperform in that environment. As such, we maintained the effective duration of the Fund longer than that of the benchmark and maintained an overweight to bonds with maturities of 15 years and longer
throughout the period.
From a sector perspective, we
increased the Fund’s exposure to the airport, continuing care retirement communities (CCRC) and state general obligation sectors. That said, we exited individual positions where we saw negative trends or where financial strength did not appear
able to withstand an economic downturn. For instance, we sold individual issues with declining financial metrics in the charter schools, CCRC and student housing sectors. We also reduced the Fund’s exposure to pre-refunded bonds and reinvested
those proceeds in securities we believed offered better total return opportunities, including those with 10- to 20-year maturities.
We tended to focus on what we believed to be higher quality
issues within ratings categories and credit sectors. For example, we added to the Fund’s AAA- and AA-rated holdings in the education, airport and state and local general obligation sectors. As state and local budgets improved, we became more
comfortable increasing exposure to their general obligations. In the last several months of the period, given an uptick in supply, we also increased exposure to housing bonds, which in general are rated AAA or AA and offer attractive income.
Fixed-income securities present
issuer default risk. The Fund invests substantially in municipal securities and will be affected by tax, legislative, regulatory, demographic or political changes, as well
as changes impacting a state’s financial, economic or other conditions. A relatively small number of tax-exempt issuers may necessitate the Fund investing more heavily in a single issuer and, therefore, be more exposed to the risk of loss than
a fund that invests more broadly. Prepayment and extension risk exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest
rates rise which may reduce investment opportunities and potential returns. A rise in interest rates may result in a price decline of
6
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Manager Discussion of Fund Performance (continued)
fixed-income instruments held by the Fund, negatively impacting its
performance and NAV. Falling rates may result in the Fund investing in lower yielding debt instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities. Non-investment-grade (high-yield or junk) securities present greater price volatility and more risk to principal and income than higher rated securities. Market risk may affect
a single issuer, sector of the economy, industry or the market as a whole. Federal and state tax rules apply to capital gain distributions and any gains or losses on sales. Income may be subject to state, local
or alternative minimum taxes. Liquidity risk is associated with the difficulty of selling underlying investments at a desirable time or price. See the Fund’s prospectus for more information on these and
other risks.
The views expressed in this report reflect
the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from
the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice
and, because investment decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a
recommendation or investment advice.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
7
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,064.40
|
1,020.83
|
4.09
|
4.01
|
0.80
|
Advisor
Class
|
1,000.00
|
1,000.00
|
1,063.20
|
1,022.02
|
2.86
|
2.81
|
0.56
|
Class
C
|
1,000.00
|
1,000.00
|
1,057.80
|
1,017.11
|
7.91
|
7.75
|
1.55
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,063.20
|
1,022.02
|
2.86
|
2.81
|
0.56
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,065.90
|
1,022.07
|
2.82
|
2.76
|
0.55
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,066.00
|
1,022.32
|
2.56
|
2.51
|
0.50
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
8
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Exchange-Traded
Funds 0.8%
|
|
Shares
|
Value
($)
|
United
States 0.8%
|
Columbia
Multi-Sector Municipal Income ETF(a)
|
717,818
|
15,504,869
|
Total
Exchange-Traded Funds
(Cost $14,938,779)
|
15,504,869
|
Floating
Rate Notes 3.7%
|
Issue
Description
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
Indiana
0.2%
|
Indiana
Finance Authority(b),(c)
|
Revenue
Bonds
|
Parkview
Health System
|
Series
2018D (Wells Fargo Bank)
|
11/01/2039
|
1.470%
|
|
3,790,000
|
3,790,000
|
Minnesota
0.3%
|
City
of Minneapolis/St. Paul Housing & Redevelopment Authority(b),(c)
|
Revenue
Bonds
|
Allina
Health Systems
|
Series
2009B-2 (JPMorgan Chase Bank)
|
11/15/2035
|
1.480%
|
|
4,775,000
|
4,775,000
|
New
York 2.8%
|
City
of New York(b),(c)
|
Unlimited
General Obligation Bonds
|
Fiscal
2015
|
Subordinated
Series 2015 (JPMorgan Chase Bank)
|
06/01/2044
|
1.480%
|
|
4,000,000
|
4,000,000
|
New
York City Transitional Finance Authority(b),(c)
|
Revenue
Bonds
|
Future
Tax Secured
|
Subordinated
Series 2015 (JPMorgan Chase Bank)
|
02/01/2045
|
1.480%
|
|
6,550,000
|
6,550,000
|
New
York City Water & Sewer System(b),(c)
|
Revenue
Bonds
|
2nd
General Resolution
|
Series
2013 (JPMorgan Chase Bank)
|
06/15/2050
|
1.480%
|
|
10,000,000
|
10,000,000
|
Series
2016BB (State Street Bank and Trust Co.)
|
06/15/2049
|
1.490%
|
|
10,000,000
|
10,000,000
|
06/15/2049
|
1.490%
|
|
1,640,000
|
1,640,000
|
Triborough
Bridge & Tunnel Authority(b),(c)
|
Refunding
Revenue Bonds
|
General
|
Subordinated
Series 2018-B-3 (State Street Bank and Trust Co.)
|
01/01/2032
|
1.450%
|
|
5,980,000
|
5,980,000
|
Series
2018C (State Street Bank and Trust Co.)
|
01/01/2032
|
1.450%
|
|
16,705,000
|
16,705,000
|
Total
|
54,875,000
|
Floating
Rate Notes (continued)
|
Issue
Description
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
Utah
0.4%
|
City
of Murray(b),(c)
|
Revenue
Bonds
|
IHC
Health Services, Inc.
|
Series
2005A (JPMorgan Chase Bank)
|
05/15/2037
|
1.480%
|
|
7,800,000
|
7,800,000
|
Total
Floating Rate Notes
(Cost $71,240,000)
|
71,240,000
|
|
Municipal
Bonds 94.1%
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Alabama
1.3%
|
Alabama
Special Care Facilities Financing Authority
|
Refunding
Revenue Bonds
|
Children’s
Hospital of Alabama
|
Series
2015
|
06/01/2034
|
5.000%
|
|
4,000,000
|
4,586,200
|
Black
Belt Energy Gas District
|
Revenue
Bonds
|
Project
Number 4
|
Series
2019A-1
|
12/01/2049
|
4.000%
|
|
15,000,000
|
16,758,000
|
Lower
Alabama Gas District (The)
|
Revenue
Bonds
|
Series
2016A
|
09/01/2046
|
5.000%
|
|
2,420,000
|
3,290,280
|
Total
|
24,634,480
|
Alaska
0.4%
|
Alaska
Industrial Development & Export Authority
|
Revenue
Bonds
|
Yukon-Kuskokwim
Health Corp. Project
|
Series
2017
|
12/01/2020
|
3.500%
|
|
2,700,000
|
2,713,743
|
City
of Koyukuk
|
Prerefunded
10/01/19 Revenue Bonds
|
Tanana
Chiefs Conference Health Care
|
Series
2011
|
10/01/2032
|
7.500%
|
|
3,665,000
|
3,702,640
|
10/01/2041
|
7.750%
|
|
2,000,000
|
2,021,360
|
Total
|
8,437,743
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Arizona
1.1%
|
Arizona
Industrial Development Authority
|
Revenue
Bonds
|
Great
Lakes Senior Living Community
|
Series
2019
|
01/01/2049
|
4.500%
|
|
750,000
|
795,165
|
Chandler
Industrial Development Authority(d)
|
Revenue
Bonds
|
Intel
Corp.
|
Series
2019 AMT
|
06/01/2049
|
5.000%
|
|
2,800,000
|
3,242,036
|
Industrial
Development Authority of the City of Phoenix (The)
|
Refunding
Revenue Bonds
|
Downtown
Phoenix Student Housing
|
Series
2018
|
07/01/2042
|
5.000%
|
|
1,000,000
|
1,145,300
|
La
Paz County Industrial Development Authority
|
Revenue
Bonds
|
Charter
School Solutions - Harmony Public
|
Series
2016
|
02/15/2046
|
5.000%
|
|
6,500,000
|
7,160,595
|
Charter
School Solutions - Harmony Public Schools Project
|
Series
2018
|
02/15/2048
|
5.000%
|
|
870,000
|
980,516
|
Maricopa
County Industrial Development Authority
|
Revenue
Bonds
|
Banner
Health
|
Series
2017A
|
01/01/2041
|
4.000%
|
|
4,000,000
|
4,374,840
|
Maricopa
County Industrial Development Authority(e)
|
Revenue
Bonds
|
Christian
Care Surprise, Inc.
|
Series
2016
|
01/01/2036
|
5.750%
|
|
1,600,000
|
1,682,608
|
Christian
Care Surprise, Inc. Project
|
Series
2016
|
01/01/2048
|
6.000%
|
|
1,250,000
|
1,310,025
|
Total
|
20,691,085
|
California
6.6%
|
ABAG
Finance Authority for Nonprofit Corps.
|
Refunding
Revenue Bonds
|
Episcopal
Senior Communities
|
Series
2012
|
07/01/2047
|
5.000%
|
|
4,100,000
|
4,359,653
|
California
Health Facilities Financing Authority
|
Revenue
Bonds
|
Kaiser
Permanente
|
Subordinated
Series 2017A-2
|
11/01/2044
|
4.000%
|
|
4,280,000
|
4,688,740
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
California
Municipal Finance Authority
|
Refunding
Revenue Bonds
|
Community
Medical Centers
|
Series
2017A
|
02/01/2042
|
4.000%
|
|
3,000,000
|
3,218,790
|
02/01/2042
|
5.000%
|
|
1,500,000
|
1,728,315
|
California
Municipal Finance Authority(e)
|
Revenue
Bonds
|
California
Baptist University
|
Series
2016A
|
11/01/2046
|
5.000%
|
|
1,000,000
|
1,127,270
|
California
Municipal Finance Authority(d)
|
Revenue
Bonds
|
Senior
Lien
|
Series
2018A AMT
|
12/31/2047
|
4.000%
|
|
1,000,000
|
1,065,590
|
12/31/2047
|
5.000%
|
|
4,500,000
|
5,252,760
|
California
School Finance Authority(e)
|
Revenue
Bonds
|
River
Springs Charter School Project
|
Series
2015
|
07/01/2046
|
6.375%
|
|
2,000,000
|
2,331,360
|
07/01/2046
|
6.375%
|
|
150,000
|
174,855
|
California
State Public Works Board
|
Revenue
Bonds
|
Judicial
Council Projects
|
Series
2011D
|
12/01/2031
|
5.000%
|
|
5,000,000
|
5,438,550
|
Various
Capital Projects
|
Series
2012A
|
04/01/2037
|
5.000%
|
|
650,000
|
710,463
|
California
Statewide Communities Development Authority
|
Refunding
Revenue Bonds
|
Front
Porch Communities & Services
|
Series
2017
|
04/01/2042
|
4.000%
|
|
1,905,000
|
2,029,930
|
California
Statewide Communities Development Authority(d),(e)
|
Revenue
Bonds
|
Loma
Linda University Medical Center
|
Series
2016A
|
12/01/2046
|
5.000%
|
|
500,000
|
554,970
|
City
of Los Angeles Department of Airports(d)
|
Refunding
Revenue Bonds
|
Los
Angeles International Airport
|
Subordinated
Series 2018 AMT
|
05/15/2031
|
5.000%
|
|
15,715,000
|
19,852,445
|
Revenue
Bonds
|
Los
Angeles International
|
Subordinated
Series 2018 AMT
|
05/15/2044
|
5.000%
|
|
2,000,000
|
2,384,440
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
10
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Foothill-Eastern
Transportation Corridor Agency
|
Refunding
Revenue Bonds
|
Junior
Lien
|
Series
2014C
|
01/15/2033
|
6.250%
|
|
1,155,000
|
1,358,846
|
Series
2014A
|
01/15/2046
|
5.750%
|
|
4,250,000
|
4,920,012
|
Glendale
Unified School District(f)
|
Unlimited
General Obligation Refunding Bonds
|
Series
2015B
|
09/01/2032
|
0.000%
|
|
1,000,000
|
636,580
|
09/01/2033
|
0.000%
|
|
1,100,000
|
660,561
|
Golden
State Tobacco Securitization Corp.
|
Refunding
Revenue Bonds
|
Series
2018A-2
|
06/01/2047
|
5.000%
|
|
16,000,000
|
16,159,840
|
Norman
Y. Mineta San Jose International Airport(d)
|
Refunding
Revenue Bonds
|
Series
2017A AMT
|
03/01/2041
|
5.000%
|
|
2,000,000
|
2,341,960
|
Riverside
County Transportation Commission(f)
|
Revenue
Bonds
|
Senior
Lien
|
Series
2013B
|
06/01/2029
|
0.000%
|
|
2,500,000
|
1,924,950
|
San
Francisco City & County Airport Commission - San Francisco International Airport(d)
|
Revenue
Bonds
|
Series
2019A AMT
|
05/01/2035
|
5.000%
|
|
14,310,000
|
17,629,491
|
05/01/2036
|
5.000%
|
|
5,000,000
|
6,137,200
|
Santee
CDC Successor Agency
|
Prerefunded
02/01/21 Tax Allocation Bonds
|
Santee
Community Redevelopment Project
|
Series
2011A
|
08/01/2041
|
7.000%
|
|
2,000,000
|
2,179,460
|
State
of California
|
Unlimited
General Obligation Bonds
|
Various
Purpose
|
10/01/2028
|
5.000%
|
|
5,000,000
|
6,517,100
|
Series
2010
|
03/01/2030
|
5.250%
|
|
1,000,000
|
1,024,060
|
03/01/2033
|
6.000%
|
|
5,625,000
|
5,784,356
|
Series
2012
|
04/01/2035
|
5.250%
|
|
4,500,000
|
4,987,845
|
Unrefunded
Unlimited General Obligation Bonds
|
Series
2004
|
04/01/2029
|
5.300%
|
|
2,000
|
2,007
|
Total
|
127,182,399
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Colorado
3.8%
|
Arista
Metropolitan District
|
Limited
General Obligation Refunding & Improvement Bonds
|
Special
Revenue
|
Series
2018
|
12/01/2038
|
5.000%
|
|
620,000
|
647,801
|
City
& County of Denver(f)
|
Revenue
Bonds
|
Series
2018-A-2
|
08/01/2034
|
0.000%
|
|
6,000,000
|
3,728,160
|
City
& County of Denver Airport System(d)
|
Refunding
Revenue Bonds
|
Series
2018-A AMT
|
12/01/2037
|
5.000%
|
|
5,000,000
|
6,035,350
|
Subordinated
Series 2018-A AMT
|
12/01/2048
|
4.000%
|
|
3,500,000
|
3,769,815
|
Colorado
Bridge Enterprise(d)
|
Revenue
Bonds
|
Central
70 Project
|
Series
2017 AMT
|
06/30/2051
|
4.000%
|
|
6,690,000
|
6,972,452
|
Colorado
Educational & Cultural Facilities Authority(e)
|
Improvement
Refunding Revenue Bonds
|
Skyview
Charter School
|
Series
2014
|
07/01/2044
|
5.375%
|
|
750,000
|
788,392
|
07/01/2049
|
5.500%
|
|
700,000
|
738,094
|
Colorado
Health Facilities Authority
|
Improvement
Refunding Revenue Bonds
|
Bethesda
Project
|
09/15/2053
|
5.000%
|
|
10,000,000
|
11,071,400
|
Prerefunded
06/01/27 Revenue Bonds
|
Evangelical
Lutheran Good Samaritan Society
|
Series
2017
|
06/01/2042
|
5.000%
|
|
3,150,000
|
3,914,253
|
Refunding
Revenue Bonds
|
Covenant
Retirement Communities
|
Series
2015
|
12/01/2035
|
5.000%
|
|
850,000
|
954,125
|
NCMC,
Inc. Project
|
Series
2016
|
05/15/2031
|
4.000%
|
|
5,000,000
|
5,560,700
|
Revenue
Bonds
|
Senior
Living - Ralston Creek at Arvada
|
Series
2017
|
11/01/2047
|
5.750%
|
|
6,000,000
|
6,181,980
|
11/01/2052
|
6.000%
|
|
890,000
|
925,680
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
11
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Colorado
Health Facilities Authority(g)
|
Refunding
Revenue Bonds
|
AdventHealth
Obligated
|
Series
2019
|
11/15/2043
|
4.000%
|
|
2,000,000
|
2,208,860
|
Colorado
High Performance Transportation Enterprise
|
Revenue
Bonds
|
C-470
Express Lanes
|
Series
2017
|
12/31/2056
|
5.000%
|
|
1,700,000
|
1,852,728
|
Colorado
Housing & Finance Authority(g)
|
Revenue
Bonds
|
Multi-Family
Project
|
Series
2019B1
|
10/01/2039
|
3.000%
|
|
470,000
|
470,136
|
10/01/2049
|
3.250%
|
|
1,000,000
|
999,870
|
10/01/2054
|
3.400%
|
|
1,000,000
|
999,860
|
Colorado
Housing & Finance Authority
|
Revenue
Bonds
|
Series
2018 (GNMA)
|
11/01/2042
|
3.700%
|
|
5,000,000
|
5,258,550
|
E-470
Public Highway Authority
|
Revenue
Bonds
|
Series
2010C
|
09/01/2026
|
5.375%
|
|
10,325,000
|
10,759,063
|
Total
|
73,837,269
|
Connecticut
1.3%
|
Connecticut
Housing Finance Authority
|
Refunding
Revenue Bonds
|
Subordinated
Series 2018B-1
|
05/15/2045
|
4.000%
|
|
2,275,000
|
2,419,326
|
Connecticut
State Health & Educational Facilities Authority
|
Revenue
Bonds
|
Yale
University
|
07/01/2027
|
5.000%
|
|
2,650,000
|
3,376,073
|
State
of Connecticut
|
Unlimited
General Obligation Bonds
|
Series
2018C
|
06/15/2035
|
5.000%
|
|
1,000,000
|
1,209,040
|
Series
2018-E
|
09/15/2035
|
5.000%
|
|
2,000,000
|
2,426,480
|
Series
2019A
|
04/15/2035
|
5.000%
|
|
3,200,000
|
3,911,936
|
04/15/2037
|
4.000%
|
|
10,000,000
|
11,175,300
|
Total
|
24,518,155
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
District
of Columbia 3.4%
|
District
of Columbia
|
Prerefunded
07/01/23 Revenue Bonds
|
KIPP
Charter School
|
Series
2013
|
07/01/2048
|
6.000%
|
|
300,000
|
355,653
|
Refunding
Revenue Bonds
|
Children’s
Hospital
|
Series
2015
|
07/15/2044
|
5.000%
|
|
2,910,000
|
3,302,705
|
Unlimited
General Obligation Bonds
|
Series
2019-A
|
10/15/2032
|
5.000%
|
|
9,090,000
|
11,577,297
|
10/15/2033
|
5.000%
|
|
15,000,000
|
19,019,550
|
Metropolitan
Washington Airports Authority(d)
|
Refunding
Revenue Bonds
|
Airport
System
|
Series
2019A AMT
|
10/01/2032
|
5.000%
|
|
5,000,000
|
6,280,750
|
Metropolitan
Washington Airports Authority
|
Refunding
Revenue Bonds
|
Airport
System
|
Series
2019A AMT
|
10/01/2033
|
5.000%
|
|
1,755,000
|
2,196,312
|
10/01/2034
|
5.000%
|
|
5,000,000
|
6,223,900
|
10/01/2035
|
5.000%
|
|
4,745,000
|
5,882,614
|
Series
2015B AMT
|
10/01/2032
|
5.000%
|
|
9,575,000
|
11,198,345
|
Total
|
66,037,126
|
Florida
3.3%
|
Capital
Trust Agency, Inc.(e)
|
Revenue
Bonds
|
1st
Mortgage Tallahassee Tapestry Senior Housing Project
|
Series
2015
|
12/01/2045
|
7.000%
|
|
2,835,000
|
2,935,472
|
12/01/2050
|
7.125%
|
|
1,000,000
|
1,035,560
|
Central
Florida Expressway Authority
|
Refunding
Revenue Bonds
|
Senior
Lien
|
Series
2017 (BAM)
|
07/01/2041
|
4.000%
|
|
5,000,000
|
5,461,500
|
City
of Atlantic Beach
|
Revenue
Bonds
|
Fleet
Landing Project
|
Series
2018A
|
11/15/2053
|
5.000%
|
|
3,000,000
|
3,365,670
|
County
of Miami-Dade Aviation(d)
|
Refunding
Revenue Bonds
|
Series
2017B AMT
|
10/01/2040
|
5.000%
|
|
6,250,000
|
7,352,312
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
12
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Florida
Development Finance Corp.(d),(e)
|
Refunding
Revenue Bonds
|
Virgin
Trains USA Pass
|
Series
2019 AMT
|
01/01/2049
|
6.375%
|
|
1,000,000
|
955,520
|
01/01/2049
|
6.500%
|
|
2,000,000
|
1,906,400
|
Florida
Development Finance Corp.(e)
|
Revenue
Bonds
|
Miami
Arts Charter School Project
|
Series
2014A
|
06/15/2034
|
5.875%
|
|
415,000
|
417,494
|
Renaissance
Charter School
|
Series
2015
|
06/15/2046
|
6.125%
|
|
980,000
|
1,067,759
|
Florida
Municipal Loan Council(f)
|
Revenue
Bonds
|
Capital
Appreciation
|
Series
2000A (NPFGC)
|
04/01/2020
|
0.000%
|
|
790,000
|
780,244
|
Greater
Orlando Aviation Authority(d)
|
Revenue
Bonds
|
Series
2016A AMT
|
10/01/2046
|
5.000%
|
|
5,000,000
|
5,789,300
|
Hillsborough
County Aviation Authority(d)
|
Revenue
Bonds
|
Tampa
International
|
Subordinated
Series 2018 AMT
|
10/01/2048
|
5.000%
|
|
4,700,000
|
5,542,663
|
Hillsborough
County Aviation Authority
|
Revenue
Bonds
|
Tampa
International Airport
|
Series
2015A
|
10/01/2044
|
5.000%
|
|
2,220,000
|
2,520,455
|
Miami-Dade
County Educational Facilities Authority
|
Revenue
Bonds
|
Series
2018A
|
04/01/2053
|
5.000%
|
|
8,000,000
|
9,348,400
|
Miami-Dade
County Health Facilities Authority
|
Refunding
Revenue Bonds
|
Nicklaus
Childrens Hospital
|
Series
2017
|
08/01/2047
|
4.000%
|
|
2,250,000
|
2,406,488
|
Mid-Bay
Bridge Authority
|
Refunding
Revenue Bonds
|
Series
2015C
|
10/01/2040
|
5.000%
|
|
1,000,000
|
1,114,200
|
Orange
County Health Facilities Authority
|
Refunding
Revenue Bonds
|
Mayflower
Retirement Center
|
Series
2012
|
06/01/2036
|
5.000%
|
|
250,000
|
259,710
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Revenue
Bonds
|
Presbyterian
Retirement Communities
|
Series
2016
|
08/01/2036
|
5.000%
|
|
2,000,000
|
2,221,120
|
08/01/2041
|
5.000%
|
|
2,000,000
|
2,203,800
|
Polk
County Industrial Development Authority
|
Refunding
Revenue Bonds
|
Carpenter’s
Home Estates
|
Series
2019
|
01/01/2049
|
5.000%
|
|
2,350,000
|
2,606,808
|
Putnam
County Development Authority
|
Refunding
Revenue Bonds
|
Seminole
Project
|
Series
2018A
|
03/15/2042
|
5.000%
|
|
3,335,000
|
3,928,030
|
Total
|
63,218,905
|
Georgia
2.8%
|
Brookhaven
Development Authority(g)
|
Revenue
Bonds
|
Children’s
Healthcare of Atlanta
|
Series
2019
|
07/01/2044
|
4.000%
|
|
7,000,000
|
7,709,380
|
Burke
County Development Authority
|
Revenue
Bonds
|
Georgia
Power Co. Plant Vogtle Project
|
Series
2019
|
10/01/2032
|
2.250%
|
|
1,800,000
|
1,832,580
|
Cherokee
County Water & Sewer Authority
|
Unrefunded
Revenue Bonds
|
Series
1995 (NPFGC)
|
08/01/2025
|
5.200%
|
|
2,665,000
|
3,108,456
|
Dalton
Whitfield County Joint Development Authority
|
Revenue
Bonds
|
Hamilton
Health Care System Obligation
|
Series
2017
|
08/15/2041
|
4.000%
|
|
1,000,000
|
1,089,780
|
DeKalb
County Hospital Authority
|
Prerefunded
09/01/20 Revenue Bonds
|
DeKalb
Medical Center, Inc. Project
|
Series
2010
|
09/01/2040
|
6.125%
|
|
6,250,000
|
6,569,000
|
Floyd
County Development Authority
|
Revenue
Bonds
|
Spires
Berry College Project
|
12/01/2048
|
6.250%
|
|
4,000,000
|
4,144,040
|
12/01/2053
|
6.500%
|
|
1,900,000
|
1,985,690
|
Fulton
County Development Authority
|
Revenue
Bonds
|
RAC
Series 2017
|
04/01/2042
|
5.000%
|
|
1,000,000
|
1,161,680
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
13
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Gainesville
& Hall County Hospital Authority
|
Refunding
Revenue Bonds
|
Northeast
Georgia Health System, Inc. Project
|
Series
2017
|
02/15/2037
|
5.000%
|
|
4,280,000
|
4,978,325
|
Unrefunded
Revenue Bonds
|
Northeast
Georgia Health System, Inc. Project
|
Series
2010A
|
02/15/2045
|
5.500%
|
|
1,330,000
|
1,357,930
|
Georgia
Housing & Finance Authority
|
Revenue
Bonds
|
Single
Family Mortgage Bonds
|
Series
2017C
|
06/01/2048
|
3.750%
|
|
5,960,000
|
6,210,141
|
Main
Street Natural Gas, Inc.
|
Revenue
Bonds
|
Series
2019B
|
08/01/2049
|
4.000%
|
|
7,400,000
|
8,269,870
|
Oconee
County Industrial Development Authority
|
Revenue
Bonds
|
Presbyterian
Village Athens Project
|
12/01/2038
|
6.125%
|
|
3,515,000
|
3,699,537
|
12/01/2048
|
6.250%
|
|
1,960,000
|
2,060,156
|
Total
|
54,176,565
|
Hawaii
0.5%
|
City
& County of Honolulu
|
Unlimited
General Obligation Bonds
|
Honolulu
Rail Transit Project
|
09/01/2030
|
5.000%
|
|
6,000,000
|
7,647,660
|
Hawaii
Pacific Health
|
Prerefunded
07/01/20 Revenue Bonds
|
Series
2010B
|
07/01/2030
|
5.625%
|
|
280,000
|
291,275
|
07/01/2040
|
5.750%
|
|
370,000
|
385,322
|
State
of Hawaii Department of Budget & Finance
|
Refunding
Revenue Bonds
|
Special
Purpose - Kahala Nui
|
Series
2012
|
11/15/2037
|
5.250%
|
|
705,000
|
778,299
|
Total
|
9,102,556
|
Idaho
0.4%
|
Idaho
Health Facilities Authority
|
Revenue
Bonds
|
Terraces
of Boise Project
|
Series
2014A
|
10/01/2044
|
8.000%
|
|
4,365,000
|
4,928,653
|
10/01/2049
|
8.125%
|
|
1,635,000
|
1,851,343
|
Total
|
6,779,996
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Illinois
12.0%
|
Chicago
Board of Education
|
Special
Tax Bonds
|
Series
2017
|
04/01/2042
|
5.000%
|
|
1,600,000
|
1,761,168
|
Unlimited
General Obligation Bonds
|
Dedicated
|
Series
2017H
|
12/01/2046
|
5.000%
|
|
3,000,000
|
3,261,000
|
Project
|
Series
2015C
|
12/01/2039
|
5.250%
|
|
2,000,000
|
2,149,620
|
Series
2018
|
12/01/2046
|
5.000%
|
|
2,500,000
|
2,739,350
|
Unlimited
General Obligation Refunding Bonds
|
Series
2018A (AGM)
|
12/01/2034
|
5.000%
|
|
500,000
|
590,870
|
Chicago
Board of Education(e)
|
Unlimited
General Obligation Bonds
|
Dedicated
|
Series
2017A
|
12/01/2046
|
7.000%
|
|
3,615,000
|
4,508,990
|
Chicago
Midway International Airport
|
Refunding
Revenue Bonds
|
2nd
Lien
|
Series
2013B
|
01/01/2035
|
5.250%
|
|
3,000,000
|
3,343,260
|
Series
2014B
|
01/01/2035
|
5.000%
|
|
5,000,000
|
5,650,400
|
Chicago
O’Hare International Airport(d)
|
Refunding
Revenue Bonds
|
Senior
Lien
|
01/01/2037
|
5.000%
|
|
2,000,000
|
2,397,560
|
Revenue
Bonds
|
General
Senior Lien
|
Series
2017D AMT
|
01/01/2042
|
5.000%
|
|
8,895,000
|
10,242,770
|
01/01/2052
|
5.000%
|
|
8,030,000
|
9,157,251
|
Senior
Lien
|
Series
2017G AMT
|
01/01/2042
|
5.000%
|
|
2,650,000
|
3,051,528
|
01/01/2047
|
5.000%
|
|
1,000,000
|
1,145,180
|
Series
2017J AMT
|
01/01/2037
|
5.000%
|
|
2,000,000
|
2,328,320
|
TriPs
Obligated Group
|
Series
2018 AMT
|
07/01/2038
|
5.000%
|
|
1,000,000
|
1,165,570
|
07/01/2048
|
5.000%
|
|
800,000
|
922,552
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
14
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Chicago
O’Hare International Airport
|
Revenue
Bonds
|
Customer
Facility Charge Senior Lien
|
Series
2013
|
01/01/2043
|
5.750%
|
|
2,285,000
|
2,589,796
|
Series
2015D
|
01/01/2046
|
5.000%
|
|
4,390,000
|
4,938,135
|
Unrefunded
Revenue Bonds
|
General
Third Lien
|
Series
2011
|
01/01/2039
|
5.750%
|
|
295,000
|
312,927
|
Chicago
Park District
|
Limited
General Obligation Bonds
|
Series
2016A
|
01/01/2040
|
5.000%
|
|
1,650,000
|
1,841,681
|
City
of Chicago
|
Unlimited
General Obligation Bonds
|
Project
|
Series
2011A
|
01/01/2035
|
5.250%
|
|
4,500,000
|
4,632,615
|
Series
2012A
|
01/01/2033
|
5.000%
|
|
5,000,000
|
5,213,450
|
Series
2015A
|
01/01/2033
|
5.500%
|
|
1,350,000
|
1,506,857
|
Series
2017A
|
01/01/2038
|
6.000%
|
|
4,185,000
|
4,899,170
|
Unlimited
General Obligation Refunding Bonds
|
Project
|
Series
2014A
|
01/01/2035
|
5.000%
|
|
1,000,000
|
1,069,560
|
01/01/2036
|
5.000%
|
|
11,745,000
|
12,538,610
|
City
of Chicago Wastewater Transmission
|
Refunding
Revenue Bonds
|
2nd
Lien
|
Series
2015C
|
01/01/2039
|
5.000%
|
|
530,000
|
585,973
|
Revenue
Bonds
|
2nd
Lien
|
Series
2012
|
01/01/2025
|
5.000%
|
|
5,000,000
|
5,383,700
|
01/01/2042
|
5.000%
|
|
5,000,000
|
5,263,500
|
Series
2014
|
01/01/2034
|
5.000%
|
|
1,000,000
|
1,096,560
|
01/01/2039
|
5.000%
|
|
2,000,000
|
2,166,000
|
City
of Chicago Waterworks
|
Revenue
Bonds
|
2nd
Lien
|
Series
2012
|
11/01/2031
|
5.000%
|
|
2,000,000
|
2,170,480
|
Series
2014
|
11/01/2044
|
5.000%
|
|
650,000
|
716,300
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Series
2016
|
11/01/2030
|
5.000%
|
|
10,775,000
|
12,624,313
|
City
of Springfield Electric
|
Refunding
Revenue Bonds
|
Senior
Lien
|
Series
2015 (AGM)
|
03/01/2040
|
4.000%
|
|
5,000,000
|
5,278,650
|
County
of Cook
|
Unlimited
General Obligation Refunding Bonds
|
Series
2018
|
11/15/2035
|
5.000%
|
|
900,000
|
1,036,521
|
Illinois
Development Finance Authority(f)
|
Subordinated
Revenue Bonds
|
Regency
|
Series
1990-RMK Escrowed to Maturity
|
04/15/2020
|
0.000%
|
|
13,745,000
|
13,619,508
|
Illinois
Finance Authority
|
Prerefunded
02/15/20 Revenue Bonds
|
Swedish
Covenant
|
Series
2010A
|
08/15/2038
|
6.000%
|
|
2,475,000
|
2,539,103
|
Prerefunded
08/15/19 Revenue Bonds
|
Silver
Cross & Medical Centers
|
Series
2009
|
08/15/2038
|
6.875%
|
|
8,200,000
|
8,216,810
|
Refunding
Revenue Bonds
|
Rush
University Medical Center
|
Series
2015B
|
11/15/2039
|
5.000%
|
|
1,810,000
|
2,030,494
|
Silver
Cross Hospital & Medical Centers
|
Series
2015C
|
08/15/2035
|
5.000%
|
|
1,500,000
|
1,696,290
|
Unrefunded
Revenue Bonds
|
Riverside
Health System
|
Series
2009
|
11/15/2035
|
6.250%
|
|
395,000
|
400,277
|
Metropolitan
Pier & Exposition Authority
|
Refunding
Revenue Bonds
|
McCormick
Place Project
|
Series
2010B-2
|
06/15/2050
|
5.000%
|
|
5,000,000
|
5,073,350
|
Revenue
Bonds
|
McCormick
Place Expansion Project
|
Series
2017
|
06/15/2057
|
5.000%
|
|
3,025,000
|
3,335,456
|
Metropolitan
Pier & Exposition Authority(f)
|
Revenue
Bonds
|
Capital
Appreciation
|
Series
1993A Escrowed to Maturity (FGIC)
|
06/15/2021
|
0.000%
|
|
1,870,000
|
1,824,559
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
15
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Railsplitter
Tobacco Settlement Authority
|
Prerefunded
06/01/21 Revenue Bonds
|
Series
2010
|
06/01/2028
|
6.000%
|
|
5,000,000
|
5,436,000
|
State
of Illinois
|
Unlimited
General Obligation Bonds
|
Series
2013
|
07/01/2026
|
5.500%
|
|
1,955,000
|
2,154,175
|
07/01/2033
|
5.500%
|
|
5,000,000
|
5,454,550
|
07/01/2038
|
5.500%
|
|
875,000
|
946,435
|
Series
2016
|
01/01/2026
|
5.000%
|
|
2,965,000
|
3,346,299
|
11/01/2027
|
5.000%
|
|
2,785,000
|
3,159,137
|
Series
2017A
|
12/01/2035
|
5.000%
|
|
1,345,000
|
1,473,999
|
12/01/2036
|
5.000%
|
|
5,000,000
|
5,461,800
|
Series
2018A
|
05/01/2032
|
5.000%
|
|
2,500,000
|
2,827,225
|
05/01/2033
|
5.000%
|
|
5,000,000
|
5,636,200
|
05/01/2039
|
5.000%
|
|
4,320,000
|
4,780,080
|
05/01/2040
|
5.000%
|
|
6,005,000
|
6,627,779
|
05/01/2041
|
5.000%
|
|
6,000,000
|
6,609,720
|
Series
2018B
|
05/01/2027
|
5.000%
|
|
4,950,000
|
5,667,354
|
Unlimited
General Obligation Refunding Bonds
|
Series
2018-A
|
10/01/2031
|
5.000%
|
|
2,500,000
|
2,846,925
|
Total
|
231,443,712
|
Indiana
0.2%
|
City
of Whiting(d)
|
Refunding
Revenue Bonds
|
BP
Products North America
|
Series
2019 AMT
|
12/01/2044
|
5.000%
|
|
3,200,000
|
3,840,096
|
Iowa
1.4%
|
Iowa
Finance Authority
|
Revenue
Bonds
|
Council
Bluffs, Inc. Project
|
Series
2018
|
08/01/2048
|
5.125%
|
|
1,750,000
|
1,839,775
|
Genesis
Health System
|
Series
2013
|
07/01/2033
|
5.000%
|
|
5,000,000
|
5,560,200
|
Lifespace
Communities, Inc.
|
Series
2018-A
|
05/15/2043
|
5.000%
|
|
5,000,000
|
5,517,900
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
PEFA,
Inc.
|
Revenue
Bonds
|
Series
2019
|
09/01/2049
|
5.000%
|
|
12,000,000
|
14,250,960
|
Total
|
27,168,835
|
Kansas
0.2%
|
University
of Kansas Hospital Authority
|
Improvement
Refunding Revenue Bonds
|
Kansas
University Health System
|
Series
2015
|
09/01/2045
|
5.000%
|
|
3,725,000
|
4,222,213
|
Kentucky
0.4%
|
Kentucky
Economic Development Finance Authority
|
Prerefunded
06/01/20 Revenue Bonds
|
Owensboro
Medical Health System
|
Series
2010A
|
03/01/2045
|
6.500%
|
|
2,950,000
|
3,076,998
|
Series
2010B
|
03/01/2040
|
6.375%
|
|
1,700,000
|
1,771,587
|
Refunding
Revenue Bonds
|
Owensboro
Health System
|
Series
2017A
|
06/01/2037
|
5.000%
|
|
1,200,000
|
1,360,392
|
Kentucky
State Property & Building Commission
|
Revenue
Bonds
|
Project
#119
|
Series
2018
|
05/01/2036
|
5.000%
|
|
1,000,000
|
1,189,040
|
Total
|
7,398,017
|
Louisiana
0.7%
|
Ascension
Parish Industrial Development Board, Inc.
|
Revenue
Bonds
|
Impala
Warehousing LLC
|
Series
2011
|
07/01/2036
|
6.000%
|
|
3,995,000
|
4,348,078
|
Louisiana
Local Government Environmental Facilities & Community Development Authority
|
Revenue
Bonds
|
Westlake
Chemical Corp.
|
Series
2010A-2
|
11/01/2035
|
6.500%
|
|
1,750,000
|
1,849,820
|
Louisiana
Public Facilities Authority
|
Refunding
Revenue Bonds
|
19th
Judicial District Court
|
Series
2015 (AGM)
|
06/01/2036
|
5.000%
|
|
1,000,000
|
1,152,050
|
Ochsner
Clinic Foundation Project
|
Series
2017
|
05/15/2042
|
5.000%
|
|
2,000,000
|
2,300,240
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
16
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Revenue
Bonds
|
Provident
Group - Flagship Properties
|
Series
2017
|
07/01/2057
|
5.000%
|
|
1,500,000
|
1,693,215
|
New
Orleans Aviation Board(d)
|
Revenue
Bonds
|
General
Airport-North Terminal
|
Series
2017B AMT
|
01/01/2048
|
5.000%
|
|
1,275,000
|
1,452,442
|
Total
|
12,795,845
|
Maryland
1.5%
|
Maryland
Community Development Administration
|
Refunding
Revenue Bonds
|
Series
2019B
|
09/01/2039
|
3.200%
|
|
7,475,000
|
7,609,102
|
Maryland
Health & Higher Educational Facilities Authority
|
Refunding
Revenue Bonds
|
Meritus
Medical Center Issue
|
Series
2015
|
07/01/2040
|
5.000%
|
|
1,200,000
|
1,356,060
|
Revenue
Bonds
|
University
of Maryland Medical System
|
Series
2017
|
07/01/2048
|
4.000%
|
|
3,665,000
|
3,936,796
|
State
of Maryland
|
Unlimited
General Obligation Bonds
|
Series
2017A
|
03/15/2026
|
5.000%
|
|
2,845,000
|
3,516,164
|
State
and Local Facilities Loan
|
Series
2019
|
03/15/2032
|
5.000%
|
|
10,000,000
|
12,854,900
|
Total
|
29,273,022
|
Massachusetts
2.0%
|
Commonwealth
of Massachusetts
|
Refunding
Revenue Bonds
|
Series
2005 (NPFGC)
|
01/01/2027
|
5.500%
|
|
500,000
|
637,275
|
Massachusetts
Development Finance Agency
|
Refunding
Revenue Bonds
|
Harvard
University
|
Series
2016A
|
07/15/2040
|
5.000%
|
|
8,730,000
|
12,337,323
|
UMass
Memorial Healthcare
|
Series
2017
|
07/01/2044
|
4.000%
|
|
7,500,000
|
7,940,100
|
Revenue
Bonds
|
UMass
Boston Student Housing Project
|
Series
2016
|
10/01/2041
|
5.000%
|
|
2,000,000
|
2,265,700
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Massachusetts
Educational Financing Authority(d)
|
Refunding
Revenue Bonds
|
Issue
K
|
Series
2017A AMT
|
07/01/2026
|
5.000%
|
|
1,650,000
|
1,980,330
|
Subordinated
Series 2017B AMT
|
07/01/2046
|
4.250%
|
|
3,000,000
|
3,190,410
|
Massachusetts
Health & Educational Facilities Authority
|
Revenue
Bonds
|
Milford
Regional Medical Center
|
Series
2007E
|
07/15/2037
|
5.000%
|
|
2,200,000
|
2,221,494
|
Massachusetts
Port Authority(d)
|
Refunding
Revenue Bonds
|
Series
2019A AMT
|
Series
2019
|
07/01/2031
|
5.000%
|
|
7,065,000
|
8,910,308
|
Total
|
39,482,940
|
Michigan
3.8%
|
City
of Detroit Sewage Disposal System
|
Refunding
Revenue Bonds
|
Senior
Lien
|
Series
2012A
|
07/01/2039
|
5.250%
|
|
1,700,000
|
1,848,699
|
City
of Detroit Water Supply System
|
Revenue
Bonds
|
Senior
Lien
|
Series
2011A
|
07/01/2041
|
5.250%
|
|
1,500,000
|
1,594,665
|
Grand
Traverse County Hospital Finance Authority
|
Revenue
Bonds
|
Munson
Healthcare
|
Series
2014A
|
07/01/2047
|
5.000%
|
|
505,000
|
555,333
|
Great
Lakes Water Authority Water Supply System
|
Revenue
Bonds
|
2nd
Lien
|
Series
2016B
|
07/01/2046
|
5.000%
|
|
6,615,000
|
7,587,273
|
Michigan
Finance Authority
|
Refunding
Revenue Bonds
|
Senior
Lien - Great Lakes Water Authority
|
Series
2014C-6
|
07/01/2033
|
5.000%
|
|
430,000
|
488,588
|
Series
2015
|
11/15/2045
|
5.000%
|
|
1,220,000
|
1,374,513
|
Trinity
Health Corp.
|
Series
2017
|
12/01/2042
|
5.000%
|
|
500,000
|
591,840
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
17
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Revenue
Bonds
|
Beaumont
Health Credit Group
|
Series
2016S
|
11/01/2044
|
5.000%
|
|
7,500,000
|
8,526,750
|
Henry
Ford Health System
|
Series
2019A
|
11/15/2048
|
5.000%
|
|
1,320,000
|
1,576,700
|
Local
Government Loan Program - Great Lakes Water Authority
|
Series
2015
|
07/01/2034
|
5.000%
|
|
1,000,000
|
1,156,020
|
07/01/2035
|
5.000%
|
|
5,000,000
|
5,765,000
|
Michigan
State Housing Development Authority
|
Revenue
Bonds
|
Series
2018A
|
12/01/2033
|
3.600%
|
|
1,800,000
|
1,912,122
|
10/01/2043
|
4.000%
|
|
2,300,000
|
2,450,535
|
Series
2019A-1
|
10/01/2044
|
3.250%
|
|
1,500,000
|
1,515,510
|
U.S.
Department of Housing and Urban Development
|
Series
2017A
|
10/01/2042
|
3.750%
|
|
4,060,000
|
4,237,381
|
10/01/2047
|
3.850%
|
|
5,000,000
|
5,217,250
|
Michigan
Strategic Fund(d)
|
Revenue
Bonds
|
I-75
Improvement Project
|
Series
2018 AMT
|
12/31/2043
|
5.000%
|
|
15,500,000
|
18,192,815
|
Wayne
County Airport Authority
|
Revenue
Bonds
|
Series
2015D
|
12/01/2045
|
5.000%
|
|
6,455,000
|
7,420,152
|
Wayne
County Airport Authority(d)
|
Revenue
Bonds
|
Series
2017B AMT
|
12/01/2042
|
5.000%
|
|
700,000
|
817,698
|
Total
|
72,828,844
|
Minnesota
2.5%
|
City
of Blaine
|
Refunding
Revenue Bonds
|
Crest
View Senior Community Project
|
Series
2015
|
07/01/2050
|
6.125%
|
|
3,000,000
|
3,048,030
|
City
of Brooklyn Center
|
Revenue
Bonds
|
Sanctuary
Brooklyn Center Project
|
Series
2016
|
11/01/2035
|
5.500%
|
|
1,000,000
|
1,023,230
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
City
of Forest Lake
|
Revenue
Bonds
|
Lakes
International Language Academy
|
08/01/2036
|
5.000%
|
|
835,000
|
914,083
|
08/01/2043
|
5.250%
|
|
500,000
|
546,815
|
City
of Minneapolis
|
Revenue
Bonds
|
Housing
- 1500 Nicollet Apartments Project
|
Series
2017
|
05/01/2021
|
3.000%
|
|
1,450,000
|
1,449,797
|
City
of North Oaks
|
Refunding
Revenue Bonds
|
Waverly
Gardens Project
|
Series
2016
|
10/01/2047
|
5.000%
|
|
4,000,000
|
4,357,840
|
City
of Wayzata(g)
|
Refunding
Revenue Bonds
|
Folkstone
Senior Living Co.
|
Series
2019
|
08/01/2044
|
4.000%
|
|
1,500,000
|
1,521,960
|
Duluth
Economic Development Authority
|
Refunding
Revenue Bonds
|
Essentia
Health Obligation Group
|
Series
2018
|
02/15/2048
|
4.250%
|
|
6,500,000
|
7,107,100
|
02/15/2053
|
5.000%
|
|
8,000,000
|
9,246,320
|
Essential
Health Obligated Group
|
02/15/2043
|
5.000%
|
|
2,000,000
|
2,339,600
|
Hastings
Independent School District No. 200(f)
|
Unlimited
General Obligation Bonds
|
Student
Credit Enhancement Program School Building
|
Series
2018A
|
02/01/2031
|
0.000%
|
|
2,340,000
|
1,730,219
|
02/01/2034
|
0.000%
|
|
1,565,000
|
1,018,267
|
Housing
& Redevelopment Authority of The City of St. Paul
|
Prerefunded
11/15/25 Revenue Bonds
|
HealthEast
Care System Project
|
Series
2015
|
11/15/2040
|
5.000%
|
|
400,000
|
486,352
|
Revenue
Bonds
|
Legends
Berry Senior Apartments Project
|
Series
2018
|
09/01/2021
|
3.750%
|
|
3,900,000
|
3,917,082
|
Union
Flats Apartments Project
|
Series
2017B
|
02/01/2022
|
2.750%
|
|
2,125,000
|
2,125,000
|
Minneapolis-St.
Paul Metropolitan Airports Commission(d)
|
Refunding
Revenue Bonds
|
Subordinated
Series 2016D AMT
|
01/01/2041
|
5.000%
|
|
750,000
|
870,930
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
18
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Minnesota
Higher Education Facilities Authority
|
Prerefunded
10/01/21 Revenue Bonds
|
Hamline
University
|
7th
Series 2011K2
|
10/01/2040
|
6.000%
|
|
2,250,000
|
2,480,985
|
Revenue
Bonds
|
Augsburg
College
|
Series
2016A
|
05/01/2046
|
5.000%
|
|
610,000
|
673,782
|
Perham
Hospital District
|
Prerefunded
03/01/20 Revenue Bonds
|
Perham
Memorial Hospital & Home
|
Series
2010
|
03/01/2035
|
6.350%
|
|
1,000,000
|
1,030,050
|
03/01/2040
|
6.500%
|
|
700,000
|
721,602
|
St.
Cloud Housing & Redevelopment Authority
|
Revenue
Bonds
|
Sanctuary
St. Cloud Project
|
Series
2016A
|
08/01/2036
|
5.250%
|
|
2,850,000
|
2,581,872
|
Total
|
49,190,916
|
Missouri
1.5%
|
Arnold
Retail Corridor Transportation Development District
|
Revenue
Bonds
|
Series
2010
|
05/01/2038
|
6.650%
|
|
5,000,000
|
5,008,550
|
Cape
Girardeau County Industrial Development Authority
|
Refunding
Revenue Bonds
|
SoutheastHEALTH
|
Series
2017
|
03/01/2036
|
5.000%
|
|
750,000
|
853,477
|
City
of Manchester
|
Refunding
Tax Allocation Bonds
|
Highway
141/Manchester Road Project
|
Series
2010
|
11/01/2025
|
6.000%
|
|
30,000
|
30,024
|
Health
& Educational Facilities Authority
|
Refunding
Revenue Bonds
|
Mosaic
Health System
|
Series
2019
|
02/15/2044
|
4.000%
|
|
2,000,000
|
2,194,140
|
Health
& Educational Facilities Authority of the State of Missouri
|
Refunding
Revenue Bonds
|
Mercy
Health
|
Series
2017C
|
11/15/2036
|
4.000%
|
|
1,500,000
|
1,653,405
|
Revenue
Bonds
|
Lutheran
Senior Services
|
Series
2011
|
02/01/2041
|
6.000%
|
|
650,000
|
682,572
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Series
2014
|
02/01/2044
|
5.000%
|
|
2,275,000
|
2,446,171
|
Medical
Research Lutheran Services
|
Series
2016A
|
02/01/2036
|
5.000%
|
|
1,000,000
|
1,120,340
|
Kirkwood
Industrial Development Authority
|
Prerefunded
05/15/20 Revenue Bonds
|
Aberdeen
Heights Project
|
Series
2010A
|
05/15/2039
|
8.250%
|
|
3,000,000
|
3,162,930
|
Refunding
Revenue Bonds
|
Aberdeen
Heights Project
|
Series
2017
|
05/15/2042
|
5.250%
|
|
1,260,000
|
1,398,197
|
05/15/2050
|
5.250%
|
|
500,000
|
551,630
|
Missouri
Development Finance Board
|
Revenue
Bonds
|
St.
Joseph Sewage System Improvements
|
Series
2011
|
05/01/2031
|
5.250%
|
|
500,000
|
514,475
|
Missouri
Joint Municipal Electric Utility Commission
|
Refunding
Revenue Bonds
|
Series
2016A
|
12/01/2041
|
4.000%
|
|
5,000,000
|
5,430,000
|
St.
Louis County Industrial Development Authority
|
Refunding
Revenue Bonds
|
St.
Andrew’s Resources for Seniors Obligated Group
|
Series
2015
|
12/01/2035
|
5.000%
|
|
1,500,000
|
1,600,365
|
Revenue
Bonds
|
Friendship
Village Sunset Hills
|
Series
2012
|
09/01/2032
|
5.000%
|
|
1,120,000
|
1,190,851
|
09/01/2042
|
5.000%
|
|
2,000,000
|
2,103,560
|
Total
|
29,940,687
|
Montana
0.1%
|
City
of Kalispell
|
Refunding
Revenue Bonds
|
Immanuel
Lutheran Corp. Project
|
Series
2017
|
05/15/2052
|
5.250%
|
|
520,000
|
553,420
|
Montana
Board of Housing
|
Revenue
Bonds
|
Series
2017B-2
|
12/01/2042
|
3.500%
|
|
535,000
|
547,744
|
12/01/2047
|
3.600%
|
|
705,000
|
721,532
|
Total
|
1,822,696
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
19
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Nebraska
0.5%
|
Douglas
County Hospital Authority No. 2
|
Revenue
Bonds
|
Madonna
Rehabilitation Hospital
|
Series
2014
|
05/15/2044
|
5.000%
|
|
4,350,000
|
4,736,150
|
Douglas
County Hospital Authority No. 3
|
Refunding
Revenue Bonds
|
Health
Facilities - Nebraska Methodist Health System
|
Series
2015
|
11/01/2036
|
4.125%
|
|
2,000,000
|
2,132,360
|
Nebraska
Investment Finance Authority
|
Revenue
Bonds
|
Series
2018A
|
09/01/2033
|
3.550%
|
|
2,800,000
|
2,988,384
|
Total
|
9,856,894
|
Nevada
0.5%
|
Carson
City
|
Refunding
Revenue Bonds
|
Carson
Tahoe Regional Medical Center
|
Series
2012
|
09/01/2033
|
5.000%
|
|
2,600,000
|
2,812,628
|
City
of Carson City
|
Refunding
Revenue Bonds
|
Carson
Tahoe Regional Medical Center
|
Series
2017
|
09/01/2042
|
5.000%
|
|
845,000
|
967,170
|
County
of Clark Department of Aviation
|
Revenue
Bonds
|
Las
Vegas-McCarran International Airport
|
Series
2010A
|
07/01/2034
|
5.125%
|
|
4,250,000
|
4,314,515
|
State
of Nevada Department of Business & Industry(e)
|
Revenue
Bonds
|
Somerset
Academy
|
Series
2015A
|
12/15/2035
|
5.000%
|
|
570,000
|
613,691
|
Series
2018A
|
12/15/2038
|
5.000%
|
|
415,000
|
443,647
|
Total
|
9,151,651
|
New
Hampshire 0.3%
|
New
Hampshire Business Finance Authority(d)
|
Refunding
Revenue Bonds
|
Waste
Management
|
Series
2019 AMT
|
07/01/2027
|
2.150%
|
|
3,000,000
|
3,053,580
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
New
Hampshire Health & Education Facilities Authority Act
|
Refunding
Revenue Bonds
|
Elliot
Hospital
|
Series
2016
|
10/01/2038
|
5.000%
|
|
850,000
|
977,755
|
New
Hampshire Health and Education Facilities Authority Act
|
Revenue
Bonds
|
Hillside
Village Entrance Fee
|
Series
2017
|
07/01/2022
|
3.500%
|
|
2,000,000
|
2,002,160
|
Total
|
6,033,495
|
New
Jersey 5.1%
|
City
of Atlantic City
|
Unlimited
General Obligation Bonds
|
Tax
Appeal
|
Series
2017B (AGM)
|
03/01/2037
|
5.000%
|
|
340,000
|
397,501
|
03/01/2042
|
4.000%
|
|
1,250,000
|
1,345,400
|
Unlimited
General Obligation Refunding Bonds
|
Build
America Mutual Assurance Co. Tax Appeal
|
Series
2017A
|
03/01/2042
|
5.000%
|
|
1,000,000
|
1,156,530
|
Garden
State Preservation Trust(f)
|
Revenue
Bonds
|
Capital
Appreciation
|
Series
2003B (AGM)
|
11/01/2022
|
0.000%
|
|
10,000,000
|
9,548,600
|
New
Jersey Economic Development Authority
|
Refunding
Revenue Bonds
|
Series
2015XX
|
06/15/2024
|
5.000%
|
|
2,000,000
|
2,292,460
|
Subordinated
Series 2017A
|
07/01/2030
|
3.375%
|
|
2,000,000
|
2,040,660
|
Revenue
Bonds
|
Provident
Group-Kean Properties
|
Series
2017
|
07/01/2047
|
5.000%
|
|
500,000
|
548,590
|
Provident
Group-Rowan Properties LLC
|
Series
2015
|
01/01/2048
|
5.000%
|
|
1,200,000
|
1,285,596
|
Series
2015WW
|
06/15/2040
|
5.250%
|
|
375,000
|
417,937
|
Series
2017DDD
|
06/15/2042
|
5.000%
|
|
1,000,000
|
1,122,910
|
New
Jersey Higher Education Student Assistance Authority(d)
|
Revenue
Bonds
|
Series
2018A AMT
|
12/01/2034
|
4.000%
|
|
400,000
|
434,856
|
12/01/2035
|
4.000%
|
|
400,000
|
433,288
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
20
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
New
Jersey Housing & Mortgage Finance Agency(d)
|
Refunding
Revenue Bonds
|
Series
2017D AMT
|
11/01/2037
|
4.250%
|
|
1,525,000
|
1,630,530
|
Single
Family Housing
|
Series
2018 AMT
|
10/01/2032
|
3.800%
|
|
2,445,000
|
2,589,842
|
New
Jersey Housing & Mortgage Finance Agency
|
Refunding
Revenue Bonds
|
Single
Family Housing
|
Series
2019C
|
10/01/2039
|
3.850%
|
|
3,280,000
|
3,494,873
|
New
Jersey Transportation Trust Fund Authority
|
Refunding
Revenue Bonds
|
Federal
Highway Reimbursement
|
Series
2018
|
06/15/2030
|
5.000%
|
|
4,000,000
|
4,690,400
|
Transportation
System
|
Series
2018-A
|
12/15/2035
|
5.000%
|
|
5,000,000
|
5,822,300
|
Revenue
Bonds
|
Transportation
Program
|
Series
2013AA
|
06/15/2044
|
5.000%
|
|
8,090,000
|
8,687,284
|
Series
2015AA
|
06/15/2041
|
5.250%
|
|
5,000,000
|
5,579,550
|
Series
2019
|
06/15/2046
|
5.000%
|
|
3,500,000
|
3,976,805
|
New
Jersey Transportation Trust Fund Authority(f)
|
Revenue
Bonds
|
Capital
Appreciation Transportation System
|
Series
2010A
|
12/15/2030
|
0.000%
|
|
6,000,000
|
4,317,600
|
New
Jersey Turnpike Authority
|
Refunding
Revenue Bonds
|
Series
2017B
|
01/01/2040
|
5.000%
|
|
1,000,000
|
1,199,990
|
Series
2017E
|
01/01/2032
|
5.000%
|
|
2,500,000
|
3,095,575
|
Series
2017G
|
01/01/2034
|
4.000%
|
|
15,160,000
|
17,088,807
|
South
Jersey Port Corp.(d)
|
Revenue
Bonds
|
Marine
Terminal
|
Subordinated
Series 2017B AMT
|
01/01/2048
|
5.000%
|
|
2,900,000
|
3,270,939
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Tobacco
Settlement Financing Corp.
|
Refunding
Revenue Bonds
|
Subordinated
Series 2018B
|
06/01/2046
|
5.000%
|
|
12,080,000
|
13,069,956
|
Total
|
99,538,779
|
New
Mexico 0.3%
|
New
Mexico Hospital Equipment Loan Council
|
Revenue
Bonds
|
La
Vida Expansion Project
|
Series
2019
|
07/01/2039
|
5.000%
|
|
1,225,000
|
1,388,868
|
07/01/2049
|
5.000%
|
|
1,350,000
|
1,510,812
|
New
Mexico Mortgage Finance Authority(g)
|
Revenue
Bonds
|
Single
Family Mortgage Program
|
Series
2019D Class I (GNMA)
|
07/01/2044
|
3.250%
|
|
3,250,000
|
3,317,015
|
Total
|
6,216,695
|
New
York 5.5%
|
Brooklyn
Arena Local Development Corp.
|
Prerefunded
01/15/20 Revenue Bonds
|
Barclays
Center Project
|
Series
2009
|
07/15/2030
|
6.000%
|
|
1,500,000
|
1,534,065
|
City
of New York
|
Unlimited
General Obligation Bonds
|
Subordinated
Series 2018D-1
|
12/01/2038
|
5.000%
|
|
10,000,000
|
12,335,000
|
Subordinated
Series 2018F-1
|
04/01/2037
|
5.000%
|
|
5,390,000
|
6,599,246
|
Glen
Cove Local Economic Assistance Corp.(h)
|
Revenue
Bonds
|
Garvies
Point
|
Series
2016 CABS
|
01/01/2055
|
0.000%
|
|
2,500,000
|
2,301,525
|
Housing
Development Corp.
|
Revenue
Bonds
|
Sustainable
Neighborhood
|
Series
2017G
|
11/01/2042
|
3.600%
|
|
4,000,000
|
4,150,120
|
Long
Island Power Authority
|
Revenue
Bonds
|
General
|
Series
2017
|
09/01/2042
|
5.000%
|
|
2,000,000
|
2,395,500
|
Metropolitan
Transportation Authority(f)
|
Refunding
Revenue Bonds
|
Series
2012A
|
11/15/2032
|
0.000%
|
|
2,605,000
|
1,835,613
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
21
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
New
York City Housing Development Corp.
|
Revenue
Bonds
|
Sustainable
Neighborhood
|
Series
2018
|
11/01/2048
|
3.900%
|
|
2,000,000
|
2,098,840
|
Series
2019
|
11/01/2049
|
3.250%
|
|
7,310,000
|
7,382,808
|
New
York City Transitional Finance Authority
|
Revenue
Bonds
|
Future
Tax Secured
|
Subordinated
Series 2017F-1
|
05/01/2036
|
5.000%
|
|
5,170,000
|
6,256,269
|
New
York State Housing Finance Agency
|
Revenue
Bonds
|
Affordable
Housing
|
Series
2017M
|
11/01/2047
|
3.750%
|
|
3,585,000
|
3,735,606
|
New
York Transportation Development Corp.(d)
|
Revenue
Bonds
|
Delta
Air Lines, Inc. - LaGuardia Airport
|
Series
2018 AMT
|
01/01/2036
|
4.000%
|
|
5,925,000
|
6,386,676
|
Delta
Air Lines, Inc., LaGuardia
|
Series
2018 AMT
|
01/01/2034
|
5.000%
|
|
3,000,000
|
3,554,340
|
LaGuardia
Airport Terminal B Redevelopment
|
Series
2016 AMT
|
07/01/2041
|
4.000%
|
|
5,000,000
|
5,225,200
|
Port
Authority of New York & New Jersey(d)
|
Refunding
Revenue Bonds
|
Series
2018-207 AMT
|
09/15/2032
|
5.000%
|
|
12,235,000
|
15,056,880
|
Port
Authority of New York & New Jersey
|
Revenue
Bonds
|
JFK
International Air Terminal
|
Series
2010
|
12/01/2042
|
6.000%
|
|
5,000,000
|
5,280,900
|
State
of New York Mortgage Agency
|
Refunding
Revenue Bonds
|
Series
2017-203
|
10/01/2041
|
3.500%
|
|
3,730,000
|
3,850,330
|
Series
2018-208
|
10/01/2034
|
3.600%
|
|
5,000,000
|
5,307,050
|
Ulster
County Capital Resource Corp.(e)
|
Refunding
Revenue Bonds
|
Woodland
Pond at New Paltz
|
Series
2017
|
09/15/2042
|
5.250%
|
|
5,095,000
|
5,199,295
|
09/15/2047
|
5.250%
|
|
1,475,000
|
1,500,267
|
09/15/2053
|
5.250%
|
|
3,045,000
|
3,084,981
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Westchester
County Healthcare Corp.
|
Prerefunded
11/01/20 Revenue Bonds
|
Senior
Lien
|
Series
2010C
|
11/01/2037
|
6.125%
|
|
580,000
|
616,441
|
Unrefunded
Revenue Bonds
|
Senior
Lien
|
Series
2010C-2
|
11/01/2037
|
6.125%
|
|
70,000
|
73,854
|
Total
|
105,760,806
|
North
Carolina 0.9%
|
North
Carolina Medical Care Commission
|
Refunding
Revenue Bonds
|
Southminster,
Inc.
|
Series
2016
|
10/01/2037
|
5.000%
|
|
1,800,000
|
1,962,810
|
United
Methodist Retirement
|
Series
2017
|
10/01/2042
|
5.000%
|
|
1,100,000
|
1,215,742
|
Revenue
Bonds
|
Novant
Health Obligated Group
|
Series
2019
|
11/01/2049
|
4.000%
|
|
12,400,000
|
13,542,164
|
North
Carolina Turnpike Authority(f)
|
Revenue
Bonds
|
Series
2017C
|
07/01/2032
|
0.000%
|
|
2,000,000
|
1,236,340
|
Total
|
17,957,056
|
North
Dakota 0.6%
|
North
Dakota Housing Finance Agency
|
Revenue
Bonds
|
Home
Mortgage Finance Program
|
Series
2018
|
01/01/2042
|
3.850%
|
|
2,220,000
|
2,355,487
|
Housing
Finance Program
|
Series
2017 (FHA)
|
07/01/2040
|
3.550%
|
|
1,410,000
|
1,462,353
|
Housing
Finance Program-Home Mortgage Finance
|
Series
2018
|
07/01/2042
|
3.950%
|
|
5,000,000
|
5,358,550
|
Series
2019C
|
07/01/2039
|
3.200%
|
|
2,755,000
|
2,804,920
|
Total
|
11,981,310
|
Ohio
2.1%
|
Buckeye
Tobacco Settlement Financing Authority
|
Asset-Backed
Senior Turbo Revenue Bonds
|
Series
2007A-2
|
06/01/2047
|
5.875%
|
|
21,550,000
|
21,142,705
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
22
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
City
of Middleburg Heights
|
Revenue
Bonds
|
Southwest
General Facilities
|
Series
2011
|
08/01/2036
|
5.250%
|
|
1,870,000
|
1,996,468
|
County
of Lucas
|
Prerefunded
11/01/20 Improvement Revenue Bonds
|
Lutheran
Homes
|
Series
2010A
|
11/01/2035
|
6.625%
|
|
5,000,000
|
5,332,750
|
Lake
County Port & Economic Development Authority(e)
|
Revenue
Bonds
|
1st
Mortgage - Tapestry Wickliffe LLC
|
Series
2017
|
12/01/2052
|
6.750%
|
|
6,000,000
|
6,195,780
|
Miami
University
|
Refunding
Revenue Bonds
|
Series
2017
|
09/01/2034
|
5.000%
|
|
675,000
|
806,450
|
Ohio
Housing Finance Agency
|
Revenue
Bonds
|
Series
2019B
|
09/01/2044
|
3.250%
|
|
4,000,000
|
4,057,240
|
State
of Ohio
|
Refunding
Revenue Bonds
|
Cleveland
Clinic Health System
|
Series
2017
|
01/01/2036
|
4.000%
|
|
1,500,000
|
1,680,960
|
Total
|
41,212,353
|
Oklahoma
0.1%
|
Tulsa
County Industrial Authority
|
Refunding
Revenue Bonds
|
Montereau,
Inc. Project
|
Series
2017
|
11/15/2037
|
5.250%
|
|
1,250,000
|
1,426,838
|
11/15/2045
|
5.250%
|
|
1,165,000
|
1,313,339
|
Total
|
2,740,177
|
Oregon
0.3%
|
Hospital
Facilities Authority of Multnomah County
|
Refunding
Revenue Bonds
|
Mirabella
at South Waterfront
|
Series
2014A
|
10/01/2044
|
5.400%
|
|
525,000
|
570,434
|
Port
of Portland Airport(d)
|
Revenue
Bonds
|
Series
2017-24B AMT
|
07/01/2042
|
5.000%
|
|
1,000,000
|
1,163,810
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
State
of Oregon Housing & Community Services Department
|
Revenue
Bonds
|
Series
2017D
|
01/01/2038
|
3.450%
|
|
4,575,000
|
4,781,790
|
Total
|
6,516,034
|
Pennsylvania
6.8%
|
Allegheny
County Hospital Development Authority
|
Refunding
Revenue Bonds
|
University
of Pittsburgh Medical Center
|
Series
2019
|
07/15/2038
|
4.000%
|
|
1,750,000
|
1,930,985
|
City
of Philadelphia Airport(d)
|
Refunding
Revenue Bonds
|
Series
2017B AMT
|
07/01/2042
|
5.000%
|
|
2,250,000
|
2,625,233
|
Commonwealth
Financing Authority
|
Revenue
Bonds
|
Series
2015A
|
06/01/2035
|
5.000%
|
|
1,950,000
|
2,239,107
|
Tobacco
Master Settlement Payment
|
Series
2018
|
06/01/2035
|
5.000%
|
|
2,000,000
|
2,406,200
|
Commonwealth
of Pennsylvania
|
Refunding
Certificate of Participation
|
Series
2018A
|
07/01/2037
|
5.000%
|
|
1,600,000
|
1,909,728
|
Cumberland
County Municipal Authority
|
Refunding
Revenue Bonds
|
Diakon
Lutheran Ministries
|
Series
2015
|
01/01/2038
|
5.000%
|
|
1,630,000
|
1,779,732
|
East
Hempfield Township Industrial Development Authority
|
Revenue
Bonds
|
Student
Service, Inc. Student Housing Project
|
Series
2014
|
07/01/2046
|
5.000%
|
|
1,000,000
|
1,058,810
|
Franklin
County Industrial Development Authority
|
Refunding
Revenue Bonds
|
Menno-Haven,
Inc. Project
|
Series
2018
|
12/01/2043
|
5.000%
|
|
1,200,000
|
1,315,092
|
Geisinger
Authority
|
Refunding
Revenue Bonds
|
Geisinger
Health System
|
Series
2017
|
02/15/2047
|
4.000%
|
|
5,000,000
|
5,367,050
|
Lancaster
County Hospital Authority
|
Refunding
Revenue Bonds
|
Masonic
Villages of the Grand Lodge of Pennsylvania
|
Series
2015
|
11/01/2035
|
5.000%
|
|
700,000
|
784,371
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
23
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Montgomery
County Industrial Development Authority
|
Refunding
Revenue Bonds
|
Albert
Einstein HealthCare Network
|
Series
2015
|
01/15/2045
|
5.250%
|
|
1,850,000
|
2,063,564
|
Meadowood
Senior Living Project
|
12/01/2038
|
5.000%
|
|
1,270,000
|
1,431,277
|
Northampton
County General Purpose Authority
|
Refunding
Revenue Bonds
|
St.
Luke’s University Health Network
|
Series
2018
|
08/15/2043
|
5.000%
|
|
675,000
|
791,951
|
08/15/2048
|
5.000%
|
|
1,500,000
|
1,759,500
|
Pennsylvania
Economic Development Financing Authority
|
Refunding
Revenue Bonds
|
Series
2017A
|
11/15/2042
|
4.000%
|
|
10,000,000
|
10,790,700
|
Pennsylvania
Economic Development Financing Authority(e)
|
Refunding
Revenue Bonds
|
Tapestry
Moon Senior Housing Project
|
Series
2018
|
12/01/2053
|
6.750%
|
|
6,000,000
|
6,111,420
|
Pennsylvania
Economic Development Financing Authority(d)
|
Revenue
Bonds
|
PA
Bridges Finco LP
|
Series
2015 AMT
|
12/31/2038
|
5.000%
|
|
4,125,000
|
4,694,662
|
06/30/2042
|
5.000%
|
|
11,000,000
|
12,349,150
|
Pennsylvania
Higher Educational Facilities Authority
|
Prerefunded
10/01/21 Revenue Bonds
|
Shippensburg
University
|
Series
2011
|
10/01/2031
|
6.000%
|
|
2,000,000
|
2,205,320
|
Pennsylvania
Housing Finance Agency
|
Refunding
Revenue Bonds
|
Series
2016-120
|
10/01/2046
|
3.500%
|
|
1,795,000
|
1,875,344
|
Series
2017-124B
|
10/01/2042
|
3.650%
|
|
7,810,000
|
8,132,006
|
Pennsylvania
Turnpike Commission
|
Refunding
Subordinated Revenue Bonds
|
Mass
Transit Projects
|
Series
2016A-1
|
12/01/2041
|
5.000%
|
|
4,800,000
|
5,454,336
|
Revenue
Bonds
|
Series
2014C
|
12/01/2044
|
5.000%
|
|
2,500,000
|
2,836,575
|
Series
2015B
|
12/01/2040
|
5.000%
|
|
2,500,000
|
2,844,475
|
Subordinated
Series 2017B-1
|
06/01/2042
|
5.000%
|
|
3,000,000
|
3,466,110
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Subordinated
Series 2018B
|
12/01/2048
|
5.000%
|
|
5,000,000
|
5,927,200
|
Subordinated
Series 2019A
|
12/01/2044
|
5.000%
|
|
10,000,000
|
11,783,300
|
Philadelphia
Authority for Industrial Development
|
Refunding
Revenue Bonds
|
Thomas
Jefferson University
|
Series
2017
|
09/01/2042
|
5.000%
|
|
2,500,000
|
2,913,400
|
Wesley
Enhanced Living
|
Series
2017
|
07/01/2037
|
5.000%
|
|
2,000,000
|
2,168,340
|
Revenue
Bonds
|
First
Philadelphia Preparatory Charter School
|
Series
2014
|
06/15/2043
|
7.250%
|
|
750,000
|
865,433
|
Pocono
Mountains Industrial Park Authority
|
Revenue
Bonds
|
St.
Luke’s Hospital-Monroe Project
|
Series
2015
|
08/15/2040
|
5.000%
|
|
1,450,000
|
1,611,284
|
Quakertown
General Authority
|
Refunding
Revenue Bonds
|
USDA
Loan Anticipation Notes
|
Series
2017
|
07/01/2021
|
3.125%
|
|
2,500,000
|
2,491,900
|
School
District of Philadelphia (The)
|
Limited
General Obligation Bonds
|
Series
2018A
|
09/01/2038
|
5.000%
|
|
1,135,000
|
1,344,294
|
Series
2018B
|
09/01/2043
|
5.000%
|
|
515,000
|
603,683
|
State
Public School Building Authority
|
Refunding
Revenue Bonds
|
Philadelphia
School District
|
Series
2016
|
06/01/2034
|
5.000%
|
|
3,000,000
|
3,495,180
|
School
District of Philadelphia
|
Series
2016
|
06/01/2036
|
5.000%
|
|
4,800,000
|
5,558,640
|
Union
County Hospital Authority
|
Revenue
Bonds
|
Evangelical
Community Hospital
|
Series
2018
|
08/01/2038
|
5.000%
|
|
3,065,000
|
3,555,185
|
Total
|
130,540,537
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
24
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Rhode
Island 0.1%
|
Rhode
Island Student Loan Authority(d)
|
Refunding
Revenue Bonds
|
Series
2018A AMT
|
12/01/2025
|
5.000%
|
|
1,200,000
|
1,416,276
|
South
Carolina 0.2%
|
Piedmont
Municipal Power Agency
|
Refunding
Revenue Bonds
|
Electric
|
Series
1991 (NPFGC)
|
01/01/2021
|
6.250%
|
|
1,000,000
|
1,069,400
|
South
Carolina Jobs-Economic Development Authority
|
Revenue
Bonds
|
York
Preparatory Academy Project
|
Series
2014A
|
11/01/2045
|
7.250%
|
|
1,315,000
|
1,452,483
|
South
Carolina Ports Authority(d)
|
Revenue
Bonds
|
Series
2018 AMT
|
07/01/2043
|
5.000%
|
|
1,570,000
|
1,852,632
|
Total
|
4,374,515
|
South
Dakota 0.7%
|
South
Dakota Health & Educational Facilities Authority
|
Refunding
Revenue Bonds
|
Avera
Health
|
Series
2017
|
07/01/2042
|
4.000%
|
|
10,000,000
|
10,765,500
|
Sanford
Obligated Group
|
Series
2015
|
11/01/2045
|
5.000%
|
|
1,580,000
|
1,788,070
|
South
Dakota Housing Development Authority
|
Revenue
Bonds
|
Homeownership
Mortgage
|
Series
2018A
|
05/01/2042
|
3.900%
|
|
1,000,000
|
1,058,500
|
Total
|
13,612,070
|
Tennessee
1.3%
|
Chattanooga
Health Educational & Housing Facility Board
|
Refunding
Revenue Bonds
|
Student
Housing - CDFI Phase I
|
Series
2015
|
10/01/2035
|
5.000%
|
|
355,000
|
394,334
|
Greeneville
Health & Educational Facilities Board
|
Refunding
Revenue Bonds
|
Ballad
Health Obligation Group
|
Series
2018
|
07/01/2037
|
5.000%
|
|
2,300,000
|
2,716,415
|
07/01/2040
|
4.000%
|
|
1,800,000
|
1,906,272
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Knox
County Health Educational & Housing Facility Board
|
Refunding
Revenue Bonds
|
East
Tennessee Children’s Hospital
|
11/15/2048
|
4.000%
|
|
5,235,000
|
5,584,174
|
Metropolitan
Government Nashville & Davidson County Health & Educational Facilities Board
|
Refunding
Revenue Bonds
|
Lipscomb
University Project
|
Series
2019
|
10/01/2058
|
5.250%
|
|
1,565,000
|
1,863,805
|
Revenue
Bonds
|
Vanderbilt
University Medical Center
|
Series
2016
|
07/01/2046
|
5.000%
|
|
1,200,000
|
1,375,560
|
Series
2017A
|
07/01/2048
|
5.000%
|
|
835,000
|
960,985
|
Tennessee
Housing Development Agency
|
Refunding
Revenue Bonds
|
Issue
2
|
Series
2018
|
07/01/2042
|
3.850%
|
|
2,475,000
|
2,607,908
|
Revenue
Bonds
|
3rd
Issue
|
Series
2017
|
07/01/2042
|
3.600%
|
|
750,000
|
787,350
|
07/01/2047
|
3.650%
|
|
1,500,000
|
1,563,990
|
Series
2017-2B
|
07/01/2036
|
3.700%
|
|
3,530,000
|
3,771,946
|
Series
2018-1
|
07/01/2042
|
3.900%
|
|
995,000
|
1,051,904
|
Total
|
24,584,643
|
Texas
9.6%
|
Bexar
County Health Facilities Development Corp.
|
Prerefunded
07/01/20 Revenue Bonds
|
Army
Retirement Residence
|
Series
2010
|
07/01/2030
|
5.875%
|
|
155,000
|
161,535
|
Army
Retirement Residence Project
|
Series
2010
|
07/01/2045
|
6.200%
|
|
1,100,000
|
1,149,621
|
Refunding
Revenue Bonds
|
Army
Retirement Residence Foundation
|
Series
2016
|
07/15/2031
|
4.000%
|
|
2,000,000
|
2,086,920
|
07/15/2036
|
4.000%
|
|
3,000,000
|
3,084,060
|
Series
2018
|
07/15/2033
|
5.000%
|
|
1,000,000
|
1,139,220
|
07/15/2037
|
5.000%
|
|
2,100,000
|
2,362,122
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
25
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Unrefunded
Revenue Bonds
|
Army
Retirement Residence
|
Series
2010
|
07/01/2030
|
5.875%
|
|
30,000
|
31,046
|
Capital
Area Cultural Education Facilities Finance Corp.
|
Revenue
Bonds
|
Roman
Catholic Diocese
|
Series
2005B
|
04/01/2045
|
6.125%
|
|
550,000
|
564,889
|
Central
Texas Regional Mobility Authority
|
Prerefunded
01/01/21 Revenue Bonds
|
Senior
Lien
|
Series
2011
|
01/01/2041
|
6.000%
|
|
5,580,000
|
5,952,688
|
Refunding
Revenue Bonds
|
Series
2016
|
01/01/2040
|
5.000%
|
|
2,500,000
|
2,854,750
|
Subordinated
Series 2016
|
01/01/2041
|
4.000%
|
|
2,295,000
|
2,432,792
|
Revenue
Bonds
|
Senior
Lien
|
Series
2015A
|
01/01/2040
|
5.000%
|
|
2,000,000
|
2,265,660
|
01/01/2045
|
5.000%
|
|
5,000,000
|
5,621,050
|
Central
Texas Turnpike System(f)
|
Refunding
Revenue Bonds
|
Series
2015B
|
08/15/2037
|
0.000%
|
|
2,000,000
|
972,760
|
Central
Texas Turnpike System
|
Refunding
Revenue Bonds
|
Subordinated
Series 2015C
|
08/15/2042
|
5.000%
|
|
2,500,000
|
2,782,400
|
City
of Austin Airport System(d)
|
Revenue
Bonds
|
Series
2017B AMT
|
11/15/2041
|
5.000%
|
|
1,000,000
|
1,161,540
|
11/15/2046
|
5.000%
|
|
1,000,000
|
1,153,710
|
City
of Houston Airport System(d)
|
Refunding
Revenue Bonds
|
Subordinated
Series 2018C AMT
|
07/01/2031
|
5.000%
|
|
1,525,000
|
1,871,404
|
Revenue
Bonds
|
Subordinated
Series 2018A AMT
|
07/01/2041
|
5.000%
|
|
1,250,000
|
1,484,375
|
Clifton
Higher Education Finance Corp.
|
Prerefunded
08/15/21 Revenue Bonds
|
Idea
Public Schools
|
Series
2011
|
08/15/2031
|
5.500%
|
|
1,750,000
|
1,897,945
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Revenue
Bonds
|
Idea
Public Schools
|
Series
2012
|
08/15/2032
|
5.000%
|
|
580,000
|
622,114
|
08/15/2042
|
5.000%
|
|
1,500,000
|
1,588,980
|
Series
2013
|
08/15/2033
|
6.000%
|
|
260,000
|
297,684
|
International
Leadership
|
Series
2015
|
08/15/2038
|
5.750%
|
|
2,015,000
|
2,217,145
|
Series
2015A
|
12/01/2045
|
5.000%
|
|
400,000
|
434,896
|
Dallas
Love Field(d)
|
Revenue
Bonds
|
Series
2017 AMT
|
11/01/2033
|
5.000%
|
|
1,000,000
|
1,180,230
|
11/01/2036
|
5.000%
|
|
1,000,000
|
1,169,330
|
Frisco
Independent School District
|
Unlimited
General Obligation Refunding Bonds
|
Texas
Permanent School Fund Program
|
Series
2019
|
08/15/2039
|
4.000%
|
|
1,000,000
|
1,134,600
|
08/15/2040
|
4.000%
|
|
1,500,000
|
1,695,840
|
Harris
County Cultural Education Facilities Finance Corp.
|
Refunding
Revenue Bonds
|
YMCA
Greater Houston Area
|
Series
2013A
|
06/01/2038
|
5.000%
|
|
1,500,000
|
1,599,495
|
Houston
Higher Education Finance Corp.
|
Prerefunded
05/15/21 Revenue Bonds
|
Cosmos
Foundation, Inc.
|
Series
2011
|
05/15/2031
|
6.500%
|
|
270,000
|
294,551
|
05/15/2031
|
6.500%
|
|
230,000
|
250,914
|
Matagorda
County Navigation District No. 1(c),(d)
|
Refunding
Revenue Bonds
|
Central
Power and Light Co.
|
Series
2017 AMT
|
05/01/2030
|
1.750%
|
|
2,000,000
|
1,995,740
|
New
Hope Cultural Education Facilities Finance Corp.
|
Refunding
Revenue Bonds
|
Texas
Children’s Health System
|
Series
2017A
|
08/15/2040
|
4.000%
|
|
3,610,000
|
3,931,759
|
Revenue
Bonds
|
4-K
Housing, Inc. Stoney Brook Project
|
Series
2017
|
07/01/2042
|
4.500%
|
|
1,000,000
|
1,064,320
|
07/01/2047
|
5.000%
|
|
1,000,000
|
1,089,940
|
07/01/2052
|
4.750%
|
|
1,500,000
|
1,610,565
|
Bridgemoor
Plano Project
|
12/01/2053
|
7.250%
|
|
5,000,000
|
5,244,400
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
26
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Cardinal
Bay, Inc. - Village on the Park
|
Series
2016
|
07/01/2036
|
4.250%
|
|
1,500,000
|
1,623,090
|
07/01/2046
|
5.000%
|
|
3,685,000
|
4,093,777
|
07/01/2051
|
4.750%
|
|
1,210,000
|
1,317,799
|
Collegiate
Housing Tarleton State University
|
Series
2015
|
04/01/2047
|
5.000%
|
|
2,465,000
|
2,628,577
|
MRC
Senior Living-Langford Project
|
Series
2016
|
11/15/2036
|
5.375%
|
|
500,000
|
535,220
|
11/15/2046
|
5.500%
|
|
750,000
|
794,662
|
New
Hope Cultural Education Facilities Finance Corp.(e)
|
Revenue
Bonds
|
Jubilee
Academic Center Project
|
Series
2017
|
08/15/2037
|
5.000%
|
|
530,000
|
541,819
|
North
Texas Tollway Authority
|
Refunding
Revenue Bonds
|
2nd
Tier
|
Series
2015A
|
01/01/2038
|
5.000%
|
|
1,730,000
|
1,975,833
|
North
Texas Tollway Authority(g)
|
Refunding
Revenue Bonds
|
Series
2019A
|
01/01/2044
|
4.000%
|
|
13,500,000
|
14,839,740
|
Northside
Independent School District
|
Unlimited
General Obligation Refunding Bonds
|
Texas
Permanent School Fund Program
|
Series
2019
|
08/15/2036
|
4.000%
|
|
5,770,000
|
6,528,120
|
08/15/2037
|
4.000%
|
|
5,995,000
|
6,761,401
|
08/15/2038
|
4.000%
|
|
6,235,000
|
7,016,744
|
Port
Authority of Houston of Harris County(d)
|
Unlimited
General Obligation Refunding Bonds
|
Series
2018A AMT
|
10/01/2036
|
5.000%
|
|
4,000,000
|
4,861,040
|
Pottsboro
Higher Education Finance Corp.
|
Revenue
Bonds
|
Series
2016A
|
08/15/2036
|
5.000%
|
|
385,000
|
411,569
|
Red
River Health Facilities Development Corp.
|
Revenue
Bonds
|
MRC
Crossings Project
|
Series
2014A
|
11/15/2044
|
7.750%
|
|
500,000
|
583,830
|
San
Juan Higher Education Finance Authority
|
Prerefunded
08/15/20 Revenue Bonds
|
Idea
Public Schools
|
Series
2010A
|
08/15/2040
|
6.700%
|
|
800,000
|
844,480
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
State
of Texas(d)
|
Unlimited
General Obligation Bonds
|
College
Student Loan
|
Series
2019 AMT
|
08/01/2030
|
5.000%
|
|
7,175,000
|
9,068,698
|
08/01/2031
|
5.000%
|
|
7,535,000
|
9,460,042
|
State
of Texas
|
Unlimited
General Obligation Refunding Bonds
|
Transportation
Commission Mobility Fund
|
Series
2017
|
10/01/2033
|
5.000%
|
|
11,300,000
|
13,954,483
|
Tarrant
County Cultural Education Facilities Finance Corp.
|
Refunding
Revenue Bonds
|
Trinity
Terrace Project
|
Series
2014
|
10/01/2049
|
5.000%
|
|
750,000
|
806,340
|
Tarrant
County Cultural Education Facilities Finance Corp.(d)
|
Revenue
Bonds
|
Buckner
Senior Living Ventana Project
|
Series
2017
|
11/15/2047
|
6.750%
|
|
1,835,000
|
2,095,735
|
Texas
Private Activity Bond Surface Transportation Corp.(g)
|
Revenue
Bonds
|
Segment
3C Project
|
Series
2019 AMT
|
06/30/2058
|
5.000%
|
|
2,700,000
|
3,131,676
|
Texas
Private Activity Bond Surface Transportation Corp.(d)
|
Revenue
Bonds
|
Senior
Lien - Blueridge Transportation
|
Series
2016 AMT
|
12/31/2055
|
5.000%
|
|
3,515,000
|
3,874,233
|
Texas
Transportation Commission(f)
|
Revenue
Bonds
|
First
Tier Toll
|
Series
2019
|
08/01/2036
|
0.000%
|
|
950,000
|
499,985
|
08/01/2039
|
0.000%
|
|
600,000
|
265,512
|
Texas
Water Development Board
|
Revenue
Bonds
|
State
Water Implementation Fund
|
10/15/2032
|
5.000%
|
|
5,105,000
|
6,470,485
|
University
of Texas System (The)
|
Refunding
Revenue Bonds
|
Series
2019A
|
08/15/2033
|
5.000%
|
|
10,000,000
|
12,815,000
|
Total
|
186,252,880
|
Utah
1.2%
|
Salt
Lake City Corp. Airport(d)
|
Revenue
Bonds
|
Series
2017A AMT
|
07/01/2042
|
5.000%
|
|
6,700,000
|
7,832,970
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
27
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Series
2018-A AMT
|
07/01/2043
|
5.000%
|
|
13,000,000
|
15,396,810
|
Total
|
23,229,780
|
Virginia
2.0%
|
Chesapeake
Bay Bridge & Tunnel District
|
Revenue
Bonds
|
1st
Tier General Resolution
|
Series
2016
|
07/01/2046
|
5.000%
|
|
7,255,000
|
8,262,357
|
City
of Chesapeake Expressway Toll Road
|
Revenue
Bonds
|
Transportation
System
|
Series
2012A
|
07/15/2047
|
5.000%
|
|
3,250,000
|
3,490,987
|
Virginia
Small Business Financing Authority(d)
|
Revenue
Bonds
|
Senior
Lien-95 Express Lane
|
Series
2017 AMT
|
01/01/2040
|
5.000%
|
|
7,500,000
|
7,978,125
|
Transform
66 P3 Project
|
Series
2017 AMT
|
12/31/2052
|
5.000%
|
|
16,200,000
|
18,380,844
|
Total
|
38,112,313
|
Washington
3.0%
|
King
County Housing Authority
|
Refunding
Revenue Bonds
|
Series
2018
|
05/01/2038
|
3.750%
|
|
3,890,000
|
4,108,579
|
King
County Public Hospital District No. 4
|
Revenue
Bonds
|
Series
2015A
|
12/01/2035
|
6.000%
|
|
1,000,000
|
1,055,080
|
Port
of Seattle(d)
|
Refunding
Revenue Bonds
|
Intermediate
Lien
|
Series
2017 AMT
|
05/01/2037
|
5.000%
|
|
6,000,000
|
7,067,820
|
Port
of Seattle(d),(g)
|
Revenue
Bonds
|
Intermediate
Lien
|
Series
2019 AMT
|
04/01/2044
|
5.000%
|
|
6,000,000
|
7,169,340
|
State
of Washington
|
Unlimited
General Obligation Bonds
|
Motor
Vehicle Fuel Tax
|
Series
2019D
|
06/01/2040
|
5.000%
|
|
5,000,000
|
6,137,500
|
Series
2017D
|
02/01/2036
|
5.000%
|
|
6,505,000
|
7,831,825
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Various
Purpose
|
Series
2019C
|
02/01/2038
|
5.000%
|
|
5,000,000
|
6,206,450
|
Washington
Health Care Facilities Authority
|
Refunding
Revenue Bonds
|
Virginia
Mason Medical Center
|
Series
2017
|
08/15/2042
|
4.000%
|
|
5,000,000
|
5,176,350
|
Washington
State Housing Finance Commission(e)
|
Refunding
Revenue Bonds
|
Bayview
Manor Homes
|
Series
2016A
|
07/01/2046
|
5.000%
|
|
1,625,000
|
1,734,834
|
Nonprofit
Housing-Mirabella
|
Series
2012
|
10/01/2047
|
6.750%
|
|
3,000,000
|
3,225,150
|
Presbyterian
Retirement Co.
|
Series
2016
|
01/01/2046
|
5.000%
|
|
4,000,000
|
4,324,640
|
Skyline
1st Hill Project
|
Series
2015
|
01/01/2035
|
5.750%
|
|
425,000
|
436,088
|
01/01/2045
|
6.000%
|
|
595,000
|
612,660
|
Washington
State Housing Finance Commission
|
Revenue
Bonds
|
Heron’s
Key
|
Series
2015A
|
07/01/2045
|
7.000%
|
|
200,000
|
214,334
|
07/01/2050
|
7.000%
|
|
2,550,000
|
2,726,128
|
Total
|
58,026,778
|
West
Virginia 0.0%
|
West
Virginia Economic Development Authority
|
Refunding
Revenue Bonds
|
Appalachian
Power Co.-Amos Project
|
Series
2010A
|
12/01/2038
|
5.375%
|
|
900,000
|
942,210
|
Wisconsin
1.7%
|
Public
Finance Authority(d)
|
Refunding
Revenue Bonds
|
Celanese
Project
|
Series
2016C AMT
|
11/01/2030
|
4.300%
|
|
2,000,000
|
2,111,320
|
Public
Finance Authority
|
Refunding
Revenue Bonds
|
Celanese
Project
|
Series
2016D
|
11/01/2030
|
4.050%
|
|
1,000,000
|
1,040,690
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
28
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
WakeMed
Hospital
|
Series
2019A
|
10/01/2044
|
5.000%
|
|
3,000,000
|
3,558,360
|
10/01/2049
|
4.000%
|
|
2,690,000
|
2,881,340
|
Revenue
Bonds
|
Coral
Academy Science Las Vegas
|
Series
2018
|
07/01/2055
|
5.000%
|
|
2,500,000
|
2,758,775
|
FFAH
NC & MO Portfolio
|
Series
2015
|
12/01/2045
|
5.000%
|
|
2,000,000
|
2,005,240
|
Rose
Villa Project
|
Series
2014A
|
11/15/2049
|
6.000%
|
|
1,645,000
|
1,792,063
|
Public
Finance Authority(e)
|
Refunding
Revenue Bonds
|
Mary’s
Woods at Marylhurst
|
Series
2017
|
05/15/2042
|
5.250%
|
|
410,000
|
449,212
|
05/15/2047
|
5.250%
|
|
220,000
|
240,196
|
Wisconsin
Health & Educational Facilities Authority
|
Refunding
Revenue Bonds
|
Saint
John’s Communities, Inc.
|
Series
2015B
|
09/15/2045
|
5.000%
|
|
1,000,000
|
1,035,840
|
Revenue
Bonds
|
Beaver
Dam Community Hospitals
|
Series
2013A
|
08/15/2028
|
5.125%
|
|
3,375,000
|
3,696,604
|
Covenant
Communities, Inc. Project
|
Series
2018A
|
07/01/2048
|
4.000%
|
|
4,665,000
|
4,819,785
|
Series
2018B
|
07/01/2033
|
4.250%
|
|
1,250,000
|
1,291,637
|
07/01/2043
|
4.500%
|
|
1,375,000
|
1,415,081
|
07/01/2048
|
5.000%
|
|
500,000
|
533,120
|
St.
John’s Communities, Inc. Project
|
Series
2018A
|
09/15/2040
|
5.000%
|
|
550,000
|
577,709
|
09/15/2045
|
5.000%
|
|
1,000,000
|
1,046,480
|
Tomah
Memorial Hospital, Inc.
|
BAN
Series 2017A
|
11/01/2020
|
2.650%
|
|
2,200,000
|
2,204,026
|
Unrefunded
Revenue Bonds
|
Medical
College of Wisconsin
|
Series
2008A
|
12/01/2035
|
5.250%
|
|
300,000
|
301,167
|
Total
|
33,758,645
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Wyoming
0.1%
|
County
of Laramie
|
Revenue
Bonds
|
Cheyenne
Regional Medical Center Project
|
Series
2012
|
05/01/2032
|
5.000%
|
|
1,000,000
|
1,056,970
|
Total
Municipal Bonds
(Cost $1,723,222,137)
|
1,820,896,969
|
|
Municipal
Short Term 2.3%
|
Issue
Description
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
California
0.1%
|
California
Pollution Control Financing Authority(d),(e)
|
Revenue
Bonds
|
Republic
Services, Inc. Project
|
Series
2018 AMT
|
11/01/2042
|
1.500%
|
|
2,250,000
|
2,250,450
|
Indiana
0.2%
|
Indiana
Finance Authority(d)
|
Revenue
Bonds
|
Republic
Services, Inc. Project
|
Series
2010A AMT
|
05/01/2034
|
1.600%
|
|
4,000,000
|
4,000,680
|
New
York 0.8%
|
Metropolitan
Transportation Authority
|
Revenue
Notes
|
BAN
Series 2019A
|
02/03/2020
|
1.230%
|
|
15,000,000
|
15,208,050
|
Pennsylvania
0.0%
|
Pennsylvania
Economic Development Financing Authority(d)
|
Revenue
Bonds
|
Republic
Services, Inc. Project
|
Series
2019 AMT
|
04/01/2049
|
1.500%
|
|
1,250,000
|
1,250,250
|
Tennessee
0.2%
|
Lewisburg
Industrial Development Board(d)
|
Refunding
Revenue Bonds
|
Waste
Management
|
Series
2019 AMT
|
07/02/2035
|
1.530%
|
|
3,500,000
|
3,500,000
|
Texas
1.0%
|
Mission
Economic Development Corp.(d),(g)
|
Refunding
Revenue Bonds
|
Republic
Services, Inc. Project
|
Series
2019 AMT
|
01/01/2026
|
1.550%
|
|
13,000,000
|
13,000,000
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
29
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Short Term (continued)
|
Issue
Description
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
Port
of Port Arthur Navigation District(d),(e)
|
Revenue
Bonds
|
Emerald
Renewable Diesel
|
Series
2019 AMT
|
06/01/2049
|
1.900%
|
|
6,000,000
|
6,001,920
|
Total
|
19,001,920
|
Total
Municipal Short Term
(Cost $45,147,272)
|
45,211,350
|
Money
Market Funds 0.3%
|
|
Shares
|
Value
($)
|
Dreyfus
AMT-Free Tax Exempt Cash Management Fund, Institutional Shares, 1.310%(d),(i)
|
472,855
|
472,855
|
JPMorgan
Institutional Tax Free Money Market Fund, Institutional Class, 1.264%(i)
|
5,018,922
|
5,018,922
|
Total
Money Market Funds
(Cost $5,491,762)
|
5,491,777
|
Total
Investments in Securities
(Cost $1,860,039,950)
|
1,958,344,965
|
Other
Assets & Liabilities, Net
|
|
(24,140,510)
|
Net
Assets
|
$1,934,204,455
|
Notes to Portfolio of Investments
(a)
|
As defined
in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and
transactions in these affiliated companies during the year ended July 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized
gain
(loss) —
affiliated
issuers ($)
|
Net
change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends
—
affiliated
issuers ($)
|
Value
—
affiliated
issuers
at end of
period ($)
|
Columbia
Multi-Sector Municipal Income ETF
|
|
—
|
717,818
|
—
|
717,818
|
—
|
566,090
|
131,863
|
15,504,869
|
(b)
|
The Fund is
entitled to receive principal and interest from the guarantor after a day or a week’s notice or upon maturity. The maturity date disclosed represents the final maturity.
|
(c)
|
Represents a
variable rate security where the coupon rate adjusts on specified dates (generally daily or weekly) using the prevailing money market rate. The interest rate shown was the current rate as of July 31, 2019.
|
(d)
|
Income
from this security may be subject to alternative minimum tax.
|
(e)
|
Represents privately
placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified
institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees.
At July 31, 2019, the total value of these securities amounted to $64,500,819, which represents 3.33% of total net assets.
|
(f)
|
Zero
coupon bond.
|
(g)
|
Represents a
security purchased on a when-issued basis.
|
(h)
|
Represents a
variable rate security with a step coupon where the rate adjusts 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 interest rate shown was the current
rate as of July 31, 2019.
|
(i)
|
The rate
shown is the seven-day current annualized yield at July 31, 2019.
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
30
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Abbreviation Legend
AGM
|
Assured
Guaranty Municipal Corporation
|
AMT
|
Alternative
Minimum Tax
|
BAM
|
Build
America Mutual Assurance Co.
|
BAN
|
Bond
Anticipation Note
|
FGIC
|
Financial
Guaranty Insurance Corporation
|
FHA
|
Federal
Housing Authority
|
GNMA
|
Government
National Mortgage Association
|
NPFGC
|
National
Public Finance Guarantee Corporation
|
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
The following table is a summary of
the inputs used to value the Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Exchange-Traded
Funds
|
15,504,869
|
—
|
—
|
15,504,869
|
Floating
Rate Notes
|
—
|
71,240,000
|
—
|
71,240,000
|
Municipal
Bonds
|
—
|
1,820,896,969
|
—
|
1,820,896,969
|
Municipal
Short Term
|
—
|
45,211,350
|
—
|
45,211,350
|
Money
Market Funds
|
5,491,777
|
—
|
—
|
5,491,777
|
Total
Investments in Securities
|
20,996,646
|
1,937,348,319
|
—
|
1,958,344,965
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
The accompanying Notes
to Financial Statements are an integral part of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
31
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $1,845,101,171)
|
$1,942,840,096
|
Affiliated
issuers (cost $14,938,779)
|
15,504,869
|
Receivable
for:
|
|
Investments
sold
|
25,154
|
Capital
shares sold
|
9,276,940
|
Interest
|
16,745,344
|
Expense
reimbursement due from Investment Manager
|
98
|
Prepaid
expenses
|
9,821
|
Total
assets
|
1,984,402,322
|
Liabilities
|
|
Due
to custodian
|
1,489
|
Payable
for:
|
|
Investments
purchased on a delayed delivery basis
|
42,071,494
|
Capital
shares purchased
|
3,084,999
|
Distributions
to shareholders
|
4,762,232
|
Management
services fees
|
24,367
|
Distribution
and/or service fees
|
7,375
|
Transfer
agent fees
|
108,976
|
Compensation
of board members
|
70,380
|
Other
expenses
|
66,555
|
Total
liabilities
|
50,197,867
|
Net
assets applicable to outstanding capital stock
|
$1,934,204,455
|
Represented
by
|
|
Paid
in capital
|
1,844,335,927
|
Total
distributable earnings (loss) (Note 2)
|
89,868,528
|
Total
- representing net assets applicable to outstanding capital stock
|
$1,934,204,455
|
Class
A
|
|
Net
assets
|
$792,540,374
|
Shares
outstanding
|
192,329,364
|
Net
asset value per share
|
$4.12
|
Maximum
sales charge
|
3.00%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares)
|
$4.25
|
Advisor
Class
|
|
Net
assets
|
$46,583,511
|
Shares
outstanding
|
11,320,731
|
Net
asset value per share
|
$4.11
|
Class
C
|
|
Net
assets
|
$72,283,077
|
Shares
outstanding
|
17,530,441
|
Net
asset value per share
|
$4.12
|
Institutional
Class
|
|
Net
assets
|
$930,893,940
|
Shares
outstanding
|
226,342,921
|
Net
asset value per share
|
$4.11
|
Institutional
2 Class
|
|
Net
assets
|
$39,067,874
|
Shares
outstanding
|
9,500,514
|
Net
asset value per share
|
$4.11
|
Institutional
3 Class
|
|
Net
assets
|
$52,835,679
|
Shares
outstanding
|
12,828,594
|
Net
asset value per share
|
$4.12
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
32
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Dividends
— unaffiliated issuers
|
$196,668
|
Dividends
— affiliated issuers
|
131,863
|
Interest
|
63,061,228
|
Total
income
|
63,389,759
|
Expenses:
|
|
Management
services fees
|
7,327,169
|
Distribution
and/or service fees
|
|
Class
A
|
1,815,528
|
Class
C
|
625,613
|
Class
T
|
10
|
Transfer
agent fees
|
|
Class
A
|
473,785
|
Advisor
Class
|
24,023
|
Class
C
|
40,834
|
Institutional
Class
|
448,556
|
Institutional
2 Class
|
12,838
|
Institutional
3 Class
|
4,090
|
Class
T
|
2
|
Compensation
of board members
|
32,772
|
Custodian
fees
|
12,901
|
Printing
and postage fees
|
70,294
|
Registration
fees
|
215,594
|
Audit
fees
|
36,363
|
Legal
fees
|
21,386
|
Compensation
of chief compliance officer
|
278
|
Other
|
29,846
|
Total
expenses
|
11,191,882
|
Fees
waived or expenses reimbursed by Investment Manager and its affiliates
|
(14,650)
|
Total
net expenses
|
11,177,232
|
Net
investment income
|
52,212,527
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
(186,726)
|
Futures
contracts
|
(3,504,065)
|
Net
realized loss
|
(3,690,791)
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
65,195,143
|
Investments
— affiliated issuers
|
566,090
|
Futures
contracts
|
(230,422)
|
Net
change in unrealized appreciation (depreciation)
|
65,530,811
|
Net
realized and unrealized gain
|
61,840,020
|
Net
increase in net assets resulting from operations
|
$114,052,547
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
33
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$52,212,527
|
$41,118,425
|
Net
realized gain (loss)
|
(3,690,791)
|
4,730,812
|
Net
change in unrealized appreciation (depreciation)
|
65,530,811
|
(11,150,479)
|
Net
increase in net assets resulting from operations
|
114,052,547
|
34,698,758
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(26,146,715)
|
|
Advisor
Class
|
(1,403,077)
|
|
Class
C
|
(1,778,816)
|
|
Institutional
Class
|
(25,975,604)
|
|
Institutional
2 Class
|
(798,595)
|
|
Institutional
3 Class
|
(1,607,691)
|
|
Class
T
|
(131)
|
|
Net
investment income
|
|
|
Class
A
|
|
(23,248,634)
|
Advisor
Class
|
|
(719,264)
|
Class
C
|
|
(1,479,943)
|
Institutional
Class
|
|
(15,196,311)
|
Institutional
2 Class
|
|
(412,951)
|
Institutional
3 Class
|
|
(783,313)
|
Class
T
|
|
(349)
|
Net
realized gains
|
|
|
Class
A
|
|
(1,668,616)
|
Advisor
Class
|
|
(42,548)
|
Class
C
|
|
(133,996)
|
Institutional
Class
|
|
(925,612)
|
Institutional
2 Class
|
|
(29,142)
|
Institutional
3 Class
|
|
(49,172)
|
Class
T
|
|
(26)
|
Total
distributions to shareholders (Note 2)
|
(57,710,629)
|
(44,689,877)
|
Increase
in net assets from capital stock activity
|
464,494,094
|
423,202,839
|
Total
increase in net assets
|
520,836,012
|
413,211,720
|
Net
assets at beginning of year
|
1,413,368,443
|
1,000,156,723
|
Net
assets at end of year
|
$1,934,204,455
|
$1,413,368,443
|
Undistributed
net investment income
|
$34,552
|
$1,037,877
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
34
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
45,038,653
|
179,777,975
|
46,486,241
|
186,753,717
|
Distributions
reinvested
|
6,359,091
|
25,322,305
|
6,025,598
|
24,185,820
|
Redemptions
|
(39,052,676)
|
(154,597,198)
|
(30,718,442)
|
(123,365,022)
|
Net
increase
|
12,345,068
|
50,503,082
|
21,793,397
|
87,574,515
|
Advisor
Class
|
|
|
|
|
Subscriptions
|
6,955,770
|
27,701,671
|
6,089,003
|
24,418,686
|
Distributions
reinvested
|
351,357
|
1,399,184
|
190,035
|
761,190
|
Redemptions
|
(3,992,615)
|
(15,828,581)
|
(1,449,217)
|
(5,800,388)
|
Net
increase
|
3,314,512
|
13,272,274
|
4,829,821
|
19,379,488
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(2,488)
|
(10,153)
|
Net
decrease
|
—
|
—
|
(2,488)
|
(10,153)
|
Class
C
|
|
|
|
|
Subscriptions
|
6,904,077
|
27,673,395
|
6,379,868
|
25,648,747
|
Distributions
reinvested
|
404,915
|
1,612,652
|
370,352
|
1,488,052
|
Redemptions
|
(4,721,533)
|
(18,819,673)
|
(3,826,516)
|
(15,347,904)
|
Net
increase
|
2,587,459
|
10,466,374
|
2,923,704
|
11,788,895
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
150,229,792
|
598,202,521
|
97,553,235
|
390,925,633
|
Distributions
reinvested
|
5,347,592
|
21,297,133
|
3,541,302
|
14,181,107
|
Redemptions
|
(68,954,573)
|
(272,689,299)
|
(34,240,958)
|
(137,257,659)
|
Net
increase
|
86,622,811
|
346,810,355
|
66,853,579
|
267,849,081
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
7,602,115
|
30,456,296
|
2,402,030
|
9,607,609
|
Distributions
reinvested
|
199,728
|
798,196
|
110,194
|
441,686
|
Redemptions
|
(1,503,213)
|
(5,962,967)
|
(1,698,890)
|
(6,791,053)
|
Net
increase
|
6,298,630
|
25,291,525
|
813,334
|
3,258,242
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
7,012,665
|
27,955,551
|
9,189,930
|
37,008,769
|
Distributions
reinvested
|
402,551
|
1,605,125
|
207,325
|
830,516
|
Redemptions
|
(2,882,528)
|
(11,400,288)
|
(1,117,500)
|
(4,476,514)
|
Net
increase
|
4,532,688
|
18,160,388
|
8,279,755
|
33,362,771
|
Class
T
|
|
|
|
|
Redemptions
|
(2,532)
|
(9,904)
|
—
|
—
|
Net
decrease
|
(2,532)
|
(9,904)
|
—
|
—
|
Total
net increase
|
115,698,636
|
464,494,094
|
105,491,102
|
423,202,839
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
35
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$3.99
|
0.13
|
0.14
|
0.27
|
(0.13)
|
(0.01)
|
(0.14)
|
Year
Ended 7/31/2018
|
$4.02
|
0.14
|
(0.02)
|
0.12
|
(0.14)
|
(0.01)
|
(0.15)
|
Year
Ended 7/31/2017
|
$4.18
|
0.14
|
(0.15)
|
(0.01)
|
(0.14)
|
(0.01)
|
(0.15)
|
Year
Ended 7/31/2016
|
$4.02
|
0.16
|
0.17
|
0.33
|
(0.16)
|
(0.01)
|
(0.17)
|
Year
Ended 7/31/2015
|
$4.00
|
0.17
|
0.02
|
0.19
|
(0.17)
|
—
|
(0.17)
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$3.99
|
0.14
|
0.13
|
0.27
|
(0.14)
|
(0.01)
|
(0.15)
|
Year
Ended 7/31/2018
|
$4.02
|
0.14
|
(0.01)
|
0.13
|
(0.15)
|
(0.01)
|
(0.16)
|
Year
Ended 7/31/2017
|
$4.18
|
0.15
|
(0.15)
|
0.00
(e)
|
(0.15)
|
(0.01)
|
(0.16)
|
Year
Ended 7/31/2016
|
$4.01
|
0.17
|
0.18
|
0.35
|
(0.17)
|
(0.01)
|
(0.18)
|
Year
Ended 7/31/2015
|
$3.99
|
0.18
|
0.02
|
0.20
|
(0.18)
|
—
|
(0.18)
|
Class
C
|
Year
Ended 7/31/2019
|
$4.00
|
0.10
|
0.13
|
0.23
|
(0.10)
|
(0.01)
|
(0.11)
|
Year
Ended 7/31/2018
|
$4.03
|
0.10
|
(0.01)
|
0.09
|
(0.11)
|
(0.01)
|
(0.12)
|
Year
Ended 7/31/2017
|
$4.18
|
0.11
|
(0.14)
|
(0.03)
|
(0.11)
|
(0.01)
|
(0.12)
|
Year
Ended 7/31/2016
|
$4.02
|
0.13
|
0.17
|
0.30
|
(0.13)
|
(0.01)
|
(0.14)
|
Year
Ended 7/31/2015
|
$4.00
|
0.14
|
0.02
|
0.16
|
(0.14)
|
—
|
(0.14)
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$3.99
|
0.14
|
0.13
|
0.27
|
(0.14)
|
(0.01)
|
(0.15)
|
Year
Ended 7/31/2018
|
$4.02
|
0.14
|
(0.01)
|
0.13
|
(0.15)
|
(0.01)
|
(0.16)
|
Year
Ended 7/31/2017
|
$4.17
|
0.15
|
(0.14)
|
0.01
|
(0.15)
|
(0.01)
|
(0.16)
|
Year
Ended 7/31/2016
|
$4.01
|
0.17
|
0.17
|
0.34
|
(0.17)
|
(0.01)
|
(0.18)
|
Year
Ended 7/31/2015
|
$3.99
|
0.18
|
0.02
|
0.20
|
(0.18)
|
—
|
(0.18)
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$3.99
|
0.14
|
0.13
|
0.27
|
(0.14)
|
(0.01)
|
(0.15)
|
Year
Ended 7/31/2018
|
$4.02
|
0.14
|
(0.01)
|
0.13
|
(0.15)
|
(0.01)
|
(0.16)
|
Year
Ended 7/31/2017
|
$4.17
|
0.15
|
(0.14)
|
0.01
|
(0.15)
|
(0.01)
|
(0.16)
|
Year
Ended 7/31/2016
|
$4.02
|
0.17
|
0.16
|
0.33
|
(0.17)
|
(0.01)
|
(0.18)
|
Year
Ended 7/31/2015
|
$3.99
|
0.18
|
0.03
|
0.21
|
(0.18)
|
—
|
(0.18)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
36
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$4.12
|
7.05%
|
0.81%
|
0.81%
|
3.23%
|
30%
|
$792,540
|
Year
Ended 7/31/2018
|
$3.99
|
2.98%
|
0.81%
|
0.81%
(c)
|
3.37%
|
19%
|
$718,879
|
Year
Ended 7/31/2017
|
$4.02
|
(0.09%)
|
0.83%
(d)
|
0.82%
(c),(d)
|
3.57%
|
27%
|
$636,647
|
Year
Ended 7/31/2016
|
$4.18
|
8.45%
|
0.84%
(d)
|
0.80%
(c),(d)
|
3.89%
|
11%
|
$654,691
|
Year
Ended 7/31/2015
|
$4.02
|
4.67%
|
0.84%
(d)
|
0.81%
(d)
|
4.10%
|
16%
|
$571,464
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$4.11
|
7.06%
|
0.56%
|
0.56%
|
3.47%
|
30%
|
$46,584
|
Year
Ended 7/31/2018
|
$3.99
|
3.24%
|
0.57%
|
0.57%
(c)
|
3.63%
|
19%
|
$31,934
|
Year
Ended 7/31/2017
|
$4.02
|
0.16%
|
0.59%
(d)
|
0.57%
(c),(d)
|
3.83%
|
27%
|
$12,765
|
Year
Ended 7/31/2016
|
$4.18
|
8.99%
|
0.60%
(d)
|
0.55%
(c),(d)
|
4.07%
|
11%
|
$8,841
|
Year
Ended 7/31/2015
|
$4.01
|
4.93%
|
0.60%
(d)
|
0.56%
(d)
|
4.38%
|
16%
|
$1,084
|
Class
C
|
Year
Ended 7/31/2019
|
$4.12
|
5.98%
|
1.56%
|
1.56%
|
2.48%
|
30%
|
$72,283
|
Year
Ended 7/31/2018
|
$4.00
|
2.22%
|
1.56%
|
1.56%
(c)
|
2.61%
|
19%
|
$59,720
|
Year
Ended 7/31/2017
|
$4.03
|
(0.59%)
|
1.58%
(d)
|
1.58%
(c),(d)
|
2.82%
|
27%
|
$48,398
|
Year
Ended 7/31/2016
|
$4.18
|
7.64%
|
1.59%
(d)
|
1.55%
(c),(d)
|
3.12%
|
11%
|
$28,896
|
Year
Ended 7/31/2015
|
$4.02
|
3.89%
|
1.59%
(d)
|
1.56%
(d)
|
3.35%
|
16%
|
$16,649
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$4.11
|
7.06%
|
0.56%
|
0.56%
|
3.46%
|
30%
|
$930,894
|
Year
Ended 7/31/2018
|
$3.99
|
3.24%
|
0.57%
|
0.57%
(c)
|
3.62%
|
19%
|
$556,945
|
Year
Ended 7/31/2017
|
$4.02
|
0.40%
|
0.59%
(d)
|
0.58%
(c),(d)
|
3.84%
|
27%
|
$292,664
|
Year
Ended 7/31/2016
|
$4.17
|
8.73%
|
0.60%
(d)
|
0.55%
(c),(d)
|
4.09%
|
11%
|
$119,993
|
Year
Ended 7/31/2015
|
$4.01
|
4.93%
|
0.59%
(d)
|
0.56%
(d)
|
4.36%
|
16%
|
$24,184
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$4.11
|
7.06%
|
0.55%
|
0.55%
|
3.45%
|
30%
|
$39,068
|
Year
Ended 7/31/2018
|
$3.99
|
3.23%
|
0.57%
|
0.57%
|
3.61%
|
19%
|
$12,762
|
Year
Ended 7/31/2017
|
$4.02
|
0.41%
|
0.58%
(d)
|
0.58%
(d)
|
3.82%
|
27%
|
$9,597
|
Year
Ended 7/31/2016
|
$4.17
|
8.45%
|
0.57%
(d)
|
0.56%
(d)
|
4.08%
|
11%
|
$6,129
|
Year
Ended 7/31/2015
|
$4.02
|
5.18%
|
0.57%
(d)
|
0.56%
(d)
|
4.35%
|
16%
|
$548
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
37
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$3.99
|
0.14
|
0.15
|
0.29
|
(0.15)
|
(0.01)
|
(0.16)
|
Year
Ended 7/31/2018
|
$4.03
|
0.15
|
(0.03)
|
0.12
|
(0.15)
|
(0.01)
|
(0.16)
|
Year
Ended 7/31/2017(f)
|
$3.95
|
0.06
|
0.08
|
0.14
|
(0.06)
|
—
|
(0.06)
|
Notes
to Financial Highlights
|
(a)
|
In
addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense
ratios.
|
(b)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(c)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
(d)
|
Ratios
include interest and fee expense related to the participation in certain inverse floater programs which is less than 0.01%. Due to an equal increase in interest income from fixed rate municipal bonds held in trust, there is no impact on the
Fund’s net assets, net asset value per share, total return or net investment income.
|
(e)
|
Rounds to
zero.
|
(f)
|
Institutional
3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date.
|
(g)
|
Annualized.
|
(h)
|
Ratios
include interest and fee expense related to the participation in certain inverse floater programs. If interest and fee expense related to the participation in certain inverse floater programs had been excluded, expenses would have been lower by
0.01%. Due to an equal increase in interest income from fixed rate municipal bonds held in trust, there is no impact on the Fund’s net assets, net asset value per share, total return or net investment income
|
The
accompanying Notes to Financial Statements are an integral part of this statement.
38
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$4.12
|
7.38%
|
0.50%
|
0.50%
|
3.52%
|
30%
|
$52,836
|
Year
Ended 7/31/2018
|
$3.99
|
3.02%
|
0.52%
|
0.52%
|
3.67%
|
19%
|
$33,118
|
Year
Ended 7/31/2017(f)
|
$4.03
|
3.66%
|
0.57%
(g),(h)
|
0.55%
(g),(h)
|
3.94%
(g)
|
27%
|
$65
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
39
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Strategic Municipal Income Fund (the Fund), a
series of Columbia Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts
business trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Advisor Class, Institutional Class, Institutional 2 Class and Institutional 3 Class shares are available for purchase through authorized investment professionals to omnibus retirement plans
or to institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years. Effective December 14, 2018, Class T shares merged, in a tax-free
transaction, into Class A shares of the Fund and are no longer offered for sale.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or not believed to be reflective of market
value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that management believes
does not approximate market value.
Investments in
open-end investment companies, including money market funds, are valued at their latest net asset value.
Certain securities in the Fund are valued utilizing the
amortized cost valuation method permitted in accordance with Rule 2a-7 under the 1940 Act provided certain conditions are met, including that the Board of Trustees continues to believe that the amortized cost valuation method fairly reflects the
market-based net asset value per share of the Fund. This method involves valuing a portfolio security initially at its cost and thereafter assuming a constant accretion or amortization to maturity of any discount or premium, respectively. The Board
of Trustees has established procedures intended to stabilize the Fund’s net asset value for purposes of purchases and redemptions of Fund shares at $1.00 per share. These procedures include determinations, at such intervals as the Board of
Trustees deems appropriate and reasonable in light of current market conditions, of the extent, if any, to which the Fund’s market-based net asset value deviates from $1.00 per share. In the event such deviation exceeds 1/2 of 1%, the Board of
Trustees will promptly consider what action, if any, should be initiated.
40
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Futures and options on futures contracts are valued based upon
the settlement price at the close of regular trading on their principal exchanges or, in the absence of transactions, at the mean of the latest quoted bid and ask prices.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Derivative instruments
The Fund invests in certain derivative instruments, as
detailed below, to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more securities, currencies, commodities, indices, or other assets or instruments.
Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to
pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including
the potential inability of the counterparty to fulfill its obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the
potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial
statements.
A derivative instrument may suffer a
marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its obligations under the contract. The
Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund and the amount of any variation margin held by the
counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk to the Fund since the clearinghouse or central counterparty (CCP) provides some protection
in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract; therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in
exchange-traded or centrally cleared derivatives with respect to initial and variation margin that is held in a broker’s customer account. While brokers are required to segregate customer margin from their own assets, in the event that a
broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across
all the broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its contractual rights and to secure
rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivatives contract
counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a
default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative instrument’s payables and/or receivables with collateral held and/or posted and create
one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
41
|
Notes to Financial Statements (continued)
July 31, 2019
Collateral (margin) requirements differ by type of derivative.
Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain circumstances. Collateral terms for most over-the-counter
derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral
requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally,
the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (e.g., $250,000) before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized,
contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any interest expense paid by the Fund is shown on the Statement of
Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those
counterparties.
Certain ISDA Master Agreements allow
counterparties of over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified time period or if the Fund fails to meet
certain terms of the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination rights if the counterparty fails to meet certain terms of the ISDA Master
Agreement. In determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk, whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes, the Fund does not offset
derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are exchange-traded and represent
commitments for the future purchase or sale of an asset at a specified price on a specified date. The Fund bought and sold futures contracts to manage the duration and yield curve exposure of the Fund versus the benchmark and to manage exposure to
movements in interest rates. These instruments may be used for other purposes in future periods. Upon entering into futures contracts, the Fund bears risks that it may not achieve the anticipated benefits of the futures contracts and may realize a
loss. Additional risks include counterparty credit risk, the possibility of an illiquid market, and that a change in the value of the contract or option may not correlate with changes in the value of the underlying asset.
Upon entering into a futures contract, the Fund deposits cash
or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be maintained at an established level over the life of the contract. Cash
deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are designated in the Portfolio of Investments. Subsequent payments (variation margin) are made or received
by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund recognizes a realized gain or
loss when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Effects of derivative transactions in the financial
statements
The following tables are intended to provide
additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the
impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules following the Portfolio of Investments present additional information regarding
derivative instruments outstanding at the end of the period, if any.
42
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
following table indicates the effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended July 31, 2019:
Amount
of realized gain (loss) on derivatives recognized in income
|
Risk
exposure category
|
|
|
|
|
|
Futures
contracts
($)
|
Interest
rate risk
|
|
|
|
|
|
(3,504,065)
|
|
Change
in unrealized appreciation (depreciation) on derivatives recognized in income
|
Risk
exposure category
|
|
|
|
|
|
Futures
contracts
($)
|
Interest
rate risk
|
|
|
|
|
|
(230,422)
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended July 31, 2019:
Derivative
instrument
|
Average
notional
amounts ($)*
|
Futures
contracts — short
|
53,545,308
|
*
|
Based on
the ending quarterly outstanding amounts for the year ended July 31, 2019.
|
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Corporate actions and dividend income are recorded on the
ex-dividend date.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
43
|
Notes to Financial Statements (continued)
July 31, 2019
Federal income tax status
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its net tax-exempt and investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods beginning after December 15, 2019 and interim periods within
those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a result of the amendments, management implemented disclosure
changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the level 3 valuation
processes, as well as modifications to the measurement uncertainty disclosure.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
44
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Note 3. Fees and other transactions with
affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.48% to 0.29% as the Fund’s net assets increase. The
effective management services fee rate for the year ended July 31, 2019 was 0.47% of the Fund’s average daily net assets.
To the extent the Fund invests a portion of its assets in
affiliated mutual funds, exchange-traded funds and closed-end funds that pay a management services fee or, where applicable, an advisory fee to the Investment Manager, the Investment Manager has voluntarily agreed to waive net management services
fees (management services fees, less reimbursements/waivers) or, where applicable, the net investment advisory services fees, (investment advisory services fees, less reimbursements/waivers) charged to such affiliated fund(s). The Investment
Manager, in its discretion, may revise or discontinue this arrangement at any time.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transactions with affiliates
For the year ended July 31, 2019, the Fund engaged in purchase
and/or sale transactions with affiliates and/or accounts that have a common investment manager (or affiliated investment managers), common directors/trustees, and/or common officers. Those purchase and sale transactions complied with provisions of
Rule 17a-7 under the 1940 Act and were $0 and $1,850,376, respectively. The sale transactions resulted in a net realized loss of $23,639.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
45
|
Notes to Financial Statements (continued)
July 31, 2019
The
Transfer Agent also receives compensation from the Fund for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an
annual limitation of not more than 0.07% and 0.02%, respectively, of the average daily net assets attributable to each share class.
For the year ended July 31, 2019, the Fund’s effective
transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.07
|
Advisor
Class
|
0.07
|
Class
C
|
0.07
|
Institutional
Class
|
0.07
|
Institutional
2 Class
|
0.06
|
Institutional
3 Class
|
0.01
|
Class
T
|
0.03
(a)
|
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at the maximum annual rates of up to 0.25%, 1.00% and 0.25% of the Fund’s average daily net assets attributable to Class A, Class C and Class T shares, respectively. For Class C shares, of the 1.00% fee, up to 0.75% can be
reimbursed for distribution expenses and up to an additional 0.25% can be reimbursed for shareholder servicing expenses. For Class T shares, of the 0.25% fee, up to 0.25% can be reimbursed for distribution and/or shareholder servicing expenses. As a
result of all Class T shares of the Fund being redeemed or converted to Class A shares, December 14, 2018 was the last day the Fund paid a distribution and shareholder services fee for Class T shares.
The amount of distribution and shareholder services expenses
incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $252,000 for Class C shares. This amount is based on the most recent information available as of June 30, 2019, and may be recovered from future payments
under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended July 31, 2019, if any, are listed below:
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
3.00
|
0.75
(a)
|
606,791
|
Class
C
|
—
|
1.00
(b)
|
10,979
|
Class
T
|
2.50
|
—
|
—
|
(a)
|
This
charge is imposed on certain investments of $500,000 or more if redeemed within 12 months after purchase.
|
(b)
|
This
charge applies to redemptions within 12 months after purchase, with certain limited exceptions.
|
The Fund’s other share classes are not subject to sales
charges.
46
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Expenses waived/reimbursed by the Investment Manager and its
affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of Trustees, 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 following annual rate(s) as a percentage of the
class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to
December 1, 2018
|
Class
A
|
0.81%
|
0.82%
|
Advisor
Class
|
0.56
|
0.57
|
Class
C
|
1.56
|
1.57
|
Institutional
Class
|
0.56
|
0.57
|
Institutional
2 Class
|
0.56
|
0.57
|
Institutional
3 Class
|
0.51
|
0.52
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), 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, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or expenses reimbursed under the expense
reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for tax straddles, trustees’ deferred compensation, distributions and principal and/or interest from fixed income securities. To the extent these differences were permanent, reclassifications were made among the components
of the Fund’s net assets. Temporary differences do not require reclassifications.
The Fund did not have any permanent differences; therefore, no
reclassifications were made.
The tax character of
distributions paid during the years indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Tax-exempt
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Tax-exempt
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
4,495,774
|
53,214,855
|
—
|
57,710,629
|
1,707,786
|
41,642,845
|
1,339,246
|
44,689,877
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At July 31, 2019, the components of distributable earnings on
a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
tax-
exempt income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
appreciation ($)
|
552,625
|
4,803,188
|
566,815
|
—
|
88,777,403
|
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
47
|
Notes to Financial Statements (continued)
July 31, 2019
At
July 31, 2019, the cost of all investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
appreciation ($)
|
1,869,567,562
|
89,262,317
|
(484,914)
|
88,777,403
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
Management of the Fund has concluded that there are no
significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors including, but not limited
to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue
Service.
Note 5. Portfolio information
The cost of purchases and proceeds from sales of securities,
excluding short-term investments and derivatives, if any, aggregated to $881,130,357 and $467,531,117, respectively, for the year ended July 31, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the
Financial Highlights.
Note 6. Interfund
lending
Pursuant to an exemptive order granted by the
Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds,
borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended July 31, 2019.
Note
7. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion.
Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each
borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment
fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
48
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Note 8. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer 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 debt instruments to indicate their credit risk. Lower rated or unrated debt instruments held by the Fund may present increased credit risk as compared to higher-rated debt instruments.
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 interest rates may also affect the liquidity of
the Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, 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. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the longer the maturity or duration of a
debt security, the greater its sensitivity to changes in interest rates.
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. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may 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. 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. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
Shareholder concentration risk
At July 31, 2019, one unaffiliated shareholder of record owned
10.7% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Affiliated shareholders of record owned 50.4% of the outstanding shares of the Fund in
one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune times,
including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund
shareholders.
Note 9. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 10. Information regarding pending and settled
legal proceedings
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (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.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
49
|
Notes to Financial Statements (continued)
July 31, 2019
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 Fund. Further, although we believe proceedings are not 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, 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.
50
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Strategic Municipal Income Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Strategic Municipal Income Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of
operations for the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
51
|
Federal Income Tax Information
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended July 31, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
Capital
gain
dividend
|
Exempt-
interest
dividends
|
$595,156
|
100.00%
|
Capital gain dividend. The Fund
designates as a capital gain dividend the amount reflected above, or if subsequently determined to be different, the net capital gain of such fiscal period.
Exempt-interest dividends. The percentage of net investment
income distributed during the fiscal year that qualifies as exempt-interest dividends for federal income tax purposes. A portion of the income may be subject to federal alternative minimum tax.
52
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
53
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
54
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
55
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
56
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
57
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Strategic Municipal Income Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management
Investment Distributors, Inc. (collectively, the Funds).
On an annual basis, the Fund’s Board of Trustees (the
Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its Contracts Committee in November 2018 and January, March,
April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive response to items of information requested by independent legal
counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented at these meetings were first supplied in draft form to
designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who is an Independent Trustee), and the final materials
were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets with portfolio management teams and senior
management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the work, deliberations and conclusions of the
various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
58
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group, the product score of the
Fund (taking into account performance relative to peers and benchmarks) and the net assets of the Fund. The Board observed that the Fund’s investment performance met expectations.
Comparative fees, costs of services provided and the profits
realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability.
The Board considered the reports of its independent fee
consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to industry competitors,
the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of the level of fees is to
achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the "pricing philosophy"
currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s total expense ratio
(after considering proposed expense caps/waivers) approximated the peer universe’s median expense ratio. Based on its review, the Board concluded that the Fund’s management fee was fair and reasonable in light of the extent and quality
of services that the Fund receives.
The Board also
considered the profitability of Columbia Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the
Profitability Report, discussing the profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was
reasonable and that the 2019 information shows that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle
profitability relative to industry competitors was reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced
ability to offer various other financial products to Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Fund should permit the Investment Manager to offer competitive
compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
59
|
Approval of Management Agreement (continued)
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
60
|
Columbia Strategic Municipal
Income Fund | Annual Report 2019
|
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT filings are available on the SEC’s website at
sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Columbia
Strategic Municipal Income Fund | Annual Report 2019
|
61
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Strategic Municipal Income Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Annual
Report
July 31, 2019
Columbia Minnesota Tax-Exempt Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
5
|
|
7
|
|
8
|
|
19
|
|
20
|
|
21
|
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24
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28
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38
|
|
39
|
|
40
|
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45
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|
48
|
Columbia Minnesota Tax-Exempt Fund | Annual Report
2019
Investment objective
Columbia Minnesota Tax-Exempt Fund
(the Fund) seeks to provide shareholders with a high level of income generally exempt from federal income tax as well as from Minnesota state and local tax.
Portfolio
management
Douglas White,
CFA
Lead
Portfolio Manager
Managed Fund
since December 2018
Catherine
Stienstra
Portfolio
Manager
Managed Fund
since 2007
Anders Myhran,
CFA
Portfolio
Manager
Managed Fund
since 2016
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
Excluding
sales charges
|
08/18/86
|
6.50
|
3.52
|
4.64
|
|
Including
sales charges
|
|
3.23
|
2.89
|
4.31
|
Advisor
Class*
|
03/19/13
|
6.77
|
3.78
|
4.83
|
Class
C
|
Excluding
sales charges
|
06/26/00
|
5.70
|
2.75
|
3.86
|
|
Including
sales charges
|
|
4.70
|
2.75
|
3.86
|
Institutional
Class*
|
09/27/10
|
6.76
|
3.78
|
4.87
|
Institutional
2 Class*
|
12/11/13
|
6.95
|
3.78
|
4.80
|
Institutional
3 Class*
|
03/01/17
|
6.80
|
3.66
|
4.71
|
Bloomberg
Barclays Minnesota Municipal Bond Index
|
|
6.98
|
3.19
|
3.96
|
Bloomberg
Barclays Municipal Bond Index
|
|
7.31
|
3.77
|
4.63
|
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related
operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
The Bloomberg Barclays Minnesota Municipal Bond Index is a
market capitalization-weighted index of Minnesota Investment-grade bonds with maturities of one year or more.
The Bloomberg Barclays Municipal Bond Index is an unmanaged
index considered representative of the broad market for investment-grade, tax-exempt bonds with a maturity of at least one year.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a
hypothetical $10,000 investment (July 31, 2009 — July 31, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Minnesota Tax-Exempt Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the
redemption of Fund shares.
Quality
breakdown (%) (at July 31, 2019)
|
AAA
rating
|
18.7
|
AA
rating
|
30.3
|
A
rating
|
24.2
|
BBB
rating
|
9.3
|
BB
rating
|
2.8
|
Not
rated
|
14.7
|
Total
|
100.0
|
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the highest and
lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is
designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the
considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage
(repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any
collateral.
4
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Manager Discussion of Fund Performance
For
the 12-month period ended July 31, 2019, Class A shares of the Fund returned 6.50% excluding sales charges. Institutional Class shares of the Fund returned 6.76%. During the same time period, the Fund underperformed its benchmark, the Bloomberg
Barclays Minnesota Municipal Bond Index, which returned 6.98%, as well as the broad-based Bloomberg Barclays Municipal Bond Index, which returned 7.31%.
Market overview
Municipal bonds generated healthy gains in the 12-month
reporting period, with the bulk of the rally occurring from November 2018 onward. After an initial advance in August 2018, the tax-exempt market moved lower over the next two months. During this time, U.S. Treasury yields climbed on indications that
the U.S. Federal Reserve (Fed) would take a more aggressive approach to raising interest rates in 2019 than investors had been expecting. (Prices and yields move in opposite directions.)
Sentiment turned positive in early November, causing yields to
fall sharply through the end of 2018. The fixed-income markets were boosted by the combination of slowing global growth, volatility in higher risk assets, and expectations that the Fed would, in fact, adopt a more accommodative stance. In addition,
various geopolitical factors — including the U.S-China trade dispute, negotiations surrounding Brexit (the U.K.’s exit from the European Union), and the U.S. government shutdown — fueled a “flight to quality” into
bonds. Municipals rallied as a result, helping the major national indexes finish 2018 in positive territory.
The rally continued into the New Year, leading to the largest
first-quarter gain for the tax-exempt market since 2014. The first quarter was also the sixth-best for municipals in the past 30 years, thanks in part to the backdrop of slow global growth and the increasingly accommodative policies of the
world’s major central banks. Supply-and-demand factors were highly favorable, as well. Municipal bond mutual funds experienced record inflows, fueled by strong demand resulting from the cap on state and local tax deductions in the Tax Cuts and
Jobs Act of 2017. At the same time, new-issue supply was limited. Trends in the Treasury market were also supportive, as yields continued to fall in anticipation of a more accommodative Fed. These developments propelled municipals higher through the
spring and into July, helping them post a solid gain for the full 12 months.
Longer term bonds outpaced shorter term issues in the annual
period, mirroring developments in the Treasury market, while lower quality bonds outperformed their higher rated counterparts. The “risk-on” environment of January 2019 to May 2019 contributed to robust investor demand for higher
yielding, lower rated bonds. This trend reversed in June and July 2019, when growing investor risk aversion led to outperformance for higher quality issues.
Minnesota narrowly underperformed, but economic fundamentals
remained robust
Minnesota municipals modestly trailed
the national market. The state has a larger representation of bonds rated AAA, as well as lower weightings in both BBB rated debt and bonds maturing in 15 years and above. Although these characteristics led to a small shortfall in total returns, we
believe the state’s economic fundamentals remained sound. Minnesota has benefited from an extended period of growth and relative prosperity amid the longest economic expansion in U.S. history. In addition, the state has experienced a budget
surplus, growth in tax receipts and unemployment rates below the nation. Minnesota has typically weathered economic downturns better than most states thanks to its diversified economy, educated workforce and above-average personal income.
Contributors and detractors
A number of factors played a role in the Fund’s modest
shortfall relative to the Bloomberg Barclays Minnesota Municipal Bond Index. Positions in bonds with maturities of one year and less hurt results given the underperformance for this segment of the yield curve. Security selection in the 25- to
30-year portion of the curve was an additional detractor. Conversely, the Fund benefited from an overweight in 15- to 20-year maturities and an underweight in the one- to five-year range.
In terms of positioning across the various credit tiers, the
Fund was hurt by selection in the A and BBB-rated categories, together with its overweight in non-rated issues. However, selection in the non-rated space added value. The Fund was further helped by its underweight in AA-rated bonds and overweight in
A-rated issues (the best performing credit tier of the past 12 months). Selection in the AAA-rated category contributed, as well.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance (continued)
At the sector level, the Fund’s overweight in
pre-refunded issues (which generally mature in one year or less) detracted from performance. An overweight in hospitals — the best performing sector in the benchmark — contributed to results, but the benefit was counteracted by security
selection in this area. Selection in the airport sector was an additional detractor. The combination of an underweight in state general obligation (GO) debt and an overweight in local GOs added value, as did selection in both areas.
Fund positioning
In late 2018, stock market volatility and signs of a
potential economic slowdown led us to tilt the portfolio toward higher quality issues and longer maturity/longer duration securities. Typically, yields fall and lower quality bonds lag during an economic slowdown, so portfolios with greater
interest-rate sensitivity and higher quality tend to outperform. We therefore kept duration above the benchmark, while we reduced the Fund’s allocation to shorter maturities and increased its weighting in longer term debt. We also added to the
Fund’s AAA-rated holdings, particularly local school districts that have indirect backing from the state of Minnesota, and decreased its allocations to BBB and non-rated debt. At the individual security level, we reduced positions where our
analysts saw negative trends or where the issuers’ financial strength did not appear able to withstand an economic downturn. Specifically, we sold bonds with declining financial metrics in the education, assisted living and continuing care
retirement communities sectors. These moves, in total, had a positive effect on Fund performance in the latter half of the fiscal year. We maintained this positioning at the end of the period given the continued risks to the global economy and our
belief that the Fed will maintain its accommodative stance.
Fixed-income securities present
issuer default risk. The Fund invests substantially in municipal securities and will be affected by tax, legislative, regulatory, demographic or political changes, as well
as changes impacting a state’s financial, economic or other conditions. A relatively small number of tax-exempt issuers may necessitate the Fund investing more heavily in a single issuer and, therefore, be more exposed to the risk of loss than
a fund that invests more broadly. The value of the Fund’s portfolio may be more volatile than a more geographically diversified fund. Prepayment and extension risk
exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest rates rise which may reduce investment opportunities and potential returns. A rise in interest rates may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt
instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities. Non-investment-grade (high-yield or junk) securities present greater price
volatility and more risk to principal and income than higher rated securities. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. Federal and state tax rules apply to capital gain distributions and any gains or losses on sales. Income may be subject to state or local taxes. Liquidity risk is associated with the difficulty
of selling underlying investments at a desirable time or price. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
6
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,052.00
|
1,020.93
|
3.97
|
3.91
|
0.78
|
Advisor
Class
|
1,000.00
|
1,000.00
|
1,053.40
|
1,022.17
|
2.70
|
2.66
|
0.53
|
Class
C
|
1,000.00
|
1,000.00
|
1,048.20
|
1,017.21
|
7.77
|
7.65
|
1.53
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,053.40
|
1,022.17
|
2.70
|
2.66
|
0.53
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,055.30
|
1,022.07
|
2.80
|
2.76
|
0.55
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,053.50
|
1,022.36
|
2.49
|
2.46
|
0.49
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
7
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Floating
Rate Notes 1.2%
|
Issue
Description
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
Variable
Rate Demand Notes 1.2%
|
City
of Minneapolis/St. Paul Housing & Redevelopment Authority(a),(b)
|
Revenue
Bonds
|
Allina
Health Systems
|
Series
2009B-1 (JPMorgan Chase Bank)
|
11/15/2035
|
1.460%
|
|
3,410,000
|
3,410,000
|
Series
2009B-2 (JPMorgan Chase Bank)
|
11/15/2035
|
1.480%
|
|
4,400,000
|
4,400,000
|
Total
|
7,810,000
|
Total
Floating Rate Notes
(Cost $7,810,000)
|
7,810,000
|
|
Municipal
Bonds 98.4%
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Airport
3.1%
|
Minneapolis-St.
Paul Metropolitan Airports Commission
|
Refunding
Revenue Bonds
|
Senior
Lien
|
Series
2016C
|
01/01/2046
|
5.000%
|
|
3,000,000
|
3,527,220
|
Series
2011
|
01/01/2025
|
5.000%
|
|
2,000,000
|
2,107,860
|
Revenue
Bonds
|
Series
2010A
|
01/01/2035
|
5.000%
|
|
6,795,000
|
6,899,167
|
Series
2010B
|
01/01/2021
|
5.000%
|
|
2,175,000
|
2,209,713
|
Subordinated
Refunding Revenue Bonds
|
Series
2012B
|
01/01/2030
|
5.000%
|
|
1,000,000
|
1,084,290
|
01/01/2031
|
5.000%
|
|
750,000
|
811,725
|
Series
2014A
|
01/01/2034
|
5.000%
|
|
1,000,000
|
1,138,720
|
Minneapolis-St.
Paul Metropolitan Airports Commission(c)
|
Refunding
Revenue Bonds
|
Series
2009B AMT
|
01/01/2022
|
5.000%
|
|
2,680,000
|
2,687,933
|
Total
|
20,466,628
|
Assisted
Living 1.1%
|
City
of Brooklyn Center
|
Revenue
Bonds
|
Sanctuary
Brooklyn Center Project
|
Series
2016
|
11/01/2035
|
5.500%
|
|
3,000,000
|
3,069,690
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
City
of Red Wing
|
Refunding
Revenue Bonds
|
Deer
Crest Project
|
Series
2012A
|
11/01/2032
|
5.000%
|
|
325,000
|
335,650
|
11/01/2042
|
5.000%
|
|
1,250,000
|
1,288,938
|
St.
Cloud Housing & Redevelopment Authority
|
Revenue
Bonds
|
Sanctuary
St. Cloud Project
|
Series
2016A
|
08/01/2036
|
5.250%
|
|
3,000,000
|
2,717,760
|
Total
|
7,412,038
|
Charter
Schools 3.9%
|
City
of Bethel
|
Refunding
Revenue Bonds
|
Spectrum
High School Project
|
Series
2017
|
07/01/2027
|
3.500%
|
|
2,000,000
|
2,050,060
|
07/01/2047
|
4.250%
|
|
1,000,000
|
1,016,790
|
07/01/2052
|
4.375%
|
|
2,255,000
|
2,304,114
|
City
of Cologne
|
Revenue
Bonds
|
Cologne
Academy Charter School Project
|
Series
2014A
|
07/01/2034
|
5.000%
|
|
500,000
|
530,560
|
07/01/2045
|
5.000%
|
|
2,070,000
|
2,164,268
|
City
of Deephaven
|
Refunding
Revenue Bonds
|
Eagle
Ridge Academy Project
|
Series
2015
|
07/01/2050
|
5.500%
|
|
1,500,000
|
1,627,110
|
Revenue
Bonds
|
Seven
Hills Preparatory Academy Project
|
Series
2017
|
10/01/2049
|
5.000%
|
|
1,700,000
|
1,741,038
|
City
of Forest Lake
|
Revenue
Bonds
|
Lakes
International Language Academy
|
08/01/2050
|
5.375%
|
|
3,600,000
|
3,949,380
|
City
of Woodbury
|
Revenue
Bonds
|
MSA
Building Co.
|
Series
2012A
|
12/01/2032
|
5.000%
|
|
220,000
|
229,946
|
12/01/2043
|
5.000%
|
|
1,500,000
|
1,557,225
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
8
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Duluth
Housing & Redevelopment Authority
|
Refunding
Revenue Bonds
|
Duluth
Public Schools Academy
|
Series
2018
|
11/01/2038
|
5.000%
|
|
1,100,000
|
1,201,827
|
Housing
& Redevelopment Authority of The City of St. Paul
|
Refunding
Revenue Bonds
|
Hope
Community Academy Project
|
Series
2015A
|
12/01/2043
|
5.000%
|
|
3,000,000
|
3,120,660
|
Nova
Classical Academy Project
|
Series
2016
|
09/01/2036
|
4.000%
|
|
1,000,000
|
1,031,090
|
St.
Paul Conservatory
|
Series
2013A
|
03/01/2028
|
4.000%
|
|
200,000
|
200,658
|
03/01/2043
|
4.625%
|
|
1,000,000
|
1,002,090
|
Township
of Baytown
|
Refunding
Revenue Bonds
|
Series
2016A
|
08/01/2041
|
4.000%
|
|
750,000
|
753,637
|
08/01/2046
|
4.250%
|
|
1,000,000
|
1,015,740
|
Total
|
25,496,193
|
Health
Services 0.5%
|
City
of Center City(d)
|
Refunding
Revenue Bonds
|
Hazelden
Betty Ford Foundation
|
Series
2019
|
11/01/2041
|
4.000%
|
|
1,000,000
|
1,091,630
|
City
of Center City
|
Revenue
Bonds
|
Hazelden
Betty Ford Foundation Project
|
Series
2011
|
11/01/2041
|
5.000%
|
|
1,600,000
|
1,615,168
|
Series
2014
|
11/01/2044
|
5.000%
|
|
500,000
|
551,255
|
Total
|
3,258,053
|
Higher
Education 9.9%
|
City
of Moorhead
|
Refunding
Revenue Bonds
|
Concordia
College Corp. Project
|
Series
2016
|
12/01/2034
|
5.000%
|
|
1,155,000
|
1,292,526
|
12/01/2040
|
5.000%
|
|
1,350,000
|
1,489,590
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Minnesota
Higher Education Facilities Authority
|
Refunding
Revenue Bonds
|
Carleton
College
|
Series
2017
|
03/01/2037
|
4.000%
|
|
500,000
|
557,210
|
03/01/2039
|
4.000%
|
|
500,000
|
554,230
|
03/01/2040
|
4.000%
|
|
1,000,000
|
1,105,870
|
03/01/2047
|
4.000%
|
|
2,500,000
|
2,739,600
|
Gustavus
Adolphus College
|
Series
2017
|
10/01/2041
|
4.000%
|
|
3,000,000
|
3,249,030
|
Macalester
College
|
Series
2017
|
03/01/2029
|
5.000%
|
|
150,000
|
185,354
|
03/01/2030
|
5.000%
|
|
175,000
|
215,285
|
03/01/2042
|
4.000%
|
|
900,000
|
980,208
|
03/01/2048
|
4.000%
|
|
600,000
|
650,484
|
St.
Catherine University
|
Series
2018
|
10/01/2037
|
4.000%
|
|
580,000
|
617,938
|
10/01/2038
|
4.000%
|
|
920,000
|
976,552
|
10/01/2045
|
5.000%
|
|
2,500,000
|
2,882,125
|
St.
Olaf College
|
8th
Series 2015G
|
12/01/2031
|
5.000%
|
|
740,000
|
875,435
|
12/01/2032
|
5.000%
|
|
1,000,000
|
1,180,530
|
Series
2016-8N
|
10/01/2034
|
4.000%
|
|
1,500,000
|
1,672,020
|
10/01/2035
|
4.000%
|
|
500,000
|
556,325
|
University
of St. Thomas
|
Series
2016-8-L
|
04/01/2035
|
5.000%
|
|
750,000
|
880,402
|
04/01/2039
|
4.000%
|
|
2,000,000
|
2,169,240
|
Series
2017A
|
10/01/2035
|
4.000%
|
|
800,000
|
888,976
|
10/01/2037
|
4.000%
|
|
750,000
|
827,842
|
Revenue
Bonds
|
Augsburg
College
|
Series
2016A
|
05/01/2046
|
5.000%
|
|
8,000,000
|
8,836,480
|
College
of St. Benedict
|
Series
2016-8-K
|
03/01/2043
|
4.000%
|
|
1,000,000
|
1,043,790
|
College
of St. Scholastica
|
Series
2010H
|
12/01/2030
|
5.125%
|
|
870,000
|
879,483
|
12/01/2035
|
5.250%
|
|
1,000,000
|
1,010,200
|
Series
2011-7J
|
12/01/2040
|
6.300%
|
|
1,800,000
|
1,823,454
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Series
2012
|
12/01/2027
|
4.250%
|
|
350,000
|
371,606
|
12/01/2032
|
4.000%
|
|
350,000
|
358,722
|
St.
John’s University
|
Series
2015-8-1
|
10/01/2031
|
5.000%
|
|
370,000
|
432,486
|
10/01/2032
|
5.000%
|
|
645,000
|
753,134
|
10/01/2033
|
5.000%
|
|
350,000
|
407,460
|
10/01/2034
|
5.000%
|
|
380,000
|
441,317
|
University
of St. Thomas
|
Series
2019
|
10/01/2040
|
5.000%
|
|
1,250,000
|
1,529,050
|
10/01/2041
|
4.000%
|
|
1,000,000
|
1,123,120
|
10/01/2044
|
4.000%
|
|
2,750,000
|
3,058,330
|
University
of Minnesota
|
Revenue
Bonds
|
Series
2014B
|
01/01/2044
|
4.000%
|
|
3,750,000
|
3,974,025
|
Series
2016A
|
04/01/2033
|
5.000%
|
|
1,725,000
|
2,071,535
|
04/01/2034
|
5.000%
|
|
1,855,000
|
2,220,991
|
Series
2019A
|
04/01/2036
|
5.000%
|
|
1,300,000
|
1,640,015
|
04/01/2037
|
5.000%
|
|
1,000,000
|
1,254,620
|
04/01/2038
|
5.000%
|
|
3,875,000
|
4,845,184
|
Total
|
64,621,774
|
Hospital
18.4%
|
City
of Crookston
|
Revenue
Bonds
|
Riverview
Health Project
|
Series
2019
|
05/01/2044
|
5.000%
|
|
500,000
|
538,585
|
05/01/2051
|
5.000%
|
|
1,500,000
|
1,609,185
|
City
of Glencoe
|
Refunding
Revenue Bonds
|
Glencoe
Regional Health Services Project
|
Series
2013
|
04/01/2023
|
4.000%
|
|
400,000
|
422,628
|
04/01/2024
|
4.000%
|
|
745,000
|
784,649
|
04/01/2026
|
4.000%
|
|
500,000
|
524,265
|
04/01/2031
|
4.000%
|
|
1,450,000
|
1,507,942
|
City
of Maple Grove
|
Refunding
Revenue Bonds
|
Maple
Grove Hospital Corp.
|
Series
2017
|
05/01/2037
|
4.000%
|
|
10,500,000
|
11,362,470
|
North
Memorial Health Care
|
Series
2015
|
09/01/2032
|
5.000%
|
|
1,000,000
|
1,157,720
|
09/01/2035
|
4.000%
|
|
1,500,000
|
1,609,320
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
City
of Minneapolis
|
Refunding
Revenue Bonds
|
Fairview
Health Services
|
Series
2015A
|
11/15/2034
|
5.000%
|
|
4,000,000
|
4,668,600
|
11/15/2044
|
5.000%
|
|
6,475,000
|
7,322,254
|
Revenue
Bonds
|
Fairview
Health Services
|
Series
2018-A
|
11/15/2037
|
4.000%
|
|
4,000,000
|
4,415,360
|
11/15/2038
|
4.000%
|
|
1,630,000
|
1,793,929
|
City
of Minneapolis/St. Paul Housing & Redevelopment Authority
|
Revenue
Bonds
|
Children’s
Health Care Facilities
|
Series
2010A
|
08/15/2025
|
5.250%
|
|
1,000,000
|
1,039,140
|
08/15/2035
|
5.250%
|
|
2,275,000
|
2,363,793
|
City
of Plato
|
Revenue
Bonds
|
Glencoe
Regional Health Services
|
Series
2017
|
04/01/2037
|
4.000%
|
|
1,810,000
|
1,924,392
|
04/01/2041
|
5.000%
|
|
675,000
|
755,960
|
City
of Rochester
|
Refunding
Revenue Bonds
|
Mayo
Clinic
|
Series
2016B
|
11/15/2036
|
5.000%
|
|
5,000,000
|
6,969,950
|
Revenue
Bonds
|
Mayo
Clinic
|
Series
2011C
|
11/15/2038
|
4.500%
|
|
1,250,000
|
1,342,950
|
Olmsted
Medical Center Project
|
Series
2010
|
07/01/2030
|
5.875%
|
|
1,950,000
|
2,025,835
|
Series
2013
|
07/01/2024
|
5.000%
|
|
300,000
|
340,392
|
07/01/2027
|
5.000%
|
|
245,000
|
276,093
|
07/01/2028
|
5.000%
|
|
225,000
|
252,828
|
07/01/2033
|
5.000%
|
|
650,000
|
717,919
|
City
of Shakopee
|
Refunding
Revenue Bonds
|
St.
Francis Regional Medical Center
|
Series
2014
|
09/01/2034
|
5.000%
|
|
1,000,000
|
1,116,400
|
City
of St. Cloud
|
Refunding
Revenue Bonds
|
Centracare
Health
|
Series
2016A
|
05/01/2037
|
4.000%
|
|
3,175,000
|
3,456,114
|
05/01/2046
|
5.000%
|
|
3,500,000
|
4,048,275
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
10
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
CentraCare
Health
|
Series
2016A
|
05/01/2028
|
5.000%
|
|
1,745,000
|
2,110,002
|
CentraCare
Health System
|
Series
2014B
|
05/01/2024
|
5.000%
|
|
1,400,000
|
1,628,424
|
Series
2019
|
05/01/2048
|
5.000%
|
|
5,000,000
|
6,006,200
|
Unrefunded
Revenue Bonds
|
CentraCare
Health System
|
Series
2010
|
05/01/2030
|
5.125%
|
|
315,000
|
323,757
|
City
of Winona
|
Refunding
Revenue Bonds
|
Winona
Health Obligation Group
|
Series
2012
|
07/01/2034
|
5.000%
|
|
750,000
|
778,193
|
County
of Chippewa
|
Refunding
Revenue Bonds
|
Montevideo
Hospital Project
|
Series
2016
|
03/01/2037
|
4.000%
|
|
7,660,000
|
7,991,448
|
County
of Kanabec Healthcare
|
Refunding
Revenue Bonds
|
FirstLight
Health System
|
BAN
Series 2018
|
12/01/2019
|
2.750%
|
|
2,000,000
|
2,001,040
|
Duluth
Economic Development Authority
|
Refunding
Revenue Bonds
|
Essentia
Health Obligation Group
|
Series
2018
|
02/15/2048
|
4.250%
|
|
1,000,000
|
1,093,400
|
02/15/2048
|
5.000%
|
|
1,300,000
|
1,514,578
|
02/15/2058
|
5.000%
|
|
6,000,000
|
6,890,760
|
Essential
Health Obligated Group
|
02/15/2043
|
5.000%
|
|
1,615,000
|
1,889,227
|
Housing
& Redevelopment Authority of The City of St. Paul
|
Refunding
Revenue Bonds
|
Fairview
Health Services
|
Series
2017
|
11/15/2036
|
4.000%
|
|
1,200,000
|
1,319,904
|
11/15/2037
|
4.000%
|
|
600,000
|
656,790
|
11/15/2043
|
4.000%
|
|
3,000,000
|
3,248,760
|
HealthPartners
Obligation Group
|
Series
2015
|
07/01/2033
|
5.000%
|
|
3,000,000
|
3,425,970
|
07/01/2035
|
4.000%
|
|
10,630,000
|
11,438,093
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Unrefunded
Revenue Bonds
|
Allina
Health System
|
Series
2009
|
11/15/2029
|
5.250%
|
|
3,450,000
|
3,491,434
|
Total
|
120,154,928
|
Joint
Power Authority 6.3%
|
Central
Minnesota Municipal Power Agency
|
Revenue
Bonds
|
Brookings-Southeast
Twin Cities Transmission Project
|
Series
2012
|
01/01/2042
|
5.000%
|
|
1,500,000
|
1,610,340
|
Hutchinson
Utilities Commission
|
Revenue
Bonds
|
Series
2012A
|
12/01/2022
|
5.000%
|
|
250,000
|
281,020
|
12/01/2025
|
5.000%
|
|
400,000
|
446,292
|
Minnesota
Municipal Power Agency
|
Refunding
Revenue Bonds
|
Series
2014
|
10/01/2032
|
5.000%
|
|
250,000
|
289,050
|
10/01/2033
|
5.000%
|
|
250,000
|
289,113
|
Series
2014A
|
10/01/2035
|
5.000%
|
|
1,000,000
|
1,154,110
|
Revenue
Bonds
|
Series
2010A
|
10/01/2035
|
5.250%
|
|
7,000,000
|
7,316,470
|
Series
2016
|
10/01/2041
|
4.000%
|
|
1,000,000
|
1,088,720
|
10/01/2047
|
5.000%
|
|
500,000
|
584,480
|
Northern
Municipal Power Agency
|
Refunding
Revenue Bonds
|
Series
2017
|
01/01/2034
|
5.000%
|
|
210,000
|
248,346
|
01/01/2035
|
5.000%
|
|
170,000
|
200,493
|
01/01/2036
|
5.000%
|
|
180,000
|
211,646
|
01/01/2041
|
5.000%
|
|
400,000
|
465,376
|
Revenue
Bonds
|
Series
2013A
|
01/01/2030
|
5.000%
|
|
340,000
|
375,040
|
01/01/2031
|
5.000%
|
|
460,000
|
506,612
|
Southern
Minnesota Municipal Power Agency
|
Refunding
Revenue Bonds
|
Series
2015A
|
01/01/2035
|
5.000%
|
|
1,000,000
|
1,172,540
|
01/01/2041
|
5.000%
|
|
2,550,000
|
2,949,304
|
01/01/2046
|
5.000%
|
|
2,000,000
|
2,308,900
|
Revenue
Bonds
|
Series
2017A
|
01/01/2042
|
5.000%
|
|
1,000,000
|
1,196,300
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
11
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Southern
Minnesota Municipal Power Agency(e)
|
Revenue
Bonds
|
Capital
Appreciation
|
Series
1994A (NPFGC)
|
01/01/2026
|
0.000%
|
|
10,000,000
|
8,962,300
|
Western
Minnesota Municipal Power Agency
|
Refunding
Revenue Bonds
|
Series
2012A
|
01/01/2029
|
5.000%
|
|
1,200,000
|
1,342,212
|
01/01/2030
|
5.000%
|
|
1,000,000
|
1,116,740
|
Series
2015A
|
01/01/2036
|
5.000%
|
|
1,000,000
|
1,177,270
|
Revenue
Bonds
|
Series
2014A
|
01/01/2040
|
5.000%
|
|
1,000,000
|
1,127,720
|
01/01/2046
|
5.000%
|
|
4,025,000
|
4,527,521
|
Total
|
40,947,915
|
Local
Appropriation 5.3%
|
Anoka-Hennepin
Independent School District No. 11
|
Certificate
of Participation
|
Series
2014A
|
02/01/2034
|
5.000%
|
|
1,700,000
|
1,937,898
|
Duluth
Independent School District No. 709
|
Refunding
Certificate of Participation
|
School
District Credit Enhancement Project
|
Series
2019B
|
02/01/2027
|
5.000%
|
|
740,000
|
903,673
|
Goodhue
County Education District No. 6051
|
Certificate
of Participation
|
Series
2014
|
02/01/2029
|
5.000%
|
|
1,200,000
|
1,358,004
|
02/01/2034
|
5.000%
|
|
1,200,000
|
1,343,628
|
02/01/2039
|
5.000%
|
|
1,300,000
|
1,436,747
|
Northeastern
Metropolitan Intermediate School District No. 916
|
Certificate
of Participation
|
Series
2015B
|
02/01/2034
|
5.000%
|
|
1,000,000
|
1,154,840
|
02/01/2042
|
4.000%
|
|
5,250,000
|
5,590,882
|
Plymouth
Intermediate District No. 287
|
Refunding
Certificate of Participation
|
Series
2016A
|
05/01/2030
|
4.000%
|
|
450,000
|
495,279
|
05/01/2031
|
4.000%
|
|
450,000
|
492,030
|
St.
Paul Independent School District No. 625
|
Certificate
of Participation
|
Series
2017C
|
02/01/2028
|
5.000%
|
|
2,720,000
|
3,368,421
|
02/01/2029
|
5.000%
|
|
2,855,000
|
3,527,067
|
02/01/2030
|
5.000%
|
|
2,965,000
|
3,651,753
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Series
2019 (School District Credit Enhancement Program)
|
02/01/2037
|
4.000%
|
|
515,000
|
578,592
|
02/01/2038
|
4.000%
|
|
1,000,000
|
1,120,340
|
02/01/2039
|
3.000%
|
|
565,000
|
565,379
|
West
St. Paul-Mendota Heights-Eagan Independent School District No. 197
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2018A (School District Credit Enhancement Program)
|
02/01/2039
|
4.000%
|
|
5,000,000
|
5,502,000
|
Worthington
Independent School District No. 518
|
Certificate
of Participation
|
Series
2017A
|
02/01/2039
|
4.000%
|
|
1,370,000
|
1,471,942
|
Total
|
34,498,475
|
Local
General Obligation 17.6%
|
Anoka-Hennepin
Independent School District No. 11
|
Unlimited
General Obligation Bonds
|
Series
2018A
|
02/01/2039
|
4.000%
|
|
8,905,000
|
9,856,766
|
Brainerd
Independent School District No. 181
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2018A (School District Credit Enhancement Program)
|
02/01/2037
|
4.000%
|
|
9,800,000
|
10,856,342
|
Burnsville-Eagan-Savage
Independent School District No. 191
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2015A
|
02/01/2031
|
4.000%
|
|
4,820,000
|
5,317,858
|
Centennial
Independent School District No. 12(e)
|
Unlimited
General Obligation Bonds
|
Series
2015A (School District Credit Enhancement Program)
|
02/01/2032
|
0.000%
|
|
1,225,000
|
814,588
|
02/01/2033
|
0.000%
|
|
750,000
|
474,675
|
Chisago
Lakes Independent School District No. 2144
|
Unlimited
General Obligation Bonds
|
Minnesota
School District Credit Enhancement Program
|
Series
2017A
|
02/01/2030
|
4.000%
|
|
3,145,000
|
3,626,594
|
City
of Willmar
|
Unlimited
General Obligation Refunding Bonds
|
Rice
Memorial Hospital Project
|
Series
2012A
|
02/01/2027
|
5.000%
|
|
1,000,000
|
1,053,400
|
County
of Otter Tail(c)
|
Unlimited
General Obligation Bonds
|
Disposal
Systems-Prairie Lakes
|
Series
2011 AMT
|
11/01/2030
|
5.000%
|
|
2,010,000
|
2,137,816
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
12
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Duluth
Independent School District No. 709
|
Refunding
Certificate of Participation
|
Series
2016A (School District Credit Enhancement Program)
|
02/01/2028
|
4.000%
|
|
1,500,000
|
1,674,030
|
Eden
Prairie Independent School District No. 272
|
Unlimited
General Obligation Bonds
|
Series
2019B (School District Credit Enhancement Program)
|
02/01/2040
|
3.000%
|
|
3,000,000
|
3,020,760
|
Farmington
Independent School District No. 192
|
Unlimited
General Obligation Refunding Bonds
|
Series
2015A (School District Credit Enhancement Program)
|
02/01/2026
|
5.000%
|
|
4,155,000
|
4,845,270
|
Goodhue
Independent School District No. 253
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2019A (School District Credit Enhancement Program)
|
02/01/2027
|
5.000%
|
|
1,280,000
|
1,596,621
|
02/01/2028
|
5.000%
|
|
1,345,000
|
1,712,898
|
02/01/2029
|
5.000%
|
|
1,415,000
|
1,792,069
|
Hastings
Independent School District No. 200(e)
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2018A (School District Credit Enhancement Program)
|
02/01/2032
|
0.000%
|
|
1,305,000
|
925,206
|
02/01/2033
|
0.000%
|
|
2,140,000
|
1,453,360
|
Hennepin
County Regional Railroad Authority
|
Limited
General Obligation Bonds
|
Series
2019A
|
12/01/2037
|
5.000%
|
|
4,685,000
|
5,867,681
|
12/01/2038
|
5.000%
|
|
3,965,000
|
4,951,452
|
Hermantown
Independent School District No. 700
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2014A (School District Credit Enhancement Program)
|
02/01/2037
|
5.000%
|
|
4,740,000
|
5,403,600
|
Mahtomedi
Independent School District No. 832
|
Unlimited
General Obligation Refunding Bonds
|
School
Building
|
Series
2014A (School District Credit Enhancement Program)
|
02/01/2030
|
5.000%
|
|
500,000
|
594,180
|
02/01/2031
|
5.000%
|
|
1,140,000
|
1,354,069
|
Marshall
Independent School District No. 413
|
Unlimited
General Obligation Bonds
|
Series
2019B (School District Credit Enhancement Program)
|
02/01/2039
|
3.000%
|
|
2,440,000
|
2,454,274
|
02/01/2040
|
3.000%
|
|
2,515,000
|
2,522,973
|
Minneapolis
Special School District No. 1
|
Unlimited
General Obligation Bonds
|
Long-Term
Facilities Maintenance
|
Series
2017 (School District Credit Enhancement Program)
|
02/01/2031
|
5.000%
|
|
2,000,000
|
2,513,640
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Monticello
Independent School District No. 882
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2016A (School District Credit Enhancement Program)
|
02/01/2030
|
4.000%
|
|
1,000,000
|
1,124,090
|
02/01/2031
|
4.000%
|
|
1,735,000
|
1,936,902
|
Mounds
View Independent School District No. 621
|
Unlimited
General Obligation Bonds
|
Student
Credit Enhancement Program School Building
|
Series
2018A
|
02/01/2043
|
4.000%
|
|
6,455,000
|
7,033,433
|
Mountain
Iron-Buhl Independent School District No. 712
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2016A (School District Credit Enhancement Program)
|
02/01/2032
|
4.000%
|
|
1,775,000
|
1,971,510
|
Richfield
Independent School District No. 280
|
Unlimited
General Obligation Bonds
|
Student
Credit Enhancement Program School Building
|
Series
2018A
|
02/01/2040
|
4.000%
|
|
5,000,000
|
5,471,350
|
Roseville
Independent School District No. 623
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2018A
|
02/01/2038
|
4.000%
|
|
10,000,000
|
10,973,600
|
Russell
Tyler Ruthton Independent School District No. 2902(d)
|
Unlimited
General Obligation Bonds
|
Series
2019A (School District Credit Enhancement Program)
|
02/01/2035
|
3.000%
|
|
1,950,000
|
2,011,249
|
02/01/2036
|
3.000%
|
|
1,000,000
|
1,025,700
|
02/01/2037
|
3.000%
|
|
1,035,000
|
1,054,789
|
Sartell-St.
Stephen Independent School District No. 748(e)
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2016B (School District Credit Enhancement Program)
|
02/01/2032
|
0.000%
|
|
1,565,000
|
1,111,854
|
02/01/2033
|
0.000%
|
|
2,585,000
|
1,761,833
|
02/01/2034
|
0.000%
|
|
1,500,000
|
980,580
|
St.
Francis Independent School District No. 15
|
Unlimited
General Obligation Bonds
|
Series
2018A
|
02/01/2033
|
4.000%
|
|
450,000
|
477,729
|
02/01/2034
|
4.000%
|
|
325,000
|
344,243
|
Waterville-Elysian-Morristown
Independent School District No. 2143
|
Unlimited
General Obligation Bonds
|
School
Building
|
Series
2019A (School District Credit Enhancement Program)
|
02/01/2028
|
5.000%
|
|
875,000
|
1,084,283
|
Total
|
115,183,267
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
13
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Multi-Family
3.1%
|
Anoka
Housing & Redevelopment Authority
|
Revenue
Bonds
|
Woodland
Park Apartments Project
|
Series
2011A
|
04/01/2027
|
5.000%
|
|
2,500,000
|
2,505,875
|
City
of Crystal
|
Revenue
Bonds
|
Crystal
Leased Housing Association
|
Series
2014
|
06/01/2031
|
5.250%
|
|
2,500,000
|
2,559,825
|
City
of Minneapolis
|
Revenue
Bonds
|
Housing
- 1500 Nicollet Apartments Project
|
Series
2017
|
05/01/2021
|
3.000%
|
|
6,000,000
|
5,999,160
|
City
of St. Anthony
|
Revenue
Bonds
|
Multifamily
Housing Landings Silver Lake Village
|
Series
2013
|
12/01/2030
|
6.000%
|
|
3,000,000
|
3,287,100
|
Housing
& Redevelopment Authority of The City of St. Paul
|
Revenue
Bonds
|
Legends
Berry Senior Apartments Project
|
Series
2018
|
09/01/2021
|
3.750%
|
|
3,000,000
|
3,013,140
|
Northwest
Multi-County Housing & Redevelopment Authority
|
Refunding
Revenue Bonds
|
Pooled
Housing Program
|
Series
2015
|
07/01/2045
|
5.500%
|
|
2,500,000
|
2,661,825
|
Total
|
20,026,925
|
Municipal
Power 0.3%
|
City
of Rochester Electric Utility
|
Refunding
Revenue Bonds
|
Series
2015E
|
12/01/2027
|
4.000%
|
|
1,000,000
|
1,139,860
|
12/01/2028
|
4.000%
|
|
950,000
|
1,079,048
|
Total
|
2,218,908
|
Nursing
Home 2.1%
|
City
of Oak Park Heights
|
Refunding
Revenue Bonds
|
Boutwells
Landing Care Center
|
Series
2013
|
08/01/2025
|
5.250%
|
|
1,480,000
|
1,588,395
|
City
of Sauk Rapids
|
Refunding
Revenue Bonds
|
Good
Shepherd Lutheran Home
|
Series
2013
|
01/01/2039
|
5.125%
|
|
2,500,000
|
2,571,950
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Dakota
County Community Development Agency
|
Revenue
Bonds
|
Ebenezer
Ridges Care Center TCU Project
|
Series
2014S
|
09/01/2046
|
5.000%
|
|
2,000,000
|
2,076,160
|
Housing
& Redevelopment Authority of The City of St. Paul
|
Revenue
Bonds
|
Episcopal
Homes Project
|
Series
2013
|
05/01/2038
|
5.000%
|
|
1,200,000
|
1,222,884
|
05/01/2048
|
5.125%
|
|
6,250,000
|
6,357,000
|
Total
|
13,816,389
|
Other
Bond Issue 0.5%
|
City
of Minneapolis
|
Revenue
Bonds
|
YMCA
Greater Twin Cities Project
|
Series
2016
|
06/01/2027
|
4.000%
|
|
100,000
|
111,669
|
06/01/2028
|
4.000%
|
|
170,000
|
188,632
|
06/01/2029
|
4.000%
|
|
165,000
|
182,229
|
06/01/2030
|
4.000%
|
|
125,000
|
137,298
|
06/01/2031
|
4.000%
|
|
100,000
|
109,266
|
Housing
& Redevelopment Authority of The City of St. Paul
|
Refunding
Revenue Bonds
|
Series
2017A
|
08/01/2032
|
3.000%
|
|
500,000
|
514,980
|
08/01/2033
|
3.000%
|
|
500,000
|
514,330
|
08/01/2034
|
3.125%
|
|
850,000
|
876,605
|
08/01/2035
|
3.125%
|
|
800,000
|
823,256
|
Total
|
3,458,265
|
Other
Utility 1.0%
|
Housing
& Redevelopment Authority of The City of St. Paul
|
Refunding
Revenue Bonds
|
Series
2017A
|
10/01/2031
|
4.000%
|
|
875,000
|
970,856
|
10/01/2032
|
4.000%
|
|
800,000
|
882,080
|
10/01/2033
|
4.000%
|
|
655,000
|
720,926
|
St.
Paul Port Authority(c)
|
Revenue
Bonds
|
Energy
Park Utility Co. Project
|
Series
2012 AMT
|
08/01/2028
|
5.450%
|
|
250,000
|
257,863
|
08/01/2036
|
5.700%
|
|
1,250,000
|
1,286,675
|
Series
2017-4 AMT
|
10/01/2040
|
4.000%
|
|
1,000,000
|
1,072,740
|
St.
Paul Port Authority
|
Revenue
Bonds
|
Series
2017-3
|
10/01/2042
|
4.000%
|
|
1,360,000
|
1,478,782
|
Total
|
6,669,922
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
14
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Pool
/ Bond Bank 0.2%
|
City
of Minneapolis
|
Limited
Tax Revenue Bonds
|
Supported
Common Bond
|
Series
2010
|
12/01/2030
|
6.250%
|
|
1,000,000
|
1,064,610
|
Prep
School 0.4%
|
County
of Rice(f)
|
Revenue
Bonds
|
Shattuck-St.
Mary’s School
|
Series
2015A
|
08/01/2022
|
5.000%
|
|
2,435,000
|
2,565,808
|
Refunded
/ Escrowed 7.7%
|
City
of Anoka
|
Prerefunded
11/01/19 Revenue Bonds
|
Homestead
Anoka, Inc. Project
|
Series
2011A
|
11/01/2040
|
7.000%
|
|
1,000,000
|
1,024,110
|
Series
2011B
|
11/01/2034
|
6.875%
|
|
2,765,000
|
2,831,111
|
City
of Oak Park Heights
|
Prerefunded
08/01/20 Revenue Bonds
|
Oakgreen
Commons Project
|
Series
2010
|
08/01/2045
|
7.000%
|
|
2,000,000
|
2,113,200
|
Oakgreen
Commons Project - Memory Care Building
|
Series
2013
|
08/01/2043
|
6.500%
|
|
1,000,000
|
1,071,310
|
City
of St. Cloud
|
Prerefunded
05/01/20 Revenue Bonds
|
CentraCare
Health System
|
Series
2010
|
05/01/2030
|
5.125%
|
|
4,685,000
|
4,823,067
|
County
of Anoka
|
Prerefunded
06/01/20 Revenue Bonds
|
Spectrum
Building Co.
|
Series
2012A
|
06/01/2027
|
5.000%
|
|
290,000
|
304,918
|
06/01/2032
|
5.000%
|
|
300,000
|
315,432
|
06/01/2043
|
5.000%
|
|
1,000,000
|
1,051,440
|
Series
2014A
|
06/01/2047
|
5.000%
|
|
1,600,000
|
1,682,304
|
Housing
& Redevelopment Authority of The City of St. Paul
|
Prerefunded
09/01/21 Revenue Bonds
|
Nova
Classical Academy
|
Series
2011A
|
09/01/2042
|
6.625%
|
|
1,500,000
|
1,665,375
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Prerefunded
11/15/19 Revenue Bonds
|
Allina
Health System
|
Series
2009
|
11/15/2029
|
5.250%
|
|
2,000,000
|
2,023,360
|
Prerefunded
11/15/25 Revenue Bonds
|
HealthEast
Care System Project
|
Series
2015
|
11/15/2027
|
5.000%
|
|
2,500,000
|
3,039,700
|
11/15/2040
|
5.000%
|
|
1,000,000
|
1,215,880
|
11/15/2044
|
5.000%
|
|
1,000,000
|
1,215,880
|
Refunding
Revenue Bonds
|
HealthEast
Care System Project
|
Series
2015 Escrowed to Maturity
|
11/15/2023
|
5.000%
|
|
1,000,000
|
1,157,820
|
Minnesota
Higher Education Facilities Authority
|
Prerefunded
03/01/20 Revenue Bonds
|
College
of St. Benedict
|
7th
Series 2011M
|
03/01/2031
|
5.000%
|
|
300,000
|
306,678
|
03/01/2036
|
5.125%
|
|
275,000
|
281,319
|
Prerefunded
10/01/21 Revenue Bonds
|
Hamline
University
|
7th
Series 2011K2
|
10/01/2032
|
6.000%
|
|
1,000,000
|
1,102,660
|
10/01/2040
|
6.000%
|
|
2,000,000
|
2,205,320
|
Prerefunded
10/01/22 Revenue Bonds
|
St.
Catherine University
|
7th
Series 2012Q
|
10/01/2025
|
5.000%
|
|
325,000
|
362,258
|
10/01/2026
|
5.000%
|
|
280,000
|
312,099
|
10/01/2027
|
5.000%
|
|
200,000
|
222,928
|
10/01/2032
|
5.000%
|
|
700,000
|
780,248
|
Perham
Hospital District
|
Prerefunded
03/01/20 Revenue Bonds
|
Perham
Memorial Hospital & Home
|
Series
2010
|
03/01/2040
|
6.500%
|
|
3,500,000
|
3,608,010
|
Territory
of Guam(g)
|
Prerefunded
12/01/19 Revenue Bonds
|
Section
30
|
Series
2009A
|
12/01/2034
|
5.750%
|
|
3,500,000
|
3,554,530
|
University
of Minnesota
|
Prerefunded
12/01/20 Revenue Bonds
|
Series
2011A
|
12/01/2031
|
5.250%
|
|
5,000,000
|
5,271,900
|
Prerefunded
12/01/21 Revenue Bonds
|
Series
2011D
|
12/01/2036
|
5.000%
|
|
5,985,000
|
6,516,169
|
Total
|
50,059,026
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
15
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Retirement
Communities 5.1%
|
City
of Anoka
|
Refunding
Revenue Bonds
|
Homestead
at Anoka, Inc. Project
|
Series
2017
|
11/01/2046
|
5.000%
|
|
1,500,000
|
1,592,490
|
City
of Apple Valley
|
Refunding
Revenue Bonds
|
Apple
Vally Senior Housing
|
Series
2018
|
09/01/2053
|
4.500%
|
|
3,000,000
|
3,101,460
|
City
of Blaine
|
Refunding
Revenue Bonds
|
Crest
View Senior Community Project
|
Series
2015
|
07/01/2050
|
6.125%
|
|
2,500,000
|
2,540,025
|
City
of Maple Plain
|
Revenue
Bonds
|
Haven
Homes, Inc. Project
|
Series
2019
|
07/01/2057
|
4.650%
|
|
1,250,000
|
1,253,237
|
City
of Moorhead
|
Refunding
Revenue Bonds
|
Evercare
Senior Living LLC
|
Series
2012
|
09/01/2037
|
5.125%
|
|
1,000,000
|
1,009,950
|
City
of North Oaks
|
Refunding
Revenue Bonds
|
Waverly
Gardens Project
|
Series
2016
|
10/01/2041
|
4.250%
|
|
5,000,000
|
5,168,300
|
10/01/2047
|
5.000%
|
|
2,000,000
|
2,178,920
|
City
of Red Wing
|
Revenue
Bonds
|
Benedictine
Living Community
|
Series
2018
|
08/01/2047
|
5.000%
|
|
1,500,000
|
1,557,360
|
08/01/2053
|
5.000%
|
|
600,000
|
620,748
|
City
of Rochester
|
Revenue
Bonds
|
Homestead
Rochester, Inc. Project
|
Series
2015
|
12/01/2049
|
5.000%
|
|
2,400,000
|
2,452,056
|
City
of Sartell
|
Refunding
Revenue Bonds
|
Country
Manor Campus LLC
|
Series
2017
|
09/01/2042
|
4.500%
|
|
2,000,000
|
2,090,900
|
09/01/2042
|
5.000%
|
|
875,000
|
967,313
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
City
of St. Joseph
|
Revenue
Bonds
|
Woodcrest
of Country Manor Project
|
Series
2019
|
07/01/2055
|
5.000%
|
|
1,500,000
|
1,563,990
|
City
of St. Paul Park
|
Refunding
Revenue Bonds
|
Presbyterian
Homes Bloomington
|
Series
2017
|
09/01/2036
|
4.200%
|
|
275,000
|
287,796
|
09/01/2037
|
4.250%
|
|
300,000
|
313,797
|
09/01/2042
|
5.000%
|
|
1,000,000
|
1,092,090
|
City
of Wayzata(d)
|
Refunding
Revenue Bonds
|
Folkstone
Senior Living Co.
|
Series
2019
|
08/01/2054
|
5.000%
|
|
1,625,000
|
1,761,630
|
Dakota
County Community Development Agency(f)
|
Refunding
Revenue Bonds
|
Walker
Highviews Hills LLC
|
Series
2016
|
08/01/2051
|
5.000%
|
|
1,500,000
|
1,546,680
|
Woodbury
Housing & Redevelopment Authority
|
Revenue
Bonds
|
St.
Therese of Woodbury
|
Series
2014
|
12/01/2049
|
5.250%
|
|
2,000,000
|
2,105,100
|
Total
|
33,203,842
|
Sales
Tax 0.5%
|
City
of St. Paul
|
Revenue
Bonds
|
Series
2014G
|
11/01/2032
|
5.000%
|
|
1,250,000
|
1,453,450
|
City
of St. Paul Sales & Use Tax
|
Refunding
Revenue Bonds
|
Series
2019C
|
11/01/2025
|
4.000%
|
|
1,605,000
|
1,813,490
|
Total
|
3,266,940
|
Single
Family 2.5%
|
Minneapolis/St.
Paul Housing Finance Board
|
Mortgage-Backed
Revenue Bonds
|
City
Living
|
Series
2011A (GNMA)
|
12/01/2027
|
4.450%
|
|
400,000
|
418,612
|
Minnesota
Housing Finance Agency(c)
|
Refunding
Revenue Bonds
|
Residential
Housing
|
Series
2017D (GNMA) AMT
|
01/01/2030
|
3.300%
|
|
465,000
|
486,204
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
16
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Series
2018A (GNMA) AMT
|
07/01/2032
|
3.625%
|
|
1,790,000
|
1,885,640
|
Residential
Housing Finance
|
Series
2017A AMT
|
07/01/2030
|
3.200%
|
|
1,580,000
|
1,603,510
|
Revenue
Bonds
|
Residential
Housing
|
Series
2015E AMT
|
01/01/2046
|
3.500%
|
|
1,120,000
|
1,171,330
|
Minnesota
Housing Finance Agency
|
Refunding
Revenue Bonds
|
Residential
Housing Finance
|
Series
2019B (GNMA)
|
07/01/2033
|
3.300%
|
|
1,000,000
|
1,052,990
|
Revenue
Bonds
|
Mortgage-Backed
Securities Pass-Through Program
|
Series
2019 (GNMA)
|
03/01/2049
|
3.450%
|
|
1,984,962
|
2,055,607
|
06/01/2049
|
3.150%
|
|
1,996,334
|
2,043,706
|
Series
2016 (GNMA / FNMA)
|
02/01/2046
|
2.950%
|
|
5,601,867
|
5,688,472
|
Total
|
16,406,071
|
State
Appropriated 4.6%
|
State
of Minnesota
|
Refunding
Revenue Bonds
|
Appropriation
|
Series
2012B
|
03/01/2025
|
5.000%
|
|
5,000,000
|
5,476,400
|
03/01/2028
|
5.000%
|
|
3,000,000
|
3,282,600
|
03/01/2029
|
5.000%
|
|
4,250,000
|
4,643,550
|
Revenue
Bonds
|
Appropriation
|
Series
2014A
|
06/01/2038
|
5.000%
|
|
8,880,000
|
9,966,557
|
University
of Minnesota
|
Refunding
Revenue Bonds
|
State
Supported Stadium Debt
|
08/01/2027
|
5.000%
|
|
1,185,000
|
1,427,214
|
Municipal
Bonds (continued)
|
Issue
Description
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Revenue
Bonds
|
State
Supported Biomed Science Research Facilities
|
Series
2013
|
08/01/2038
|
5.000%
|
|
5,000,000
|
5,634,300
|
Total
|
30,430,621
|
State
General Obligation 4.0%
|
State
of Minnesota
|
Unlimited
General Obligation Bonds
|
Series
2018A
|
08/01/2031
|
5.000%
|
|
5,000,000
|
6,362,200
|
08/01/2032
|
5.000%
|
|
5,000,000
|
6,338,000
|
08/01/2033
|
5.000%
|
|
10,500,000
|
13,266,750
|
Total
|
25,966,950
|
Transportation
0.3%
|
Virgin
Islands Public Finance Authority(f),(g)
|
Revenue
Bonds
|
Series
2015
|
09/01/2033
|
5.000%
|
|
2,000,000
|
2,193,100
|
Total
Municipal Bonds
(Cost $612,647,980)
|
643,386,648
|
Money
Market Funds 0.2%
|
|
Shares
|
Value
($)
|
Dreyfus
AMT-Free Tax Exempt Cash Management Fund, Institutional Shares, 1.310%(h)
|
262,881
|
262,881
|
JPMorgan
Institutional Tax Free Money Market Fund, Institutional Class, 1.264%(h)
|
731,764
|
731,764
|
Total
Money Market Funds
(Cost $994,645)
|
994,645
|
Total
Investments in Securities
(Cost: $621,452,625)
|
652,191,293
|
Other
Assets & Liabilities, Net
|
|
1,473,224
|
Net
Assets
|
653,664,517
|
Notes to Portfolio of Investments
(a)
|
The Fund is
entitled to receive principal and interest from the guarantor after a day or a week’s notice or upon maturity. The maturity date disclosed represents the final maturity.
|
(b)
|
Represents a
variable rate security where the coupon rate adjusts on specified dates (generally daily or weekly) using the prevailing money market rate. The interest rate shown was the current rate as of July 31, 2019.
|
(c)
|
Income
from this security may be subject to alternative minimum tax.
|
(d)
|
Represents a
security purchased on a when-issued basis.
|
(e)
|
Zero
coupon bond.
|
(f)
|
Represents privately
placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified
institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees.
At July 31, 2019, the total value of these securities amounted to $6,305,588, which represents 0.96% of total net assets.
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
17
|
Portfolio of Investments (continued)
July 31, 2019
Notes to Portfolio of
Investments (continued)
(g)
|
Municipal
obligations include debt obligations issued by or on behalf of territories, possessions, or sovereign nations within the territorial boundaries of the United States. At July 31, 2019, the total value of these securities amounted to $5,747,630, which
represents 0.88% of total net assets.
|
(h)
|
The rate
shown is the seven-day current annualized yield at July 31, 2019.
|
Abbreviation Legend
AMT
|
Alternative
Minimum Tax
|
BAN
|
Bond
Anticipation Note
|
FNMA
|
Federal
National Mortgage Association
|
GNMA
|
Government
National Mortgage Association
|
NPFGC
|
National
Public Finance Guarantee Corporation
|
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
The following table is a summary of
the inputs used to value the Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Floating
Rate Notes
|
—
|
7,810,000
|
—
|
7,810,000
|
Municipal
Bonds
|
—
|
643,386,648
|
—
|
643,386,648
|
Money
Market Funds
|
994,645
|
—
|
—
|
994,645
|
Total
Investments in Securities
|
994,645
|
651,196,648
|
—
|
652,191,293
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
The accompanying Notes
to Financial Statements are an integral part of this statement.
18
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $621,452,625)
|
$652,191,293
|
Receivable
for:
|
|
Investments
sold
|
81,558
|
Capital
shares sold
|
2,765,121
|
Interest
|
7,997,572
|
Prepaid
expenses
|
5,353
|
Total
assets
|
663,040,897
|
Liabilities
|
|
Due
to custodian
|
868
|
Payable
for:
|
|
Investments
purchased on a delayed delivery basis
|
6,860,098
|
Capital
shares purchased
|
881,647
|
Distributions
to shareholders
|
1,496,451
|
Management
services fees
|
8,130
|
Distribution
and/or service fees
|
4,438
|
Transfer
agent fees
|
25,929
|
Compensation
of board members
|
51,657
|
Other
expenses
|
47,162
|
Total
liabilities
|
9,376,380
|
Net
assets applicable to outstanding capital stock
|
$653,664,517
|
Represented
by
|
|
Paid
in capital
|
625,514,635
|
Total
distributable earnings (loss) (Note 2)
|
28,149,882
|
Total
- representing net assets applicable to outstanding capital stock
|
$653,664,517
|
Class
A
|
|
Net
assets
|
$414,106,786
|
Shares
outstanding
|
74,561,677
|
Net
asset value per share
|
$5.55
|
Maximum
sales charge
|
3.00%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares)
|
$5.72
|
Advisor
Class
|
|
Net
assets
|
$12,205,107
|
Shares
outstanding
|
2,198,511
|
Net
asset value per share
|
$5.55
|
Class
C
|
|
Net
assets
|
$58,620,416
|
Shares
outstanding
|
10,554,647
|
Net
asset value per share
|
$5.55
|
Institutional
Class
|
|
Net
assets
|
$156,662,019
|
Shares
outstanding
|
28,230,394
|
Net
asset value per share
|
$5.55
|
Institutional
2 Class
|
|
Net
assets
|
$2,682,712
|
Shares
outstanding
|
483,751
|
Net
asset value per share
|
$5.55
|
Institutional
3 Class
|
|
Net
assets
|
$9,387,477
|
Shares
outstanding
|
1,689,112
|
Net
asset value per share
|
$5.56
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
19
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Dividends
— unaffiliated issuers
|
$26,230
|
Interest
|
22,549,832
|
Total
income
|
22,576,062
|
Expenses:
|
|
Management
services fees
|
2,772,157
|
Distribution
and/or service fees
|
|
Class
A
|
987,138
|
Class
C
|
591,448
|
Transfer
agent fees
|
|
Class
A
|
202,755
|
Advisor
Class
|
5,270
|
Class
C
|
30,369
|
Institutional
Class
|
66,974
|
Institutional
2 Class
|
1,476
|
Institutional
3 Class
|
677
|
Compensation
of board members
|
20,008
|
Custodian
fees
|
6,182
|
Printing
and postage fees
|
30,360
|
Registration
fees
|
22,447
|
Audit
fees
|
32,250
|
Legal
fees
|
12,422
|
Compensation
of chief compliance officer
|
124
|
Other
|
17,154
|
Total
expenses
|
4,799,211
|
Net
investment income
|
17,776,851
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
(1,032,836)
|
Futures
contracts
|
(348,973)
|
Net
realized loss
|
(1,381,809)
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
22,285,778
|
Net
change in unrealized appreciation (depreciation)
|
22,285,778
|
Net
realized and unrealized gain
|
20,903,969
|
Net
increase in net assets resulting from operations
|
$38,680,820
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
20
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$17,776,851
|
$17,480,370
|
Net
realized gain (loss)
|
(1,381,809)
|
489,082
|
Net
change in unrealized appreciation (depreciation)
|
22,285,778
|
(12,530,703)
|
Net
increase in net assets resulting from operations
|
38,680,820
|
5,438,749
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(11,872,720)
|
|
Advisor
Class
|
(332,324)
|
|
Class
C
|
(1,335,328)
|
|
Institutional
Class
|
(4,232,545)
|
|
Institutional
2 Class
|
(76,545)
|
|
Institutional
3 Class
|
(253,506)
|
|
Net
investment income
|
|
|
Class
A
|
|
(12,108,331)
|
Advisor
Class
|
|
(182,765)
|
Class
C
|
|
(1,549,281)
|
Institutional
Class
|
|
(3,599,969)
|
Institutional
2 Class
|
|
(53,815)
|
Institutional
3 Class
|
|
(186,427)
|
Net
realized gains
|
|
|
Class
A
|
|
(1,799,523)
|
Advisor
Class
|
|
(22,579)
|
Class
C
|
|
(314,080)
|
Institutional
Class
|
|
(487,469)
|
Institutional
2 Class
|
|
(6,638)
|
Institutional
3 Class
|
|
(26,743)
|
Total
distributions to shareholders (Note 2)
|
(18,102,968)
|
(20,337,620)
|
Increase
in net assets from capital stock activity
|
30,236,893
|
9,162,035
|
Total
increase (decrease) in net assets
|
50,814,745
|
(5,736,836)
|
Net
assets at beginning of year
|
602,849,772
|
608,586,608
|
Net
assets at end of year
|
$653,664,517
|
$602,849,772
|
Undistributed
(excess of distributions over) net investment income
|
$(26,442)
|
$299,675
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
21
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
10,552,153
|
56,904,871
|
8,535,272
|
46,394,897
|
Distributions
reinvested
|
2,176,016
|
11,739,090
|
2,529,368
|
13,731,474
|
Redemptions
|
(13,160,494)
|
(70,466,387)
|
(12,776,155)
|
(69,352,916)
|
Net
decrease
|
(432,325)
|
(1,822,426)
|
(1,711,515)
|
(9,226,545)
|
Advisor
Class
|
|
|
|
|
Subscriptions
|
1,465,567
|
7,824,507
|
832,097
|
4,522,274
|
Distributions
reinvested
|
61,257
|
330,903
|
37,830
|
204,979
|
Redemptions
|
(714,638)
|
(3,823,263)
|
(252,171)
|
(1,372,527)
|
Net
increase
|
812,186
|
4,332,147
|
617,756
|
3,354,726
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(1,812)
|
(9,914)
|
Net
decrease
|
—
|
—
|
(1,812)
|
(9,914)
|
Class
C
|
|
|
|
|
Subscriptions
|
1,358,894
|
7,331,292
|
1,881,405
|
10,261,733
|
Distributions
reinvested
|
241,769
|
1,303,272
|
335,548
|
1,821,845
|
Redemptions
|
(2,901,445)
|
(15,580,787)
|
(3,664,419)
|
(19,869,941)
|
Net
decrease
|
(1,300,782)
|
(6,946,223)
|
(1,447,466)
|
(7,786,363)
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
14,793,022
|
79,473,438
|
9,928,716
|
53,967,447
|
Distributions
reinvested
|
761,919
|
4,110,647
|
729,681
|
3,957,650
|
Redemptions
|
(9,522,455)
|
(50,871,755)
|
(8,077,710)
|
(43,914,821)
|
Net
increase
|
6,032,486
|
32,712,330
|
2,580,687
|
14,010,276
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
324,735
|
1,753,413
|
338,393
|
1,827,505
|
Distributions
reinvested
|
14,167
|
76,220
|
11,099
|
60,088
|
Redemptions
|
(308,915)
|
(1,652,559)
|
(105,875)
|
(568,522)
|
Net
increase
|
29,987
|
177,074
|
243,617
|
1,319,071
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
778,610
|
4,206,415
|
1,522,818
|
8,367,212
|
Distributions
reinvested
|
46,835
|
253,117
|
39,280
|
212,803
|
Redemptions
|
(501,572)
|
(2,675,541)
|
(198,707)
|
(1,079,231)
|
Net
increase
|
323,873
|
1,783,991
|
1,363,391
|
7,500,784
|
Total
net increase
|
5,465,425
|
30,236,893
|
1,644,658
|
9,162,035
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
22
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
23
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$5.37
|
0.16
|
0.18
|
0.34
|
(0.16)
|
—
|
(0.16)
|
Year
Ended 7/31/2018
|
$5.50
|
0.16
|
(0.11)
|
0.05
|
(0.16)
|
(0.02)
|
(0.18)
|
Year
Ended 7/31/2017
|
$5.68
|
0.17
|
(0.18)
|
(0.01)
|
(0.17)
|
(0.00)
(d)
|
(0.17)
|
Year
Ended 7/31/2016
|
$5.52
|
0.19
|
0.16
|
0.35
|
(0.19)
|
—
|
(0.19)
|
Year
Ended 7/31/2015
|
$5.49
|
0.20
|
0.03
|
0.23
|
(0.20)
|
—
|
(0.20)
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$5.37
|
0.17
|
0.19
|
0.36
|
(0.18)
|
—
|
(0.18)
|
Year
Ended 7/31/2018
|
$5.50
|
0.17
|
(0.10)
|
0.07
|
(0.18)
|
(0.02)
|
(0.20)
|
Year
Ended 7/31/2017
|
$5.68
|
0.18
|
(0.18)
|
0.00
|
(0.18)
|
(0.00)
(d)
|
(0.18)
|
Year
Ended 7/31/2016
|
$5.51
|
0.20
|
0.17
|
0.37
|
(0.20)
|
—
|
(0.20)
|
Year
Ended 7/31/2015
|
$5.49
|
0.21
|
0.02
|
0.23
|
(0.21)
|
—
|
(0.21)
|
Class
C
|
Year
Ended 7/31/2019
|
$5.37
|
0.12
|
0.18
|
0.30
|
(0.12)
|
—
|
(0.12)
|
Year
Ended 7/31/2018
|
$5.50
|
0.12
|
(0.11)
|
0.01
|
(0.12)
|
(0.02)
|
(0.14)
|
Year
Ended 7/31/2017
|
$5.68
|
0.12
|
(0.18)
|
(0.06)
|
(0.12)
|
(0.00)
(d)
|
(0.12)
|
Year
Ended 7/31/2016
|
$5.52
|
0.14
|
0.16
|
0.30
|
(0.14)
|
—
|
(0.14)
|
Year
Ended 7/31/2015
|
$5.49
|
0.15
|
0.03
|
0.18
|
(0.15)
|
—
|
(0.15)
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$5.37
|
0.17
|
0.19
|
0.36
|
(0.18)
|
—
|
(0.18)
|
Year
Ended 7/31/2018
|
$5.50
|
0.17
|
(0.10)
|
0.07
|
(0.18)
|
(0.02)
|
(0.20)
|
Year
Ended 7/31/2017
|
$5.68
|
0.18
|
(0.18)
|
0.00
|
(0.18)
|
(0.00)
(d)
|
(0.18)
|
Year
Ended 7/31/2016
|
$5.52
|
0.20
|
0.16
|
0.36
|
(0.20)
|
—
|
(0.20)
|
Year
Ended 7/31/2015
|
$5.49
|
0.21
|
0.03
|
0.24
|
(0.21)
|
—
|
(0.21)
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$5.36
|
0.17
|
0.19
|
0.36
|
(0.17)
|
—
|
(0.17)
|
Year
Ended 7/31/2018
|
$5.49
|
0.17
|
(0.10)
|
0.07
|
(0.18)
|
(0.02)
|
(0.20)
|
Year
Ended 7/31/2017
|
$5.67
|
0.18
|
(0.18)
|
0.00
|
(0.18)
|
(0.00)
(d)
|
(0.18)
|
Year
Ended 7/31/2016
|
$5.52
|
0.20
|
0.15
|
0.35
|
(0.20)
|
—
|
(0.20)
|
Year
Ended 7/31/2015
|
$5.49
|
0.21
|
0.03
|
0.24
|
(0.21)
|
—
|
(0.21)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
24
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$5.55
|
6.50%
|
0.78%
|
0.78%
|
2.95%
|
18%
|
$414,107
|
Year
Ended 7/31/2018
|
$5.37
|
0.98%
|
0.78%
|
0.78%
(c)
|
2.90%
|
17%
|
$402,818
|
Year
Ended 7/31/2017
|
$5.50
|
(0.20%)
|
0.79%
|
0.79%
(c)
|
2.99%
|
19%
|
$422,118
|
Year
Ended 7/31/2016
|
$5.68
|
6.38%
|
0.81%
|
0.81%
(c)
|
3.35%
|
8%
|
$475,734
|
Year
Ended 7/31/2015
|
$5.52
|
4.14%
|
0.82%
|
0.82%
(c)
|
3.54%
|
9%
|
$409,338
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$5.55
|
6.77%
|
0.53%
|
0.53%
|
3.19%
|
18%
|
$12,205
|
Year
Ended 7/31/2018
|
$5.37
|
1.23%
|
0.54%
|
0.54%
(c)
|
3.16%
|
17%
|
$7,443
|
Year
Ended 7/31/2017
|
$5.50
|
0.05%
|
0.54%
|
0.54%
(c)
|
3.24%
|
19%
|
$4,228
|
Year
Ended 7/31/2016
|
$5.68
|
6.84%
|
0.56%
|
0.56%
(c)
|
3.55%
|
8%
|
$5,156
|
Year
Ended 7/31/2015
|
$5.51
|
4.21%
|
0.57%
|
0.57%
(c)
|
3.79%
|
9%
|
$861
|
Class
C
|
Year
Ended 7/31/2019
|
$5.55
|
5.70%
|
1.53%
|
1.53%
|
2.20%
|
18%
|
$58,620
|
Year
Ended 7/31/2018
|
$5.37
|
0.22%
|
1.53%
|
1.53%
(c)
|
2.14%
|
17%
|
$63,680
|
Year
Ended 7/31/2017
|
$5.50
|
(0.95%)
|
1.54%
|
1.54%
(c)
|
2.24%
|
19%
|
$73,206
|
Year
Ended 7/31/2016
|
$5.68
|
5.59%
|
1.56%
|
1.56%
(c)
|
2.58%
|
8%
|
$70,213
|
Year
Ended 7/31/2015
|
$5.52
|
3.37%
|
1.57%
|
1.57%
(c)
|
2.79%
|
9%
|
$50,570
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$5.55
|
6.76%
|
0.53%
|
0.53%
|
3.19%
|
18%
|
$156,662
|
Year
Ended 7/31/2018
|
$5.37
|
1.23%
|
0.53%
|
0.53%
(c)
|
3.15%
|
17%
|
$119,138
|
Year
Ended 7/31/2017
|
$5.50
|
0.05%
|
0.55%
|
0.55%
(c)
|
3.23%
|
19%
|
$107,860
|
Year
Ended 7/31/2016
|
$5.68
|
6.65%
|
0.56%
|
0.56%
(c)
|
3.56%
|
8%
|
$26,415
|
Year
Ended 7/31/2015
|
$5.52
|
4.40%
|
0.57%
|
0.57%
(c)
|
3.80%
|
9%
|
$8,291
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$5.55
|
6.95%
|
0.54%
|
0.54%
|
3.20%
|
18%
|
$2,683
|
Year
Ended 7/31/2018
|
$5.36
|
1.21%
|
0.55%
|
0.55%
|
3.15%
|
17%
|
$2,433
|
Year
Ended 7/31/2017
|
$5.49
|
0.03%
|
0.56%
|
0.56%
|
3.23%
|
19%
|
$1,155
|
Year
Ended 7/31/2016
|
$5.67
|
6.48%
|
0.55%
|
0.55%
|
3.55%
|
8%
|
$453
|
Year
Ended 7/31/2015
|
$5.52
|
4.42%
|
0.55%
|
0.55%
|
3.81%
|
9%
|
$10
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
25
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$5.38
|
0.17
|
0.19
|
0.36
|
(0.18)
|
—
|
(0.18)
|
Year
Ended 7/31/2018
|
$5.51
|
0.17
|
(0.10)
|
0.07
|
(0.18)
|
(0.02)
|
(0.20)
|
Year
Ended 7/31/2017(e)
|
$5.41
|
0.07
|
0.10
(f)
|
0.17
|
(0.07)
|
—
|
(0.07)
|
Notes
to Financial Highlights
|
(a)
|
In
addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense
ratios.
|
(b)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(c)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
(d)
|
Rounds to
zero.
|
(e)
|
Institutional
3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date.
|
(f)
|
Calculation
of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of subscriptions and redemptions of Fund shares in
relation to fluctuations in the market value of the portfolio.
|
(g)
|
Annualized.
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
26
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$5.56
|
6.80%
|
0.49%
|
0.49%
|
3.24%
|
18%
|
$9,387
|
Year
Ended 7/31/2018
|
$5.38
|
1.27%
|
0.50%
|
0.50%
|
3.23%
|
17%
|
$7,339
|
Year
Ended 7/31/2017(e)
|
$5.51
|
3.20%
|
0.53%
(g)
|
0.53%
(g)
|
3.17%
(g)
|
19%
|
$10
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
27
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Minnesota Tax-Exempt Fund (the Fund), a series of
Columbia Funds Series Trust II (the Trust), is a non-diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business
trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Advisor Class, Institutional Class, Institutional 2 Class and Institutional 3 Class shares are available for purchase through authorized investment professionals to omnibus retirement plans
or to institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or not believed to be reflective of market
value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that management believes
does not approximate market value.
Investments in
open-end investment companies, including money market funds, are valued at their latest net asset value.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
28
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
GAAP
requires disclosure regarding the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following
the Fund’s Portfolio of Investments.
Derivative
instruments
The Fund invests in certain derivative
instruments, as detailed below, to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more securities, currencies, commodities, indices, or other assets
or instruments. Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce
transaction costs and to pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve
various risks, including the potential inability of the counterparty to fulfill its obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at
favorable prices) and the potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not
recorded in the financial statements.
A derivative
instrument may suffer a marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its obligations
under the contract. The Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund and the amount of any variation
margin held by the counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk to the Fund since the clearinghouse or central counterparty (CCP)
provides some protection in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract; therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit
risk still exists in exchange-traded or centrally cleared derivatives with respect to initial and variation margin that is held in a broker’s customer account. While brokers are required to segregate customer margin from their own assets, in
the event that a broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a
pro-rata basis across all the broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its contractual rights and to secure
rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivatives contract
counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a
default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative instrument’s payables and/or receivables with collateral held and/or posted and create
one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
Collateral (margin) requirements differ by type of derivative.
Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain circumstances. Collateral terms for most over-the-counter
derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral
requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally,
the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (e.g., $250,000) before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized,
contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
29
|
Notes to Financial Statements (continued)
July 31, 2019
broker. Any
interest expense paid by the Fund is shown on the Statement of Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations
and by monitoring the financial stability of those counterparties.
Certain ISDA Master Agreements allow counterparties of
over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified time period or if the Fund fails to meet certain terms of
the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination rights if the counterparty fails to meet certain terms of the ISDA Master Agreement. In
determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk, whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes, the Fund does not offset
derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are exchange-traded and represent
commitments for the future purchase or sale of an asset at a specified price on a specified date. The Fund bought and sold futures contracts to manage exposure to movements in interest rates. These instruments may be used for other purposes in
future periods. Upon entering into futures contracts, the Fund bears risks that it may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional risks include counterparty credit risk, the possibility of an
illiquid market, and that a change in the value of the contract or option may not correlate with changes in the value of the underlying asset.
Upon entering into a futures contract, the Fund deposits cash
or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be maintained at an established level over the life of the contract. Cash
deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are designated in the Portfolio of Investments. Subsequent payments (variation margin) are made or received
by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund recognizes a realized gain or
loss when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Effects of derivative transactions in the financial
statements
The following tables are intended to provide
additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the
impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules following the Portfolio of Investments present additional information regarding
derivative instruments outstanding at the end of the period, if any.
The following table indicates the effect of derivative
instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended July 31, 2019:
Amount
of realized gain (loss) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Interest
rate risk
|
(348,973)
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended July 31, 2019:
Derivative
instrument
|
Average
notional
amounts ($)*
|
Futures
contracts — short
|
3,130,173
|
30
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
*
|
Based on
the ending daily outstanding amounts for the year ended July 31, 2019.
|
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Dividend income is recorded on the ex-dividend date.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its net tax-exempt and investment company taxable income and net capital gain, if any, for its tax year, and as
such will not be subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be
subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
31
|
Notes to Financial Statements (continued)
July 31, 2019
Recent
accounting pronouncements
Accounting Standards Update
2017-08 Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods beginning after December 15, 2019 and interim periods within
those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a result of the amendments, management implemented disclosure
changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the level 3 valuation
processes, as well as modifications to the measurement uncertainty disclosure.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.47% to 0.31% as the Fund’s net assets increase. The
effective management services fee rate for the year ended July 31, 2019 was 0.46% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
32
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transactions with affiliates
For the year ended July 31, 2019, the Fund engaged in purchase
and/or sale transactions with affiliates and/or accounts that have a common investment manager (or affiliated investment managers), common directors/trustees, and/or common officers. Those purchase and sale transactions complied with provisions of
Rule 17a-7 under the 1940 Act and were $1,850,376 and $0, respectively.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
For the year ended July 31, 2019, the Fund’s effective
transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.05
|
Advisor
Class
|
0.05
|
Class
C
|
0.05
|
Institutional
Class
|
0.05
|
Institutional
2 Class
|
0.06
|
Institutional
3 Class
|
0.01
|
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at the maximum annual rates of up to 0.25% and 1.00% of the Fund’s average daily net assets attributable to Class A and Class C shares, respectively. For Class C shares, of the 1.00% fee, up to 0.75% can be reimbursed for
distribution expenses and up to an additional 0.25% can be reimbursed for shareholder servicing expenses.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
33
|
Notes to Financial Statements (continued)
July 31, 2019
The
amount of distribution and shareholder services expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $410,000 for Class C shares. This amount is based on the most recent information available as of
June 30, 2019, and may be recovered from future payments under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended July 31, 2019, if any, are listed below:
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
3.00
|
0.75
(a)
|
262,540
|
Class
C
|
—
|
1.00
(b)
|
3,033
|
(a)
|
This
charge is imposed on certain investments of $500,000 or more if redeemed within 12 months after purchase.
|
(b)
|
This
charge applies to redemptions within 12 months after purchase, with certain limited exceptions.
|
The Fund’s other share classes are not subject to sales
charges.
Expenses waived/reimbursed by the Investment
Manager and its affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of
Trustees, 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 following annual rate(s) as a
percentage of the class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to
December 1, 2018
|
Class
A
|
0.85%
|
0.85%
|
Advisor
Class
|
0.60
|
0.60
|
Class
C
|
1.60
|
1.60
|
Institutional
Class
|
0.60
|
0.60
|
Institutional
2 Class
|
0.61
|
0.62
|
Institutional
3 Class
|
0.56
|
0.56
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), 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, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or expenses reimbursed under the expense
reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for tax straddles, capital loss carryforwards, trustees’ deferred compensation and distributions. To the extent these differences were permanent, reclassifications were made among the components of the Fund’s net
assets. Temporary differences do not require reclassifications.
34
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
Fund did not have any permanent differences; therefore, no reclassifications were made.
The tax character of distributions paid during the years
indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Tax-exempt
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Tax-exempt
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
—
|
18,102,968
|
—
|
18,102,968
|
148,730
|
17,544,896
|
2,643,994
|
20,337,620
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At July 31, 2019, the components of distributable earnings on
a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
tax-
exempt income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
appreciation ($)
|
—
|
1,521,058
|
—
|
(1,624,198)
|
29,800,522
|
At July 31, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
appreciation ($)
|
622,390,771
|
30,083,602
|
(283,080)
|
29,800,522
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at July
31, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended July 31, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
No
expiration
short-term ($)
|
No
expiration
long-term ($)
|
Total
($)
|
Utilized
($)
|
Expired
($)
|
277,919
|
1,346,279
|
1,624,198
|
—
|
—
|
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and proceeds from
sales of securities, excluding short-term investments and derivatives, if any, aggregated to $136,092,166 and $106,488,585, respectively, for the year ended July 31, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate
reported in the Financial Highlights.
Note
6. Interfund lending
Pursuant to an exemptive
order granted by the Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and
money market funds, borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
35
|
Notes to Financial Statements (continued)
July 31, 2019
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended July 31, 2019.
Note
7. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion.
Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each
borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment
fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
Note 8. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer 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 debt instruments to indicate their credit risk. Lower rated or unrated debt instruments held by the Fund may present increased credit risk as compared to higher-rated debt instruments.
Geographic concentration risk
Because the Fund invests substantially in municipal securities
issued by the state identified in the Fund’s name and political sub-divisions of that state, the Fund will be particularly affected by adverse tax, legislative, regulatory, demographic or political changes as well as changes impacting the
state’s financial, economic or other condition and prospects. In addition, because of the relatively small number of issuers of tax-exempt securities in the 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. The value of municipal and other securities owned by the Fund also may be adversely affected by future changes in federal or state income tax laws.
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 interest rates may also affect the liquidity of
the Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, 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. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the longer the maturity or duration of a
debt security, the greater its sensitivity to changes in interest rates.
36
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
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. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may 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. 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. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
Non-diversification risk
A non-diversified fund is permitted to 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.
Shareholder concentration risk
At July 31, 2019, affiliated shareholders of record owned
70.8% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced
to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased
operating expenses for non-redeeming Fund shareholders.
Note 9. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 10. Information regarding pending and settled
legal proceedings
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (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 Fund. Further, although we believe proceedings are not 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, 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.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
37
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Minnesota Tax-Exempt Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Minnesota Tax-Exempt Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of operations
for the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
38
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Federal Income Tax Information
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended July 31, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
Exempt-
interest
dividends
|
|
100.00%
|
|
Exempt-interest dividends. The percentage of net investment
income distributed during the fiscal year that qualifies as exempt-interest dividends for federal income tax purposes.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
39
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
40
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
41
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
42
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
43
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
44
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Minnesota Tax-Exempt Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management Investment
Distributors, Inc. (collectively, the Funds).
On an
annual basis, the Fund’s Board of Trustees (the Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its
Contracts Committee in November 2018 and January, March, April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive
response to items of information requested by independent legal counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented
at these meetings were first supplied in draft form to designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who
is an Independent Trustee), and the final materials were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets
with portfolio management teams and senior management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the
work, deliberations and conclusions of the various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
45
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group, the product score of the
Fund (taking into account performance relative to peers and benchmarks) and the net assets of the Fund. The Board observed that the Fund’s investment performance was understandable in light of the particular management style involved and the
particular market environment.
Comparative fees, costs
of services provided and the profits realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability.
The Board considered the reports of its independent fee
consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to industry competitors,
the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of the level of fees is to
achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the "pricing philosophy"
currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s total expense ratio
(after considering proposed expense caps/waivers) was below the peer universe’s median expense ratio shown in the reports. Based on its review, the Board concluded that the Fund’s management fee was fair and reasonable in light of the
extent and quality of services that the Fund receives.
The Board also considered the profitability of Columbia
Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the Profitability Report, discussing the
profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was reasonable and that the 2019 information shows
that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle profitability relative to industry competitors was
reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced ability to offer various other financial products to
Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Fund should permit the Investment Manager to offer competitive compensation to its personnel, make necessary
investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
46
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
Columbia
Minnesota Tax-Exempt Fund | Annual Report 2019
|
47
|
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT filings are available on the SEC’s website at
sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
48
|
Columbia Minnesota Tax-Exempt
Fund | Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Minnesota Tax-Exempt Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Annual
Report
July 31, 2019
Columbia Limited Duration Credit Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
5
|
|
7
|
|
8
|
|
13
|
|
15
|
|
16
|
|
18
|
|
22
|
|
33
|
|
34
|
|
39
|
|
42
|
Columbia Limited Duration Credit Fund | Annual Report
2019
Investment objective
Columbia Limited Duration Credit Fund
(the Fund) seeks to provide shareholders with a level of current income consistent with preservation of capital.
Portfolio
management
Tom
Murphy, CFA
Co-Portfolio
Manager
Managed Fund
since 2003
Timothy Doubek,
CFA
Co-Portfolio
Manager
Managed Fund
since 2009
Royce Wilson,
CFA
Co-Portfolio
Manager
Managed Fund
since 2012
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
Excluding
sales charges
|
06/19/03
|
5.75
|
1.96
|
3.16
|
|
Including
sales charges
|
|
2.57
|
1.34
|
2.85
|
Advisor
Class*
|
02/28/13
|
6.02
|
2.22
|
3.33
|
Class
C
|
Excluding
sales charges
|
06/19/03
|
4.96
|
1.20
|
2.39
|
|
Including
sales charges
|
|
3.96
|
1.20
|
2.39
|
Institutional
Class*
|
09/27/10
|
6.01
|
2.24
|
3.39
|
Institutional
2 Class*
|
11/08/12
|
6.08
|
2.28
|
3.39
|
Institutional
3 Class*
|
03/19/13
|
6.13
|
2.33
|
3.41
|
Bloomberg
Barclays U.S. 1-5 Year Corporate Index
|
|
6.10
|
2.56
|
3.55
|
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. Since the Fund launched more than one share class at its
inception, Class A shares were used. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit
columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
The Bloomberg Barclays U.S. 1-5 Year Corporate Index includes
U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility, and financial companies, with maturities between 1 and 5 years.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a
hypothetical $10,000 investment (July 31, 2009 — July 31, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Limited Duration Credit Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the
redemption of Fund shares.
Portfolio
breakdown (%) (at July 31, 2019)
|
Corporate
Bonds & Notes
|
80.9
|
Money
Market Funds
|
9.9
|
Treasury
Bills
|
2.1
|
U.S.
Treasury Obligations
|
7.1
|
Total
|
100.0
|
Percentages indicated are based
upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
Quality
breakdown (%) (at July 31, 2019)
|
AAA
rating
|
10.2
|
AA
rating
|
6.5
|
A
rating
|
20.8
|
BBB
rating
|
62.5
|
Total
|
100.0
|
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the highest and
lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is
designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the
considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage
(repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any
collateral.
4
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Manager Discussion of Fund Performance
At
July 31, 2019, approximately 25.99% of the Fund’s shares were owned in the aggregate by affiliated funds-of-funds managed by Columbia Management Investment Advisers, LLC (the Investment Manager). As a result of asset allocation decisions by
the Investment Manager, it is possible that the Fund may experience relatively large purchases or redemptions from affiliated funds-of-funds. The Investment Manager seeks to minimize the impact of these transactions by structuring them over a
reasonable period of time. The Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds.
For the 12-month period ended July 31, 2019, Class A shares of
the Fund returned 5.75% excluding sales charges. The Fund underperformed its benchmark, the Bloomberg Barclays U.S. 1-5 Year Corporate Index, which returned 6.10% for the same time period. For the 12-month period, the largest contribution to
relative performance came from the Fund’s higher level of credit risk compared with the benchmark, as the Fund benefited from the tightening of credit spreads.
U.S. Federal Reserve pivoted amid rising trade
tensions
During the 12-month period, positive drivers
of fixed-income market returns included the dovish pivot by the U.S. Federal Reserve (Fed) in late December/early January, declining interest rates and supportive U.S. economic data and corporate earnings, while volatile commodity prices and
U.S./China trade tensions represented a drag on returns. Overall, solid fixed-income returns masked significant underlying volatility during the period.
At times, international trade tensions were extreme during the
period. While the United States, Canada and Mexico came to agreement regarding modifications to NAFTA, little progress was made with respect to the U.S.-China trade dispute. The United States imposed 10% tariffs on $200 billion of Chinese goods
during the third quarter of 2018, while threatening further tariff increases. China then responded with its own tariffs. Ongoing negotiations forestalled further hikes in tariffs until May 2019, when U.S. tariffs on $200 billion of Chinese imports
were abruptly increased from 10% to 25%. In addition, the United States threatened to apply 25% tariffs on an additional $325 billion of Chinese goods by the end of June. In late June, both sides agreed to a pause in any further escalation and to
re-start negotiations.
The Fed raised short-term rates
for the fourth time during the calendar year in December of 2018, with its accompanying commentary more hawkish than expected, raising strong concerns from financial market participants. However, the Fed then pivoted to a dovish stance in late
December/early January, acknowledging the risks to growth from escalating trade tensions, and reduced its projections for rate hikes in 2019 from two to zero. The Fed cut short-term rates in July and the market immediately “priced in”
additional cuts in 2019 and 2020. Fed Chairman Jerome Powell expressed a favorable outlook for the domestic economy but described the federal funds rate cut as necessary given downside risks to U.S. growth from the global slowdown and continuing
trade tensions. After being as high as 3.24% in early November, the 10-year U.S. Treasury yield ended the period at 2.02%, a two-year low.
U.S. economic data was mixed over the 12-month period. While
the data was generally in line with expectations during the third quarter and early in the fourth quarter of 2018, the data grew more disappointing in late 2018 and early 2019. Though employment reports and broad labor market conditions remained
strong, durable goods orders, retail sales, industrial production and manufacturing data all softened. Corporate earnings were broadly supportive during the period, with the majority of companies exceeding expectations across most sectors.
Contributors and detractors
For the 12-month period, the largest positive contribution
to relative performance came from the Fund’s higher level of credit risk compared with the benchmark, which allowed the Fund to benefit from the tightening of credit spreads. Issue selection also added to performance during the period, led by
overweights in utilities Pacific Gas & Electric Company and DTE Energy. The Fund’s overall industry selection detracted slightly from returns, primarily due to an overweight position in electric utilities. Lastly, the Fund’s slight
underweight stance with respect to duration versus the benchmark detracted modestly as interest rates declined over the period. (Duration is a measure of a portfolio’s sensitivity to changes in interest rates.)
During the period, the Fund employed Treasury futures intended
to reduce the potentially negative impact of rising interest rates. On a stand-alone basis, these derivatives had a negative impact on Fund performance.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance (continued)
Fund positioning
At the close of the reporting period, U.S. equity indices
were at record or near-record levels and credit spreads were substantially narrower than they were at the start of 2019. However, we believe that spreads have the potential to tighten from current levels given recent history. That said, the
BBB-rated portion of the benchmark has registered substantial returns to date in 2019. Given ongoing serious concerns surrounding global trade, we are closely monitoring the financial and strategic execution, as well as the needed progress towards
deleveraging, by our holdings in the bottom portion of the investment grade category. Given the strong recent performance of many of our favored names year to date, we have reduced BBB exposure at the margins.
As always, our focus is on identifying idiosyncratic credit
opportunities as opposed to attempting to predict macroeconomic developments. We favor companies with management teams that are believed to execute in a way that balances returns to shareholders and bondholders, and that have demonstrated the
ability to withstand macroeconomic or industry headwinds.
The Fund ended the reporting period underweight duration
versus the benchmark. In sector terms, the Fund ended the period with overweights relative to the benchmark in electric, life insurance and food and beverage issuers. These sectors are primarily U.S.-centric and non-cyclical in nature. The
Fund’s largest underweights are to banking and technology. We believe that a backdrop of declining interest rates could weigh on the banking sector, and we did not see many relative value opportunities within technology issues as of the close
of the reporting period.
Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. Fixed-income securities present issuer default risk. A rise in interest rates may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt instruments, lowering the
Fund’s income and yield. These risks may be heightened for longer maturity and duration securities. Non-investment-grade securities (high-yield or junk bonds) are volatile and carry more risk to
principal and income than investment-grade securities. Prepayment and extension risk exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or
decelerate when interest rates rise which may reduce investment opportunities and potential returns. As a non-diversified fund, fewer investments could have a greater effect on performance. Foreign investments subject the Fund to risks, including political, economic, market, social and others within a particular country, as well as to currency instabilities and less stringent financial and accounting standards
generally applicable to U.S. issuers. Risks are enhanced for emerging market issuers. Market or other (e.g., interest rate) environments may adversely affect the liquidity of Fund investments, negatively impacting their price. Generally, the less liquid the market at the time the Fund sells a holding, the greater the risk of loss or decline of value to the Fund. Investing in
derivatives is a specialized activity that involves special risks that subject the Fund to significant loss potential, including when used as leverage, and may result in greater fluctuation in Fund value. See
the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
6
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,039.30
|
1,020.83
|
4.05
|
4.01
|
0.80
|
Advisor
Class
|
1,000.00
|
1,000.00
|
1,040.60
|
1,022.07
|
2.78
|
2.76
|
0.55
|
Class
C
|
1,000.00
|
1,000.00
|
1,036.50
|
1,017.11
|
7.83
|
7.75
|
1.55
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,041.60
|
1,022.07
|
2.78
|
2.76
|
0.55
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,042.00
|
1,022.36
|
2.48
|
2.46
|
0.49
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,042.20
|
1,022.61
|
2.23
|
2.21
|
0.44
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
7
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Corporate
Bonds & Notes 82.1%
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Aerospace
& Defense 2.2%
|
Lockheed
Martin Corp.
|
11/23/2020
|
2.500%
|
|
9,755,000
|
9,777,368
|
Northrop
Grumman Corp.
|
08/01/2019
|
5.050%
|
|
4,240,000
|
4,240,229
|
Total
|
14,017,597
|
Automotive
1.0%
|
Ford
Motor Credit Co. LLC
|
06/09/2025
|
4.687%
|
|
6,075,000
|
6,243,369
|
Banking
9.1%
|
American
Express Co.
|
05/20/2022
|
2.750%
|
|
4,985,000
|
5,029,172
|
02/27/2023
|
3.400%
|
|
6,670,000
|
6,883,207
|
Bank
of Montreal
|
03/26/2022
|
2.900%
|
|
5,900,000
|
5,977,715
|
02/05/2024
|
3.300%
|
|
2,795,000
|
2,888,580
|
Bank
of Nova Scotia (The)
|
02/11/2024
|
3.400%
|
|
5,460,000
|
5,673,819
|
Capital
One Financial Corp.
|
05/12/2020
|
2.500%
|
|
2,129,000
|
2,129,996
|
04/30/2025
|
4.250%
|
|
6,415,000
|
6,866,603
|
Goldman
Sachs Group, Inc. (The)
|
02/20/2024
|
3.625%
|
|
6,880,000
|
7,145,974
|
Toronto-Dominion
Bank (The)
|
03/11/2024
|
3.250%
|
|
5,950,000
|
6,158,095
|
Wells
Fargo & Co.
|
01/24/2024
|
3.750%
|
|
5,865,000
|
6,148,725
|
Wells
Fargo Bank NA
|
10/22/2021
|
3.625%
|
|
4,610,000
|
4,728,376
|
Total
|
59,630,262
|
Cable
and Satellite 3.5%
|
Charter
Communications Operating LLC/Capital
|
07/23/2025
|
4.908%
|
|
3,332,000
|
3,601,539
|
NBCUniversal
Media LLC
|
04/01/2021
|
4.375%
|
|
8,995,000
|
9,306,910
|
Sky
PLC(a)
|
09/16/2024
|
3.750%
|
|
9,525,000
|
10,066,887
|
Total
|
22,975,336
|
Chemicals
0.7%
|
Dow
Chemical Co. (The)(a)
|
05/15/2024
|
3.150%
|
|
4,560,000
|
4,644,852
|
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Diversified
Manufacturing 1.7%
|
Honeywell
International, Inc.(b)
|
08/08/2022
|
2.150%
|
|
2,212,000
|
2,210,432
|
United
Technologies Corp.
|
05/04/2020
|
1.900%
|
|
4,440,000
|
4,423,510
|
06/01/2022
|
3.100%
|
|
4,455,000
|
4,549,459
|
Total
|
11,183,401
|
Electric
16.2%
|
AEP
Texas, Inc.
|
10/01/2022
|
2.400%
|
|
7,765,000
|
7,756,148
|
American
Electric Power Co., Inc.
|
11/13/2020
|
2.150%
|
|
3,753,000
|
3,739,016
|
12/01/2021
|
3.650%
|
|
1,548,000
|
1,590,418
|
CMS
Energy Corp.
|
03/01/2024
|
3.875%
|
|
6,245,000
|
6,533,007
|
11/15/2025
|
3.600%
|
|
7,445,000
|
7,724,098
|
DTE
Energy Co.
|
10/01/2026
|
2.850%
|
|
8,988,000
|
8,972,712
|
Duke
Energy Corp.
|
09/01/2026
|
2.650%
|
|
9,511,000
|
9,417,830
|
Edison
International
|
09/15/2022
|
2.400%
|
|
4,710,000
|
4,606,130
|
Emera
U.S. Finance LP
|
06/15/2021
|
2.700%
|
|
6,091,000
|
6,099,564
|
06/15/2026
|
3.550%
|
|
5,330,000
|
5,491,243
|
Eversource
Energy
|
10/01/2024
|
2.900%
|
|
8,650,000
|
8,784,066
|
Public
Service Enterprise Group, Inc.
|
11/15/2019
|
1.600%
|
|
4,575,000
|
4,562,062
|
06/15/2024
|
2.875%
|
|
4,948,000
|
5,010,310
|
Southern
Co. (The)
|
07/01/2026
|
3.250%
|
|
8,855,000
|
9,033,269
|
WEC
Energy Group, Inc.
|
06/15/2025
|
3.550%
|
|
4,095,000
|
4,292,424
|
Xcel
Energy, Inc.
|
03/15/2021
|
2.400%
|
|
3,395,000
|
3,392,943
|
06/01/2025
|
3.300%
|
|
8,995,000
|
9,292,213
|
Total
|
106,297,453
|
Finance
Companies 0.9%
|
GE
Capital International Funding Co. Unlimited Co.
|
11/15/2025
|
3.373%
|
|
5,935,000
|
6,048,887
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
8
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Food
and Beverage 11.1%
|
Anheuser-Busch
InBev Finance, Inc.
|
02/01/2021
|
2.650%
|
|
3,880,000
|
3,900,669
|
Bacardi
Ltd.(a)
|
05/15/2025
|
4.450%
|
|
2,750,000
|
2,907,443
|
07/15/2026
|
2.750%
|
|
8,200,000
|
7,801,406
|
Conagra
Brands, Inc.
|
11/01/2025
|
4.600%
|
|
1,530,000
|
1,660,292
|
General
Mills, Inc.
|
10/21/2019
|
2.200%
|
|
1,400,000
|
1,399,131
|
JM
Smucker Co. (The)
|
12/06/2019
|
2.200%
|
|
2,385,000
|
2,381,833
|
03/15/2020
|
2.500%
|
|
6,718,000
|
6,716,589
|
Kraft
Heinz Foods Co. (The)
|
06/01/2026
|
3.000%
|
|
14,420,000
|
14,183,036
|
Molson
Coors Brewing Co.
|
07/15/2021
|
2.100%
|
|
2,915,000
|
2,895,128
|
Mondelez
International, Inc.(a)
|
10/28/2019
|
1.625%
|
|
8,515,000
|
8,496,080
|
Sysco
Corp.
|
07/15/2021
|
2.500%
|
|
3,675,000
|
3,681,424
|
Tyson
Foods, Inc.
|
08/15/2019
|
2.650%
|
|
8,720,000
|
8,719,697
|
Wm.
Wrigley Jr., Co.(a)
|
10/21/2019
|
2.900%
|
|
7,762,000
|
7,762,551
|
Total
|
72,505,279
|
Health
Care 4.6%
|
Becton
Dickinson and Co.
|
11/08/2021
|
3.125%
|
|
5,607,000
|
5,676,611
|
12/15/2024
|
3.734%
|
|
4,470,000
|
4,685,713
|
Cardinal
Health, Inc.
|
06/15/2027
|
3.410%
|
|
5,260,000
|
5,141,387
|
CVS
Health Corp.
|
03/25/2025
|
4.100%
|
|
9,430,000
|
9,918,521
|
Halfmoon
Parent, Inc.(a)
|
11/15/2025
|
4.125%
|
|
4,578,000
|
4,866,341
|
Total
|
30,288,573
|
Healthcare
Insurance 0.5%
|
Aetna,
Inc.
|
11/15/2022
|
2.750%
|
|
3,220,000
|
3,226,334
|
Independent
Energy 0.7%
|
Canadian
Natural Resources Ltd.
|
06/01/2027
|
3.850%
|
|
4,455,000
|
4,608,715
|
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Life
Insurance 8.9%
|
AIG
Global Funding(a)
|
07/02/2020
|
2.150%
|
|
2,180,000
|
2,171,648
|
Five
Corners Funding Trust(a)
|
11/15/2023
|
4.419%
|
|
13,005,000
|
13,894,360
|
Guardian
Life Global Funding(a)
|
05/06/2024
|
2.900%
|
|
6,650,000
|
6,796,074
|
MassMutual
Global Funding II(a)
|
07/01/2022
|
2.250%
|
|
4,194,000
|
4,179,279
|
06/22/2024
|
2.750%
|
|
8,015,000
|
8,122,040
|
Metropolitan
Life Global Funding I(a)
|
06/12/2020
|
2.050%
|
|
8,980,000
|
8,962,247
|
Peachtree
Corners Funding Trust(a)
|
02/15/2025
|
3.976%
|
|
13,693,000
|
14,271,981
|
Total
|
58,397,629
|
Media
and Entertainment 2.1%
|
Discovery
Communications LLC
|
06/15/2020
|
2.800%
|
|
13,643,000
|
13,659,385
|
Midstream
6.1%
|
Enterprise
Products Operating LLC
|
02/15/2021
|
2.800%
|
|
3,665,000
|
3,684,318
|
Kinder
Morgan Energy Partners LP
|
05/01/2024
|
4.300%
|
|
2,132,000
|
2,263,790
|
Plains
All American Pipeline LP/Finance Corp.
|
11/01/2024
|
3.600%
|
|
13,562,000
|
13,811,161
|
12/15/2026
|
4.500%
|
|
2,500,000
|
2,663,672
|
Southern
Natural Gas Co. LLC/Issuing Corp.
|
06/15/2021
|
4.400%
|
|
4,714,000
|
4,853,185
|
Western
Gas Partners LP
|
07/01/2026
|
4.650%
|
|
3,037,000
|
3,102,548
|
Williams
Companies, Inc. (The)
|
09/15/2025
|
4.000%
|
|
9,150,000
|
9,639,516
|
Total
|
40,018,190
|
Natural
Gas 1.9%
|
NiSource,
Inc.
|
11/17/2022
|
2.650%
|
|
5,850,000
|
5,870,422
|
06/15/2023
|
3.650%
|
|
3,870,000
|
4,014,638
|
Sempra
Energy
|
06/15/2024
|
3.550%
|
|
2,320,000
|
2,397,664
|
Total
|
12,282,724
|
Pharmaceuticals
3.6%
|
AbbVie,
Inc.
|
05/14/2025
|
3.600%
|
|
5,855,000
|
6,031,212
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
July 31, 2019
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Allergan
Funding SCS
|
06/15/2024
|
3.850%
|
|
6,590,000
|
6,857,857
|
Amgen,
Inc.
|
11/15/2021
|
3.875%
|
|
4,510,000
|
4,638,535
|
05/11/2022
|
2.650%
|
|
2,770,000
|
2,785,700
|
Gilead
Sciences, Inc.
|
09/20/2019
|
1.850%
|
|
3,522,000
|
3,519,465
|
Total
|
23,832,769
|
Property
& Casualty 0.6%
|
Liberty
Mutual Insurance Co.(a)
|
Subordinated
|
10/15/2026
|
7.875%
|
|
3,335,000
|
4,148,423
|
Railroads
1.2%
|
Canadian
National Railway Co.
|
02/03/2020
|
2.400%
|
|
7,940,000
|
7,939,937
|
Supermarkets
0.7%
|
Kroger
Co. (The)
|
10/15/2026
|
2.650%
|
|
4,665,000
|
4,539,110
|
Technology
2.7%
|
Broadcom
Corp./Cayman Finance Ltd.
|
01/15/2024
|
3.625%
|
|
6,765,000
|
6,828,165
|
International
Business Machines Corp.
|
05/13/2022
|
2.850%
|
|
10,330,000
|
10,462,534
|
Total
|
17,290,699
|
Transportation
Services 0.7%
|
ERAC
U.S.A. Finance LLC(a)
|
11/15/2024
|
3.850%
|
|
4,442,000
|
4,681,997
|
Wireless
1.4%
|
American
Tower Corp.
|
01/15/2025
|
2.950%
|
|
9,285,000
|
9,357,720
|
Total
Corporate Bonds & Notes
(Cost $524,496,588)
|
537,818,641
|
|
Treasury
Bills 2.1%
|
Issuer
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
United
States 2.1%
|
U.S.
Treasury Bills
|
11/21/2019
|
2.050%
|
|
14,000,000
|
13,911,684
|
Total
Treasury Bills
(Cost $13,897,862)
|
13,911,684
|
|
U.S.
Treasury Obligations 7.2%
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
U.S.
Treasury
|
02/29/2020
|
2.250%
|
|
30,000,000
|
30,017,578
|
01/31/2021
|
1.375%
|
|
17,215,000
|
17,065,041
|
Total
U.S. Treasury Obligations
(Cost $46,947,810)
|
47,082,619
|
Money
Market Funds 10.1%
|
|
Shares
|
Value
($)
|
Columbia
Short-Term Cash Fund, 2.361%(c),(d)
|
65,870,256
|
65,863,669
|
Total
Money Market Funds
(Cost $65,863,669)
|
65,863,669
|
Total
Investments in Securities
(Cost: $651,205,929)
|
664,676,613
|
Other
Assets & Liabilities, Net
|
|
(9,618,553)
|
Net
Assets
|
655,058,060
|
At July 31, 2019, securities and/or cash totaling
$701,295 were pledged as collateral.
Investments in derivatives
Long
futures contracts
|
Description
|
Number
of
contracts
|
Expiration
date
|
Trading
currency
|
Notional
amount
|
Value/Unrealized
appreciation ($)
|
Value/Unrealized
depreciation ($)
|
U.S.
Treasury 2-Year Note
|
1,091
|
09/2019
|
USD
|
233,917,219
|
740,870
|
—
|
The accompanying Notes to Financial Statements are an integral
part of this statement.
10
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Short
futures contracts
|
Description
|
Number
of
contracts
|
Expiration
date
|
Trading
currency
|
Notional
amount
|
Value/Unrealized
appreciation ($)
|
Value/Unrealized
depreciation ($)
|
U.S.
Treasury 10-Year Note
|
(822)
|
09/2019
|
USD
|
(104,740,781)
|
—
|
(2,132,174)
|
U.S.
Treasury 5-Year Note
|
(104)
|
09/2019
|
USD
|
(12,225,688)
|
—
|
(144,035)
|
U.S.
Treasury Ultra 10-Year Note
|
(17)
|
09/2019
|
USD
|
(2,343,344)
|
—
|
(59,452)
|
Total
|
|
|
|
|
—
|
(2,335,661)
|
Notes to Portfolio of
Investments
(a)
|
Represents
privately placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified
institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees.
At July 31, 2019, the total value of these securities amounted to $113,773,609, which represents 17.37% of total net assets.
|
(b)
|
Represents a
security purchased on a when-issued basis.
|
(c)
|
The rate
shown is the seven-day current annualized yield at July 31, 2019.
|
(d)
|
As
defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and
transactions in these affiliated companies during the year ended July 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized
gain
(loss) —
affiliated
issuers ($)
|
Net
change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends
—
affiliated
issuers ($)
|
Value
—
affiliated
issuers
at end of
period ($)
|
Columbia
Short-Term Cash Fund, 2.361%
|
|
2,783,340
|
494,640,315
|
(431,553,399)
|
65,870,256
|
218
|
—
|
618,772
|
65,863,669
|
Currency Legend
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
11
|
Portfolio of Investments (continued)
July 31, 2019
Fair value
measurements (continued)
The Committee meets at least monthly to review and approve valuation matters, which may include a description of specific valuation determinations, data regarding
pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and procedures (the Policies). The Policies address, among other things, instances when market quotations are or are
not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with
a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss
additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board
at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those described earlier.
The following table is a summary of the inputs used to value the
Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Corporate
Bonds & Notes
|
—
|
537,818,641
|
—
|
537,818,641
|
Treasury
Bills
|
13,911,684
|
—
|
—
|
13,911,684
|
U.S.
Treasury Obligations
|
47,082,619
|
—
|
—
|
47,082,619
|
Money
Market Funds
|
65,863,669
|
—
|
—
|
65,863,669
|
Total
Investments in Securities
|
126,857,972
|
537,818,641
|
—
|
664,676,613
|
Investments
in Derivatives
|
|
|
|
|
Asset
|
|
|
|
|
Futures
Contracts
|
740,870
|
—
|
—
|
740,870
|
Liability
|
|
|
|
|
Futures
Contracts
|
(2,335,661)
|
—
|
—
|
(2,335,661)
|
Total
|
125,263,181
|
537,818,641
|
—
|
663,081,822
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
Derivative instruments are valued at unrealized appreciation
(depreciation).
The accompanying Notes to Financial Statements are an integral part of this
statement.
12
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $585,342,260)
|
$598,812,944
|
Affiliated
issuers (cost $65,863,669)
|
65,863,669
|
Margin
deposits on:
|
|
Futures
contracts
|
701,295
|
Receivable
for:
|
|
Capital
shares sold
|
2,294,275
|
Dividends
|
105,124
|
Interest
|
4,518,262
|
Foreign
tax reclaims
|
8,486
|
Variation
margin for futures contracts
|
6,500
|
Expense
reimbursement due from Investment Manager
|
455
|
Prepaid
expenses
|
5,303
|
Total
assets
|
672,316,313
|
Liabilities
|
|
Payable
for:
|
|
Investments
purchased
|
12,721,579
|
Investments
purchased on a delayed delivery basis
|
2,209,766
|
Capital
shares purchased
|
550,849
|
Distributions
to shareholders
|
1,300,636
|
Variation
margin for futures contracts
|
264,404
|
Management
services fees
|
7,675
|
Distribution
and/or service fees
|
1,805
|
Transfer
agent fees
|
69,640
|
Compensation
of board members
|
70,551
|
Other
expenses
|
61,348
|
Total
liabilities
|
17,258,253
|
Net
assets applicable to outstanding capital stock
|
$655,058,060
|
Represented
by
|
|
Paid
in capital
|
667,157,263
|
Total
distributable earnings (loss) (Note 2)
|
(12,099,203)
|
Total
- representing net assets applicable to outstanding capital stock
|
$655,058,060
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
13
|
Statement of Assets and Liabilities (continued)
July 31, 2019
Class
A
|
|
Net
assets
|
$173,842,758
|
Shares
outstanding
|
17,439,804
|
Net
asset value per share
|
$9.97
|
Maximum
sales charge
|
3.00%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares)
|
$10.28
|
Advisor
Class
|
|
Net
assets
|
$48,340,271
|
Shares
outstanding
|
4,847,813
|
Net
asset value per share
|
$9.97
|
Class
C
|
|
Net
assets
|
$22,796,552
|
Shares
outstanding
|
2,287,559
|
Net
asset value per share
|
$9.97
|
Institutional
Class
|
|
Net
assets
|
$166,237,568
|
Shares
outstanding
|
16,665,141
|
Net
asset value per share
|
$9.98
|
Institutional
2 Class
|
|
Net
assets
|
$66,741,228
|
Shares
outstanding
|
6,689,495
|
Net
asset value per share
|
$9.98
|
Institutional
3 Class
|
|
Net
assets
|
$177,099,683
|
Shares
outstanding
|
17,753,677
|
Net
asset value per share
|
$9.98
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
14
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Dividends
— affiliated issuers
|
$618,772
|
Interest
|
17,903,885
|
Total
income
|
18,522,657
|
Expenses:
|
|
Management
services fees
|
2,529,936
|
Distribution
and/or service fees
|
|
Class
A
|
426,083
|
Class
C
|
256,083
|
Class
T
|
230
|
Transfer
agent fees
|
|
Class
A
|
203,662
|
Advisor
Class
|
57,612
|
Class
C
|
30,598
|
Institutional
Class
|
181,421
|
Institutional
2 Class
|
35,015
|
Institutional
3 Class
|
10,290
|
Class
T
|
109
|
Compensation
of board members
|
20,686
|
Custodian
fees
|
16,277
|
Printing
and postage fees
|
40,922
|
Registration
fees
|
103,509
|
Audit
fees
|
36,750
|
Legal
fees
|
12,224
|
Compensation
of chief compliance officer
|
128
|
Other
|
17,615
|
Total
expenses
|
3,979,150
|
Fees
waived or expenses reimbursed by Investment Manager and its affiliates
|
(235,744)
|
Total
net expenses
|
3,743,406
|
Net
investment income
|
14,779,251
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
1,616,262
|
Investments
— affiliated issuers
|
218
|
Futures
contracts
|
(5,201,177)
|
Net
realized loss
|
(3,584,697)
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
24,007,275
|
Futures
contracts
|
(1,283,282)
|
Net
change in unrealized appreciation (depreciation)
|
22,723,993
|
Net
realized and unrealized gain
|
19,139,296
|
Net
increase in net assets resulting from operations
|
$33,918,547
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
15
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$14,779,251
|
$12,624,997
|
Net
realized loss
|
(3,584,697)
|
(804,331)
|
Net
change in unrealized appreciation (depreciation)
|
22,723,993
|
(14,916,136)
|
Net
increase (decrease) in net assets resulting from operations
|
33,918,547
|
(3,095,470)
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(4,157,647)
|
|
Advisor
Class
|
(1,296,509)
|
|
Class
C
|
(432,373)
|
|
Institutional
Class
|
(4,077,981)
|
|
Institutional
2 Class
|
(1,659,268)
|
|
Institutional
3 Class
|
(3,709,208)
|
|
Class
T
|
(2,188)
|
|
Net
investment income
|
|
|
Class
A
|
|
(3,402,048)
|
Advisor
Class
|
|
(1,010,520)
|
Class
C
|
|
(349,024)
|
Institutional
Class
|
|
(3,694,113)
|
Institutional
2 Class
|
|
(1,392,798)
|
Institutional
3 Class
|
|
(2,490,109)
|
Class
K
|
|
(1,118)
|
Class
T
|
|
(5,367)
|
Total
distributions to shareholders (Note 2)
|
(15,335,174)
|
(12,345,097)
|
Increase
(decrease) in net assets from capital stock activity
|
25,819,037
|
(77,325,357)
|
Total
increase (decrease) in net assets
|
44,402,410
|
(92,765,924)
|
Net
assets at beginning of year
|
610,655,650
|
703,421,574
|
Net
assets at end of year
|
$655,058,060
|
$610,655,650
|
Undistributed
(excess of distributions over) net investment income
|
$(58,020)
|
$497,903
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
16
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
3,399,846
|
33,121,033
|
2,746,773
|
26,835,329
|
Distributions
reinvested
|
418,535
|
4,081,612
|
343,667
|
3,352,898
|
Redemptions
|
(4,954,852)
|
(48,125,857)
|
(6,424,393)
|
(62,661,266)
|
Net
decrease
|
(1,136,471)
|
(10,923,212)
|
(3,333,953)
|
(32,473,039)
|
Advisor
Class
|
|
|
|
|
Subscriptions
|
826,462
|
8,058,251
|
963,604
|
9,421,410
|
Distributions
reinvested
|
132,900
|
1,296,211
|
103,549
|
1,010,227
|
Redemptions
|
(1,258,631)
|
(12,234,246)
|
(1,722,212)
|
(16,868,519)
|
Net
decrease
|
(299,269)
|
(2,879,784)
|
(655,059)
|
(6,436,882)
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(1,031)
|
(8,710)
|
Net
decrease
|
—
|
—
|
(1,031)
|
(8,710)
|
Class
C
|
|
|
|
|
Subscriptions
|
423,962
|
4,146,680
|
310,876
|
3,039,184
|
Distributions
reinvested
|
40,270
|
392,078
|
33,256
|
324,347
|
Redemptions
|
(1,187,438)
|
(11,568,066)
|
(1,792,751)
|
(17,481,168)
|
Net
decrease
|
(723,206)
|
(7,029,308)
|
(1,448,619)
|
(14,117,637)
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
7,180,357
|
70,382,911
|
7,699,164
|
75,523,215
|
Distributions
reinvested
|
391,261
|
3,818,569
|
333,958
|
3,260,578
|
Redemptions
|
(7,816,033)
|
(76,076,963)
|
(11,311,531)
|
(110,523,611)
|
Net
decrease
|
(244,415)
|
(1,875,483)
|
(3,278,409)
|
(31,739,818)
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
2,236,045
|
21,918,539
|
2,739,342
|
26,814,332
|
Distributions
reinvested
|
169,951
|
1,658,892
|
142,742
|
1,392,505
|
Redemptions
|
(3,398,255)
|
(33,018,170)
|
(1,598,817)
|
(15,639,675)
|
Net
increase (decrease)
|
(992,259)
|
(9,440,739)
|
1,283,267
|
12,567,162
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
7,335,968
|
71,812,313
|
1,091,746
|
10,732,213
|
Distributions
reinvested
|
379,167
|
3,708,676
|
255,040
|
2,489,907
|
Redemptions
|
(1,786,690)
|
(17,294,520)
|
(1,860,454)
|
(18,085,258)
|
Net
increase (decrease)
|
5,928,445
|
58,226,469
|
(513,668)
|
(4,863,138)
|
Class
K
|
|
|
|
|
Distributions
reinvested
|
—
|
—
|
99
|
978
|
Redemptions
|
—
|
—
|
(11,348)
|
(110,320)
|
Net
decrease
|
—
|
—
|
(11,249)
|
(109,342)
|
Class
T
|
|
|
|
|
Distributions
reinvested
|
194
|
1,875
|
532
|
5,200
|
Redemptions
|
(27,113)
|
(260,781)
|
(15,191)
|
(149,153)
|
Net
decrease
|
(26,919)
|
(258,906)
|
(14,659)
|
(143,953)
|
Total
net increase (decrease)
|
2,505,906
|
25,819,037
|
(7,973,380)
|
(77,325,357)
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
17
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$9.66
|
0.23
|
0.32
|
0.55
|
(0.24)
|
—
|
(0.24)
|
Year
Ended 7/31/2018
|
$9.88
|
0.17
|
(0.22)
|
(0.05)
|
(0.17)
|
—
|
(0.17)
|
Year
Ended 7/31/2017
|
$9.80
|
0.15
|
0.07
|
0.22
|
(0.14)
|
—
|
(0.14)
|
Year
Ended 7/31/2016
|
$9.70
|
0.22
|
0.10
|
0.32
|
(0.22)
|
—
|
(0.22)
|
Year
Ended 7/31/2015
|
$9.99
|
0.19
|
(0.28)
|
(0.09)
|
(0.19)
|
(0.01)
|
(0.20)
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$9.66
|
0.25
|
0.32
|
0.57
|
(0.26)
|
—
|
(0.26)
|
Year
Ended 7/31/2018
|
$9.89
|
0.19
|
(0.23)
|
(0.04)
|
(0.19)
|
—
|
(0.19)
|
Year
Ended 7/31/2017
|
$9.80
|
0.17
|
0.09
|
0.26
|
(0.17)
|
—
|
(0.17)
|
Year
Ended 7/31/2016
|
$9.70
|
0.24
|
0.11
|
0.35
|
(0.25)
|
—
|
(0.25)
|
Year
Ended 7/31/2015
|
$9.99
|
0.22
|
(0.29)
|
(0.07)
|
(0.21)
|
(0.01)
|
(0.22)
|
Class
C
|
Year
Ended 7/31/2019
|
$9.66
|
0.15
|
0.32
|
0.47
|
(0.16)
|
—
|
(0.16)
|
Year
Ended 7/31/2018
|
$9.88
|
0.10
|
(0.23)
|
(0.13)
|
(0.09)
|
—
|
(0.09)
|
Year
Ended 7/31/2017
|
$9.80
|
0.07
|
0.08
|
0.15
|
(0.07)
|
—
|
(0.07)
|
Year
Ended 7/31/2016
|
$9.69
|
0.15
|
0.11
|
0.26
|
(0.15)
|
—
|
(0.15)
|
Year
Ended 7/31/2015
|
$9.99
|
0.12
|
(0.30)
|
(0.18)
|
(0.11)
|
(0.01)
|
(0.12)
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$9.67
|
0.25
|
0.32
|
0.57
|
(0.26)
|
—
|
(0.26)
|
Year
Ended 7/31/2018
|
$9.89
|
0.19
|
(0.22)
|
(0.03)
|
(0.19)
|
—
|
(0.19)
|
Year
Ended 7/31/2017
|
$9.80
|
0.17
|
0.09
|
0.26
|
(0.17)
|
—
|
(0.17)
|
Year
Ended 7/31/2016
|
$9.70
|
0.24
|
0.11
|
0.35
|
(0.25)
|
—
|
(0.25)
|
Year
Ended 7/31/2015
|
$9.99
|
0.21
|
(0.28)
|
(0.07)
|
(0.21)
|
(0.01)
|
(0.22)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
18
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$9.97
|
5.75%
|
0.84%
|
0.80%
|
2.34%
|
99%
|
$173,843
|
Year
Ended 7/31/2018
|
$9.66
|
(0.55%)
|
0.84%
(c)
|
0.80%
(c),(d)
|
1.74%
|
79%
|
$179,474
|
Year
Ended 7/31/2017
|
$9.88
|
2.28%
|
0.83%
|
0.81%
(d)
|
1.47%
|
119%
|
$216,524
|
Year
Ended 7/31/2016
|
$9.80
|
3.43%
|
0.89%
|
0.83%
(d)
|
2.29%
|
49%
|
$388,216
|
Year
Ended 7/31/2015
|
$9.70
|
(0.96%)
|
0.86%
|
0.83%
(d)
|
1.92%
|
68%
|
$538,661
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$9.97
|
6.02%
|
0.59%
|
0.55%
|
2.59%
|
99%
|
$48,340
|
Year
Ended 7/31/2018
|
$9.66
|
(0.40%)
|
0.59%
(c)
|
0.55%
(c),(d)
|
1.99%
|
79%
|
$49,745
|
Year
Ended 7/31/2017
|
$9.89
|
2.65%
|
0.59%
|
0.56%
(d)
|
1.74%
|
119%
|
$57,357
|
Year
Ended 7/31/2016
|
$9.80
|
3.68%
|
0.64%
|
0.58%
(d)
|
2.53%
|
49%
|
$47,065
|
Year
Ended 7/31/2015
|
$9.70
|
(0.71%)
|
0.61%
|
0.58%
(d)
|
2.27%
|
68%
|
$48,659
|
Class
C
|
Year
Ended 7/31/2019
|
$9.97
|
4.96%
|
1.59%
|
1.55%
|
1.59%
|
99%
|
$22,797
|
Year
Ended 7/31/2018
|
$9.66
|
(1.29%)
|
1.59%
(c)
|
1.55%
(c),(d)
|
0.97%
|
79%
|
$29,079
|
Year
Ended 7/31/2017
|
$9.88
|
1.53%
|
1.58%
|
1.56%
(d)
|
0.74%
|
119%
|
$44,055
|
Year
Ended 7/31/2016
|
$9.80
|
2.76%
|
1.65%
|
1.58%
(d)
|
1.54%
|
49%
|
$52,777
|
Year
Ended 7/31/2015
|
$9.69
|
(1.80%)
|
1.61%
|
1.58%
(d)
|
1.17%
|
68%
|
$66,931
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$9.98
|
6.01%
|
0.59%
|
0.55%
|
2.59%
|
99%
|
$166,238
|
Year
Ended 7/31/2018
|
$9.67
|
(0.30%)
|
0.59%
(c)
|
0.55%
(c),(d)
|
1.98%
|
79%
|
$163,477
|
Year
Ended 7/31/2017
|
$9.89
|
2.65%
|
0.59%
|
0.56%
(d)
|
1.78%
|
119%
|
$199,635
|
Year
Ended 7/31/2016
|
$9.80
|
3.69%
|
0.64%
|
0.58%
(d)
|
2.53%
|
49%
|
$81,473
|
Year
Ended 7/31/2015
|
$9.70
|
(0.71%)
|
0.61%
|
0.58%
(d)
|
2.17%
|
68%
|
$131,631
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
19
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$9.67
|
0.26
|
0.32
|
0.58
|
(0.27)
|
—
|
(0.27)
|
Year
Ended 7/31/2018
|
$9.89
|
0.20
|
(0.22)
|
(0.02)
|
(0.20)
|
—
|
(0.20)
|
Year
Ended 7/31/2017
|
$9.81
|
0.18
|
0.07
|
0.25
|
(0.17)
|
—
|
(0.17)
|
Year
Ended 7/31/2016
|
$9.71
|
0.25
|
0.10
|
0.35
|
(0.25)
|
—
|
(0.25)
|
Year
Ended 7/31/2015
|
$10.00
|
0.22
|
(0.28)
|
(0.06)
|
(0.22)
|
(0.01)
|
(0.23)
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$9.67
|
0.26
|
0.32
|
0.58
|
(0.27)
|
—
|
(0.27)
|
Year
Ended 7/31/2018
|
$9.89
|
0.20
|
(0.22)
|
(0.02)
|
(0.20)
|
—
|
(0.20)
|
Year
Ended 7/31/2017
|
$9.80
|
0.19
|
0.08
|
0.27
|
(0.18)
|
—
|
(0.18)
|
Year
Ended 7/31/2016
|
$9.70
|
0.25
|
0.11
|
0.36
|
(0.26)
|
—
|
(0.26)
|
Year
Ended 7/31/2015
|
$10.00
|
0.24
|
(0.31)
|
(0.07)
|
(0.22)
|
(0.01)
|
(0.23)
|
Notes
to Financial Highlights
|
(a)
|
In
addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense
ratios.
|
(b)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(c)
|
Ratios
include interfund lending expense which is less than 0.01%.
|
(d)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
20
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$9.98
|
6.08%
|
0.53%
|
0.49%
|
2.65%
|
99%
|
$66,741
|
Year
Ended 7/31/2018
|
$9.67
|
(0.25%)
|
0.53%
(c)
|
0.50%
(c)
|
2.06%
|
79%
|
$74,279
|
Year
Ended 7/31/2017
|
$9.89
|
2.59%
|
0.52%
|
0.52%
|
1.78%
|
119%
|
$63,284
|
Year
Ended 7/31/2016
|
$9.81
|
3.76%
|
0.51%
|
0.51%
|
2.60%
|
49%
|
$53,070
|
Year
Ended 7/31/2015
|
$9.71
|
(0.63%)
|
0.51%
|
0.51%
|
2.26%
|
68%
|
$58,152
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$9.98
|
6.13%
|
0.48%
|
0.44%
|
2.70%
|
99%
|
$177,100
|
Year
Ended 7/31/2018
|
$9.67
|
(0.20%)
|
0.48%
(c)
|
0.45%
(c)
|
2.08%
|
79%
|
$114,340
|
Year
Ended 7/31/2017
|
$9.89
|
2.75%
|
0.48%
|
0.47%
|
1.90%
|
119%
|
$122,034
|
Year
Ended 7/31/2016
|
$9.80
|
3.81%
|
0.47%
|
0.46%
|
2.65%
|
49%
|
$3,113
|
Year
Ended 7/31/2015
|
$9.70
|
(0.69%)
|
0.47%
|
0.46%
|
2.44%
|
68%
|
$2,941
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
21
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Limited Duration Credit Fund (the Fund), a series
of Columbia Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business
trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Advisor Class, Institutional Class, Institutional 2 Class and Institutional 3 Class shares are available for purchase through authorized investment professionals to omnibus retirement plans
or to institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years. Effective December 14, 2018, Class T shares merged, in a tax-free
transaction, into Class A shares of the Fund and are no longer offered for sale.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or not believed to be reflective of market
value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that management believes
does not approximate market value.
Investments in
open-end investment companies, including money market funds, are valued at their latest net asset value.
Futures and options on futures contracts are valued based upon
the settlement price at the close of regular trading on their principal exchanges or, in the absence of transactions, at the mean of the latest quoted bid and ask prices.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
22
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
determination of fair value often requires significant judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to
determine fair value.
GAAP requires disclosure regarding
the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of
Investments.
Derivative instruments
The Fund invests in certain derivative instruments, as
detailed below, to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more securities, currencies, commodities, indices, or other assets or instruments.
Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to
pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including
the potential inability of the counterparty to fulfill its obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the
potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial
statements.
A derivative instrument may suffer a
marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its obligations under the contract. The
Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund and the amount of any variation margin held by the
counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk to the Fund since the clearinghouse or central counterparty (CCP) provides some protection
in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract; therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in
exchange-traded or centrally cleared derivatives with respect to initial and variation margin that is held in a broker’s customer account. While brokers are required to segregate customer margin from their own assets, in the event that a
broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across
all the broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its contractual rights and to secure
rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivatives contract
counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a
default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative instrument’s payables and/or receivables with collateral held and/or posted and create
one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
Collateral (margin) requirements differ by type of derivative.
Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain circumstances. Collateral terms for most over-the-counter
derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral
requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally,
the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (e.g., $250,000) before a transfer has to be made. To the extent
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
23
|
Notes to Financial Statements (continued)
July 31, 2019
amounts due to the
Fund from its counterparties are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any interest
expense paid by the Fund is shown on the Statement of Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by
monitoring the financial stability of those counterparties.
Certain ISDA Master Agreements allow counterparties of
over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified time period or if the Fund fails to meet certain terms of
the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination rights if the counterparty fails to meet certain terms of the ISDA Master Agreement. In
determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk, whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes, the Fund does not offset
derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are exchange-traded and represent
commitments for the future purchase or sale of an asset at a specified price on a specified date. The Fund bought and sold futures contracts to manage the duration and yield curve exposure of the Fund versus the benchmark and to manage exposure to
movements in interest rates. These instruments may be used for other purposes in future periods. Upon entering into futures contracts, the Fund bears risks that it may not achieve the anticipated benefits of the futures contracts and may realize a
loss. Additional risks include counterparty credit risk, the possibility of an illiquid market, and that a change in the value of the contract or option may not correlate with changes in the value of the underlying asset.
Upon entering into a futures contract, the Fund deposits cash
or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be maintained at an established level over the life of the contract. Cash
deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are designated in the Portfolio of Investments. Subsequent payments (variation margin) are made or received
by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund recognizes a realized gain or
loss when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Effects of derivative transactions in the financial
statements
The following tables are intended to provide
additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the
impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules following the Portfolio of Investments present additional information regarding
derivative instruments outstanding at the end of the period, if any.
The following table is a summary of the fair value of
derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) at July 31, 2019:
|
Asset
derivatives
|
|
Risk
exposure
category
|
Statement
of assets and liabilities
location
|
Fair
value ($)
|
Interest
rate risk
|
Component
of total distributable earnings (loss) — unrealized appreciation on futures contracts
|
740,870*
|
24
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
|
Liability
derivatives
|
|
Risk
exposure
category
|
Statement
of assets and liabilities
location
|
Fair
value ($)
|
Interest
rate risk
|
Component
of total distributable earnings (loss) — unrealized depreciation on futures contracts
|
2,335,661*
|
*
|
Includes
cumulative appreciation (depreciation) as reported in the tables following the Portfolio of Investments. Only the current day’s variation margin is reported in receivables or payables in the Statement of Assets and Liabilities.
|
The following table indicates the
effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended July 31, 2019:
Amount
of realized gain (loss) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Interest
rate risk
|
(5,201,177)
|
|
Change
in unrealized appreciation (depreciation) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Interest
rate risk
|
(1,283,282)
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended July 31, 2019:
Derivative
instrument
|
Average
notional
amounts ($)*
|
Futures
contracts — long
|
229,512,918
|
Futures
contracts — short
|
148,680,783
|
*
|
Based on
the ending quarterly outstanding amounts for the year ended July 31, 2019.
|
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Dividend income is recorded on the ex-dividend date.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
25
|
Notes to Financial Statements (continued)
July 31, 2019
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Foreign taxes
The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries, as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it
invests.
Realized gains in certain countries may be
subject to foreign taxes at the Fund level, based on statutory rates. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction, as applicable. The amount, if any, is disclosed as a
liability on the Statement of Assets and Liabilities.
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
26
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
In
August 2018, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods
beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a
result of the amendments, management implemented disclosure changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between
levels, removal of the description of the level 3 valuation processes, as well as modifications to the measurement uncertainty disclosure.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.43% to 0.28% as the Fund’s net assets increase. The
effective management services fee rate for the year ended July 31, 2019 was 0.43% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
27
|
Notes to Financial Statements (continued)
July 31, 2019
The
Fund pays the Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of
accounts or on a percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to
time.
The Transfer Agent also receives compensation from
the Fund for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
For the year ended July 31, 2019, the Fund’s effective
transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.12
|
Advisor
Class
|
0.12
|
Class
C
|
0.12
|
Institutional
Class
|
0.12
|
Institutional
2 Class
|
0.06
|
Institutional
3 Class
|
0.01
|
Class
T
|
0.04
(a)
|
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at the maximum annual rates of up to 0.25%, 1.00% and 0.25% of the Fund’s average daily net assets attributable to Class A, Class C and Class T shares, respectively. For Class C shares, of the 1.00% fee, up to 0.75% can be
reimbursed for distribution expenses and up to an additional 0.25% can be reimbursed for shareholder servicing expenses. For Class T shares, of the 0.25% fee, up to 0.25% can be reimbursed for distribution and/or shareholder servicing expenses. As a
result of all Class T shares of the Fund being redeemed or converted to Class A shares, December 14, 2018 was the last day the Fund paid a distribution and shareholder services fee for Class T shares.
The amount of distribution and shareholder services expenses
incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $646,000 for Class C shares. This amount is based on the most recent information available as of June 30, 2019, and may be recovered from future payments
under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended July 31, 2019, if any, are listed below:
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
3.00
|
0.50 - 1.00
(a)
|
136,830
|
Class
C
|
—
|
1.00
(b)
|
1,426
|
Class
T
|
2.50
|
—
|
—
|
28
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
(a)
|
This
charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months after purchase, as follows: 1.00% if redeemed within 12 months after 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 12 months after purchase, with certain limited exceptions.
|
The Fund’s other share classes are not subject to sales
charges.
Expenses waived/reimbursed by the Investment
Manager and its affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of
Trustees, 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 following annual rate(s) as a
percentage of the class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to
December 1, 2018
|
Class
A
|
0.80%
|
0.80%
|
Advisor
Class
|
0.55
|
0.55
|
Class
C
|
1.55
|
1.55
|
Institutional
Class
|
0.55
|
0.55
|
Institutional
2 Class
|
0.49
|
0.50
|
Institutional
3 Class
|
0.44
|
0.45
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), 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, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or expenses reimbursed under the expense
reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for deferral/reversal of wash sale losses, derivative investments, tax straddles, capital loss carryforwards, trustees’ deferred compensation and distributions. To the extent these differences were permanent,
reclassifications were made among the components of the Fund’s net assets. Temporary differences do not require reclassifications.
The Fund did not have any permanent differences; therefore, no
reclassifications were made.
The tax character of
distributions paid during the years indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
15,335,174
|
—
|
15,335,174
|
12,345,097
|
—
|
12,345,097
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
29
|
Notes to Financial Statements (continued)
July 31, 2019
At
July 31, 2019, the components of distributable earnings on a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
appreciation ($)
|
1,312,563
|
—
|
(23,391,108)
|
11,349,925
|
At July 31, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
appreciation ($)
|
651,731,897
|
13,119,285
|
(1,769,360)
|
11,349,925
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at July
31, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended July 31, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
No
expiration
short-term ($)
|
No
expiration
long-term ($)
|
Total
($)
|
Utilized
($)
|
Expired
($)
|
2,819,222
|
20,571,886
|
23,391,108
|
—
|
—
|
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and proceeds from
sales of securities, excluding short-term investments and derivatives, if any, aggregated to $554,493,438 and $591,966,569, respectively, for the year ended July 31, 2019, of which $144,130,899 and $97,609,825, respectively, were U.S. government
securities. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the Financial Highlights.
Note 6. Affiliated money market fund
The Fund invests in Columbia Short-Term Cash Fund, an
affiliated money market fund established for the exclusive use by the Fund and other affiliated funds (the Affiliated MMF). The income earned by the Fund from such investments is included as Dividends - affiliated issuers in the Statement of
Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of the Affiliated MMF. The Affiliated MMF prices its shares with a floating net asset value. In addition, the Board of Trustees of the Affiliated MMF
may impose a fee on redemptions (sometimes referred to as a liquidity fee) or temporarily suspend redemptions (sometimes referred to as imposing a redemption gate) in the event its liquidity falls below regulatory limits.
Note 7. Interfund lending
Pursuant to an exemptive order granted by the Securities and
Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds, borrow money
directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
30
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended July 31, 2019.
Note
8. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion.
Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each
borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment
fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
Note 9. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer 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 debt instruments to indicate their credit risk. Lower rated or unrated debt instruments held by the Fund may present increased credit risk as compared to higher-rated debt instruments.
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 interest rates may also affect the liquidity of
the Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, 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. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the longer the maturity or duration of a
debt security, the greater its sensitivity to changes in interest rates.
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. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may 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. 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. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
31
|
Notes to Financial Statements (continued)
July 31, 2019
Shareholder concentration risk
At July 31, 2019, one unaffiliated shareholder of record owned
10.6% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Affiliated shareholders of record owned 63.0% of the outstanding shares of the Fund in
one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune times,
including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund
shareholders.
Note 10. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 11. Information regarding pending and settled
legal proceedings
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (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 Fund. Further, although we believe proceedings are not 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, 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.
32
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Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Limited Duration Credit Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Limited Duration Credit Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of
operations for the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the five years in the period ended
July 31, 2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its
operations for the year then ended, the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the five years in the period ended July 31, 2019 in conformity with accounting
principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
33
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
34
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
35
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
36
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
37
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
38
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Limited Duration Credit Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management Investment
Distributors, Inc. (collectively, the Funds).
On an
annual basis, the Fund’s Board of Trustees (the Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its
Contracts Committee in November 2018 and January, March, April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive
response to items of information requested by independent legal counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented
at these meetings were first supplied in draft form to designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who
is an Independent Trustee), and the final materials were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets
with portfolio management teams and senior management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the
work, deliberations and conclusions of the various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
39
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group, the product score of the
Fund (taking into account performance relative to peers and benchmarks) and the net assets of the Fund. The Board observed that the Fund’s investment performance was understandable in light of the particular management style involved and the
particular market environment.
Comparative fees, costs
of services provided and the profits realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability. The Board
reviewed the fees charged to comparable institutional or other accounts/vehicles managed by Columbia Threadneedle and discussed differences in how the products are managed and operated, noting no unreasonable differences in the levels of contractual
management fees.
The Board considered the reports of its
independent fee consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to
industry competitors, the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of
the level of fees is to achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the
"pricing philosophy" currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s
total expense ratio (after considering proposed expense caps/waivers) approximated the peer universe’s median expense ratio shown in the report. Based on its review, the Board concluded that the Fund’s management fee was fair and
reasonable in light of the extent and quality of services that the Fund receives.
The Board also considered the profitability of Columbia
Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the Profitability Report, discussing the
profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was reasonable and that the 2019 information shows
that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle profitability relative to industry competitors was
reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced ability to offer various other financial products to
Ameriprise Financial customers, soft dollar benefits and overall
40
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
reputational advantages. The Board noted that the fees paid by the Fund
should permit the Investment Manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
Columbia
Limited Duration Credit Fund | Annual Report 2019
|
41
|
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT filings are available on the SEC’s website at
sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
42
|
Columbia Limited Duration
Credit Fund | Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Limited Duration Credit Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Annual
Report
July 31, 2019
Columbia Disciplined Core Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
5
|
|
7
|
|
8
|
|
13
|
|
15
|
|
16
|
|
18
|
|
22
|
|
33
|
|
34
|
|
35
|
|
40
|
|
43
|
Columbia Disciplined Core Fund | Annual Report 2019
Investment objective
Columbia Disciplined Core Fund (the
Fund) seeks to provide shareholders with long-term capital growth.
Portfolio
management
Brian Condon, CFA,
CAIA
Co-Portfolio
Manager
Managed Fund
since 2010
Peter
Albanese
Co-Portfolio
Manager
Managed Fund
since 2014
Morningstar
style boxTM
The Morningstar
Style Box is based on a fund’s portfolio holdings. For equity funds, the vertical axis shows the market capitalization of the stocks owned, and the horizontal axis shows investment style (value, blend, or growth). Information shown is based on
the most recent data provided by Morningstar.
© 2019
Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.
Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
Excluding
sales charges
|
04/24/03
|
4.01
|
10.34
|
13.89
|
|
Including
sales charges
|
|
-1.98
|
9.05
|
13.22
|
Advisor
Class*
|
03/19/13
|
4.33
|
10.64
|
14.08
|
Class
C
|
Excluding
sales charges
|
04/24/03
|
3.23
|
9.53
|
13.03
|
|
Including
sales charges
|
|
2.27
|
9.53
|
13.03
|
Institutional
Class*
|
09/27/10
|
4.26
|
10.63
|
14.16
|
Institutional
2 Class
|
12/11/06
|
4.31
|
10.68
|
14.30
|
Institutional
3 Class*
|
06/01/15
|
4.43
|
10.68
|
14.07
|
Class
R
|
12/11/06
|
3.73
|
10.06
|
13.59
|
S&P
500 Index
|
|
7.99
|
11.34
|
14.03
|
Returns for Class A shares are shown
with and without the maximum initial sales charge of 5.75%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. Since the Fund launched more than one share class at its
inception, Class A shares were used. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit
columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
The S&P 500 Index, an unmanaged index, measures the
performance of 500 widely held, large-capitalization U.S. stocks and is frequently used as a general measure of market performance.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
Columbia
Disciplined Core Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a
hypothetical $10,000 investment (July 31, 2009 — July 31, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Disciplined Core Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption
of Fund shares.
Top
10 holdings (%) (at July 31, 2019)
|
Alphabet,
Inc., Class A
|
4.6
|
Facebook,
Inc., Class A
|
3.5
|
Cisco
Systems, Inc.
|
2.8
|
MasterCard,
Inc., Class A
|
2.8
|
Microsoft
Corp.
|
2.6
|
Citigroup,
Inc.
|
2.5
|
Verizon
Communications, Inc.
|
2.5
|
Amazon.com,
Inc.
|
2.5
|
Starbucks
Corp.
|
2.3
|
Adobe,
Inc.
|
2.3
|
Percentages indicated are based
upon total investments excluding Money Market Funds and investments in derivatives, if any.
For further detail about these holdings, please refer to the
section entitled “Portfolio of Investments.”
Fund holdings are as of the date given, are subject to change
at any time, and are not recommendations to buy or sell any security.
Portfolio
breakdown (%) (at July 31, 2019)
|
Common
Stocks
|
98.9
|
Money
Market Funds
|
1.1
|
Total
|
100.0
|
Percentages indicated are based
upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
Equity
sector breakdown (%) (at July 31, 2019)
|
Communication
Services
|
10.6
|
Consumer
Discretionary
|
10.1
|
Consumer
Staples
|
7.6
|
Energy
|
4.6
|
Financials
|
13.0
|
Health
Care
|
13.6
|
Industrials
|
9.1
|
Information
Technology
|
22.4
|
Materials
|
2.9
|
Real
Estate
|
2.8
|
Utilities
|
3.3
|
Total
|
100.0
|
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
4
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Manager Discussion of Fund Performance
For the
12-month period that ended July 31, 2019, the Fund’s Class A shares gained 4.01% excluding sales charges. The Fund produced solid absolute gains but underperformed its benchmark, the S&P 500 Index, which rose 7.99% for the same time
period. Stock selection detracted from the Fund’s relative results, while sector allocation contributed positively, albeit modestly.
U.S. equity markets advanced despite heightened
volatility
As the reporting period began in August
2018, U.S. equity markets were continuing their climb from earlier in the year, supported by a growing U.S. economy and strong corporate earnings, each in turn fueled in large part by December 2017’s tax reform legislation. The U.S. equity
market rally came to an end in the fourth quarter of 2018, as investors grappled with the U.S. Federal Reserve (the Fed) continuing to raise interest rates, the sharp slowdown in eurozone business confidence, weaker economic growth in China and
heightened geopolitical concerns, including trade and tariff tensions. Long dormant volatility spiked, and U.S. equity markets declined precipitously in the final weeks of calendar year 2018. This sharp sell-off then set the stage for the nearly
equally dramatic rally in the first quarter of 2019, as much of the ground lost in December 2018 was retraced. Following a relative calm in ongoing U.S.-China trade negotiations, volatility then returned in the second quarter of 2019 amid signs that
trade talks had soured. Offsetting this disappointment was the apparent change in the stance of the Fed, which had adopted a more dovish posture with respect to the direction of interest rates, a shift much applauded by the U.S. equity markets. On
July 31, 2019, the Fed lowered interest rates for the first time since 2008 to help stave off the possibility of an economic downturn.
For the 12-month period overall, growth strategies
significantly outperformed value strategies across the capitalization spectrum.
Large-cap stocks led market higher
Generally, the U.S. equity markets tended to favor
capitalization during the reporting period, as large-cap stocks significantly outperformed their smaller cap counterparts. The Russell 1000 Index returned 8.00% compared to the -4.42% return of the Russell 2000 Index for the 12-month period. Stocks
characterized by low beta, low dividend yield and low volatility were also in favor during the period. Conversely, higher yielding stocks, high-growth stocks and stocks with relatively high beta were out of favor during the period as was the
liquidity factor.
Our stock selection model performed
weakly during the reporting period. We divide the metrics for our stock selection model into three broad categories: valuation, catalyst and quality. We then rank the securities within a sector/industry from “1” (most attractive) to
“5” (least attractive) based upon the metrics within these categories. During the period, the valuation and quality models were particularly weak, while the catalyst model outperformed the benchmark, showing some signs of strength toward
the end of the period. Notably, the valuation model was in the second-worst drawdown in the 16-year history of our proprietary models during the period. Emphasizing inexpensive and high-quality stocks is a key part of our investment strategy, and,
despite this period of underperformance, we remain committed to this strategy, maintaining a long-term perspective.
Stock selection overall detracted from returns
As usual, the Fund maintained a relatively neutral stance on
sector allocation, though sector allocation did contribute positively, albeit modestly, to relative performance during the period. Stock selection overall — indeed, in 10 of the 11 sectors of the benchmark — detracted from the
Fund’s performance relative to the benchmark. Stock selection in the consumer discretionary, industrials and materials sectors were the primary detractors from the Fund’s relative performance.
Among the individual stocks detracting most from relative
performance were Valero Energy, LyondellBasell Industries and Bristol-Myers Squibb. Oil refiner Valero Energy’s stock traded lower through the period in concert with falling energy commodity prices. Shares of chemicals manufacturer
LyondellBasell Industries declined on lower earnings estimates and disappointing results stemming from weakness in Europe, where rising feedstock costs and seasonally slow demand weighed on results. Pharmaceuticals company Bristol-Myers Squibb saw
its shares lose ground as its lung cancer drug, Opdivo, experienced mixed clinical results, while Merck’s competing lung cancer drug, Keytruda, delivered more favorable newsflow.
Columbia
Disciplined Core Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance (continued)
Information technology stock selection boosted returns
Stock selection in the information technology sector
contributed positively to the Fund’s relative performance during the period.
Among the Fund’s greatest individual positive
contributors were VeriSign, Mastercard and Pfizer. VeriSign is a provider of domain name registry services and Internet infrastructure. Its shares rose during the period on news of the extension of its cooperative agreement with the U.S. government
for managing the “.com” domain name. The agreement also provides a 7% price increase in each of the last four years of its six year “.com” contract. The company also benefited during the period from an increase in
“.com” domain registrations. Shares of Mastercard rose, as the financial transaction processing services provider executed well and benefited from the long-term secular shift to electronic forms of payment. Mastercard posted strong
quarterly reports that indicated a dominant competitive position with a notable network effect, including a long, durable growth runway in its core consumer payment market and a significant edge over Visa in many business-to-business opportunities.
Pharmaceuticals company Pfizer saw its shares gain, as it delivered better than consensus expected earnings throughout the period based on higher than anticipated revenues from some of its legacy drugs, including Lipitor, Lyrica and Prevna.
Portfolio construction process guided investment
changes
While there were some changes in sector
allocations and individual security positions during the period as a result of the Fund’s bottom-up stock selection process, all changes were quite modest as we maintained our sector neutral investment approach. Within our stock selection
model, we replaced the Credit Suisse HOLT Adjusted Value Target signal in all 11 sector models with other value factors and bolstered many investment themes with complementary and efficacious indicators. The updated models are more diversified and
may exhibit better consistency of performance in different market regimes. We also completed a full review of our utilities sector models and put more emphasis on forward-looking valuation multiples, dividend growth, cash flow generation and
business momentum. Finally, we adjusted factors to handle inconsistencies in the quarterly cash flow numbers of certain companies.
Market risk may affect a single
issuer, sector of the economy, industry or the market as a whole. Investing in derivatives is a specialized activity that involves special risks, which may result in significant losses. See the Fund’s
prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
6
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,072.60
|
1,019.89
|
5.09
|
4.96
|
0.99
|
Advisor
Class
|
1,000.00
|
1,000.00
|
1,074.50
|
1,021.12
|
3.81
|
3.71
|
0.74
|
Class
C
|
1,000.00
|
1,000.00
|
1,068.80
|
1,016.17
|
8.93
|
8.70
|
1.74
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,074.00
|
1,021.12
|
3.81
|
3.71
|
0.74
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,074.20
|
1,021.27
|
3.65
|
3.56
|
0.71
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,074.80
|
1,021.57
|
3.34
|
3.26
|
0.65
|
Class
R
|
1,000.00
|
1,000.00
|
1,071.80
|
1,018.65
|
6.37
|
6.21
|
1.24
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Columbia
Disciplined Core Fund | Annual Report 2019
|
7
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Common
Stocks 98.8%
|
Issuer
|
Shares
|
Value
($)
|
Communication
Services 10.4%
|
Diversified
Telecommunication Services 2.4%
|
Verizon
Communications, Inc.
|
1,985,000
|
109,710,950
|
Interactive
Media & Services 8.0%
|
Alphabet,
Inc., Class A(a)
|
169,400
|
206,363,080
|
Facebook,
Inc., Class A(a)
|
795,300
|
154,471,119
|
Total
|
|
360,834,199
|
Total
Communication Services
|
470,545,149
|
Consumer
Discretionary 10.0%
|
Automobiles
0.6%
|
Harley-Davidson,
Inc.
|
692,600
|
24,781,228
|
Hotels,
Restaurants & Leisure 2.3%
|
Starbucks
Corp.
|
1,095,600
|
103,742,364
|
Internet
& Direct Marketing Retail 3.6%
|
Amazon.com,
Inc.(a)
|
58,700
|
109,579,986
|
eBay,
Inc.
|
430,191
|
17,719,567
|
Expedia
Group, Inc.
|
275,600
|
36,583,144
|
Total
|
|
163,882,697
|
Specialty
Retail 2.1%
|
Advance
Auto Parts, Inc.
|
245,900
|
37,042,376
|
AutoZone,
Inc.(a)
|
52,500
|
58,959,600
|
Total
|
|
96,001,976
|
Textiles,
Apparel & Luxury Goods 1.4%
|
Nike,
Inc., Class B
|
710,000
|
61,081,300
|
Total
Consumer Discretionary
|
449,489,565
|
Consumer
Staples 7.5%
|
Food
& Staples Retailing 2.5%
|
Walgreens
Boots Alliance, Inc.
|
1,111,850
|
60,584,706
|
Walmart,
Inc.
|
494,200
|
54,549,796
|
Total
|
|
115,134,502
|
Food
Products 1.0%
|
General
Mills, Inc.
|
136,700
|
7,260,137
|
Tyson
Foods, Inc., Class A
|
463,200
|
36,824,400
|
Total
|
|
44,084,537
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Household
Products 1.8%
|
Kimberly-Clark
Corp.
|
546,950
|
74,193,768
|
Procter
& Gamble Co. (The)
|
51,000
|
6,020,040
|
Total
|
|
80,213,808
|
Tobacco
2.2%
|
Altria
Group, Inc.
|
1,101,700
|
51,857,019
|
Philip
Morris International, Inc.
|
549,500
|
45,943,695
|
Total
|
|
97,800,714
|
Total
Consumer Staples
|
337,233,561
|
Energy
4.6%
|
Oil,
Gas & Consumable Fuels 4.6%
|
Chevron
Corp.
|
336,200
|
41,389,582
|
ConocoPhillips
Co.
|
1,280,760
|
75,667,301
|
HollyFrontier
Corp.
|
514,600
|
25,611,642
|
Marathon
Petroleum Corp.
|
299,200
|
16,871,888
|
Valero
Energy Corp.
|
548,450
|
46,755,362
|
Total
|
|
206,295,775
|
Total
Energy
|
206,295,775
|
Financials
12.8%
|
Banks
3.3%
|
Bank
of America Corp.
|
717,500
|
22,012,900
|
Citigroup,
Inc.
|
1,572,900
|
111,927,564
|
Citizens
Financial Group, Inc.
|
118,900
|
4,430,214
|
Comerica,
Inc.
|
157,100
|
11,499,720
|
Total
|
|
149,870,398
|
Capital
Markets 3.8%
|
Bank
of New York Mellon Corp. (The)
|
246,800
|
11,579,856
|
CME
Group, Inc.
|
31,600
|
6,143,672
|
Franklin
Resources, Inc.
|
1,328,200
|
43,339,166
|
Intercontinental
Exchange, Inc.
|
1,020,700
|
89,678,702
|
Morgan
Stanley
|
101,400
|
4,518,384
|
T.
Rowe Price Group, Inc.
|
157,700
|
17,881,603
|
Total
|
|
173,141,383
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
8
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Consumer
Finance 2.0%
|
Capital
One Financial Corp.
|
823,600
|
76,117,112
|
Synchrony
Financial
|
323,900
|
11,621,532
|
Total
|
|
87,738,644
|
Diversified
Financial Services 0.8%
|
Voya
Financial, Inc.
|
623,300
|
35,010,761
|
Insurance
2.9%
|
Allstate
Corp. (The)
|
392,300
|
42,133,020
|
Aon
PLC
|
92,800
|
17,562,400
|
MetLife,
Inc.
|
533,100
|
26,345,802
|
Prudential
Financial, Inc.
|
459,000
|
46,501,290
|
Total
|
|
132,542,512
|
Total
Financials
|
578,303,698
|
Health
Care 13.4%
|
Biotechnology
2.1%
|
AbbVie,
Inc.
|
407,580
|
27,152,980
|
Alexion
Pharmaceuticals, Inc.(a)
|
233,580
|
26,462,278
|
BioMarin
Pharmaceutical, Inc.(a)
|
198,800
|
15,768,816
|
Vertex
Pharmaceuticals, Inc.(a)
|
142,920
|
23,813,330
|
Total
|
|
93,197,404
|
Health
Care Equipment & Supplies 1.8%
|
Abbott
Laboratories
|
465,500
|
40,545,050
|
Baxter
International, Inc.
|
458,800
|
38,525,436
|
Total
|
|
79,070,486
|
Health
Care Providers & Services 3.1%
|
AmerisourceBergen
Corp.
|
87,200
|
7,599,480
|
Cardinal
Health, Inc.
|
1,600,310
|
73,182,177
|
McKesson
Corp.
|
439,000
|
60,999,050
|
Total
|
|
141,780,707
|
Pharmaceuticals
6.4%
|
Allergan
PLC
|
62,400
|
10,015,200
|
Bristol-Myers
Squibb Co.
|
1,911,000
|
84,867,510
|
Eli
Lilly & Co.
|
495,800
|
54,017,410
|
Johnson
& Johnson
|
294,800
|
38,388,856
|
Merck
& Co., Inc.
|
1,158,700
|
96,160,513
|
Mylan
NV(a)
|
345,000
|
7,210,500
|
Total
|
|
290,659,989
|
Total
Health Care
|
604,708,586
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Industrials
9.1%
|
Aerospace
& Defense 2.3%
|
Boeing
Co. (The)
|
249,929
|
85,270,776
|
L3
Harris Technologies, Inc.
|
92,100
|
19,119,960
|
Total
|
|
104,390,736
|
Airlines
1.7%
|
Southwest
Airlines Co.
|
1,450,500
|
74,744,265
|
Electrical
Equipment 0.3%
|
Eaton
Corp. PLC
|
85,709
|
7,044,423
|
Rockwell
Automation, Inc.
|
31,895
|
5,128,078
|
Total
|
|
12,172,501
|
Industrial
Conglomerates 0.9%
|
Honeywell
International, Inc.
|
232,300
|
40,062,458
|
Machinery
2.6%
|
Cummins,
Inc.
|
363,000
|
59,532,000
|
Snap-On,
Inc.
|
394,476
|
60,200,983
|
Total
|
|
119,732,983
|
Professional
Services 0.4%
|
Robert
Half International, Inc.
|
279,200
|
16,866,472
|
Road
& Rail 0.9%
|
CSX
Corp.
|
187,900
|
13,228,160
|
Union
Pacific Corp.
|
147,300
|
26,506,635
|
Total
|
|
39,734,795
|
Total
Industrials
|
407,704,210
|
Information
Technology 22.1%
|
Communications
Equipment 3.1%
|
Cisco
Systems, Inc.
|
2,269,600
|
125,735,840
|
F5
Networks, Inc.(a)
|
93,088
|
13,657,872
|
Total
|
|
139,393,712
|
IT
Services 6.1%
|
MasterCard,
Inc., Class A
|
459,200
|
125,026,384
|
PayPal
Holdings, Inc.(a)
|
232,100
|
25,623,840
|
VeriSign,
Inc.(a)
|
407,500
|
86,019,175
|
Visa,
Inc., Class A
|
213,919
|
38,077,582
|
Total
|
|
274,746,981
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Disciplined Core Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Semiconductors
& Semiconductor Equipment 3.3%
|
Broadcom,
Inc.
|
324,200
|
94,014,758
|
Lam
Research Corp.
|
242,600
|
50,608,786
|
Qorvo,
Inc.(a)
|
37,900
|
2,777,691
|
Total
|
|
147,401,235
|
Software
6.5%
|
Adobe,
Inc.(a)
|
338,700
|
101,223,882
|
Fortinet,
Inc.(a)
|
336,600
|
27,032,346
|
Microsoft
Corp.(b)
|
837,700
|
114,153,379
|
VMware,
Inc., Class A
|
301,200
|
52,556,388
|
Total
|
|
294,965,995
|
Technology
Hardware, Storage & Peripherals 3.1%
|
Apple,
Inc.
|
442,780
|
94,329,851
|
HP,
Inc.
|
2,116,900
|
44,539,576
|
Total
|
|
138,869,427
|
Total
Information Technology
|
995,377,350
|
Materials
2.9%
|
Chemicals
1.6%
|
LyondellBasell
Industries NV, Class A
|
831,300
|
69,571,497
|
Metals
& Mining 1.3%
|
Nucor
Corp.
|
1,102,500
|
59,953,950
|
Total
Materials
|
129,525,447
|
Real
Estate 2.8%
|
Equity
Real Estate Investment Trusts (REITS) 2.8%
|
American
Tower Corp.
|
134,600
|
28,484,052
|
Host
Hotels & Resorts, Inc.
|
1,999,200
|
34,766,088
|
Simon
Property Group, Inc.
|
382,800
|
62,090,160
|
Total
|
|
125,340,300
|
Total
Real Estate
|
125,340,300
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Utilities
3.2%
|
Electric
Utilities 2.1%
|
American
Electric Power Co., Inc.
|
244,000
|
21,425,640
|
Exelon
Corp.
|
1,584,600
|
71,402,076
|
Total
|
|
92,827,716
|
Independent
Power and Renewable Electricity Producers 1.1%
|
AES
Corp. (The)
|
1,426,600
|
23,952,614
|
NRG
Energy, Inc.
|
799,520
|
27,295,613
|
Total
|
|
51,248,227
|
Multi-Utilities
0.0%
|
Public
Service Enterprise Group, Inc.
|
34,756
|
1,986,305
|
Total
Utilities
|
146,062,248
|
Total
Common Stocks
(Cost $3,623,498,988)
|
4,450,585,889
|
|
Money
Market Funds 1.1%
|
|
Shares
|
Value
($)
|
Columbia
Short-Term Cash Fund, 2.361%(c),(d)
|
49,357,445
|
49,352,509
|
Total
Money Market Funds
(Cost $49,352,509)
|
49,352,509
|
Total
Investments in Securities
(Cost: $3,672,851,497)
|
4,499,938,398
|
Other
Assets & Liabilities, Net
|
|
3,258,940
|
Net
Assets
|
4,503,197,338
|
At July 31, 2019, securities and/or cash totaling
$4,646,807 were pledged as collateral.
Investments in derivatives
Long
futures contracts
|
Description
|
Number
of
contracts
|
Expiration
date
|
Trading
currency
|
Notional
amount
|
Value/Unrealized
appreciation ($)
|
Value/Unrealized
depreciation ($)
|
S&P
500 E-mini
|
422
|
09/2019
|
USD
|
62,926,530
|
1,214,497
|
—
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
10
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Notes to Portfolio of Investments
(a)
|
Non-income
producing investment.
|
(b)
|
This
security or a portion of this security has been pledged as collateral in connection with derivative contracts.
|
(c)
|
The rate
shown is the seven-day current annualized yield at July 31, 2019.
|
(d)
|
As
defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and
transactions in these affiliated companies during the year ended July 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized
gain
(loss) —
affiliated
issuers ($)
|
Net
change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends
—
affiliated
issuers ($)
|
Value
—
affiliated
issuers
at end of
period ($)
|
Columbia
Short-Term Cash Fund, 2.361%
|
|
47,331,148
|
437,952,684
|
(435,926,387)
|
49,357,445
|
(566)
|
493
|
1,292,472
|
49,352,509
|
Currency Legend
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Core Fund | Annual Report 2019
|
11
|
Portfolio of Investments (continued)
July 31, 2019
Fair value
measurements (continued)
The following table is a summary of the inputs used to value the Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Common
Stocks
|
|
|
|
|
Communication
Services
|
470,545,149
|
—
|
—
|
470,545,149
|
Consumer
Discretionary
|
449,489,565
|
—
|
—
|
449,489,565
|
Consumer
Staples
|
337,233,561
|
—
|
—
|
337,233,561
|
Energy
|
206,295,775
|
—
|
—
|
206,295,775
|
Financials
|
578,303,698
|
—
|
—
|
578,303,698
|
Health
Care
|
604,708,586
|
—
|
—
|
604,708,586
|
Industrials
|
407,704,210
|
—
|
—
|
407,704,210
|
Information
Technology
|
995,377,350
|
—
|
—
|
995,377,350
|
Materials
|
129,525,447
|
—
|
—
|
129,525,447
|
Real
Estate
|
125,340,300
|
—
|
—
|
125,340,300
|
Utilities
|
146,062,248
|
—
|
—
|
146,062,248
|
Total
Common Stocks
|
4,450,585,889
|
—
|
—
|
4,450,585,889
|
Money
Market Funds
|
49,352,509
|
—
|
—
|
49,352,509
|
Total
Investments in Securities
|
4,499,938,398
|
—
|
—
|
4,499,938,398
|
Investments
in Derivatives
|
|
|
|
|
Asset
|
|
|
|
|
Futures
Contracts
|
1,214,497
|
—
|
—
|
1,214,497
|
Total
|
4,501,152,895
|
—
|
—
|
4,501,152,895
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
Derivative instruments are valued at unrealized appreciation
(depreciation).
The accompanying Notes to Financial Statements are an integral part of this
statement.
12
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $3,623,498,988)
|
$4,450,585,889
|
Affiliated
issuers (cost $49,352,509)
|
49,352,509
|
Receivable
for:
|
|
Investments
sold
|
119,204,286
|
Capital
shares sold
|
876,063
|
Dividends
|
3,714,359
|
Prepaid
expenses
|
19,614
|
Other
assets
|
22,506
|
Total
assets
|
4,623,775,226
|
Liabilities
|
|
Payable
for:
|
|
Investments
purchased
|
116,212,203
|
Capital
shares purchased
|
2,879,434
|
Variation
margin for futures contracts
|
633,000
|
Management
services fees
|
78,266
|
Distribution
and/or service fees
|
26,480
|
Transfer
agent fees
|
316,652
|
Compensation
of board members
|
266,878
|
Other
expenses
|
164,975
|
Total
liabilities
|
120,577,888
|
Net
assets applicable to outstanding capital stock
|
$4,503,197,338
|
Represented
by
|
|
Paid
in capital
|
3,385,367,987
|
Total
distributable earnings (loss) (Note 2)
|
1,117,829,351
|
Total
- representing net assets applicable to outstanding capital stock
|
$4,503,197,338
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Core Fund | Annual Report 2019
|
13
|
Statement of Assets and Liabilities (continued)
July 31, 2019
Class
A
|
|
Net
assets
|
$3,602,297,644
|
Shares
outstanding
|
293,772,941
|
Net
asset value per share
|
$12.26
|
Maximum
sales charge
|
5.75%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares)
|
$13.01
|
Advisor
Class
|
|
Net
assets
|
$17,612,562
|
Shares
outstanding
|
1,420,685
|
Net
asset value per share
|
$12.40
|
Class
C
|
|
Net
assets
|
$50,697,419
|
Shares
outstanding
|
4,234,391
|
Net
asset value per share
|
$11.97
|
Institutional
Class
|
|
Net
assets
|
$493,839,851
|
Shares
outstanding
|
40,008,980
|
Net
asset value per share
|
$12.34
|
Institutional
2 Class
|
|
Net
assets
|
$53,463,718
|
Shares
outstanding
|
4,345,674
|
Net
asset value per share
|
$12.30
|
Institutional
3 Class
|
|
Net
assets
|
$280,888,570
|
Shares
outstanding
|
22,726,791
|
Net
asset value per share
|
$12.36
|
Class
R
|
|
Net
assets
|
$4,397,574
|
Shares
outstanding
|
359,215
|
Net
asset value per share
|
$12.24
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
14
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Dividends
— unaffiliated issuers
|
$93,408,733
|
Dividends
— affiliated issuers
|
1,292,472
|
Total
income
|
94,701,205
|
Expenses:
|
|
Management
services fees
|
27,660,875
|
Distribution
and/or service fees
|
|
Class
A
|
8,998,156
|
Class
C
|
503,577
|
Class
R
|
21,302
|
Class
T
|
1,195
|
Transfer
agent fees
|
|
Class
A
|
3,195,797
|
Advisor
Class
|
11,458
|
Class
C
|
44,810
|
Institutional
Class
|
361,570
|
Institutional
2 Class
|
30,538
|
Institutional
3 Class
|
21,169
|
Class
R
|
3,775
|
Class
T
|
393
|
Compensation
of board members
|
78,924
|
Custodian
fees
|
35,195
|
Printing
and postage fees
|
303,689
|
Registration
fees
|
179,384
|
Audit
fees
|
38,451
|
Legal
fees
|
47,218
|
Compensation
of chief compliance officer
|
903
|
Other
|
78,699
|
Total
expenses
|
41,617,078
|
Net
investment income
|
53,084,127
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
328,422,982
|
Investments
— affiliated issuers
|
(566)
|
Futures
contracts
|
1,973,746
|
Net
realized gain
|
330,396,162
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
(197,666,313)
|
Investments
— affiliated issuers
|
493
|
Futures
contracts
|
363,254
|
Net
change in unrealized appreciation (depreciation)
|
(197,302,566)
|
Net
realized and unrealized gain
|
133,093,596
|
Net
increase in net assets resulting from operations
|
$186,177,723
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Disciplined Core Fund | Annual Report 2019
|
15
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$53,084,127
|
$40,345,089
|
Net
realized gain
|
330,396,162
|
320,562,021
|
Net
change in unrealized appreciation (depreciation)
|
(197,302,566)
|
370,014,185
|
Net
increase in net assets resulting from operations
|
186,177,723
|
730,921,295
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(262,138,569)
|
|
Advisor
Class
|
(839,395)
|
|
Class
C
|
(3,399,386)
|
|
Institutional
Class
|
(34,732,155)
|
|
Institutional
2 Class
|
(3,823,913)
|
|
Institutional
3 Class
|
(21,752,522)
|
|
Class
R
|
(302,970)
|
|
Class
T
|
(88,745)
|
|
Net
investment income
|
|
|
Class
A
|
|
(52,999,190)
|
Advisor
Class
|
|
(110,839)
|
Class
C
|
|
(466,638)
|
Institutional
Class
|
|
(2,841,035)
|
Institutional
2 Class
|
|
(2,080,750)
|
Institutional
3 Class
|
|
(5,480,347)
|
Class
K
|
|
(25,699)
|
Class
R
|
|
(60,849)
|
Class
T
|
|
(20,965)
|
Net
realized gains
|
|
|
Class
A
|
|
(162,252,446)
|
Advisor
Class
|
|
(292,108)
|
Class
C
|
|
(2,658,313)
|
Institutional
Class
|
|
(7,504,180)
|
Institutional
2 Class
|
|
(5,347,909)
|
Institutional
3 Class
|
|
(13,727,135)
|
Class
K
|
|
(75,700)
|
Class
R
|
|
(218,938)
|
Class
T
|
|
(64,017)
|
Total
distributions to shareholders (Note 2)
|
(327,077,655)
|
(256,227,058)
|
Increase
(decrease) in net assets from capital stock activity
|
253,783,977
|
(210,114,426)
|
Total
increase in net assets
|
112,884,045
|
264,579,811
|
Net
assets at beginning of year
|
4,390,313,293
|
4,125,733,482
|
Net
assets at end of year
|
$4,503,197,338
|
$4,390,313,293
|
Undistributed
net investment income
|
$31,733,495
|
$21,168,153
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
16
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
7,789,778
|
93,358,819
|
4,941,593
|
60,798,153
|
Distributions
reinvested
|
23,405,065
|
259,094,070
|
18,003,505
|
212,621,389
|
Redemptions
|
(31,334,102)
|
(376,777,023)
|
(33,573,703)
|
(406,351,415)
|
Net
decrease
|
(139,259)
|
(24,324,134)
|
(10,628,605)
|
(132,931,873)
|
Advisor
Class
|
|
|
|
|
Subscriptions
|
792,762
|
9,659,114
|
455,836
|
5,617,284
|
Distributions
reinvested
|
75,055
|
839,113
|
33,785
|
402,720
|
Redemptions
|
(196,968)
|
(2,320,114)
|
(308,584)
|
(3,758,651)
|
Net
increase
|
670,849
|
8,178,113
|
181,037
|
2,261,353
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(250)
|
(3,689)
|
Net
decrease
|
—
|
—
|
(250)
|
(3,689)
|
Class
C
|
|
|
|
|
Subscriptions
|
1,285,634
|
15,105,446
|
945,562
|
11,385,008
|
Distributions
reinvested
|
293,072
|
3,182,757
|
252,632
|
2,930,530
|
Redemptions
|
(1,191,202)
|
(13,850,421)
|
(2,437,629)
|
(29,596,219)
|
Net
increase (decrease)
|
387,504
|
4,437,782
|
(1,239,435)
|
(15,280,681)
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
31,569,610
|
384,880,080
|
6,256,539
|
76,785,167
|
Distributions
reinvested
|
3,065,100
|
34,114,567
|
833,483
|
9,893,443
|
Redemptions
|
(11,595,819)
|
(138,293,208)
|
(3,859,836)
|
(46,731,235)
|
Net
increase
|
23,038,891
|
280,701,439
|
3,230,186
|
39,947,375
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
880,809
|
10,738,609
|
1,278,465
|
15,633,848
|
Distributions
reinvested
|
341,063
|
3,782,389
|
627,930
|
7,428,412
|
Redemptions
|
(965,023)
|
(11,832,635)
|
(7,456,011)
|
(92,888,582)
|
Net
increase (decrease)
|
256,849
|
2,688,363
|
(5,549,616)
|
(69,826,322)
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
986,261
|
11,800,752
|
1,516,002
|
19,007,087
|
Distributions
reinvested
|
1,950,614
|
21,729,841
|
1,616,775
|
19,207,291
|
Redemptions
|
(4,061,734)
|
(50,181,416)
|
(5,656,504)
|
(69,683,619)
|
Net
decrease
|
(1,124,859)
|
(16,650,823)
|
(2,523,727)
|
(31,469,241)
|
Class
K
|
|
|
|
|
Subscriptions
|
—
|
—
|
2,423
|
30,466
|
Distributions
reinvested
|
—
|
—
|
8,517
|
101,179
|
Redemptions
|
—
|
—
|
(148,877)
|
(1,863,391)
|
Net
decrease
|
—
|
—
|
(137,937)
|
(1,731,746)
|
Class
R
|
|
|
|
|
Subscriptions
|
131,228
|
1,568,176
|
126,659
|
1,529,760
|
Distributions
reinvested
|
12,786
|
141,540
|
10,919
|
128,960
|
Redemptions
|
(153,261)
|
(1,816,613)
|
(200,845)
|
(2,426,074)
|
Net
decrease
|
(9,247)
|
(106,897)
|
(63,267)
|
(767,354)
|
Class
T
|
|
|
|
|
Distributions
reinvested
|
7,934
|
88,469
|
7,129
|
84,760
|
Redemptions
|
(111,017)
|
(1,228,335)
|
(32,853)
|
(397,008)
|
Net
decrease
|
(103,083)
|
(1,139,866)
|
(25,724)
|
(312,248)
|
Total
net increase (decrease)
|
22,977,645
|
253,783,977
|
(16,757,338)
|
(210,114,426)
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Core Fund | Annual Report 2019
|
17
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$12.76
|
0.14
|
0.27
|
0.41
|
(0.11)
|
(0.80)
|
(0.91)
|
Year
Ended 7/31/2018
|
$11.43
|
0.11
|
1.95
|
2.06
|
(0.18)
|
(0.55)
|
(0.73)
|
Year
Ended 7/31/2017
|
$10.00
|
0.18
|
1.38
|
1.56
|
(0.13)
|
—
|
(0.13)
|
Year
Ended 7/31/2016
|
$9.99
|
0.13
|
(0.00)
(d)
|
0.13
|
(0.12)
|
—
|
(0.12)
|
Year
Ended 7/31/2015
|
$8.93
|
0.11
|
1.05
|
1.16
|
(0.10)
|
—
|
(0.10)
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$12.89
|
0.17
|
0.28
|
0.45
|
(0.14)
|
(0.80)
|
(0.94)
|
Year
Ended 7/31/2018
|
$11.54
|
0.14
|
1.97
|
2.11
|
(0.21)
|
(0.55)
|
(0.76)
|
Year
Ended 7/31/2017
|
$10.09
|
0.21
|
1.39
|
1.60
|
(0.15)
|
—
|
(0.15)
|
Year
Ended 7/31/2016
|
$10.07
|
0.14
|
0.03
(e)
|
0.17
|
(0.15)
|
—
|
(0.15)
|
Year
Ended 7/31/2015
|
$9.00
|
0.14
|
1.05
|
1.19
|
(0.12)
|
—
|
(0.12)
|
Class
C
|
Year
Ended 7/31/2019
|
$12.47
|
0.05
|
0.27
|
0.32
|
(0.02)
|
(0.80)
|
(0.82)
|
Year
Ended 7/31/2018
|
$11.20
|
0.02
|
1.90
|
1.92
|
(0.10)
|
(0.55)
|
(0.65)
|
Year
Ended 7/31/2017
|
$9.80
|
0.09
|
1.37
|
1.46
|
(0.06)
|
—
|
(0.06)
|
Year
Ended 7/31/2016
|
$9.78
|
0.05
|
0.02
(e)
|
0.07
|
(0.05)
|
—
|
(0.05)
|
Year
Ended 7/31/2015
|
$8.75
|
0.04
|
1.02
|
1.06
|
(0.03)
|
—
|
(0.03)
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$12.84
|
0.17
|
0.27
|
0.44
|
(0.14)
|
(0.80)
|
(0.94)
|
Year
Ended 7/31/2018
|
$11.50
|
0.14
|
1.96
|
2.10
|
(0.21)
|
(0.55)
|
(0.76)
|
Year
Ended 7/31/2017
|
$10.06
|
0.23
|
1.37
|
1.60
|
(0.16)
|
—
|
(0.16)
|
Year
Ended 7/31/2016
|
$10.04
|
0.15
|
0.02
(e)
|
0.17
|
(0.15)
|
—
|
(0.15)
|
Year
Ended 7/31/2015
|
$8.97
|
0.14
|
1.05
|
1.19
|
(0.12)
|
—
|
(0.12)
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$12.80
|
0.17
|
0.28
|
0.45
|
(0.15)
|
(0.80)
|
(0.95)
|
Year
Ended 7/31/2018
|
$11.47
|
0.15
|
1.95
|
2.10
|
(0.22)
|
(0.55)
|
(0.77)
|
Year
Ended 7/31/2017
|
$10.03
|
0.22
|
1.38
|
1.60
|
(0.16)
|
—
|
(0.16)
|
Year
Ended 7/31/2016
|
$10.02
|
0.16
|
0.01
(e)
|
0.17
|
(0.16)
|
—
|
(0.16)
|
Year
Ended 7/31/2015
|
$8.96
|
0.14
|
1.06
|
1.20
|
(0.14)
|
—
|
(0.14)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
18
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$12.26
|
4.01%
|
0.98%
|
0.98%
|
1.16%
|
75%
|
$3,602,298
|
Year
Ended 7/31/2018
|
$12.76
|
18.55%
|
0.98%
|
0.98%
(c)
|
0.90%
|
71%
|
$3,749,864
|
Year
Ended 7/31/2017
|
$11.43
|
15.74%
|
1.03%
|
1.03%
(c)
|
1.66%
|
72%
|
$3,481,990
|
Year
Ended 7/31/2016
|
$10.00
|
1.39%
|
1.04%
|
1.04%
(c)
|
1.34%
|
77%
|
$3,475,816
|
Year
Ended 7/31/2015
|
$9.99
|
13.03%
|
1.06%
|
1.06%
(c)
|
1.12%
|
77%
|
$3,601,777
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$12.40
|
4.33%
|
0.74%
|
0.74%
|
1.38%
|
75%
|
$17,613
|
Year
Ended 7/31/2018
|
$12.89
|
18.83%
|
0.73%
|
0.73%
(c)
|
1.15%
|
71%
|
$9,665
|
Year
Ended 7/31/2017
|
$11.54
|
16.05%
|
0.77%
|
0.77%
(c)
|
1.98%
|
72%
|
$6,566
|
Year
Ended 7/31/2016
|
$10.09
|
1.75%
|
0.80%
|
0.80%
(c)
|
1.50%
|
77%
|
$3,298
|
Year
Ended 7/31/2015
|
$10.07
|
13.29%
|
0.80%
|
0.80%
(c)
|
1.40%
|
77%
|
$948
|
Class
C
|
Year
Ended 7/31/2019
|
$11.97
|
3.23%
|
1.73%
|
1.73%
|
0.42%
|
75%
|
$50,697
|
Year
Ended 7/31/2018
|
$12.47
|
17.56%
|
1.73%
|
1.73%
(c)
|
0.17%
|
71%
|
$47,968
|
Year
Ended 7/31/2017
|
$11.20
|
14.94%
|
1.77%
|
1.77%
(c)
|
0.91%
|
72%
|
$56,943
|
Year
Ended 7/31/2016
|
$9.80
|
0.74%
|
1.79%
|
1.79%
(c)
|
0.57%
|
77%
|
$58,819
|
Year
Ended 7/31/2015
|
$9.78
|
12.17%
|
1.80%
|
1.80%
(c)
|
0.37%
|
77%
|
$52,590
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$12.34
|
4.26%
|
0.74%
|
0.74%
|
1.42%
|
75%
|
$493,840
|
Year
Ended 7/31/2018
|
$12.84
|
18.80%
|
0.73%
|
0.73%
(c)
|
1.15%
|
71%
|
$217,861
|
Year
Ended 7/31/2017
|
$11.50
|
16.01%
|
0.77%
|
0.77%
(c)
|
2.12%
|
72%
|
$157,993
|
Year
Ended 7/31/2016
|
$10.06
|
1.75%
|
0.79%
|
0.79%
(c)
|
1.58%
|
77%
|
$43,386
|
Year
Ended 7/31/2015
|
$10.04
|
13.34%
|
0.80%
|
0.80%
(c)
|
1.38%
|
77%
|
$43,636
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$12.30
|
4.31%
|
0.70%
|
0.70%
|
1.44%
|
75%
|
$53,464
|
Year
Ended 7/31/2018
|
$12.80
|
18.82%
|
0.70%
|
0.70%
|
1.22%
|
71%
|
$52,336
|
Year
Ended 7/31/2017
|
$11.47
|
16.14%
|
0.71%
|
0.71%
|
2.05%
|
72%
|
$110,542
|
Year
Ended 7/31/2016
|
$10.03
|
1.75%
|
0.71%
|
0.71%
|
1.67%
|
77%
|
$79,994
|
Year
Ended 7/31/2015
|
$10.02
|
13.40%
|
0.70%
|
0.70%
|
1.47%
|
77%
|
$76,799
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Disciplined Core Fund | Annual Report 2019
|
19
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$12.85
|
0.18
|
0.28
|
0.46
|
(0.15)
|
(0.80)
|
(0.95)
|
Year
Ended 7/31/2018
|
$11.51
|
0.15
|
1.96
|
2.11
|
(0.22)
|
(0.55)
|
(0.77)
|
Year
Ended 7/31/2017
|
$10.07
|
0.27
|
1.34
|
1.61
|
(0.17)
|
—
|
(0.17)
|
Year
Ended 7/31/2016
|
$10.06
|
0.09
|
0.08
(e)
|
0.17
|
(0.16)
|
—
|
(0.16)
|
Year
Ended 7/31/2015(f)
|
$10.09
|
0.02
|
(0.05)
(e)
|
(0.03)
|
—
|
—
|
—
|
Class
R
|
Year
Ended 7/31/2019
|
$12.74
|
0.11
|
0.27
|
0.38
|
(0.08)
|
(0.80)
|
(0.88)
|
Year
Ended 7/31/2018
|
$11.42
|
0.08
|
1.94
|
2.02
|
(0.15)
|
(0.55)
|
(0.70)
|
Year
Ended 7/31/2017
|
$9.99
|
0.15
|
1.39
|
1.54
|
(0.11)
|
—
|
(0.11)
|
Year
Ended 7/31/2016
|
$9.98
|
0.10
|
0.01
(e)
|
0.11
|
(0.10)
|
—
|
(0.10)
|
Year
Ended 7/31/2015
|
$8.92
|
0.08
|
1.06
|
1.14
|
(0.08)
|
—
|
(0.08)
|
Notes
to Financial Highlights
|
(a)
|
In
addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense
ratios.
|
(b)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(c)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
(d)
|
Rounds to
zero.
|
(e)
|
Calculation
of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of subscriptions and redemptions of Fund shares in
relation to fluctuations in the market value of the portfolio.
|
(f)
|
Institutional
3 Class shares commenced operations on June 1, 2015. Per share data and total return reflect activity from that date.
|
(g)
|
Annualized.
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
20
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$12.36
|
4.43%
|
0.65%
|
0.65%
|
1.50%
|
75%
|
$280,889
|
Year
Ended 7/31/2018
|
$12.85
|
18.89%
|
0.65%
|
0.65%
|
1.23%
|
71%
|
$306,602
|
Year
Ended 7/31/2017
|
$11.51
|
16.12%
|
0.66%
|
0.66%
|
2.46%
|
72%
|
$303,699
|
Year
Ended 7/31/2016
|
$10.07
|
1.82%
|
0.68%
|
0.68%
|
0.92%
|
77%
|
$1,054
|
Year
Ended 7/31/2015(f)
|
$10.06
|
(0.30%)
|
0.60%
(g)
|
0.60%
(g)
|
1.16%
(g)
|
77%
|
$2
|
Class
R
|
Year
Ended 7/31/2019
|
$12.24
|
3.73%
|
1.23%
|
1.23%
|
0.92%
|
75%
|
$4,398
|
Year
Ended 7/31/2018
|
$12.74
|
18.21%
|
1.23%
|
1.23%
(c)
|
0.65%
|
71%
|
$4,693
|
Year
Ended 7/31/2017
|
$11.42
|
15.49%
|
1.27%
|
1.27%
(c)
|
1.43%
|
72%
|
$4,929
|
Year
Ended 7/31/2016
|
$9.99
|
1.13%
|
1.29%
|
1.29%
(c)
|
1.10%
|
77%
|
$4,349
|
Year
Ended 7/31/2015
|
$9.98
|
12.78%
|
1.31%
|
1.31%
(c)
|
0.86%
|
77%
|
$4,943
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Core Fund | Annual Report 2019
|
21
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Disciplined Core Fund (the Fund), a series of
Columbia Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business
trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Advisor Class, Institutional Class, Institutional 2 Class, Institutional 3 Class and Class R shares are available for purchase through authorized investment professionals to omnibus
retirement plans or to institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years. Effective December 14, 2018, Class T shares merged, in a
tax-free transaction, into Class A shares of the Fund and are no longer offered for sale.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
All equity securities are valued at the close of business of
the New York Stock Exchange. Equity securities are valued at the official closing price on the principal exchange or market on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the
mean of the latest quoted bid and ask prices on such exchanges or markets.
Foreign equity securities are valued based on the closing
price on the foreign exchange in which such securities are primarily traded. If any foreign equity security closing prices are not readily available, the securities are valued at the mean of the latest quoted bid and ask prices on such exchanges or
markets. Foreign currency exchange rates are determined at the scheduled closing time of the New York Stock Exchange. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange; therefore, the
closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. In those situations, foreign securities will be fair valued pursuant to
a policy adopted by the Board of Trustees, including, if available, utilizing a third party pricing service to determine these fair values. The third-party pricing service takes into account multiple factors, including, but not limited to, movements
in the U.S. securities markets, certain depositary receipts, futures contracts and foreign exchange rates that have occurred subsequent to the close of the foreign exchange or market, to determine a good faith estimate that reasonably reflects the
current market conditions as of the close of the New York Stock Exchange. The fair value of a security is likely to be different from the quoted or published price, if available.
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
22
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Futures and options on futures contracts are valued based upon
the settlement price at the close of regular trading on their principal exchanges or, in the absence of transactions, at the mean of the latest quoted bid and ask prices.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Derivative instruments
The Fund invests in certain derivative instruments, as
detailed below, to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more securities, currencies, commodities, indices, or other assets or instruments.
Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to
pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including
the potential inability of the counterparty to fulfill its obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the
potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial
statements.
A derivative instrument may suffer a
marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its obligations under the contract. The
Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund and the amount of any variation margin held by the
counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk to the Fund since the clearinghouse or central counterparty (CCP) provides some protection
in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract; therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in
exchange-traded or centrally cleared derivatives with respect to initial and variation margin that is held in a broker’s customer account. While brokers are required to segregate customer margin from their own assets, in the event that a
broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across
all the broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its contractual rights and to secure
rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivatives contract
counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a
default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative instrument’s payables and/or receivables with collateral held and/or posted and create
one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
Columbia
Disciplined Core Fund | Annual Report 2019
|
23
|
Notes to Financial Statements (continued)
July 31, 2019
Collateral (margin) requirements differ by type of derivative.
Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain circumstances. Collateral terms for most over-the-counter
derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral
requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally,
the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (e.g., $250,000) before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized,
contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any interest expense paid by the Fund is shown on the Statement of
Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those
counterparties.
Certain ISDA Master Agreements allow
counterparties of over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified time period or if the Fund fails to meet
certain terms of the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination rights if the counterparty fails to meet certain terms of the ISDA Master
Agreement. In determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk, whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes, the Fund does not offset
derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are exchange-traded and represent
commitments for the future purchase or sale of an asset at a specified price on a specified date. The Fund bought and sold futures contracts to maintain appropriate equity market exposure while keeping sufficient cash to accommodate daily
redemptions. These instruments may be used for other purposes in future periods. Upon entering into futures contracts, the Fund bears risks that it may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional
risks include counterparty credit risk, the possibility of an illiquid market, and that a change in the value of the contract or option may not correlate with changes in the value of the underlying asset.
Upon entering into a futures contract, the Fund deposits cash
or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be maintained at an established level over the life of the contract. Cash
deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are designated in the Portfolio of Investments. Subsequent payments (variation margin) are made or received
by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund recognizes a realized gain or
loss when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Effects of derivative transactions in the financial
statements
The following tables are intended to provide
additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the
impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules following the Portfolio of Investments present additional information regarding
derivative instruments outstanding at the end of the period, if any.
24
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
following table is a summary of the fair value of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) at July 31, 2019:
|
Asset
derivatives
|
|
Risk
exposure
category
|
Statement
of assets and liabilities
location
|
Fair
value ($)
|
Equity
risk
|
Component
of total distributable earnings (loss) — unrealized appreciation on futures contracts
|
1,214,497*
|
*
|
Includes
cumulative appreciation (depreciation) as reported in the tables following the Portfolio of Investments. Only the current day’s variation margin is reported in receivables or payables in the Statement of Assets and Liabilities.
|
The following table indicates the
effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended July 31, 2019:
Amount
of realized gain (loss) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Equity
risk
|
1,973,746
|
|
Change
in unrealized appreciation (depreciation) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Equity
risk
|
363,254
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended July 31, 2019:
Derivative
instrument
|
Average
notional
amounts ($)*
|
Futures
contracts — long
|
62,851,232
|
*
|
Based on
the ending quarterly outstanding amounts for the year ended July 31, 2019.
|
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Corporate actions and dividend income are generally recorded
net of any non-reclaimable tax withholdings, on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities.
The Fund may receive distributions from holdings in equity
securities, business development companies (BDCs), exchange-traded funds (ETFs), limited partnerships (LPs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information on the tax character of
their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. Return of capital is recorded as a reduction of the cost basis of securities held. If the
Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. With respect to REITs, to the extent actual information has not yet been reported, estimates for return of capital are made by the Fund’s
management. Management’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a proportionate change in return of capital to shareholders.
Awards from class action litigation are recorded as a
reduction of cost basis if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains.
Columbia
Disciplined Core Fund | Annual Report 2019
|
25
|
Notes to Financial Statements (continued)
July 31, 2019
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Distributions to shareholders
Distributions from net investment income, if any, are declared
and paid annually. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods beginning after December 15, 2019 and interim periods within
those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a result of the amendments, management implemented disclosure
changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the level 3 valuation
processes, as well as modifications to the measurement uncertainty disclosure.
26
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.75% to 0.55% as the Fund’s net assets increase. The
effective management services fee rate for the year ended July 31, 2019 was 0.63% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
Columbia
Disciplined Core Fund | Annual Report 2019
|
27
|
Notes to Financial Statements (continued)
July 31, 2019
For
the year ended July 31, 2019, the Fund’s effective transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.09
|
Advisor
Class
|
0.09
|
Class
C
|
0.09
|
Institutional
Class
|
0.09
|
Institutional
2 Class
|
0.06
|
Institutional
3 Class
|
0.01
|
Class
R
|
0.09
|
Class
T
|
0.03
(a)
|
The Fund and certain other
associated investment companies have severally, but not jointly, guaranteed the performance and observance of all the terms and conditions of a lease entered into by Seligman Data Corp. (SDC), the former transfer agent, including the payment of rent
by SDC (the Guaranty). SDC was the legacy Seligman funds’ former transfer agent.
The lease and the Guaranty expired on January 31, 2019. SDC is
owned by six associated investment companies, including the Fund. The Fund’s ownership interest in SDC at July 31, 2019 is recorded as a part of other assets in the Statement of Assets and Liabilities at a cost of $22,506, which approximates
the fair value of the ownership interest.
An annual
minimum account balance fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account
balance fees are remitted to the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at the maximum annual rates of up to 0.25%, 1.00%, 0.50% and 0.25% of the Fund’s average daily net assets attributable to Class A, Class C, Class R and Class T shares, respectively. For Class C shares, of the 1.00% fee, up to 0.75%
can be reimbursed for distribution expenses and up to an additional 0.25% can be reimbursed for shareholder servicing expenses. For Class R shares, of the 0.50% fee, up to 0.25% can be reimbursed for shareholder servicing expenses. For Class T
shares, of the 0.25% fee, up to 0.25% can be reimbursed for distribution and/or shareholder servicing expenses. As a result of all Class T shares of the Fund being redeemed or converted to Class A shares, December 14, 2018 was the last day the Fund
paid a distribution and shareholder services fee for Class T shares.
The amount of distribution and shareholder services expenses
incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $1,285,000 for Class C shares. This amount is based on the most recent information available as of June 30, 2019, and may be recovered from future payments
under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended July 31, 2019, if any, are listed below:
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
5.75
|
0.50 - 1.00
(a)
|
1,212,045
|
Class
C
|
—
|
1.00
(b)
|
3,252
|
Class
T
|
2.50
|
—
|
—
|
28
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
(a)
|
This
charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months after purchase, as follows: 1.00% if redeemed within 12 months after 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 12 months after purchase, with certain limited exceptions.
|
The Fund’s other share classes are not subject to sales
charges.
Expenses waived/reimbursed by the Investment
Manager and its affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of
Trustees, 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 following annual rate(s) as a
percentage of the class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to
December 1, 2018
|
Class
A
|
1.12%
|
1.12%
|
Advisor
Class
|
0.87
|
0.87
|
Class
C
|
1.87
|
1.87
|
Institutional
Class
|
0.87
|
0.87
|
Institutional
2 Class
|
0.85
|
0.83
|
Institutional
3 Class
|
0.80
|
0.78
|
Class
R
|
1.37
|
1.37
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), 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, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or expenses reimbursed under the expense
reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for deferral/reversal of wash sale losses, re-characterization of distributions for investments, derivative investments, post-October capital losses and trustees’ deferred compensation. To the extent these differences were
permanent, reclassifications were made among the components of the Fund’s net assets. Temporary differences do not require reclassifications.
The following reclassifications were made:
Undistributed
net
investment
income ($)
|
Accumulated
net realized
gain ($)
|
Paid
in
capital ($)
|
(20,048)
|
20,048
|
—
|
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification.
Columbia
Disciplined Core Fund | Annual Report 2019
|
29
|
Notes to Financial Statements (continued)
July 31, 2019
The
tax character of distributions paid during the years indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
42,498,737
|
284,578,918
|
327,077,655
|
62,522,526
|
193,704,532
|
256,227,058
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At July 31, 2019, the components of distributable earnings on
a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
appreciation ($)
|
31,997,995
|
322,665,690
|
—
|
817,760,487
|
At July 31, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
appreciation ($)
|
3,683,392,408
|
908,041,768
|
(90,281,281)
|
817,760,487
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at July
31, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended July 31, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
No
expiration
short-term ($)
|
No
expiration
long-term ($)
|
Total
($)
|
Utilized
($)
|
Expired
($)
|
—
|
—
|
—
|
18,579,540
|
—
|
Under current tax rules, regulated
investment companies can elect to treat certain late-year ordinary losses incurred and post-October capital losses (capital losses realized after October 31) as arising on the first day of the following taxable year. As of July 31, 2019, the Fund
will elect to treat the following late-year ordinary losses and post-October capital losses as arising on August 1, 2019.
Late
year
ordinary losses ($)
|
Post-October
capital losses ($)
|
—
|
54,330,321
|
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and proceeds from
sales of securities, excluding short-term investments and derivatives, if any, aggregated to $3,290,369,754 and $3,302,835,333, respectively, for the year ended July 31, 2019. The amount of purchase and sale activity impacts the portfolio turnover
rate reported in the Financial Highlights.
30
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Note 6. Affiliated money market fund
The Fund invests in Columbia Short-Term Cash Fund, an
affiliated money market fund established for the exclusive use by the Fund and other affiliated funds (the Affiliated MMF). The income earned by the Fund from such investments is included as Dividends - affiliated issuers in the Statement of
Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of the Affiliated MMF. The Affiliated MMF prices its shares with a floating net asset value. In addition, the Board of Trustees of the Affiliated MMF
may impose a fee on redemptions (sometimes referred to as a liquidity fee) or temporarily suspend redemptions (sometimes referred to as imposing a redemption gate) in the event its liquidity falls below regulatory limits.
Note 7. Interfund lending
Pursuant to an exemptive order granted by the Securities and
Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds, borrow money
directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended July 31, 2019.
Note
8. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion.
Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each
borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment
fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
Note 9. Significant risks
Shareholder concentration risk
At July 31, 2019, affiliated shareholders of record owned
84.1% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced
to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased
operating expenses for non-redeeming Fund shareholders.
Technology and technology-related investment risk
The Fund may be more susceptible to the particular risks that
may affect companies in the information technology sector, 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.
Columbia
Disciplined Core Fund | Annual Report 2019
|
31
|
Notes to Financial Statements (continued)
July 31, 2019
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.
Note 10. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 11. Information regarding pending and settled
legal proceedings
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (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 Fund. Further, although we believe proceedings are not 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, 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.
32
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Disciplined Core Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Disciplined Core Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of operations for
the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
Columbia
Disciplined Core Fund | Annual Report 2019
|
33
|
Federal Income Tax Information
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended July 31, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
Qualified
dividend
income
|
Dividends
received
deduction
|
Capital
gain
dividend
|
100.00%
|
100.00%
|
$390,722,485
|
Qualified dividend income. For
taxable, non-corporate shareholders, the percentage of ordinary income distributed during the fiscal year that represents qualified dividend income subject to reduced tax rates.
Dividends received deduction. The percentage of ordinary
income distributed during the fiscal year that qualifies for the corporate dividends received deduction.
Capital gain dividend. The Fund designates as a capital gain
dividend the amount reflected above, or if subsequently determined to be different, the net capital gain of such fiscal period.
34
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
Columbia
Disciplined Core Fund | Annual Report 2019
|
35
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
36
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
Columbia
Disciplined Core Fund | Annual Report 2019
|
37
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
38
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
Columbia
Disciplined Core Fund | Annual Report 2019
|
39
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Disciplined Core Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management Investment
Distributors, Inc. (collectively, the Funds).
On an
annual basis, the Fund’s Board of Trustees (the Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its
Contracts Committee in November 2018 and January, March, April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive
response to items of information requested by independent legal counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented
at these meetings were first supplied in draft form to designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who
is an Independent Trustee), and the final materials were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets
with portfolio management teams and senior management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the
work, deliberations and conclusions of the various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
40
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group, the product score of the
Fund (taking into account performance relative to peers and benchmarks) and the net assets of the Fund. The Board observed that the Fund’s investment performance met expectations.
Comparative fees, costs of services provided and the profits
realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability.
The Board considered the reports of its independent fee
consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to industry competitors,
the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of the level of fees is to
achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the "pricing philosophy"
currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s total expense ratio
(after considering proposed expense caps/waivers) was below the peer universe’s median expense ratio shown in the reports. Based on its review, the Board concluded that the Fund’s management fee was fair and reasonable in light of the
extent and quality of services that the Fund receives.
The Board also considered the profitability of Columbia
Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the Profitability Report, discussing the
profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was reasonable and that the 2019 information shows
that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle profitability relative to industry competitors was
reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced ability to offer various other financial products to
Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Fund should permit the Investment Manager to offer competitive compensation to its personnel, make necessary
investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
Columbia
Disciplined Core Fund | Annual Report 2019
|
41
|
Approval of Management Agreement (continued)
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
42
|
Columbia Disciplined Core
Fund | Annual Report 2019
|
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT filings are available on the SEC’s website at
sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Columbia
Disciplined Core Fund | Annual Report 2019
|
43
|
Columbia Disciplined Core Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Annual
Report
July 31, 2019
Columbia Income Opportunities Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
5
|
|
7
|
|
8
|
|
18
|
|
20
|
|
21
|
|
24
|
|
28
|
|
42
|
|
43
|
|
48
|
|
51
|
Columbia Income Opportunities Fund | Annual Report
2019
Investment objective
Columbia Income Opportunities Fund
(the Fund) seeks to provide shareholders with a high total return through current income and capital appreciation.
Portfolio
management
Brian Lavin,
CFA
Lead
Portfolio Manager
Managed Fund
since 2003
Daniel
DeYoung
Portfolio
Manager
Managed Fund
since February 2019
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
Excluding
sales charges
|
06/19/03
|
7.62
|
4.40
|
7.20
|
|
Including
sales charges
|
|
2.50
|
3.40
|
6.68
|
Advisor
Class*
|
11/08/12
|
7.99
|
4.69
|
7.40
|
Class
C
|
Excluding
sales charges
|
06/19/03
|
6.82
|
3.63
|
6.44
|
|
Including
sales charges
|
|
5.82
|
3.63
|
6.44
|
Institutional
Class*
|
09/27/10
|
7.89
|
4.67
|
7.45
|
Institutional
2 Class*
|
11/08/12
|
8.08
|
4.78
|
7.46
|
Institutional
3 Class*
|
03/07/11
|
8.13
|
4.85
|
7.58
|
Class
R*
|
09/27/10
|
7.35
|
4.14
|
6.94
|
ICE
BofAML BB-B US Cash Pay High Yield Constrained Index
|
|
8.09
|
5.20
|
8.17
|
Returns for Class A shares are shown
with and without the maximum initial sales charge of 4.75%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. Since the Fund launched more than one share class at its
inception, Class A shares were used. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit
columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
The ICE BofAML BB-B US Cash Pay High Yield Constrained Index is
an unmanaged index of high yield bonds. The index is subject to a 2% cap on allocation to any one issuer. The 2% cap is intended to provide broad diversification and better reflect the overall character of the high yield market.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
Columbia
Income Opportunities Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a
hypothetical $10,000 investment (July 31, 2009 — July 31, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Income Opportunities Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the
redemption of Fund shares.
Portfolio
breakdown (%) (at July 31, 2019)
|
Common
Stocks
|
0.0
(a)
|
Convertible
Bonds
|
0.0
(a)
|
Corporate
Bonds & Notes
|
88.0
|
Money
Market Funds
|
8.9
|
Senior
Loans
|
3.1
|
Total
|
100.0
|
Percentages indicated are based
upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
Quality
breakdown (%) (at July 31, 2019)
|
BBB
rating
|
1.2
|
BB
rating
|
43.3
|
B
rating
|
53.4
|
CCC
rating
|
2.0
|
Not
rated
|
0.1
|
Total
|
100.0
|
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the average rating of Moody’s, S&P and Fitch. When ratings are available from
only two rating agencies, the average of the two rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is designated as “Not rated.” Credit quality
ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the considerations that the Investment Manager and/or
Fund’s subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage (repay) through free cash flow, quality of management,
market positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any collateral.
4
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Manager Discussion of Fund Performance
For
the 12-month period ended July 31, 2019, the Fund’s Class A shares returned 7.62% excluding sales charges. The Fund underperformed its benchmark, the unmanaged ICE BofAML BB-B US Cash Pay High Yield Constrained Index, which returned 8.09% for
the same time period. The Fund’s security selection was the main driver of its underperformance during the 12-month period.
U.S. Federal Reserve pivoted amid rising trade
tensions
High-yield bonds in aggregate posted solid
returns over the 12 months ended July 31, 2019, with higher quality issues leading performance within the asset class. Drivers of the high-yield market’s positive return included the dovish pivot by the U.S. Federal Reserve (Fed) entering
2019, declining U.S. Treasury yields, and generally supportive U.S. economic data and corporate earnings. However, U.S./China trade tensions and weak commodity prices led to heightened volatility during the period and a significant dispersion of
returns within the high-yield market.
At times,
international trade tensions were high during the period. While the United States, Canada and Mexico came to agreement regarding modifications to NAFTA, little progress was made with respect to the U.S./China trade dispute. The United States imposed
10% tariffs on $200 billion of Chinese goods during the third quarter of 2018, while threatening further tariff increases. China then responded with its own tariffs. Ongoing negotiations forstalled further hikes in tariffs until May 2019, when U.S.
tariffs on $200 billion of Chinese imports were abruptly increased from 10% to 25%. In addition, the United States threatened to apply 25% tariffs on an additional $325 billion of Chinese goods by the end of June. In late June, both sides agreed to
a pause in any further escalation and to re-start negotiations.
The Fed raised short-term rates for the fourth time during the
calendar year in December 2018, with its accompanying commentary more hawkish than expected, raising strong concerns from financial market participants. However, the Fed then pivoted to a dovish stance in late December/early January, acknowledging
the risks to growth from escalating trade tensions, and reduced its projections for rate hikes in 2019 from two to zero. The Fed cut short-term rates in July and the market immediately priced in additional cuts in 2019 and 2020. Fed Chairman Powell
expressed a favorable outlook for the domestic economy but described the federal funds rate cut as necessary given downside risks to U.S. growth from the global slowdown and continuing trade tensions. After being as high as 3.24% in early November
2018, the 10-year U.S. Treasury yield ended the period at 2.02%, a two-year low.
U.S. economic data was mixed over the 12-month period. While
the data was generally in line with expectations during the third quarter and early in the fourth quarter of 2018, the data grew more disappointing in late 2018 and early 2019. Though employment reports and broad labor market conditions remained
strong, durable goods orders, retail sales, industrial production and manufacturing data all softened. Corporate earnings were broadly supportive during the period, with the majority of companies exceeding expectations across most sectors. However,
S&P 500 companies in aggregate reported a modest year-over-year earnings decline in the first quarter of 2019, the first such decline since the second quarter of 2016.
Security selection drove Fund performance
Security selection was the primary driver of the
Fund’s performance during the 12-month period. Selection was strongest in energy exploration and production, cable and satellite TV, metals/mining, telecom-wireline and pharmaceuticals. Conversely, security selection detracted within personal
and household products and oil field equipment and services. In terms of sector allocation, the Fund’s overweight to cable and underweight to oil field equipment and services were notable contributors. An underweight to banking and an
overweight to energy exploration and production detracted from performance relative to the benchmark.
Outlook and positioning
In July 2019, the Fed cut short-term rates for the first
time since 2008. At the close of the reporting period, we were not convinced that current funding costs were slowing the U.S. economy, and we believed that trade uncertainty represented more of a headwind. Therefore, we did not expect lower rates to
provide a significant boost to the economy. The U.S. consumer remained on sound footing, and June’s employment report surprised to the upside. Elsewhere, recent GDP, manufacturing, durable goods and industrial production estimates met or
exceeded expectations, but international growth
Columbia
Income Opportunities Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance (continued)
data continued to trend negative. In addition, given oil’s strong
representation within the high-yield market, the direction of oil prices may continue to be an important component of overall high-yield returns. Recent spikes in the price of oil had been driven more by increased geopolitical risk and optimism
surrounding Fed easing than by improved supply/demand dynamics.
The technical backdrop within the high-yield market softened
recently but remained supportive. Net new issue volume had increased over recent months, but we expected issuance to remain manageable given elevated refinancing activity in recent years and a lack of leveraged buyout activity. High-yield spreads
have widened following the most recent escalation in U.S./China trade tensions, leading to more reasonable valuations and increased market opportunities.
At the close of the reporting period, the Fund remained
positioned more conservatively than the benchmark as reflected in the below-benchmark average yield of holdings and defensive sector allocations. As of period end, the Fund was underweight in the retail, banking, automotive, basic industry and
transportation sectors. Overweights included utilities, telecommunications and consumer goods. As always, we will maintain our disciplined credit selection process, based on strong fundamental analysis and rigorous risk management, as we seek to
take advantage of opportunities in the marketplace.
Market
risk may affect a single issuer, sector of the economy, industry or the market as a whole. Foreign investments subject the Fund to risks, including political, economic,
market, social and others within a particular country, as well as to currency instabilities and less stringent financial and accounting standards generally applicable to U.S. issuers. Fixed-income securities present issuer default risk. A rise in interest rates may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result
in the Fund investing in lower yielding debt instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities. Prepayment and extension risk
exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest rates rise which may reduce investment opportunities and potential returns. Non-investment-grade (high-yield or junk) securities present greater price volatility and more risk to principal and income than higher rated securities. The Fund may invest significantly in issuers within a particular sector, which may be negatively affected by market, economic or other conditions, making the Fund more vulnerable to unfavorable developments in the sector. Market or other (e.g., interest rate) environments may adversely
affect the liquidity of fund investments, negatively impacting their price. Generally, the less liquid the market at the time the Fund sells a holding, the greater the risk of loss or decline of value to the
Fund.See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
6
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,062.90
|
1,019.59
|
5.37
|
5.26
|
1.05
|
Advisor
Class
|
1,000.00
|
1,000.00
|
1,065.10
|
1,020.83
|
4.10
|
4.01
|
0.80
|
Class
C
|
1,000.00
|
1,000.00
|
1,059.00
|
1,015.87
|
9.19
|
9.00
|
1.80
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,064.10
|
1,020.83
|
4.09
|
4.01
|
0.80
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,065.60
|
1,021.22
|
3.69
|
3.61
|
0.72
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,065.90
|
1,021.47
|
3.43
|
3.36
|
0.67
|
Class
R
|
1,000.00
|
1,000.00
|
1,061.60
|
1,018.35
|
6.65
|
6.51
|
1.30
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Columbia
Income Opportunities Fund | Annual Report 2019
|
7
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Common
Stocks 0.0%
|
Issuer
|
Shares
|
Value
($)
|
Communication
Services 0.0%
|
Media
0.0%
|
Haights
Cross Communications, Inc.(a),(b),(c),(d)
|
275,078
|
0
|
Loral
Space & Communications, Inc.(b)
|
101
|
3,716
|
Ziff
Davis Holdings, Inc.(a),(b),(d)
|
6,107
|
61
|
Total
|
|
3,777
|
Total
Communication Services
|
3,777
|
Consumer
Discretionary 0.0%
|
Auto
Components 0.0%
|
Lear
Corp.
|
540
|
68,461
|
Total
Consumer Discretionary
|
68,461
|
Industrials
0.0%
|
Commercial
Services & Supplies 0.0%
|
Quad/Graphics,
Inc.
|
1,298
|
14,681
|
Total
Industrials
|
14,681
|
Utilities
—%
|
Independent
Power and Renewable Electricity Producers —%
|
Calpine
Corp. Escrow(a),(b),(c),(d)
|
23,187,000
|
0
|
Total
Utilities
|
0
|
Total
Common Stocks
(Cost $3,191,147)
|
86,919
|
Convertible
Bonds —%
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Wirelines
—%
|
At
Home Corp.(a),(c),(d),(e)
|
Subordinated
|
06/12/2015
|
0.000%
|
|
3,896,787
|
0
|
Total
Convertible Bonds
(Cost $—)
|
0
|
|
Corporate
Bonds & Notes 88.4%
|
|
|
|
|
|
Aerospace
& Defense 2.1%
|
Bombardier,
Inc.(f)
|
10/15/2022
|
6.000%
|
|
752,000
|
752,566
|
12/01/2024
|
7.500%
|
|
1,645,000
|
1,698,008
|
03/15/2025
|
7.500%
|
|
2,249,000
|
2,290,681
|
04/15/2027
|
7.875%
|
|
306,000
|
309,610
|
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
TransDigm,
Inc.
|
05/15/2025
|
6.500%
|
|
555,000
|
569,920
|
06/15/2026
|
6.375%
|
|
7,515,000
|
7,660,708
|
TransDigm,
Inc.(f)
|
03/15/2026
|
6.250%
|
|
9,515,000
|
9,989,180
|
03/15/2027
|
7.500%
|
|
3,201,000
|
3,374,558
|
Total
|
26,645,231
|
Automotive
0.4%
|
IAA
Spinco, Inc.(f)
|
06/15/2027
|
5.500%
|
|
643,000
|
671,970
|
Panther
BF Aggregator 2 LP/Finance Co., Inc.(f)
|
05/15/2026
|
6.250%
|
|
1,946,000
|
2,015,934
|
05/15/2027
|
8.500%
|
|
1,881,000
|
1,909,685
|
Total
|
4,597,589
|
Banking
0.5%
|
Ally
Financial, Inc.
|
11/01/2031
|
8.000%
|
|
5,118,000
|
6,843,027
|
Brokerage/Asset
Managers/Exchanges 0.1%
|
VFH
Parent LLC/Orchestra Co-Issuer, Inc.(f)
|
06/15/2022
|
6.750%
|
|
908,000
|
937,637
|
Building
Materials 1.2%
|
American
Builders & Contractors Supply Co., Inc.(f)
|
05/15/2026
|
5.875%
|
|
6,005,000
|
6,372,752
|
Beacon
Roofing Supply, Inc.(f)
|
11/01/2025
|
4.875%
|
|
7,082,000
|
7,016,995
|
James
Hardie International Finance DAC(f)
|
01/15/2025
|
4.750%
|
|
1,430,000
|
1,462,418
|
Total
|
14,852,165
|
Cable
and Satellite 9.3%
|
CCO
Holdings LLC/Capital Corp.(f)
|
05/01/2025
|
5.375%
|
|
5,259,000
|
5,444,595
|
02/15/2026
|
5.750%
|
|
8,985,000
|
9,456,919
|
05/01/2026
|
5.500%
|
|
106,000
|
110,998
|
05/01/2027
|
5.875%
|
|
3,109,000
|
3,262,277
|
06/01/2029
|
5.375%
|
|
4,640,000
|
4,808,372
|
CSC
Holdings LLC(f)
|
07/15/2023
|
5.375%
|
|
7,131,000
|
7,316,149
|
10/15/2025
|
6.625%
|
|
877,000
|
934,602
|
02/01/2028
|
5.375%
|
|
8,773,000
|
9,148,730
|
04/01/2028
|
7.500%
|
|
7,060,000
|
7,790,399
|
02/01/2029
|
6.500%
|
|
2,663,000
|
2,935,308
|
01/15/2030
|
5.750%
|
|
1,922,000
|
1,954,340
|
DISH
DBS Corp.
|
07/01/2026
|
7.750%
|
|
13,892,000
|
13,612,549
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
8
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Sirius
XM Radio, Inc.(f)
|
07/15/2024
|
4.625%
|
|
1,395,000
|
1,435,480
|
04/15/2025
|
5.375%
|
|
3,385,000
|
3,516,751
|
07/15/2026
|
5.375%
|
|
1,236,000
|
1,292,735
|
Unitymedia
Hessen GmbH & Co. KG NRW(f)
|
01/15/2025
|
5.000%
|
|
14,823,000
|
15,326,004
|
Viasat,
Inc.(f)
|
04/15/2027
|
5.625%
|
|
1,120,000
|
1,174,996
|
Virgin
Media Secured Finance PLC(f)
|
01/15/2026
|
5.250%
|
|
1,394,000
|
1,425,188
|
08/15/2026
|
5.500%
|
|
4,893,000
|
5,108,757
|
05/15/2029
|
5.500%
|
|
5,267,000
|
5,400,287
|
Ziggo
Bond Finance BV(f)
|
01/15/2027
|
6.000%
|
|
5,350,000
|
5,432,443
|
Ziggo
BV(f)
|
01/15/2027
|
5.500%
|
|
9,828,000
|
10,060,737
|
Total
|
116,948,616
|
Chemicals
3.1%
|
Angus
Chemical Co.(f)
|
02/15/2023
|
8.750%
|
|
6,093,000
|
6,124,178
|
Axalta
Coating Systems LLC(f)
|
08/15/2024
|
4.875%
|
|
4,749,000
|
4,902,160
|
INEOS
Group Holdings SA(f)
|
08/01/2024
|
5.625%
|
|
1,104,000
|
1,103,763
|
Platform
Specialty Products Corp.(f)
|
12/01/2025
|
5.875%
|
|
9,250,000
|
9,425,056
|
PQ
Corp.(f)
|
11/15/2022
|
6.750%
|
|
7,000,000
|
7,247,219
|
12/15/2025
|
5.750%
|
|
3,530,000
|
3,583,836
|
SPCM
SA(f)
|
09/15/2025
|
4.875%
|
|
2,650,000
|
2,680,557
|
Starfruit
Finco BV/US Holdco LLC(f)
|
10/01/2026
|
8.000%
|
|
4,307,000
|
4,268,642
|
Total
|
39,335,411
|
Construction
Machinery 1.2%
|
H&E
Equipment Services, Inc.
|
09/01/2025
|
5.625%
|
|
3,719,000
|
3,820,663
|
Herc
Holdings, Inc.(f)
|
07/15/2027
|
5.500%
|
|
2,749,000
|
2,752,747
|
Ritchie
Bros. Auctioneers, Inc.(f)
|
01/15/2025
|
5.375%
|
|
2,029,000
|
2,109,961
|
United
Rentals North America, Inc.
|
09/15/2026
|
5.875%
|
|
2,077,000
|
2,210,503
|
12/15/2026
|
6.500%
|
|
4,138,000
|
4,495,378
|
Total
|
15,389,252
|
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Consumer
Cyclical Services 0.9%
|
APX
Group, Inc.
|
12/01/2022
|
7.875%
|
|
8,811,000
|
8,371,208
|
APX
Group, Inc.(f)
|
11/01/2024
|
8.500%
|
|
2,129,000
|
2,030,655
|
frontdoor,
Inc.(f)
|
08/15/2026
|
6.750%
|
|
1,334,000
|
1,426,011
|
Total
|
11,827,874
|
Consumer
Products 2.4%
|
Energizer
Holdings, Inc.(f)
|
07/15/2026
|
6.375%
|
|
1,353,000
|
1,410,105
|
01/15/2027
|
7.750%
|
|
2,125,000
|
2,309,512
|
Mattel,
Inc.(f)
|
12/31/2025
|
6.750%
|
|
2,428,000
|
2,555,035
|
Prestige
Brands, Inc.(f)
|
12/15/2021
|
5.375%
|
|
1,567,000
|
1,572,368
|
03/01/2024
|
6.375%
|
|
6,621,000
|
6,883,172
|
Scotts
Miracle-Gro Co. (The)
|
10/15/2023
|
6.000%
|
|
6,652,000
|
6,896,022
|
Spectrum
Brands, Inc.
|
07/15/2025
|
5.750%
|
|
4,042,000
|
4,192,136
|
Valvoline,
Inc.
|
07/15/2024
|
5.500%
|
|
4,333,000
|
4,484,950
|
Total
|
30,303,300
|
Diversified
Manufacturing 0.9%
|
CFX
Escrow Corp.(f)
|
02/15/2024
|
6.000%
|
|
1,031,000
|
1,093,546
|
02/15/2026
|
6.375%
|
|
912,000
|
976,500
|
Gates
Global LLC/Co.(f)
|
07/15/2022
|
6.000%
|
|
552,000
|
552,276
|
MTS
Systems Corp.(f)
|
08/15/2027
|
5.750%
|
|
644,000
|
661,910
|
Resideo
Funding, Inc.(f)
|
11/01/2026
|
6.125%
|
|
702,000
|
740,484
|
SPX
FLOW, Inc.(f)
|
08/15/2024
|
5.625%
|
|
1,201,000
|
1,250,568
|
WESCO
Distribution, Inc.
|
06/15/2024
|
5.375%
|
|
3,540,000
|
3,673,150
|
Zekelman
Industries, Inc.(f)
|
06/15/2023
|
9.875%
|
|
1,796,000
|
1,890,109
|
Total
|
10,838,543
|
Electric
5.0%
|
AES
Corp. (The)
|
05/15/2026
|
6.000%
|
|
1,976,000
|
2,107,098
|
09/01/2027
|
5.125%
|
|
4,441,000
|
4,700,652
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Income Opportunities Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
July 31, 2019
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Calpine
Corp.
|
01/15/2025
|
5.750%
|
|
1,500,000
|
1,493,802
|
Calpine
Corp.(f)
|
06/01/2026
|
5.250%
|
|
3,466,000
|
3,505,110
|
Clearway
Energy Operating LLC
|
08/15/2024
|
5.375%
|
|
8,425,000
|
8,641,573
|
09/15/2026
|
5.000%
|
|
5,656,000
|
5,684,303
|
Clearway
Energy Operating LLC(f)
|
10/15/2025
|
5.750%
|
|
1,357,000
|
1,409,015
|
NextEra
Energy Operating Partners LP(f)
|
07/15/2024
|
4.250%
|
|
1,740,000
|
1,765,166
|
09/15/2027
|
4.500%
|
|
8,160,000
|
8,208,446
|
NRG
Energy, Inc.
|
01/15/2027
|
6.625%
|
|
2,332,000
|
2,488,762
|
NRG
Energy, Inc.(f)
|
06/15/2029
|
5.250%
|
|
5,783,000
|
6,086,058
|
Pattern
Energy Group, Inc.(f)
|
02/01/2024
|
5.875%
|
|
4,857,000
|
4,981,397
|
TerraForm
Power Operating LLC(f)
|
01/31/2028
|
5.000%
|
|
5,353,000
|
5,429,751
|
Vistra
Operations Co. LLC(f)
|
02/15/2027
|
5.625%
|
|
4,127,000
|
4,357,505
|
07/31/2027
|
5.000%
|
|
2,470,000
|
2,531,750
|
Total
|
63,390,388
|
Environmental
0.1%
|
Clean
Harbors, Inc.(f)
|
07/15/2027
|
4.875%
|
|
919,000
|
948,051
|
07/15/2029
|
5.125%
|
|
644,000
|
676,738
|
Total
|
1,624,789
|
Finance
Companies 2.9%
|
Global
Aircraft Leasing Co., Ltd. PIK(f)
|
09/15/2024
|
6.500%
|
|
3,171,000
|
3,149,085
|
iStar,
Inc.
|
04/01/2022
|
6.000%
|
|
3,079,000
|
3,161,105
|
Navient
Corp.
|
01/25/2022
|
7.250%
|
|
5,777,000
|
6,285,740
|
06/15/2022
|
6.500%
|
|
3,411,000
|
3,648,982
|
09/25/2023
|
7.250%
|
|
74,000
|
80,817
|
Provident
Funding Associates LP/Finance Corp.(f)
|
06/15/2025
|
6.375%
|
|
4,304,000
|
4,161,701
|
Quicken
Loans, Inc.(f)
|
05/01/2025
|
5.750%
|
|
7,948,000
|
8,220,005
|
Springleaf
Finance Corp.
|
03/15/2023
|
5.625%
|
|
2,559,000
|
2,743,135
|
03/15/2024
|
6.125%
|
|
4,524,000
|
4,907,653
|
Total
|
36,358,223
|
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Food
and Beverage 2.2%
|
B&G
Foods, Inc.
|
04/01/2025
|
5.250%
|
|
4,910,000
|
4,896,375
|
Darling
Ingredients, Inc.(f)
|
04/15/2027
|
5.250%
|
|
468,000
|
487,745
|
FAGE
International SA/U.S.A. Dairy Industry, Inc.(f)
|
08/15/2026
|
5.625%
|
|
2,056,000
|
1,788,605
|
Lamb
Weston Holdings, Inc.(f)
|
11/01/2024
|
4.625%
|
|
2,632,000
|
2,740,191
|
11/01/2026
|
4.875%
|
|
940,000
|
976,510
|
Post
Holdings, Inc.(f)
|
08/15/2026
|
5.000%
|
|
9,994,000
|
10,214,258
|
03/01/2027
|
5.750%
|
|
3,485,000
|
3,617,639
|
01/15/2028
|
5.625%
|
|
1,446,000
|
1,492,363
|
12/15/2029
|
5.500%
|
|
1,703,000
|
1,724,327
|
Total
|
27,938,013
|
Gaming
4.6%
|
Boyd
Gaming Corp.
|
05/15/2023
|
6.875%
|
|
4,851,000
|
5,022,750
|
08/15/2026
|
6.000%
|
|
1,701,000
|
1,781,568
|
Caesars
Resort Collection LLC/CRC Finco, Inc.(f)
|
10/15/2025
|
5.250%
|
|
2,049,000
|
2,050,709
|
Eldorado
Resorts, Inc.
|
04/01/2025
|
6.000%
|
|
5,065,000
|
5,331,854
|
09/15/2026
|
6.000%
|
|
2,161,000
|
2,336,168
|
International
Game Technology PLC(f)
|
02/15/2025
|
6.500%
|
|
5,130,000
|
5,624,568
|
01/15/2027
|
6.250%
|
|
2,179,000
|
2,377,060
|
Jack
Ohio Finance LLC/1 Corp.(f)
|
11/15/2021
|
6.750%
|
|
2,524,000
|
2,582,754
|
MGM
Growth Properties Operating Partnership LP/Finance Co-Issuer, Inc.
|
05/01/2024
|
5.625%
|
|
2,076,000
|
2,221,241
|
09/01/2026
|
4.500%
|
|
1,700,000
|
1,747,761
|
MGM
Growth Properties Operating Partnership LP/Finance Co-Issuer, Inc.(f)
|
02/01/2027
|
5.750%
|
|
3,800,000
|
4,100,246
|
MGM
Resorts International
|
12/15/2021
|
6.625%
|
|
6,034,000
|
6,542,600
|
Rivers
Pittsburgh Borrower LP/Finance Corp.(f)
|
08/15/2021
|
6.125%
|
|
3,593,000
|
3,649,777
|
Scientific
Games International, Inc.(f)
|
10/15/2025
|
5.000%
|
|
4,887,000
|
5,008,496
|
03/15/2026
|
8.250%
|
|
2,469,000
|
2,644,452
|
Stars
Group Holdings BV/Co-Borrower LLC(f)
|
07/15/2026
|
7.000%
|
|
1,554,000
|
1,636,609
|
Wynn
Las Vegas LLC/Capital Corp.(f)
|
03/01/2025
|
5.500%
|
|
3,316,000
|
3,476,312
|
Total
|
58,134,925
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
10
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Health
Care 3.9%
|
Acadia
Healthcare Co., Inc.
|
07/01/2022
|
5.125%
|
|
2,493,000
|
2,511,675
|
02/15/2023
|
5.625%
|
|
1,476,000
|
1,489,114
|
03/01/2024
|
6.500%
|
|
330,000
|
341,208
|
Avantor,
Inc.(f)
|
10/01/2024
|
6.000%
|
|
1,345,000
|
1,438,299
|
10/01/2025
|
9.000%
|
|
1,071,000
|
1,193,703
|
Change
Healthcare Holdings LLC/Finance, Inc.(f)
|
03/01/2025
|
5.750%
|
|
4,144,000
|
4,157,858
|
Charles
River Laboratories International, Inc.(f)
|
04/01/2026
|
5.500%
|
|
1,382,000
|
1,466,088
|
CHS/Community
Health Systems, Inc.
|
03/31/2023
|
6.250%
|
|
2,544,000
|
2,438,584
|
HCA,
Inc.
|
09/01/2028
|
5.625%
|
|
6,274,000
|
6,923,026
|
02/01/2029
|
5.875%
|
|
1,867,000
|
2,080,811
|
Hologic,
Inc.(f)
|
10/15/2025
|
4.375%
|
|
4,639,000
|
4,662,404
|
IQVIA,
Inc.(f)
|
05/15/2027
|
5.000%
|
|
2,436,000
|
2,538,429
|
Select
Medical Corp.(f),(g)
|
08/15/2026
|
6.250%
|
|
1,607,000
|
1,632,339
|
Teleflex,
Inc.
|
06/01/2026
|
4.875%
|
|
1,661,000
|
1,727,128
|
11/15/2027
|
4.625%
|
|
2,825,000
|
2,931,178
|
Tenet
Healthcare Corp.(f)
|
02/01/2027
|
6.250%
|
|
10,932,000
|
11,342,682
|
Total
|
48,874,526
|
Healthcare
Insurance 1.3%
|
Centene
Corp.(f)
|
06/01/2026
|
5.375%
|
|
4,986,000
|
5,262,533
|
WellCare
Health Plans, Inc.
|
04/01/2025
|
5.250%
|
|
7,583,000
|
7,877,774
|
WellCare
Health Plans, Inc.(f)
|
08/15/2026
|
5.375%
|
|
3,507,000
|
3,713,331
|
Total
|
16,853,638
|
Home
Construction 1.3%
|
Lennar
Corp.
|
11/15/2024
|
5.875%
|
|
2,630,000
|
2,883,503
|
06/01/2026
|
5.250%
|
|
4,607,000
|
4,909,708
|
Meritage
Homes Corp.
|
04/01/2022
|
7.000%
|
|
1,013,000
|
1,109,272
|
Shea
Homes LP/Funding Corp.(f)
|
04/01/2023
|
5.875%
|
|
444,000
|
456,733
|
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Taylor
Morrison Communities, Inc.(f),(g)
|
01/15/2028
|
5.750%
|
|
1,835,000
|
1,901,862
|
Taylor
Morrison Communities, Inc./Holdings II(f)
|
04/15/2023
|
5.875%
|
|
376,000
|
395,072
|
03/01/2024
|
5.625%
|
|
3,500,000
|
3,647,549
|
TRI
Pointe Group, Inc./Homes
|
06/15/2024
|
5.875%
|
|
1,211,000
|
1,265,902
|
Total
|
16,569,601
|
Independent
Energy 5.9%
|
Callon
Petroleum Co.
|
10/01/2024
|
6.125%
|
|
1,574,000
|
1,537,304
|
07/01/2026
|
6.375%
|
|
6,255,000
|
6,068,601
|
Carrizo
Oil & Gas, Inc.
|
04/15/2023
|
6.250%
|
|
4,428,000
|
4,344,027
|
Centennial
Resource Production LLC(f)
|
01/15/2026
|
5.375%
|
|
2,246,000
|
2,074,963
|
04/01/2027
|
6.875%
|
|
2,499,000
|
2,436,765
|
Chesapeake
Energy Corp.
|
10/01/2026
|
7.500%
|
|
4,207,000
|
3,323,530
|
CrownRock
LP/Finance, Inc.(f)
|
10/15/2025
|
5.625%
|
|
9,247,000
|
9,099,298
|
Indigo
Natural Resources LLC(f)
|
02/15/2026
|
6.875%
|
|
2,069,000
|
1,742,655
|
Jagged
Peak Energy LLC
|
05/01/2026
|
5.875%
|
|
3,893,000
|
3,712,766
|
Matador
Resources Co.
|
09/15/2026
|
5.875%
|
|
4,247,000
|
4,198,648
|
MEG
Energy Corp.(f)
|
01/15/2025
|
6.500%
|
|
950,000
|
949,232
|
Parsley
Energy LLC/Finance Corp.(f)
|
08/15/2025
|
5.250%
|
|
8,474,000
|
8,541,970
|
10/15/2027
|
5.625%
|
|
8,359,000
|
8,626,471
|
QEP
Resources, Inc.
|
03/01/2026
|
5.625%
|
|
1,291,000
|
1,103,811
|
SM
Energy Co.
|
09/15/2026
|
6.750%
|
|
5,437,000
|
4,897,448
|
01/15/2027
|
6.625%
|
|
1,491,000
|
1,300,346
|
WPX
Energy, Inc.
|
01/15/2022
|
6.000%
|
|
2,289,000
|
2,375,982
|
09/15/2024
|
5.250%
|
|
5,535,000
|
5,562,919
|
06/01/2026
|
5.750%
|
|
2,243,000
|
2,304,469
|
Total
|
74,201,205
|
Leisure
0.6%
|
Cedar
Fair LP(f)
|
07/15/2029
|
5.250%
|
|
1,312,000
|
1,355,066
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Income Opportunities Fund | Annual Report 2019
|
11
|
Portfolio of Investments (continued)
July 31, 2019
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Live
Nation Entertainment, Inc.(f)
|
11/01/2024
|
4.875%
|
|
2,720,000
|
2,802,256
|
Viking
Cruises Ltd.(f)
|
09/15/2027
|
5.875%
|
|
2,855,000
|
2,957,777
|
Total
|
7,115,099
|
Lodging
0.1%
|
Marriott
Ownership Resorts, Inc./ILG LLC
|
09/15/2026
|
6.500%
|
|
709,000
|
760,411
|
Media
and Entertainment 3.4%
|
Diamond
Sports Group LLC/Finance Co.(f),(g)
|
08/15/2026
|
5.375%
|
|
4,407,000
|
4,482,461
|
iHeartCommunications,
Inc.
|
05/01/2026
|
6.375%
|
|
1,716,030
|
1,824,885
|
05/01/2027
|
8.375%
|
|
4,370,805
|
4,611,029
|
Netflix,
Inc.
|
11/15/2028
|
5.875%
|
|
9,898,000
|
10,904,805
|
Netflix,
Inc.(f)
|
05/15/2029
|
6.375%
|
|
3,162,000
|
3,544,659
|
11/15/2029
|
5.375%
|
|
3,783,000
|
3,977,877
|
Nexstar
Escrow, Inc.(f)
|
07/15/2027
|
5.625%
|
|
610,000
|
633,404
|
Outfront
Media Capital LLC/Corp.
|
03/15/2025
|
5.875%
|
|
6,594,000
|
6,788,345
|
Outfront
Media Capital LLC/Corp.(f)
|
08/15/2027
|
5.000%
|
|
5,212,000
|
5,304,737
|
Scripps
Escrow, Inc.(f)
|
07/15/2027
|
5.875%
|
|
1,045,000
|
1,054,595
|
Total
|
43,126,797
|
Metals
and Mining 3.3%
|
Alcoa
Nederland Holding BV(f)
|
09/30/2026
|
7.000%
|
|
2,229,000
|
2,401,164
|
Big
River Steel LLC/Finance Corp.(f)
|
09/01/2025
|
7.250%
|
|
4,622,000
|
4,930,223
|
Constellium
NV(f)
|
02/15/2026
|
5.875%
|
|
7,886,000
|
8,198,711
|
Freeport-McMoRan,
Inc.
|
11/14/2024
|
4.550%
|
|
1,251,000
|
1,282,112
|
03/15/2043
|
5.450%
|
|
7,738,000
|
7,176,569
|
HudBay
Minerals, Inc.(f)
|
01/15/2023
|
7.250%
|
|
1,986,000
|
2,050,589
|
01/15/2025
|
7.625%
|
|
5,934,000
|
6,146,283
|
Novelis
Corp.(f)
|
08/15/2024
|
6.250%
|
|
359,000
|
375,709
|
09/30/2026
|
5.875%
|
|
8,886,000
|
9,243,288
|
Total
|
41,804,648
|
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Midstream
6.1%
|
Antero
Midstream Partners LP/Finance Corp.(f)
|
03/01/2027
|
5.750%
|
|
2,855,000
|
2,680,351
|
Cheniere
Energy Partners LP
|
10/01/2026
|
5.625%
|
|
3,990,000
|
4,222,473
|
DCP
Midstream Operating LP
|
05/15/2029
|
5.125%
|
|
3,664,000
|
3,785,234
|
04/01/2044
|
5.600%
|
|
10,087,000
|
9,492,160
|
Delek
Logistics Partners LP/Finance Corp.
|
05/15/2025
|
6.750%
|
|
3,649,000
|
3,649,179
|
Holly
Energy Partners LP/Finance Corp.(f)
|
08/01/2024
|
6.000%
|
|
4,320,000
|
4,504,114
|
NGPL
PipeCo LLC(f)
|
12/15/2037
|
7.768%
|
|
3,805,000
|
5,023,795
|
NuStar
Logistics LP
|
06/01/2026
|
6.000%
|
|
1,402,000
|
1,471,623
|
04/28/2027
|
5.625%
|
|
3,998,000
|
4,131,109
|
Rockies
Express Pipeline LLC(f)
|
07/15/2029
|
4.950%
|
|
3,930,000
|
4,016,853
|
Rockpoint
Gas Storage Canada Ltd.(f)
|
03/31/2023
|
7.000%
|
|
3,719,000
|
3,762,762
|
Sunoco
LP/Finance Corp.
|
01/15/2023
|
4.875%
|
|
1,608,000
|
1,637,287
|
02/15/2026
|
5.500%
|
|
4,168,000
|
4,320,311
|
Tallgrass
Energy Partners LP/Finance Corp.(f)
|
01/15/2028
|
5.500%
|
|
1,771,000
|
1,757,073
|
Targa
Resources Partners LP/Finance Corp.
|
02/01/2027
|
5.375%
|
|
9,603,000
|
10,006,413
|
01/15/2028
|
5.000%
|
|
5,540,000
|
5,614,463
|
Targa
Resources Partners LP/Finance Corp.(f)
|
07/15/2027
|
6.500%
|
|
653,000
|
711,536
|
01/15/2029
|
6.875%
|
|
1,742,000
|
1,922,976
|
TransMontaigne
Partners LP/TLP Finance Corp.
|
02/15/2026
|
6.125%
|
|
4,225,000
|
4,098,782
|
Total
|
76,808,494
|
Oil
Field Services 1.2%
|
Apergy
Corp.
|
05/01/2026
|
6.375%
|
|
4,456,000
|
4,527,702
|
Calfrac
Holdings LP(f)
|
06/15/2026
|
8.500%
|
|
1,986,000
|
1,355,123
|
Nabors
Industries, Inc.
|
02/01/2025
|
5.750%
|
|
5,070,000
|
4,435,550
|
SESI
LLC
|
09/15/2024
|
7.750%
|
|
1,048,000
|
626,571
|
Transocean
Poseidon Ltd.(f)
|
02/01/2027
|
6.875%
|
|
1,050,000
|
1,121,657
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
12
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Transocean
Sentry Ltd.(f)
|
05/15/2023
|
5.375%
|
|
3,220,000
|
3,228,050
|
Total
|
15,294,653
|
Other
Industry 0.4%
|
KAR
Auction Services, Inc.(f)
|
06/01/2025
|
5.125%
|
|
4,220,000
|
4,352,162
|
Other
REIT 0.8%
|
CyrusOne
LP/Finance Corp.
|
03/15/2024
|
5.000%
|
|
3,085,000
|
3,175,045
|
03/15/2027
|
5.375%
|
|
5,930,000
|
6,289,743
|
Total
|
9,464,788
|
Packaging
3.8%
|
Ardagh
Packaging Finance PLC/Holdings U.S.A., Inc.(f)
|
05/15/2024
|
7.250%
|
|
8,936,000
|
9,430,742
|
02/15/2025
|
6.000%
|
|
2,809,000
|
2,899,326
|
Ardagh
Packaging Finance PLC/Holdings USA, Inc.(f),(g)
|
08/15/2026
|
4.125%
|
|
2,302,000
|
2,307,884
|
08/15/2027
|
5.250%
|
|
2,744,000
|
2,750,953
|
Berry
Global Escrow Corp.(f)
|
07/15/2026
|
4.875%
|
|
2,207,000
|
2,296,576
|
07/15/2027
|
5.625%
|
|
1,621,000
|
1,706,634
|
Berry
Global, Inc.
|
07/15/2023
|
5.125%
|
|
2,392,000
|
2,446,607
|
BWAY
Holding Co.(f)
|
04/15/2024
|
5.500%
|
|
3,689,000
|
3,687,838
|
Owens-Brockway
Glass Container, Inc.(f)
|
08/15/2023
|
5.875%
|
|
4,679,000
|
5,037,856
|
Reynolds
Group Issuer, Inc./LLC(f)
|
07/15/2023
|
5.125%
|
|
10,633,000
|
10,830,263
|
Trivium
Packaging Finance BV(f),(g)
|
08/15/2026
|
5.500%
|
|
4,226,000
|
4,355,924
|
Total
|
47,750,603
|
Pharmaceuticals
2.9%
|
Bausch
Health Companies, Inc.(f)
|
04/15/2025
|
6.125%
|
|
2,344,000
|
2,407,872
|
11/01/2025
|
5.500%
|
|
2,427,000
|
2,525,311
|
12/15/2025
|
9.000%
|
|
2,385,000
|
2,671,646
|
04/01/2026
|
9.250%
|
|
7,544,000
|
8,450,728
|
01/31/2027
|
8.500%
|
|
2,597,000
|
2,863,800
|
01/15/2028
|
7.000%
|
|
1,448,000
|
1,500,723
|
Catalent
Pharma Solutions, Inc.(f)
|
01/15/2026
|
4.875%
|
|
2,653,000
|
2,708,997
|
07/15/2027
|
5.000%
|
|
570,000
|
585,843
|
Horizon
Pharma USA, Inc.(f)
|
08/01/2027
|
5.500%
|
|
2,275,000
|
2,334,489
|
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Jaguar
Holding Co. II/Pharmaceutical Product Development LLC(f)
|
08/01/2023
|
6.375%
|
|
8,739,000
|
9,052,337
|
Par
Pharmaceutical, Inc.(f)
|
04/01/2027
|
7.500%
|
|
1,194,000
|
1,077,098
|
Total
|
36,178,844
|
Property
& Casualty 0.0%
|
Lumbermens
Mutual Casualty Co.(e),(f)
|
12/01/2097
|
0.000%
|
|
4,600,000
|
46
|
Subordinated
|
12/01/2037
|
0.000%
|
|
180,000
|
2
|
Lumbermens
Mutual Casualty Co.(e)
|
Subordinated
|
07/01/2026
|
0.000%
|
|
9,865,000
|
98
|
Total
|
146
|
Retailers
0.7%
|
L
Brands, Inc.
|
06/15/2029
|
7.500%
|
|
2,059,000
|
2,066,911
|
11/01/2035
|
6.875%
|
|
1,656,000
|
1,476,748
|
PetSmart,
Inc.(f)
|
06/01/2025
|
5.875%
|
|
5,006,000
|
4,956,986
|
Total
|
8,500,645
|
Supermarkets
0.2%
|
Albertsons
Companies LLC/Safeway, Inc.(f)
|
03/15/2026
|
7.500%
|
|
1,483,000
|
1,632,027
|
Albertsons
Companies LLC/Safeway, Inc./New Albertsons LP
|
03/15/2025
|
5.750%
|
|
1,328,000
|
1,356,989
|
Total
|
2,989,016
|
Technology
6.5%
|
Broadcom
Corp./Cayman Finance Ltd.
|
01/15/2027
|
3.875%
|
|
5,253,000
|
5,121,911
|
Camelot
Finance SA(f)
|
10/15/2024
|
7.875%
|
|
4,765,000
|
4,981,293
|
CDK
Global, Inc.
|
06/01/2027
|
4.875%
|
|
4,238,000
|
4,386,707
|
CommScope
Finance LLC(f)
|
03/01/2024
|
5.500%
|
|
1,813,000
|
1,843,981
|
03/01/2026
|
6.000%
|
|
2,133,000
|
2,158,359
|
03/01/2027
|
8.250%
|
|
1,094,000
|
1,078,574
|
CommScope
Technologies LLC(f)
|
06/15/2025
|
6.000%
|
|
3,260,000
|
2,970,916
|
03/15/2027
|
5.000%
|
|
1,638,000
|
1,383,728
|
Equinix,
Inc.
|
01/15/2026
|
5.875%
|
|
14,703,000
|
15,639,596
|
Gartner,
Inc.(f)
|
04/01/2025
|
5.125%
|
|
8,223,000
|
8,456,640
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Income Opportunities Fund | Annual Report 2019
|
13
|
Portfolio of Investments (continued)
July 31, 2019
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Iron
Mountain, Inc.
|
08/15/2024
|
5.750%
|
|
4,465,000
|
4,504,716
|
MSCI,
Inc.(f)
|
08/01/2026
|
4.750%
|
|
3,710,000
|
3,861,105
|
NCR
Corp.
|
07/15/2022
|
5.000%
|
|
3,769,000
|
3,786,801
|
12/15/2023
|
6.375%
|
|
4,719,000
|
4,852,628
|
PTC,
Inc.
|
05/15/2024
|
6.000%
|
|
5,969,000
|
6,248,200
|
Qualitytech
LP/QTS Finance Corp.(f)
|
11/15/2025
|
4.750%
|
|
6,147,000
|
6,183,784
|
Refinitiv
US Holdings, Inc.(f)
|
11/15/2026
|
8.250%
|
|
1,183,000
|
1,310,185
|
Symantec
Corp.(f)
|
04/15/2025
|
5.000%
|
|
3,258,000
|
3,321,795
|
Total
|
82,090,919
|
Transportation
Services 1.5%
|
Avis
Budget Car Rental LLC/Finance, Inc.
|
04/01/2023
|
5.500%
|
|
303,000
|
308,693
|
Avis
Budget Car Rental LLC/Finance, Inc.(f)
|
03/15/2025
|
5.250%
|
|
6,243,000
|
6,324,765
|
Hertz
Corp. (The)(f)
|
06/01/2022
|
7.625%
|
|
6,089,000
|
6,322,014
|
10/15/2024
|
5.500%
|
|
2,419,000
|
2,376,382
|
Hertz
Corp. (The)(f),(g)
|
08/01/2026
|
7.125%
|
|
2,028,000
|
2,068,227
|
XPO
Logistics, Inc.(f)
|
06/15/2022
|
6.500%
|
|
1,859,000
|
1,891,882
|
Total
|
19,291,963
|
Wireless
5.4%
|
Altice
France SA(f)
|
05/01/2026
|
7.375%
|
|
12,570,000
|
13,386,786
|
02/01/2027
|
8.125%
|
|
3,063,000
|
3,324,133
|
SBA
Communications Corp.
|
09/01/2024
|
4.875%
|
|
11,540,000
|
11,879,957
|
Sprint
Capital Corp.
|
11/15/2028
|
6.875%
|
|
6,965,000
|
7,672,080
|
Sprint
Corp.
|
03/01/2026
|
7.625%
|
|
5,426,000
|
6,069,887
|
T-Mobile
U.S.A., Inc.
|
01/15/2026
|
6.500%
|
|
12,777,000
|
13,674,687
|
02/01/2026
|
4.500%
|
|
2,022,000
|
2,062,367
|
02/01/2028
|
4.750%
|
|
2,528,000
|
2,603,789
|
Wind
Tre SpA(f)
|
01/20/2026
|
5.000%
|
|
7,722,000
|
7,673,568
|
Total
|
68,347,254
|
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Wirelines
2.2%
|
CenturyLink,
Inc.
|
06/15/2021
|
6.450%
|
|
1,784,000
|
1,873,543
|
03/15/2022
|
5.800%
|
|
3,319,000
|
3,454,199
|
04/01/2024
|
7.500%
|
|
10,039,000
|
11,000,556
|
Frontier
Communications Corp.(f)
|
04/01/2026
|
8.500%
|
|
1,327,000
|
1,298,731
|
Telecom
Italia Capital SA
|
09/30/2034
|
6.000%
|
|
1,183,000
|
1,203,655
|
Zayo
Group LLC/Capital, Inc.(f)
|
01/15/2027
|
5.750%
|
|
8,675,000
|
8,813,175
|
Total
|
27,643,859
|
Total
Corporate Bonds & Notes
(Cost $1,086,983,539)
|
1,113,984,254
|
|
Senior
Loans 3.1%
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Chemicals
0.2%
|
Starfruit
Finco BV/US Holdco LLC/AzkoNobel(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
10/01/2025
|
5.610%
|
|
3,049,636
|
2,993,736
|
Diversified
Manufacturing 0.3%
|
Gates
Global LLC(h),(i)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
04/01/2024
|
4.984%
|
|
3,743,199
|
3,725,157
|
Finance
Companies 0.2%
|
Ellie
Mae, Inc.(h),(i)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.000%
04/17/2026
|
6.525%
|
|
2,785,000
|
2,785,000
|
Food
and Beverage 0.2%
|
8th
Avenue Food & Provisions, Inc.(h),(i)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.750%
10/01/2025
|
6.110%
|
|
2,533,160
|
2,541,088
|
Health
Care 0.0%
|
Avantor
Funding, Inc.(h),(i)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
11/21/2024
|
5.234%
|
|
529,471
|
533,882
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
14
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Metals
and Mining 0.1%
|
Big
River Steel LLC(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 5.000%
Floor 1.000%
08/23/2023
|
7.330%
|
|
551,553
|
552,932
|
Restaurants
0.3%
|
IRB
Holding Corp./Arby’s/Buffalo Wild Wings(h),(i)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
02/05/2025
|
5.550%
|
|
3,756,490
|
3,739,060
|
Technology
1.8%
|
Ascend
Learning LLC(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
07/12/2024
|
5.234%
|
|
4,351,792
|
4,328,206
|
Dun
& Bradstreet Corp. (The)(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 5.000%
02/06/2026
|
7.241%
|
|
3,911,000
|
3,934,231
|
Greeneden
US Holdings I LLC/Genesys Telecommunications Laboratories, Inc.(h),(i)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 3.250%
12/01/2023
|
5.484%
|
|
3,761,923
|
3,739,088
|
Project
Alpha Intermediate Holding, Inc.(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
04/26/2024
|
5.810%
|
|
692,435
|
682,914
|
3-month
USD LIBOR + 4.250%
04/26/2024
|
6.560%
|
|
2,084,883
|
2,077,940
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Refinitiv
US Holdings, Inc.(f),(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
10/01/2025
|
0.000%
|
|
4,032,000
|
4,027,686
|
Tempo
Acquisition LLC(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
05/01/2024
|
5.234%
|
|
1,819,541
|
1,821,816
|
Ultimate
Software Group, Inc. (The)(h),(i)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.750%
05/04/2026
|
6.080%
|
|
1,548,000
|
1,559,362
|
Total
|
22,171,243
|
Total
Senior Loans
(Cost $38,890,167)
|
39,042,098
|
Money
Market Funds 9.0%
|
|
Shares
|
Value
($)
|
Columbia
Short-Term Cash Fund, 2.361%(j),(k)
|
112,898,497
|
112,887,207
|
Total
Money Market Funds
(Cost $112,887,207)
|
112,887,207
|
Total
Investments in Securities
(Cost: $1,241,952,060)
|
1,266,000,478
|
Other
Assets & Liabilities, Net
|
|
(5,748,564)
|
Net
Assets
|
1,260,251,914
|
At July 31, 2019, securities and/or cash totaling
$2,230,707 were pledged as collateral.
Investments in derivatives
Cleared
credit default swap contracts - sell protection
|
Reference
entity
|
Counterparty
|
Maturity
date
|
Receive
fixed
rate
(%)
|
Payment
frequency
|
Implied
credit
spread
(%)*
|
Notional
currency
|
Notional
amount
|
Value
($)
|
Upfront
payments
($)
|
Upfront
receipts
($)
|
Unrealized
appreciation
($)
|
Unrealized
depreciation
($)
|
Markit
CDX North America High Yield Index, Series 32
|
Morgan
Stanley
|
06/20/2024
|
5.000
|
Quarterly
|
3.236
|
USD
|
40,837,500
|
949,731
|
—
|
—
|
949,731
|
—
|
*
|
Implied
credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate or sovereign issues as of period end serve as an indicator of the current status of the payment/performance risk
and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into
the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Income Opportunities Fund | Annual Report 2019
|
15
|
Portfolio of Investments (continued)
July 31, 2019
Notes to Portfolio of Investments
(a)
|
Represents
fair value as determined in good faith under procedures approved by the Board of Trustees. At July 31, 2019, the total value of these securities amounted to $61, which represents less than 0.01% of total net assets.
|
(b)
|
Non-income producing
investment.
|
(c)
|
Negligible market
value.
|
(d)
|
Valuation
based on significant unobservable inputs.
|
(e)
|
Represents securities
that have defaulted on payment of interest. The Fund has stopped accruing interest on these securities. At July 31, 2019, the total value of these securities amounted to $146, which represents less than 0.01% of total net assets.
|
(f)
|
Represents privately
placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified
institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees.
At July 31, 2019, the total value of these securities amounted to $677,615,927, which represents 53.77% of total net assets.
|
(g)
|
Represents a
security purchased on a when-issued basis.
|
(h)
|
The
stated interest rate represents the weighted average interest rate at July 31, 2019 of contracts within the senior loan facility. Interest rates on contracts are primarily determined either weekly, monthly or quarterly by reference to the indicated
base lending rate and spread and the reset period. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and other short-term rates. Base lending rates may be subject to a floor or minimum rate. The interest
rate for senior loans purchased on a when-issued or delayed delivery basis will be determined upon settlement, therefore no interest rate is disclosed. Senior loans often require prepayments from excess cash flows or permit the borrowers to repay at
their election. The degree to which borrowers repay, cannot be predicted with accuracy. As a result, remaining maturities of senior loans may be less than the stated maturities.
|
(i)
|
Variable
rate security. The interest rate shown was the current rate as of July 31, 2019.
|
(j)
|
The rate
shown is the seven-day current annualized yield at July 31, 2019.
|
(k)
|
As
defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and
transactions in these affiliated companies during the year ended July 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized
gain
(loss) —
affiliated
issuers ($)
|
Net
change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends
—
affiliated
issuers ($)
|
Value
—
affiliated
issuers
at end of
period ($)
|
Columbia
Short-Term Cash Fund, 2.361%
|
|
49,107,861
|
441,201,761
|
(377,411,125)
|
112,898,497
|
(2,478)
|
3,869
|
1,883,763
|
112,887,207
|
Abbreviation Legend
Currency Legend
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
The accompanying Notes to Financial Statements are an integral part of this
statement.
16
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Fair value
measurements (continued)
Investments falling into the Level 3 category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments.
However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices. Additionally, valuation models may be used as the pricing source for any remaining investments classified as
Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account
balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
The following table is a summary of the
inputs used to value the Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Common
Stocks
|
|
|
|
|
Communication
Services
|
3,716
|
—
|
61
|
3,777
|
Consumer
Discretionary
|
68,461
|
—
|
—
|
68,461
|
Industrials
|
14,681
|
—
|
—
|
14,681
|
Utilities
|
—
|
—
|
0*
|
0*
|
Total
Common Stocks
|
86,858
|
—
|
61
|
86,919
|
Convertible
Bonds
|
—
|
—
|
0*
|
0*
|
Corporate
Bonds & Notes
|
—
|
1,113,984,254
|
—
|
1,113,984,254
|
Senior
Loans
|
—
|
39,042,098
|
—
|
39,042,098
|
Money
Market Funds
|
112,887,207
|
—
|
—
|
112,887,207
|
Total
Investments in Securities
|
112,974,065
|
1,153,026,352
|
61
|
1,266,000,478
|
Investments
in Derivatives
|
|
|
|
|
Asset
|
|
|
|
|
Swap
Contracts
|
—
|
949,731
|
—
|
949,731
|
Total
|
112,974,065
|
1,153,976,083
|
61
|
1,266,950,209
|
See the Portfolio of
Investments for all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
Derivative instruments are valued at unrealized appreciation
(depreciation).
The Fund does not hold any significant
investments (greater than one percent of net assets) categorized as Level 3.
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Income Opportunities Fund | Annual Report 2019
|
17
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $1,129,064,853)
|
$1,153,113,271
|
Affiliated
issuers (cost $112,887,207)
|
112,887,207
|
Cash
|
61,854
|
Margin
deposits on:
|
|
Swap
contracts
|
2,230,707
|
Receivable
for:
|
|
Investments
sold
|
1,271,868
|
Investments
sold on a delayed delivery basis
|
1,907,799
|
Capital
shares sold
|
4,675,031
|
Dividends
|
216,365
|
Interest
|
16,941,166
|
Foreign
tax reclaims
|
46,920
|
Prepaid
expenses
|
7,536
|
Total
assets
|
1,293,359,724
|
Liabilities
|
|
Payable
for:
|
|
Investments
purchased
|
4,021,920
|
Investments
purchased on a delayed delivery basis
|
21,116,425
|
Capital
shares purchased
|
2,328,155
|
Distributions
to shareholders
|
5,093,964
|
Variation
margin for swap contracts
|
117,110
|
Management
services fees
|
21,868
|
Distribution
and/or service fees
|
3,573
|
Transfer
agent fees
|
91,415
|
Compensation
of board members
|
215,667
|
Other
expenses
|
97,713
|
Total
liabilities
|
33,107,810
|
Net
assets applicable to outstanding capital stock
|
$1,260,251,914
|
Represented
by
|
|
Paid
in capital
|
1,281,381,701
|
Total
distributable earnings (loss) (Note 2)
|
(21,129,787)
|
Total
- representing net assets applicable to outstanding capital stock
|
$1,260,251,914
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
18
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Statement of Assets and Liabilities (continued)
July 31, 2019
Class
A
|
|
Net
assets
|
$373,159,360
|
Shares
outstanding
|
37,802,123
|
Net
asset value per share
|
$9.87
|
Maximum
sales charge
|
4.75%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares)
|
$10.36
|
Advisor
Class
|
|
Net
assets
|
$15,239,581
|
Shares
outstanding
|
1,538,321
|
Net
asset value per share
|
$9.91
|
Class
C
|
|
Net
assets
|
$36,860,271
|
Shares
outstanding
|
3,737,478
|
Net
asset value per share
|
$9.86
|
Institutional
Class
|
|
Net
assets
|
$323,071,451
|
Shares
outstanding
|
32,656,609
|
Net
asset value per share
|
$9.89
|
Institutional
2 Class
|
|
Net
assets
|
$80,781,090
|
Shares
outstanding
|
8,160,461
|
Net
asset value per share
|
$9.90
|
Institutional
3 Class
|
|
Net
assets
|
$430,190,924
|
Shares
outstanding
|
43,515,132
|
Net
asset value per share
|
$9.89
|
Class
R
|
|
Net
assets
|
$949,237
|
Shares
outstanding
|
96,147
|
Net
asset value per share
|
$9.87
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Income Opportunities Fund | Annual Report 2019
|
19
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Dividends
— unaffiliated issuers
|
$3,124
|
Dividends
— affiliated issuers
|
1,883,763
|
Interest
|
71,141,320
|
Interfund
lending
|
2,460
|
Foreign
taxes withheld
|
(42)
|
Total
income
|
73,030,625
|
Expenses:
|
|
Management
services fees
|
8,080,413
|
Distribution
and/or service fees
|
|
Class
A
|
965,751
|
Class
C
|
452,500
|
Class
R
|
5,295
|
Class
T
|
97
|
Transfer
agent fees
|
|
Class
A
|
503,464
|
Advisor
Class
|
18,397
|
Class
C
|
58,954
|
Institutional
Class
|
395,871
|
Institutional
2 Class
|
39,426
|
Institutional
3 Class
|
33,875
|
Class
R
|
1,382
|
Class
T
|
49
|
Compensation
of board members
|
36,384
|
Custodian
fees
|
25,869
|
Printing
and postage fees
|
114,111
|
Registration
fees
|
110,221
|
Audit
fees
|
38,500
|
Legal
fees
|
18,294
|
Compensation
of chief compliance officer
|
301
|
Other
|
29,612
|
Total
expenses
|
10,928,766
|
Net
investment income
|
62,101,859
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
(14,924,348)
|
Investments
— affiliated issuers
|
(2,478)
|
Futures
contracts
|
(2,441,729)
|
Swap
contracts
|
450,906
|
Net
realized loss
|
(16,917,649)
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
45,862,620
|
Investments
— affiliated issuers
|
3,869
|
Futures
contracts
|
220,223
|
Swap
contracts
|
949,731
|
Net
change in unrealized appreciation (depreciation)
|
47,036,443
|
Net
realized and unrealized gain
|
30,118,794
|
Net
increase in net assets resulting from operations
|
$92,220,653
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
20
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$62,101,859
|
$75,704,549
|
Net
realized gain (loss)
|
(16,917,649)
|
16,663,300
|
Net
change in unrealized appreciation (depreciation)
|
47,036,443
|
(93,322,441)
|
Net
increase (decrease) in net assets resulting from operations
|
92,220,653
|
(954,592)
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(18,080,411)
|
|
Advisor
Class
|
(696,578)
|
|
Class
C
|
(1,772,860)
|
|
Institutional
Class
|
(14,978,958)
|
|
Institutional
2 Class
|
(3,656,459)
|
|
Institutional
3 Class
|
(22,708,762)
|
|
Class
R
|
(47,006)
|
|
Class
T
|
(1,753)
|
|
Net
investment income
|
|
|
Class
A
|
|
(20,520,551)
|
Advisor
Class
|
|
(612,683)
|
Class
C
|
|
(2,880,095)
|
Institutional
Class
|
|
(19,823,234)
|
Institutional
2 Class
|
|
(4,083,437)
|
Institutional
3 Class
|
|
(27,866,070)
|
Class
K
|
|
(24,997)
|
Class
R
|
|
(46,614)
|
Class
T
|
|
(5,959)
|
Total
distributions to shareholders (Note 2)
|
(61,942,787)
|
(75,863,640)
|
Decrease
in net assets from capital stock activity
|
(185,208,531)
|
(335,682,326)
|
Total
decrease in net assets
|
(154,930,665)
|
(412,500,558)
|
Net
assets at beginning of year
|
1,415,182,579
|
1,827,683,137
|
Net
assets at end of year
|
$1,260,251,914
|
$1,415,182,579
|
Excess
of distributions over net investment income
|
$(366,035)
|
$(607,468)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Income Opportunities Fund | Annual Report 2019
|
21
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
3,933,922
|
37,953,743
|
5,529,661
|
53,973,934
|
Distributions
reinvested
|
1,724,355
|
16,546,438
|
1,922,380
|
18,839,515
|
Redemptions
|
(11,717,018)
|
(112,114,719)
|
(13,628,279)
|
(133,384,397)
|
Net
decrease
|
(6,058,741)
|
(57,614,538)
|
(6,176,238)
|
(60,570,948)
|
Advisor
Class
|
|
|
|
|
Subscriptions
|
466,826
|
4,497,436
|
827,626
|
8,111,631
|
Distributions
reinvested
|
70,686
|
681,472
|
60,509
|
593,677
|
Redemptions
|
(562,583)
|
(5,433,247)
|
(463,201)
|
(4,533,046)
|
Net
increase (decrease)
|
(25,071)
|
(254,339)
|
424,934
|
4,172,262
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(1,013)
|
(1,745)
|
Net
decrease
|
—
|
—
|
(1,013)
|
(1,745)
|
Class
C
|
|
|
|
|
Subscriptions
|
297,236
|
2,852,283
|
284,624
|
2,810,866
|
Distributions
reinvested
|
177,136
|
1,696,896
|
282,971
|
2,772,587
|
Redemptions
|
(2,329,384)
|
(22,364,846)
|
(3,821,817)
|
(37,075,013)
|
Net
decrease
|
(1,855,012)
|
(17,815,667)
|
(3,254,222)
|
(31,491,560)
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
8,209,281
|
79,586,943
|
6,255,883
|
61,908,528
|
Distributions
reinvested
|
1,325,493
|
12,748,558
|
1,701,773
|
16,728,231
|
Redemptions
|
(12,219,753)
|
(117,110,231)
|
(49,341,621)
|
(489,238,083)
|
Net
decrease
|
(2,684,979)
|
(24,774,730)
|
(41,383,965)
|
(410,601,324)
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
2,979,815
|
28,700,553
|
2,874,979
|
28,314,462
|
Distributions
reinvested
|
379,384
|
3,654,823
|
413,287
|
4,060,751
|
Redemptions
|
(3,135,709)
|
(30,195,014)
|
(5,219,093)
|
(51,432,066)
|
Net
increase (decrease)
|
223,490
|
2,160,362
|
(1,930,827)
|
(19,056,853)
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
2,724,190
|
26,221,250
|
33,215,258
|
330,637,729
|
Distributions
reinvested
|
1,404,665
|
13,504,407
|
1,576,006
|
15,480,977
|
Redemptions
|
(13,351,526)
|
(126,615,052)
|
(16,664,926)
|
(162,575,180)
|
Net
increase (decrease)
|
(9,222,671)
|
(86,889,395)
|
18,126,338
|
183,543,526
|
Class
K
|
|
|
|
|
Subscriptions
|
—
|
—
|
721
|
7,216
|
Distributions
reinvested
|
—
|
—
|
2,376
|
23,696
|
Redemptions
|
—
|
—
|
(93,698)
|
(910,895)
|
Net
decrease
|
—
|
—
|
(90,601)
|
(879,983)
|
Class
R
|
|
|
|
|
Subscriptions
|
61,693
|
584,050
|
30,662
|
301,648
|
Distributions
reinvested
|
4,086
|
39,256
|
3,725
|
36,651
|
Redemptions
|
(55,680)
|
(535,909)
|
(107,174)
|
(1,060,401)
|
Net
increase (decrease)
|
10,099
|
87,397
|
(72,787)
|
(722,102)
|
Class
T
|
|
|
|
|
Subscriptions
|
—
|
—
|
3
|
31
|
Distributions
reinvested
|
150
|
1,460
|
563
|
5,526
|
Redemptions
|
(11,629)
|
(109,081)
|
(7,965)
|
(79,156)
|
Net
decrease
|
(11,479)
|
(107,621)
|
(7,399)
|
(73,599)
|
Total
net decrease
|
(19,624,364)
|
(185,208,531)
|
(34,365,780)
|
(335,682,326)
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
22
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia
Income Opportunities Fund | Annual Report 2019
|
23
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$9.61
|
0.45
|
0.26
|
0.71
|
(0.45)
|
—
|
(0.45)
|
Year
Ended 7/31/2018
|
$10.06
|
0.44
|
(0.45)
|
(0.01)
|
(0.44)
|
—
|
(0.44)
|
Year
Ended 7/31/2017
|
$9.70
|
0.44
|
0.35
|
0.79
|
(0.43)
|
—
|
(0.43)
|
Year
Ended 7/31/2016
|
$9.92
|
0.44
|
(0.14)
|
0.30
|
(0.45)
|
(0.07)
|
(0.52)
|
Year
Ended 7/31/2015
|
$10.08
|
0.44
|
(0.13)
|
0.31
|
(0.44)
|
(0.03)
|
(0.47)
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$9.64
|
0.48
|
0.27
|
0.75
|
(0.48)
|
—
|
(0.48)
|
Year
Ended 7/31/2018
|
$10.09
|
0.46
|
(0.45)
|
0.01
|
(0.46)
|
—
|
(0.46)
|
Year
Ended 7/31/2017
|
$9.73
|
0.47
|
0.35
|
0.82
|
(0.46)
|
—
|
(0.46)
|
Year
Ended 7/31/2016
|
$9.95
|
0.46
|
(0.13)
|
0.33
|
(0.48)
|
(0.07)
|
(0.55)
|
Year
Ended 7/31/2015
|
$10.11
|
0.47
|
(0.14)
|
0.33
|
(0.46)
|
(0.03)
|
(0.49)
|
Class
C
|
Year
Ended 7/31/2019
|
$9.60
|
0.38
|
0.26
|
0.64
|
(0.38)
|
—
|
(0.38)
|
Year
Ended 7/31/2018
|
$10.05
|
0.36
|
(0.45)
|
(0.09)
|
(0.36)
|
—
|
(0.36)
|
Year
Ended 7/31/2017
|
$9.69
|
0.37
|
0.35
|
0.72
|
(0.36)
|
—
|
(0.36)
|
Year
Ended 7/31/2016
|
$9.91
|
0.37
|
(0.14)
|
0.23
|
(0.38)
|
(0.07)
|
(0.45)
|
Year
Ended 7/31/2015
|
$10.07
|
0.36
|
(0.13)
|
0.23
|
(0.36)
|
(0.03)
|
(0.39)
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$9.63
|
0.48
|
0.26
|
0.74
|
(0.48)
|
—
|
(0.48)
|
Year
Ended 7/31/2018
|
$10.08
|
0.46
|
(0.45)
|
0.01
|
(0.46)
|
—
|
(0.46)
|
Year
Ended 7/31/2017
|
$9.72
|
0.47
|
0.35
|
0.82
|
(0.46)
|
—
|
(0.46)
|
Year
Ended 7/31/2016
|
$9.94
|
0.46
|
(0.13)
|
0.33
|
(0.48)
|
(0.07)
|
(0.55)
|
Year
Ended 7/31/2015
|
$10.10
|
0.47
|
(0.14)
|
0.33
|
(0.46)
|
(0.03)
|
(0.49)
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$9.63
|
0.48
|
0.27
|
0.75
|
(0.48)
|
—
|
(0.48)
|
Year
Ended 7/31/2018
|
$10.08
|
0.47
|
(0.45)
|
0.02
|
(0.47)
|
—
|
(0.47)
|
Year
Ended 7/31/2017
|
$9.72
|
0.48
|
0.35
|
0.83
|
(0.47)
|
—
|
(0.47)
|
Year
Ended 7/31/2016
|
$9.95
|
0.47
|
(0.14)
|
0.33
|
(0.49)
|
(0.07)
|
(0.56)
|
Year
Ended 7/31/2015
|
$10.11
|
0.48
|
(0.13)
|
0.35
|
(0.48)
|
(0.03)
|
(0.51)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
24
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$9.87
|
7.62%
|
1.04%
|
1.04%
|
4.69%
|
43%
|
$373,159
|
Year
Ended 7/31/2018
|
$9.61
|
(0.12%)
|
1.04%
|
1.03%
(c)
|
4.45%
|
46%
|
$421,366
|
Year
Ended 7/31/2017
|
$10.06
|
8.37%
|
1.10%
(d)
|
1.06%
(c),(d)
|
4.45%
|
53%
|
$503,167
|
Year
Ended 7/31/2016
|
$9.70
|
3.29%
|
1.13%
|
1.07%
(c)
|
4.63%
|
53%
|
$1,520,106
|
Year
Ended 7/31/2015
|
$9.92
|
3.10%
|
1.12%
|
1.07%
(c)
|
4.37%
|
61%
|
$1,622,952
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$9.91
|
7.99%
|
0.79%
|
0.79%
|
4.93%
|
43%
|
$15,240
|
Year
Ended 7/31/2018
|
$9.64
|
0.15%
|
0.79%
|
0.79%
(c)
|
4.73%
|
46%
|
$15,072
|
Year
Ended 7/31/2017
|
$10.09
|
8.63%
|
0.83%
(d)
|
0.81%
(c),(d)
|
4.71%
|
53%
|
$11,488
|
Year
Ended 7/31/2016
|
$9.73
|
3.55%
|
0.89%
|
0.82%
(c)
|
4.94%
|
53%
|
$9,824
|
Year
Ended 7/31/2015
|
$9.95
|
3.35%
|
0.87%
|
0.82%
(c)
|
4.64%
|
61%
|
$3,759
|
Class
C
|
Year
Ended 7/31/2019
|
$9.86
|
6.82%
|
1.79%
|
1.79%
|
3.95%
|
43%
|
$36,860
|
Year
Ended 7/31/2018
|
$9.60
|
(0.87%)
|
1.78%
|
1.78%
(c)
|
3.69%
|
46%
|
$53,674
|
Year
Ended 7/31/2017
|
$10.05
|
7.58%
|
1.83%
(d)
|
1.81%
(c),(d)
|
3.71%
|
53%
|
$88,881
|
Year
Ended 7/31/2016
|
$9.69
|
2.51%
|
1.88%
|
1.82%
(c)
|
3.89%
|
53%
|
$98,405
|
Year
Ended 7/31/2015
|
$9.91
|
2.33%
|
1.87%
|
1.82%
(c)
|
3.63%
|
61%
|
$104,568
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$9.89
|
7.89%
|
0.79%
|
0.79%
|
4.94%
|
43%
|
$323,071
|
Year
Ended 7/31/2018
|
$9.63
|
0.14%
|
0.78%
|
0.78%
(c)
|
4.65%
|
46%
|
$340,274
|
Year
Ended 7/31/2017
|
$10.08
|
8.65%
|
0.84%
|
0.82%
(c)
|
4.77%
|
53%
|
$773,284
|
Year
Ended 7/31/2016
|
$9.72
|
3.55%
|
0.88%
|
0.82%
(c)
|
4.88%
|
53%
|
$670,496
|
Year
Ended 7/31/2015
|
$9.94
|
3.36%
|
0.87%
|
0.82%
(c)
|
4.62%
|
61%
|
$822,892
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$9.90
|
8.08%
|
0.72%
|
0.72%
|
5.01%
|
43%
|
$80,781
|
Year
Ended 7/31/2018
|
$9.63
|
0.21%
|
0.72%
|
0.71%
|
4.77%
|
46%
|
$76,460
|
Year
Ended 7/31/2017
|
$10.08
|
8.76%
|
0.70%
|
0.70%
|
4.82%
|
53%
|
$99,507
|
Year
Ended 7/31/2016
|
$9.72
|
3.57%
|
0.70%
|
0.70%
|
4.99%
|
53%
|
$75,552
|
Year
Ended 7/31/2015
|
$9.95
|
3.50%
|
0.69%
|
0.69%
|
4.77%
|
61%
|
$23,669
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Income Opportunities Fund | Annual Report 2019
|
25
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$9.62
|
0.49
|
0.27
|
0.76
|
(0.49)
|
—
|
(0.49)
|
Year
Ended 7/31/2018
|
$10.07
|
0.47
|
(0.45)
|
0.02
|
(0.47)
|
—
|
(0.47)
|
Year
Ended 7/31/2017
|
$9.71
|
0.48
|
0.36
|
0.84
|
(0.48)
|
—
|
(0.48)
|
Year
Ended 7/31/2016
|
$9.93
|
0.47
|
(0.13)
|
0.34
|
(0.49)
|
(0.07)
|
(0.56)
|
Year
Ended 7/31/2015
|
$10.09
|
0.48
|
(0.13)
|
0.35
|
(0.48)
|
(0.03)
|
(0.51)
|
Class
R
|
Year
Ended 7/31/2019
|
$9.61
|
0.43
|
0.26
|
0.69
|
(0.43)
|
—
|
(0.43)
|
Year
Ended 7/31/2018
|
$10.06
|
0.41
|
(0.45)
|
(0.04)
|
(0.41)
|
—
|
(0.41)
|
Year
Ended 7/31/2017
|
$9.70
|
0.42
|
0.35
|
0.77
|
(0.41)
|
—
|
(0.41)
|
Year
Ended 7/31/2016
|
$9.92
|
0.41
|
(0.13)
|
0.28
|
(0.43)
|
(0.07)
|
(0.50)
|
Year
Ended 7/31/2015
|
$10.08
|
0.41
|
(0.13)
|
0.28
|
(0.41)
|
(0.03)
|
(0.44)
|
Notes
to Financial Highlights
|
(a)
|
In
addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense
ratios.
|
(b)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(c)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
(d)
|
Expenses
have been reduced due to a reimbursement of expenses overbilled by a third party. If the reimbursement had been excluded, the expense ratios would have been higher by the percentages shown for each class in the table below. All fee waivers and
expense reimbursements by the Investment Manager and its affiliates were applied before giving effect to this third party reimbursement.
|
Year
Ended
|
Class
A
|
Advisor
Class
|
Class
C
|
Class
R
|
07/31/2017
|
0.01%
|
0.01%
|
0.01%
|
0.01%
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
26
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$9.89
|
8.13%
|
0.67%
|
0.67%
|
5.06%
|
43%
|
$430,191
|
Year
Ended 7/31/2018
|
$9.62
|
0.26%
|
0.67%
|
0.66%
|
4.84%
|
46%
|
$507,399
|
Year
Ended 7/31/2017
|
$10.07
|
8.82%
|
0.65%
|
0.65%
|
4.82%
|
53%
|
$348,644
|
Year
Ended 7/31/2016
|
$9.71
|
3.72%
|
0.65%
|
0.65%
|
4.98%
|
53%
|
$1,972
|
Year
Ended 7/31/2015
|
$9.93
|
3.55%
|
0.63%
|
0.63%
|
4.76%
|
61%
|
$443
|
Class
R
|
Year
Ended 7/31/2019
|
$9.87
|
7.35%
|
1.29%
|
1.29%
|
4.44%
|
43%
|
$949
|
Year
Ended 7/31/2018
|
$9.61
|
(0.37%)
|
1.28%
|
1.28%
(c)
|
4.15%
|
46%
|
$827
|
Year
Ended 7/31/2017
|
$10.06
|
8.11%
|
1.33%
(d)
|
1.31%
(c),(d)
|
4.22%
|
53%
|
$1,598
|
Year
Ended 7/31/2016
|
$9.70
|
3.03%
|
1.38%
|
1.32%
(c)
|
4.39%
|
53%
|
$1,430
|
Year
Ended 7/31/2015
|
$9.92
|
2.84%
|
1.37%
|
1.32%
(c)
|
4.13%
|
61%
|
$1,076
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Income Opportunities Fund | Annual Report 2019
|
27
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Income Opportunities Fund (the Fund), a series of
Columbia Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business
trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Advisor Class, Institutional Class, Institutional 2 Class, Institutional 3 Class and Class R shares are available for purchase through authorized investment professionals to omnibus
retirement plans or to institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years. Effective December 14, 2018, Class T shares merged, in a
tax-free transaction, into Class A shares of the Fund and are no longer offered for sale.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
All equity securities are valued at the close of business of
the New York Stock Exchange. Equity securities are valued at the official closing price on the principal exchange or market on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the
mean of the latest quoted bid and ask prices on such exchanges or markets.
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or not believed to be reflective of market
value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that management believes
does not approximate market value.
Senior loan
securities for which reliable market quotations are readily available are generally valued by pricing services at the average of the bids received.
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
28
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Swap
transactions are valued through an independent pricing service or broker, or if neither is available, through an internal model based upon observable inputs.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Derivative instruments
The Fund invests in certain derivative instruments, as
detailed below, to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more securities, currencies, commodities, indices, or other assets or instruments.
Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to
pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including
the potential inability of the counterparty to fulfill its obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the
potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial
statements.
A derivative instrument may suffer a
marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its obligations under the contract. The
Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund and the amount of any variation margin held by the
counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk to the Fund since the clearinghouse or central counterparty (CCP) provides some protection
in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract; therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in
exchange-traded or centrally cleared derivatives with respect to initial and variation margin that is held in a broker’s customer account. While brokers are required to segregate customer margin from their own assets, in the event that a
broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across
all the broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its contractual rights and to secure
rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivatives contract
counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a
default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative instrument’s payables and/or receivables with collateral held and/or posted and create
one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
Columbia
Income Opportunities Fund | Annual Report 2019
|
29
|
Notes to Financial Statements (continued)
July 31, 2019
Collateral (margin) requirements differ by type of derivative.
Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain circumstances. Collateral terms for most over-the-counter
derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral
requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally,
the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (e.g., $250,000) before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized,
contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any interest expense paid by the Fund is shown on the Statement of
Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those
counterparties.
Certain ISDA Master Agreements allow
counterparties of over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified time period or if the Fund fails to meet
certain terms of the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination rights if the counterparty fails to meet certain terms of the ISDA Master
Agreement. In determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk, whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes, the Fund does not offset
derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are exchange-traded and represent
commitments for the future purchase or sale of an asset at a specified price on a specified date. The Fund bought and sold futures contracts to manage the duration and yield curve exposure of the Fund versus the benchmark. These instruments may be
used for other purposes in future periods. Upon entering into futures contracts, the Fund bears risks that it may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional risks include counterparty credit
risk, the possibility of an illiquid market, and that a change in the value of the contract or option may not correlate with changes in the value of the underlying asset.
Upon entering into a futures contract, the Fund deposits cash
or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be maintained at an established level over the life of the contract. Cash
deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are designated in the Portfolio of Investments. Subsequent payments (variation margin) are made or received
by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund recognizes a realized gain or
loss when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Swap contracts
Swap contracts are negotiated in the over-the-counter market
and may be entered into as a bilateral contract or centrally cleared (centrally cleared swap contract). In a centrally cleared swap contract, immediately following execution of the swap contract with a broker, the swap contract is novated to a
central counterparty (the CCP) and the CCP becomes the Fund’s counterparty to the centrally cleared swap contract. The Fund is required to deposit initial margin with the futures commission merchant (FCM), which pledges it through to the CCP
in the form of cash or securities in an amount that varies depending on the size and risk profile of the particular swap contract. Securities deposited as initial margin are designated in the Portfolio of Investments and cash deposited is recorded
in the Statement of Assets and Liabilities as margin deposits. Unlike a bilateral swap contract, for centrally cleared swap contracts, the Fund has minimal credit exposure to the FCM because the CCP stands between the Fund and the relevant
buyer/seller on the other side of the contract. Swap contracts are
30
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
marked-to-market
daily and changes in value are recorded as unrealized appreciation (depreciation). The daily change in valuation of centrally cleared swap contracts, if any, is recorded as a receivable or payable for variation margin in the Statement of Assets and
Liabilities.
Entering into these contracts involves, to
varying degrees, elements of interest, liquidity and counterparty credit risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks involve the possibility that there may be unfavorable changes in interest rates,
market conditions or other conditions, that it may be difficult to initiate a swap transaction or liquidate a position at an advantageous time or price which may result in significant losses, and that the FCM or CCP may not fulfill its obligation
under the contract.
Credit default swap contracts
The Fund entered into credit default swap contracts to manage
cash. These instruments may be used for other purposes in future periods. Credit default swap contracts are agreements in which one party pays fixed periodic payments to a counterparty in consideration for an agreement from the counterparty to make
a specific payment should a specified credit event(s) take place. Although specified credit events are contract specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default,
or repudiation/moratorium.
As the purchaser of a credit
default swap contract, the Fund purchases protection by paying a periodic interest rate on the notional amount to the counterparty. The interest amount is accrued daily as a component of unrealized appreciation (depreciation) and is recorded as a
realized loss upon payment. If a credit event as specified in the contract occurs, the Fund may have the option either to deliver the reference obligation to the seller in exchange for a cash payment of its par amount, or to receive a net cash
settlement equal to the par amount less an agreed-upon value of the reference obligation as of the date of the credit event. The difference between the value of the obligation or cash delivered and the notional amount received will be recorded as a
realized gain (loss).
As the seller of a credit default
swap contract, the Fund sells protection to a buyer and will generally receive a periodic interest rate on a notional amount. The interest amount is accrued daily as a component of unrealized appreciation (depreciation) and is recorded as a realized
gain upon receipt of the payment. If a credit event as specified in the contract with the counterparty occurs, the Fund may either be required to accept the reference obligation from the buyer in exchange for a cash payment of its notional amount,
or to pay the buyer a net cash settlement equal to the notional amount less an agreed-upon value of the reference obligation (recovery value) as of the date of the credit event. The difference between the value of the obligation or cash received and
the notional amount paid will be recorded as a realized gain (loss). The maximum potential amount of undiscounted future payments the Fund could be required to make as the seller of protection under a credit default swap contract is equal to the
notional amount of the reference obligation. These potential amounts may be partially offset by any recovery values of the respective reference obligations or upfront receipts upon entering into the agreement. The notional amounts and market values
of all credit default swap contracts in which the Fund is the seller of protection, if any, are disclosed in the Credit Default Swap Contracts Outstanding schedule following the Portfolio of Investments.
As a protection seller, the Fund bears the risk of loss from
the credit events specified in the contract with the counterparty. For credit default swap contracts on credit indices, quoted market prices and resulting market values serve as an indicator of the current status of the payment/performance risk.
Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the reference entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as
defined under the terms of the contract.
Any upfront
payments or receipts by the Fund upon entering into a credit default swap contract is recorded as an asset or liability, respectively, and amortized daily as a component of realized gain (loss) in the Statement of Operations. Credit default swap
contracts are valued daily, and the change in value is recorded as unrealized appreciation (depreciation) until the termination of the swap, at which time a realized gain (loss) is recorded.
Credit default swap contracts can involve greater risks than
if a fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to counterparty credit risk, leverage risk, hedging risk, correlation risk and liquidity risk.
Columbia
Income Opportunities Fund | Annual Report 2019
|
31
|
Notes to Financial Statements (continued)
July 31, 2019
Effects of derivative transactions in the financial
statements
The following tables are intended to provide
additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the
impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules following the Portfolio of Investments present additional information regarding
derivative instruments outstanding at the end of the period, if any.
The following table is a summary of the fair value of
derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) at July 31, 2019:
|
Asset
derivatives
|
|
Risk
exposure
category
|
Statement
of assets and liabilities
location
|
Fair
value ($)
|
Credit
risk
|
Component
of total distributable earnings (loss) — unrealized appreciation on swap contracts
|
949,731*
|
*
|
Includes
cumulative appreciation (depreciation) as reported in the tables following the Portfolio of Investments. Only the current day’s variation margin is reported in receivables or payables in the Statement of Assets and Liabilities.
|
The following table indicates the
effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended July 31, 2019:
Amount
of realized gain (loss) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Swap
contracts
($)
|
Total
($)
|
Credit
risk
|
—
|
450,906
|
450,906
|
Interest
rate risk
|
(2,441,729)
|
—
|
(2,441,729)
|
Total
|
(2,441,729)
|
450,906
|
(1,990,823)
|
|
Change
in unrealized appreciation (depreciation) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Swap
contracts
($)
|
Total
($)
|
Credit
risk
|
—
|
949,731
|
949,731
|
Interest
rate risk
|
220,223
|
—
|
220,223
|
Total
|
220,223
|
949,731
|
1,169,954
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended July 31, 2019:
Derivative
instrument
|
Average
notional
amounts ($)*
|
Futures
contracts — short
|
39,407,590
|
Credit
default swap contracts — sell protection
|
22,409,375
|
*
|
Based on
the ending quarterly outstanding amounts for the year ended July 31, 2019.
|
Investments in senior loans
The Fund may invest in senior loan assignments. When the Fund
purchases an assignment of a senior loan, the Fund typically has direct rights against the borrower; provided, however, that the Fund’s rights may be more limited than the lender from which it acquired the assignment and the Fund may be able
to enforce its rights only through an administrative agent. Although certain senior loan assignments are secured by collateral, the Fund could experience delays or limitations in realizing such collateral or have its interest subordinated to other
indebtedness of the obligor. In the event that the administrator or collateral agent of a loan becomes insolvent or enters into receivership or bankruptcy, the Fund may incur costs and delays in realizing payment or may suffer a loss of principal
and/or interest. The risk of loss is greater for
32
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
unsecured or
subordinated loans. In addition, senior loan assignments are vulnerable to market, economic or other conditions or events that may reduce the demand for senior loan assignments and certain senior loan assignments which were liquid when purchased,
may become illiquid.
The Fund may enter into senior loan
assignments where all or a portion of the loan may be unfunded. The Fund is obligated to fund these commitments at the borrower’s discretion. These commitments, if any, are generally traded and priced in the same manner as other senior loan
securities and are disclosed as unfunded senior loan commitments in the Fund’s Portfolio of Investments with a corresponding payable for investments purchased. The Fund designates cash or liquid securities to cover these commitments.
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Offsetting of assets and liabilities
The following table presents the Fund’s gross and net
amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Fund as of July 31, 2019:
|
Morgan
Stanley ($)
|
Liabilities
|
|
Centrally
cleared credit default swap contracts (a)
|
117,110
|
Total
financial and derivative net assets
|
(117,110)
|
Total
collateral received (pledged) (b)
|
(117,110)
|
Net
amount (c)
|
-
|
(a)
|
Centrally
cleared swaps are included within payable/receivable for variation margin on the Statement of Assets and Liabilities.
|
(b)
|
In some
instances, the actual collateral received and/or pledged may be more than the amount shown due to overcollateralization.
|
(c)
|
Represents the
net amount due from/(to) counterparties in the event of default.
|
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
The trade date for senior loans purchased in the primary
market is the date on which the loan is allocated. The trade date for senior loans purchased in the secondary market is the date on which the transaction is entered into.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Corporate actions and dividend income are recorded on the
ex-dividend date.
The Fund may receive distributions
from holdings in equity securities, business development companies (BDCs), exchange-traded funds (ETFs), limited partnerships (LPs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information on
the tax character of their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. Return of capital is
Columbia
Income Opportunities Fund | Annual Report 2019
|
33
|
Notes to Financial Statements (continued)
July 31, 2019
recorded as a
reduction of the cost basis of securities held. If the Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. With respect to REITs, to the extent actual information has not yet been reported, estimates for
return of capital are made by the Fund’s management. Management’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a proportionate change in return of
capital to shareholders.
Awards from class action
litigation are recorded as a reduction of cost basis if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains.
The value of additional securities received as an income
payment through a payment in kind, if any, is recorded as interest income and increases the cost basis of such securities.
The Fund may receive other income from senior loans, including
amendment fees, consent fees and commitment fees. These fees are recorded as income when received by the Fund. These amounts are included in Interest Income in the Statement of Operations.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Foreign taxes
The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries, as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it
invests.
Realized gains in certain countries may be
subject to foreign taxes at the Fund level, based on statutory rates. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction, as applicable. The amount, if any, is disclosed as a
liability on the Statement of Assets and Liabilities.
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
34
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods beginning after December 15, 2019 and interim periods within
those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a result of the amendments, management implemented disclosure
changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the level 3 valuation
processes, as well as modifications to the measurement uncertainty disclosure.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.66% to 0.40% as the Fund’s net assets increase. The
effective management services fee rate for the year ended July 31, 2019 was 0.63% of the Fund’s average daily net assets.
Columbia
Income Opportunities Fund | Annual Report 2019
|
35
|
Notes to Financial Statements (continued)
July 31, 2019
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
For the year ended July 31, 2019, the Fund’s effective
transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.13
|
Advisor
Class
|
0.13
|
Class
C
|
0.13
|
Institutional
Class
|
0.13
|
Institutional
2 Class
|
0.05
|
Institutional
3 Class
|
0.01
|
Class
R
|
0.13
|
Class
T
|
0.05
(a)
|
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
36
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at the maximum annual rates of up to 0.25%, 1.00%, 0.50% and 0.25% of the Fund’s average daily net assets attributable to Class A, Class C, Class R and Class T shares, respectively. For Class C shares, of the 1.00% fee, up to 0.75%
can be reimbursed for distribution expenses and up to an additional 0.25% can be reimbursed for shareholder servicing expenses. For Class R shares, of the 0.50% fee, up to 0.25% can be reimbursed for shareholder servicing expenses. For Class T
shares, of the 0.25% fee, up to 0.25% can be reimbursed for distribution and/or shareholder servicing expenses. As a result of all Class T shares of the Fund being redeemed or converted to Class A shares, December 14, 2018 was the last day the Fund
paid a distribution and shareholder services fee for Class T shares.
The amount of distribution and shareholder services expenses
incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $1,012,000 for Class C shares. This amount is based on the most recent information available as of June 30, 2019, and may be recovered from future payments
under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended July 31, 2019, if any, are listed below:
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
4.75
|
0.50 - 1.00
(a)
|
131,995
|
Class
C
|
—
|
1.00
(b)
|
401
|
Class
T
|
2.50
|
—
|
—
|
(a)
|
This
charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months after purchase, as follows: 1.00% if redeemed within 12 months after 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 12 months after purchase, with certain limited exceptions.
|
The Fund’s other share classes are not subject to sales
charges.
Expenses waived/reimbursed by the Investment
Manager and its affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of
Trustees, 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 following annual rate(s) as a
percentage of the class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to December 1, 2018
|
Class
A
|
1.05%
|
1.07%
|
Advisor
Class
|
0.80
|
0.82
|
Class
C
|
1.80
|
1.82
|
Institutional
Class
|
0.80
|
0.82
|
Institutional
2 Class
|
0.73
|
0.76
|
Institutional
3 Class
|
0.68
|
0.71
|
Class
R
|
1.30
|
1.32
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), transaction costs and brokerage
Columbia
Income Opportunities Fund | Annual Report 2019
|
37
|
Notes to Financial Statements (continued)
July 31, 2019
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, infrequent and/or unusual expenses and any
other expenses the exclusion of which is specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or
expenses reimbursed under the expense reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for deferral/reversal of wash sale losses, swap investments, capital loss carryforwards, trustees’ deferred compensation, distributions and principal and/or interest from fixed income securities. To the extent these
differences were permanent, reclassifications were made among the components of the Fund’s net assets. Temporary differences do not require reclassifications.
The following reclassifications were made:
Excess
of distributions
over net investment
income ($)
|
Accumulated
net realized
(loss) ($)
|
Paid
in
capital ($)
|
82,361
|
(82,362)
|
1
|
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification.
The tax character of distributions paid during the years
indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
61,942,787
|
—
|
61,942,787
|
75,863,640
|
—
|
75,863,640
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At July 31, 2019, the components of distributable earnings on
a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
appreciation ($)
|
5,892,444
|
—
|
(44,910,286)
|
23,196,803
|
At July 31, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
appreciation ($)
|
1,243,753,406
|
38,321,493
|
(15,124,690)
|
23,196,803
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
38
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
following capital loss carryforwards, determined at July 31, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss
carryforwards with no expiration are required to be utilized prior to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire
unused. In addition, for the year ended July 31, 2019, capital loss carryforwards utilized and expired unused, if any, were as follows:
No
expiration
short-term ($)
|
No
expiration
long-term ($)
|
Total
($)
|
Utilized
($)
|
Expired
($)
|
32,135,871
|
12,774,415
|
44,910,286
|
—
|
—
|
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and proceeds from
sales of securities, excluding short-term investments and derivatives, if any, aggregated to $507,575,895 and $726,485,725, respectively, for the year ended July 31, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate
reported in the Financial Highlights.
Note
6. Affiliated money market fund
The Fund invests
in Columbia Short-Term Cash Fund, an affiliated money market fund established for the exclusive use by the Fund and other affiliated funds (the Affiliated MMF). The income earned by the Fund from such investments is included as Dividends -
affiliated issuers in the Statement of Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of the Affiliated MMF. The Affiliated MMF prices its shares with a floating net asset value. In addition, the
Board of Trustees of the Affiliated MMF may impose a fee on redemptions (sometimes referred to as a liquidity fee) or temporarily suspend redemptions (sometimes referred to as imposing a redemption gate) in the event its liquidity falls below
regulatory limits.
Note 7. Interfund
lending
Pursuant to an exemptive order granted by the
Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds,
borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund’s activity in the Interfund Program during the
year ended July 31, 2019 was as follows:
Borrower
or lender
|
Average
loan
balance ($)
|
Weighted
average
interest rate (%)
|
Days
outstanding
|
Lender
|
2,133,333
|
2.87
|
15
|
Interest income earned by the Fund
is recorded as Interfund lending in the Statement of Operations. The Fund had no outstanding interfund loans at July 31, 2019.
Columbia
Income Opportunities Fund | Annual Report 2019
|
39
|
Notes to Financial Statements (continued)
July 31, 2019
Note 8. Line of credit
The Fund has access to a revolving credit facility with a
syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility, which is
a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion. Interest is charged to each
participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit
facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other
expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
Note 9. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer 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 debt instruments to indicate their credit risk. Lower rated or unrated debt instruments held by the Fund may present increased credit risk as compared to higher-rated debt instruments.
High-yield investments risk
Securities and other debt instruments held by the Fund that
are rated below investment grade (commonly called "high-yield" or "junk" bonds) and unrated debt instruments 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 debt instruments. In addition, these investments have greater price fluctuations, are less liquid and are more likely to experience a default than higher-rated debt instruments. High-yield debt instruments 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 interest rates may also affect the liquidity of
the Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, 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. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the longer the maturity or duration of a
debt security, the greater its sensitivity to changes in interest rates.
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. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may 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. 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. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
40
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Shareholder concentration risk
At July 31, 2019, two unaffiliated shareholders of record
owned 28.7% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Affiliated shareholders of record owned 51.7% of the outstanding shares of the
Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced to sell investments at inopportune
times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for
non-redeeming Fund shareholders.
Note
10. Subsequent events
Management has evaluated
the events and transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 11. Information regarding pending and settled
legal proceedings
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (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 Fund. Further, although we believe proceedings are not 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, 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.
Columbia
Income Opportunities Fund | Annual Report 2019
|
41
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Income Opportunities Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Income Opportunities Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of operations
for the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the five years in the period ended July 31,
2019 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the five years in the period ended July 31, 2019 in conformity with accounting principles
generally accepted in the United States of America.
Basis
for Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian, transfer agent, agent banks and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
42
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
Columbia
Income Opportunities Fund | Annual Report 2019
|
43
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
44
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
Columbia
Income Opportunities Fund | Annual Report 2019
|
45
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
46
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
Columbia
Income Opportunities Fund | Annual Report 2019
|
47
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Income Opportunities Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management Investment
Distributors, Inc. (collectively, the Funds).
On an
annual basis, the Fund’s Board of Trustees (the Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its
Contracts Committee in November 2018 and January, March, April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive
response to items of information requested by independent legal counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented
at these meetings were first supplied in draft form to designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who
is an Independent Trustee), and the final materials were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets
with portfolio management teams and senior management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the
work, deliberations and conclusions of the various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
48
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group, the product score of the
Fund (taking into account performance relative to peers and benchmarks) and the net assets of the Fund. The Board observed the Fund’s underperformance for certain periods, noting that appropriate steps (such as changes to the management team)
had been taken or are contemplated to help improve the Fund’s performance.
Comparative fees, costs of services provided and the profits
realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability. The Board
reviewed the fees charged to comparable institutional or other accounts/vehicles managed by Columbia Threadneedle and discussed differences in how the products are managed and operated, noting no unreasonable differences in the levels of contractual
management fees.
The Board considered the reports of its
independent fee consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to
industry competitors, the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of
the level of fees is to achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the
"pricing philosophy" currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s
total expense ratio (after considering proposed expense caps/waivers) approximated the peer universe’s median expense ratio. Based on its review, the Board concluded that the Fund’s management fee was fair and reasonable in light of the
extent and quality of services that the Fund receives.
The Board also considered the profitability of Columbia
Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the Profitability Report, discussing the
profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was reasonable and that the 2019 information shows
that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle profitability relative to industry competitors was
reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced ability to offer various other financial products to
Ameriprise Financial customers, soft dollar benefits and overall
Columbia
Income Opportunities Fund | Annual Report 2019
|
49
|
Approval of Management Agreement (continued)
reputational advantages. The Board noted that the fees paid by the Fund
should permit the Investment Manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
50
|
Columbia Income Opportunities
Fund | Annual Report 2019
|
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT filings are available on the SEC’s website at
sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Columbia
Income Opportunities Fund | Annual Report 2019
|
51
|
Columbia Income Opportunities Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Annual
Report
July 31, 2019
Columbia Short-Term Cash Fund
Shares of the Fund are issued solely in
private placement transactions that do not involve any public offering within the meaning of Section 4(a)(2) of the Securities Act of 1933, as amended (the 1933 Act). Investments in the Fund may be made only by investment companies, common or
commingled trust funds, or similar organizations or persons that are accredited investors within the meaning of Regulation D under the 1933 Act.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
4
|
|
5
|
|
10
|
|
11
|
|
12
|
|
13
|
|
14
|
|
21
|
|
22
|
|
27
|
|
29
|
Columbia Short-Term Cash Fund | Annual Report 2019
Portfolio
management
John McColley
Portfolio
breakdown (%) (at July 31, 2019)
|
Asset-Backed
Commercial Paper
|
3.2
|
Asset-Backed
Securities — Non-Agency(a)
|
4.9
|
Certificates
of Deposit
|
24.0
|
Commercial
Paper
|
35.0
|
Repurchase
Agreements
|
1.1
|
U.S.
Government & Agency Obligations
|
27.3
|
U.S.
Treasury Obligations
|
4.5
|
Total
|
100.0
|
(a)
|
Category
comprised of short-term asset-backed securities.
|
Percentages indicated are based upon total investments
excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
Columbia
Short-Term Cash Fund | Annual Report 2019
|
3
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses. The following information is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for the entire period.
Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total return for the period.
You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply
the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the Fund’s actual return) and
then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or the expenses you
paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs
were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Columbia
Short-Term Cash Fund
|
1,000.00
|
1,000.00
|
1,012.20
|
1,024.74
|
0.05
|
0.05
|
0.01
|
Expenses paid during the period
are equal to the annualized expense ratio as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
4
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Asset-Backed
Commercial Paper 3.1%
|
Issuer
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
MetLife
Short Term Funding LLC(a)
|
08/02/2019
|
2.410%
|
|
61,850,000
|
61,841,836
|
08/08/2019
|
2.400%
|
|
40,000,000
|
39,978,960
|
08/13/2019
|
2.400%
|
|
30,000,000
|
29,974,410
|
08/14/2019
|
2.400%
|
|
15,000,000
|
14,986,230
|
08/15/2019
|
2.400%
|
|
30,000,000
|
29,970,480
|
09/18/2019
|
2.340%
|
|
40,000,000
|
39,874,600
|
09/19/2019
|
2.370%
|
|
50,000,000
|
49,838,150
|
10/04/2019
|
2.360%
|
|
62,000,000
|
61,740,468
|
10/11/2019
|
2.360%
|
|
45,000,000
|
44,791,875
|
10/17/2019
|
2.290%
|
|
33,000,000
|
32,839,092
|
10/18/2019
|
2.350%
|
|
25,000,000
|
24,873,475
|
Total
Asset-Backed Commercial Paper
(Cost $430,770,913)
|
430,709,576
|
|
Asset-Backed
Securities — Non-Agency 4.8%
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
ARI
Fleet Lease Trust(a)
|
Series
2018-B Class A1
|
10/15/2019
|
2.535%
|
|
4,468,291
|
4,468,504
|
Series
2019-A Class A1
|
06/15/2020
|
2.449%
|
|
55,000,000
|
55,027,456
|
Bank
of the West Auto Trust(a)
|
Series
2019-1 Class A1
|
07/15/2020
|
2.481%
|
|
15,307,119
|
15,311,236
|
CarMax
Auto Owner Trust
|
Series
2019-1 Class A1
|
01/15/2020
|
2.780%
|
|
4,962,110
|
4,962,824
|
Series
2019-2 Class A1
|
04/15/2020
|
2.605%
|
|
35,357,671
|
35,368,748
|
Series
2019-3 Class A1
|
08/17/2020
|
2.257%
|
|
57,000,000
|
57,000,610
|
CCG
Receivables Trust(a)
|
Series
2019-1 Class A1
|
04/14/2020
|
2.628%
|
|
8,753,936
|
8,757,239
|
CNH
Equipment Trust
|
Series
2019-B Class A1
|
06/12/2020
|
2.566%
|
|
44,879,663
|
44,928,056
|
Dell
Equipment Finance Trust(a)
|
Series
2019-1 Class A1
|
04/22/2020
|
2.648%
|
|
29,652,363
|
29,665,828
|
DLL
LLC(a)
|
Series
2019-MA2 Class A1
|
07/20/2020
|
2.303%
|
|
50,000,000
|
50,000,185
|
Enterprise
Fleet Financing LLC(a)
|
Series
2018-3 Class A1
|
11/20/2019
|
2.815%
|
|
11,033,780
|
11,035,656
|
Asset-Backed
Securities — Non-Agency (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Series
2019-1 Class A1
|
03/23/2020
|
2.700%
|
|
19,716,350
|
19,734,907
|
Series
2019-2 Class A1
|
08/20/2020
|
2.267%
|
|
63,000,000
|
63,000,000
|
Ford
Credit Auto Lease Trust
|
Series
2019-B Class A1
|
08/15/2020
|
2.287%
|
|
82,000,000
|
82,005,281
|
GM
Financial Consumer Automobile Receivables Trust
|
Series
2019-2 Class A1
|
04/16/2020
|
2.561%
|
|
4,909,001
|
4,909,060
|
Great
American Auto Leasing, Inc.(a)
|
Series
2019-1 Class A1
|
02/18/2020
|
2.764%
|
|
15,078,107
|
15,087,968
|
Harley-Davidson
Motorcycle Trust
|
Series
2019-A Class A1
|
07/15/2020
|
2.386%
|
|
17,278,449
|
17,283,355
|
Mercedes-Benz
Auto Lease Trust
|
Series
2019-A Class A1
|
02/18/2020
|
2.743%
|
|
2,603,041
|
2,603,436
|
MMAF
Equipment Finance LLC(a)
|
Series
2019-A Class A1
|
04/10/2020
|
2.665%
|
|
32,993,873
|
33,004,177
|
Santander
Retail Auto Lease Trust(a)
|
Series
2019-A Class A1
|
04/20/2020
|
2.615%
|
|
23,423,858
|
23,434,361
|
Series
2019-B Class A1
|
07/20/2020
|
2.306%
|
|
43,500,000
|
43,505,285
|
Wheels
SPV 2 LLC(a)
|
Series
2019-1A Class A1
|
06/22/2020
|
2.367%
|
|
21,368,849
|
21,379,063
|
World
Omni Auto Receivables Trust
|
Series
2019-A Class A1
|
02/18/2020
|
2.726%
|
|
5,159,139
|
5,159,444
|
Series
2019-B Class A1
|
05/15/2020
|
2.543%
|
|
16,962,925
|
16,963,718
|
Total
Asset-Backed Securities — Non-Agency
(Cost $664,408,525)
|
664,596,397
|
|
Certificates
of Deposit 23.5%
|
Issuer
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
Australia
& New Zealand Banking Group Ltd.
|
08/01/2019
|
2.390%
|
|
430,000,000
|
430,000,000
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Short-Term Cash Fund | Annual Report 2019
|
5
|
Portfolio of Investments (continued)
July 31, 2019
Certificates
of Deposit (continued)
|
Issuer
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
Bank
of Montreal
|
08/01/2019
|
2.340%
|
|
40,000,000
|
40,000,080
|
08/12/2019
|
2.340%
|
|
75,000,000
|
75,000,450
|
09/09/2019
|
2.280%
|
|
93,000,000
|
93,005,394
|
10/09/2019
|
2.270%
|
|
100,000,000
|
100,006,100
|
10/17/2019
|
2.270%
|
|
30,000,000
|
30,001,440
|
10/29/2019
|
2.270%
|
|
100,000,000
|
99,991,100
|
BB&T
Co.
|
08/06/2019
|
2.350%
|
|
93,000,000
|
93,000,000
|
08/29/2019
|
2.340%
|
|
150,000,000
|
149,982,450
|
08/30/2019
|
2.340%
|
|
175,000,000
|
174,978,825
|
Canadian
Imperial Bank of Commerce
|
08/01/2019
|
2.350%
|
|
400,000,000
|
400,000,000
|
Cooperatieve
Rabobank UA
|
08/01/2019
|
2.340%
|
|
293,900,000
|
293,900,000
|
HSBC
Bank USA NA
|
08/02/2019
|
2.350%
|
|
150,000,000
|
149,999,700
|
08/02/2019
|
2.340%
|
|
50,000,000
|
50,000,050
|
08/05/2019
|
2.340%
|
|
135,000,000
|
134,999,460
|
08/07/2019
|
2.350%
|
|
80,000,000
|
79,999,520
|
Royal
Bank of Canada
|
10/01/2019
|
2.270%
|
|
93,000,000
|
93,043,896
|
Toronto-Dominion
Bank (The)
|
08/07/2019
|
2.350%
|
|
100,000,000
|
100,000,500
|
08/27/2019
|
2.340%
|
|
100,000,000
|
100,002,900
|
09/19/2019
|
2.280%
|
|
50,000,000
|
50,004,100
|
10/08/2019
|
2.270%
|
|
50,000,000
|
50,002,950
|
11/12/2019
|
2.250%
|
|
30,000,000
|
30,000,120
|
11/13/2019
|
2.250%
|
|
83,000,000
|
82,995,767
|
Wells
Fargo Bank NA(b)
|
1-month
USD LIBOR + 0.130%
08/09/2019
|
2.500%
|
|
100,000,000
|
100,002,481
|
1-month
USD LIBOR + 0.100%
09/30/2019
|
2.340%
|
|
43,000,000
|
43,000,033
|
1-month
USD LIBOR + 0.090%
11/04/2019
|
2.450%
|
|
50,000,000
|
49,999,809
|
1-month
USD LIBOR + 0.090%
11/12/2019
|
2.460%
|
|
50,000,000
|
50,000,816
|
1-month
USD LIBOR + 0.090%
12/03/2019
|
2.480%
|
|
100,000,000
|
100,000,000
|
Total
Certificates of Deposit
(Cost $3,243,900,000)
|
3,243,917,941
|
|
Commercial
Paper 34.3%
|
|
|
|
|
|
Banking
7.4%
|
Bank
of New York (The)
|
08/01/2019
|
2.340%
|
|
300,000,000
|
299,980,800
|
Bank
of Nova Scotia(a)
|
09/18/2019
|
2.370%
|
|
75,000,000
|
74,762,400
|
09/20/2019
|
2.370%
|
|
100,000,000
|
99,670,500
|
09/23/2019
|
2.360%
|
|
100,000,000
|
99,651,500
|
10/07/2019
|
2.350%
|
|
100,000,000
|
99,563,700
|
Commercial
Paper (continued)
|
Issuer
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
BNP
Paribas
|
08/01/2019
|
2.370%
|
|
350,000,000
|
349,977,250
|
Total
|
1,023,606,150
|
Integrated
Energy 7.3%
|
Chevron
Corp.(a)
|
08/07/2019
|
2.320%
|
|
25,000,000
|
24,988,875
|
08/12/2019
|
2.310%
|
|
50,000,000
|
49,962,000
|
08/15/2019
|
2.310%
|
|
75,000,000
|
74,928,900
|
08/22/2019
|
2.300%
|
|
24,000,000
|
23,966,808
|
09/16/2019
|
2.260%
|
|
75,000,000
|
74,782,725
|
Exxon
Mobil Corp.
|
08/06/2019
|
2.300%
|
|
50,000,000
|
49,981,111
|
08/07/2019
|
2.370%
|
|
45,000,000
|
44,979,525
|
08/13/2019
|
2.300%
|
|
75,000,000
|
74,938,714
|
08/19/2019
|
2.350%
|
|
75,000,000
|
74,908,275
|
08/30/2019
|
2.330%
|
|
50,000,000
|
49,904,250
|
09/03/2019
|
2.330%
|
|
50,000,000
|
49,891,800
|
09/25/2019
|
2.290%
|
|
75,000,000
|
74,737,050
|
Shell
International Finance BV(a)
|
08/05/2019
|
2.390%
|
|
30,000,000
|
29,990,190
|
08/09/2019
|
2.380%
|
|
97,900,000
|
97,842,631
|
08/13/2019
|
2.370%
|
|
50,000,000
|
49,957,800
|
08/15/2019
|
2.370%
|
|
75,000,000
|
74,927,100
|
08/16/2019
|
2.360%
|
|
88,090,000
|
87,999,003
|
Total
|
1,008,686,757
|
Life
Insurance 4.8%
|
New
York Life Capital Corp.(a)
|
08/07/2019
|
2.420%
|
|
28,203,000
|
28,189,914
|
08/08/2019
|
2.420%
|
|
80,196,000
|
80,153,496
|
08/13/2019
|
2.420%
|
|
50,770,000
|
50,726,338
|
09/17/2019
|
2.410%
|
|
20,327,000
|
20,262,909
|
09/24/2019
|
2.400%
|
|
25,629,000
|
25,536,556
|
10/02/2019
|
2.300%
|
|
66,335,000
|
66,072,530
|
10/21/2019
|
2.300%
|
|
43,134,000
|
42,912,679
|
10/22/2019
|
2.300%
|
|
53,723,000
|
53,444,016
|
Pricoa
Short Term Funding LLC(a)
|
08/12/2019
|
2.340%
|
|
50,000,000
|
49,961,600
|
09/05/2019
|
2.320%
|
|
30,000,000
|
29,931,420
|
10/15/2019
|
2.300%
|
|
25,000,000
|
24,881,000
|
Prudential
Funding LLC
|
08/01/2019
|
2.340%
|
|
100,000,000
|
99,993,600
|
08/08/2019
|
2.340%
|
|
100,000,000
|
99,948,800
|
Total
|
672,014,858
|
Pharmaceuticals
6.9%
|
Merck
& Co., Inc.(a)
|
08/01/2019
|
2.260%
|
|
50,000,000
|
49,996,900
|
09/17/2019
|
2.290%
|
|
50,000,000
|
49,850,000
|
09/25/2019
|
2.290%
|
|
50,000,000
|
49,824,700
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
6
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Commercial
Paper (continued)
|
Issuer
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
Novartis
Finance Corp.(a)
|
08/05/2019
|
2.450%
|
|
52,000,000
|
51,982,528
|
08/06/2019
|
2.450%
|
|
52,000,000
|
51,979,044
|
08/15/2019
|
2.450%
|
|
40,000,000
|
39,959,840
|
08/19/2019
|
2.420%
|
|
47,000,000
|
46,940,874
|
08/21/2019
|
2.360%
|
|
22,000,000
|
21,970,190
|
08/26/2019
|
2.400%
|
|
34,000,000
|
33,941,962
|
09/09/2019
|
2.400%
|
|
45,000,000
|
44,881,830
|
09/10/2019
|
2.400%
|
|
45,000,000
|
44,878,860
|
09/11/2019
|
2.380%
|
|
30,000,000
|
29,917,980
|
09/13/2019
|
2.400%
|
|
50,000,000
|
49,855,550
|
11/25/2019
|
2.360%
|
|
15,000,000
|
14,887,335
|
Sanofi
Aventis(a)
|
09/11/2019
|
2.340%
|
|
150,000,000
|
149,596,950
|
Sanofi
SA(a)
|
09/13/2019
|
2.330%
|
|
100,000,000
|
99,719,700
|
09/17/2019
|
2.320%
|
|
100,000,000
|
99,695,600
|
09/27/2019
|
2.310%
|
|
20,895,000
|
20,818,483
|
Total
|
950,698,326
|
Retailers
0.6%
|
Walmart,
Inc.(a)
|
08/07/2019
|
2.240%
|
|
50,000,000
|
49,978,500
|
08/12/2019
|
2.360%
|
|
30,000,000
|
29,976,750
|
Total
|
79,955,250
|
Technology
7.3%
|
Apple,
Inc.(a)
|
08/06/2019
|
2.270%
|
|
25,000,000
|
24,990,675
|
08/08/2019
|
2.270%
|
|
80,000,000
|
79,960,160
|
09/03/2019
|
2.270%
|
|
18,000,000
|
17,962,092
|
09/12/2019
|
2.260%
|
|
50,000,000
|
49,867,000
|
09/13/2019
|
2.260%
|
|
50,000,000
|
49,863,950
|
09/26/2019
|
2.260%
|
|
100,000,000
|
99,648,200
|
Cisco
Systems, Inc.(a)
|
08/01/2019
|
2.410%
|
|
90,000,000
|
89,994,060
|
08/06/2019
|
2.410%
|
|
77,500,000
|
77,469,310
|
08/20/2019
|
2.380%
|
|
40,000,000
|
39,947,880
|
08/22/2019
|
2.380%
|
|
100,000,000
|
99,857,000
|
09/05/2019
|
2.350%
|
|
50,000,000
|
49,884,550
|
10/10/2019
|
2.270%
|
|
50,000,000
|
49,780,100
|
International
Business Machines Co.(a)
|
08/01/2019
|
2.450%
|
|
100,000,000
|
99,993,300
|
08/05/2019
|
2.450%
|
|
75,000,000
|
74,974,800
|
08/09/2019
|
2.460%
|
|
100,000,000
|
99,939,400
|
Total
|
1,004,132,477
|
Total
Commercial Paper
(Cost $4,739,511,756)
|
4,739,093,818
|
|
Repurchase
Agreements 1.1%
|
Issuer
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
Tri-party
Royal Bank of Canada
|
dated
07/31/2019, matures 08/01/2019,
|
repurchase
price $50,003,486
(collateralized by U.S. Treasury Securities, Total Market Value $51,000,004)
|
08/01/2019
|
2.510%
|
|
50,000,000
|
50,000,000
|
Tri-party
TD Securities (USA) LLC
|
dated
07/31/2019, matures 08/01/2019,
|
repurchase
price $100,007,000
(collateralized by U.S. Treasury Securities, Total Market Value $102,000,027)
|
08/01/2019
|
2.520%
|
|
100,000,000
|
100,000,000
|
Total
Repurchase Agreements
(Cost $150,000,000)
|
150,000,000
|
|
U.S.
Government & Agency Obligations 26.8%
|
|
|
|
|
|
Federal
Farm Credit Banks(b)
|
SOFR
+ 0.080%
06/10/2021
|
2.470%
|
|
8,000,000
|
7,990,744
|
Federal
Home Loan Banks(b)
|
SOFR
+ 0.050%
10/10/2019
|
2.400%
|
|
113,000,000
|
112,983,954
|
SOFR
+ 0.000%
12/11/2019
|
2.390%
|
|
100,000,000
|
99,987,300
|
SOFR
+ 0.010%
12/20/2019
|
2.400%
|
|
62,000,000
|
61,988,530
|
SOFR
+ 0.030%
03/27/2020
|
2.420%
|
|
37,000,000
|
36,985,274
|
SOFR
+ 0.025%
04/22/2020
|
2.420%
|
|
30,000,000
|
29,985,780
|
SOFR
+ 0.035%
06/19/2020
|
2.430%
|
|
90,000,000
|
89,946,720
|
SOFR
+ 0.030%
07/17/2020
|
2.420%
|
|
40,000,000
|
39,985,680
|
SOFR
+ 0.050%
01/22/2021
|
2.440%
|
|
63,000,000
|
62,954,136
|
SOFR
+ 0.075%
06/11/2021
|
2.470%
|
|
36,000,000
|
35,974,044
|
SOFR
+ 0.075%
07/08/2021
|
2.460%
|
|
86,000,000
|
86,054,266
|
Federal
Home Loan Banks
|
05/28/2020
|
2.480%
|
|
90,000,000
|
90,020,160
|
07/15/2020
|
2.220%
|
|
100,000,000
|
99,965,300
|
07/30/2020
|
2.250%
|
|
20,000,000
|
19,980,880
|
Federal
Home Loan Banks(b),(c)
|
SOFR
+ 0.050%
01/28/2021
|
3.000%
|
|
48,000,000
|
47,968,032
|
Federal
Home Loan Banks Discount Notes
|
08/01/2019
|
2.190%
|
|
41,000,000
|
40,997,540
|
08/02/2019
|
2.190%
|
|
163,900,000
|
163,880,332
|
08/05/2019
|
2.190%
|
|
150,000,000
|
149,955,000
|
08/08/2019
|
2.190%
|
|
50,000,000
|
49,976,050
|
08/12/2019
|
2.170%
|
|
75,000,000
|
74,946,525
|
08/13/2019
|
2.190%
|
|
75,000,000
|
74,941,575
|
08/15/2019
|
2.190%
|
|
100,000,000
|
99,910,200
|
08/16/2019
|
2.190%
|
|
300,000,000
|
299,712,600
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Short-Term Cash Fund | Annual Report 2019
|
7
|
Portfolio of Investments (continued)
July 31, 2019
U.S.
Government & Agency Obligations (continued)
|
Issuer
|
Effective
Yield
|
|
Principal
Amount ($)
|
Value
($)
|
08/20/2019
|
2.180%
|
|
150,000,000
|
149,820,750
|
08/21/2019
|
2.180%
|
|
275,000,000
|
274,655,700
|
08/22/2019
|
2.190%
|
|
75,000,000
|
74,901,225
|
08/23/2019
|
2.190%
|
|
340,500,000
|
340,031,813
|
08/28/2019
|
2.200%
|
|
100,000,000
|
99,831,500
|
09/04/2019
|
2.220%
|
|
150,000,000
|
149,681,550
|
09/10/2019
|
2.100%
|
|
87,000,000
|
86,795,066
|
09/17/2019
|
2.190%
|
|
100,000,000
|
99,713,300
|
09/18/2019
|
2.190%
|
|
200,000,000
|
199,414,800
|
09/19/2019
|
2.190%
|
|
50,000,000
|
49,850,700
|
09/27/2019
|
2.170%
|
|
100,000,000
|
99,656,700
|
Federal
Home Loan Mortgage Corp.
|
05/29/2020
|
2.520%
|
|
26,000,000
|
26,002,236
|
06/04/2020
|
2.450%
|
|
85,000,000
|
85,032,470
|
06/04/2020
|
2.450%
|
|
85,000,000
|
85,038,845
|
Total
U.S. Government & Agency Obligations
(Cost $3,697,794,460)
|
3,697,517,277
|
|
U.S.
Treasury Obligations 4.5%
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
U.S.
Treasury(b)
|
3-month
U.S. Treasury index + 0.012%
01/31/2020
|
2.051%
|
|
100,000,000
|
99,934,002
|
3-month
U.S. Treasury index + 0.043%
07/31/2020
|
2.094%
|
|
100,000,000
|
99,884,804
|
3-month
U.S. Treasury index + 0.045%
10/31/2020
|
2.096%
|
|
50,000,000
|
49,922,791
|
3-month
U.S. Treasury index + 0.115%
01/31/2021
|
2.166%
|
|
200,000,000
|
199,796,534
|
U.S.
Treasury Obligations (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
3-month
U.S. Treasury index + 0.139%
04/30/2021
|
2.190%
|
|
66,795,000
|
66,730,654
|
3-month
U.S. Treasury index + 0.180%
07/31/2021
|
2.271%
|
|
100,000,000
|
99,997,459
|
Total
U.S. Treasury Obligations
(Cost $616,592,303)
|
616,266,244
|
Total
Investments in Securities
(Cost: $13,542,977,957)
|
13,542,101,253
|
Other
Assets & Liabilities, Net
|
|
257,605,617
|
Net
Assets
|
13,799,706,870
|
Notes to Portfolio of Investments
(a)
|
Represents
privately placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified
institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees.
At July 31, 2019, the total value of these securities amounted to $4,293,974,084, which represents 31.12% of total net assets.
|
(b)
|
Variable
rate security. The interest rate shown was the current rate as of July 31, 2019.
|
(c)
|
Represents a
security purchased on a when-issued basis.
|
Fair value measurements
The Fund categorizes its fair value measurements
according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants
would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing
an investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad
levels listed below:
The accompanying Notes to Financial Statements are an integral part of this
statement.
8
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Fair value
measurements (continued)
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
The following table is a summary of the
inputs used to value the Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Asset-Backed
Commercial Paper
|
—
|
430,709,576
|
—
|
430,709,576
|
Asset-Backed
Securities — Non-Agency
|
—
|
664,596,397
|
—
|
664,596,397
|
Certificates
of Deposit
|
—
|
3,243,917,941
|
—
|
3,243,917,941
|
Commercial
Paper
|
—
|
4,739,093,818
|
—
|
4,739,093,818
|
Repurchase
Agreements
|
—
|
150,000,000
|
—
|
150,000,000
|
U.S.
Government & Agency Obligations
|
—
|
3,697,517,277
|
—
|
3,697,517,277
|
U.S.
Treasury Obligations
|
616,266,244
|
—
|
—
|
616,266,244
|
Total
Investments in Securities
|
616,266,244
|
12,925,835,009
|
—
|
13,542,101,253
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
The accompanying Notes
to Financial Statements are an integral part of this statement.
Columbia
Short-Term Cash Fund | Annual Report 2019
|
9
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $13,392,977,957)
|
$13,392,101,253
|
Repurchase
agreements (cost $150,000,000)
|
150,000,000
|
Cash
|
325,852,659
|
Receivable
for:
|
|
Interest
|
8,273,838
|
Prepaid
expenses
|
53,717
|
Total
assets
|
13,876,281,467
|
Liabilities
|
|
Payable
for:
|
|
Investments
purchased on a delayed delivery basis
|
48,000,000
|
Distributions
to shareholders
|
28,145,708
|
Compensation
of board members
|
302,387
|
Other
expenses
|
126,502
|
Total
liabilities
|
76,574,597
|
Net
assets applicable to outstanding capital stock
|
$13,799,706,870
|
Represented
by
|
|
Paid
in capital
|
13,800,926,065
|
Total
distributable earnings (loss) (Note 2)
|
(1,219,195)
|
Total
- representing net assets applicable to outstanding capital stock
|
$13,799,706,870
|
Shares
outstanding
|
13,801,102,234
|
Net
asset value per share
|
0.9999
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
10
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Interest
|
$324,091,219
|
Total
income
|
324,091,219
|
Expenses:
|
|
Compensation
of board members
|
204,760
|
Custodian
fees
|
104,747
|
Shareholder
reports and communication
|
12,387
|
Audit
fees
|
29,005
|
Legal
fees
|
131,570
|
Fidelity
and surety fees
|
61,028
|
Commitment
fees for bank credit facility
|
99,803
|
Compensation
of chief compliance officer
|
2,972
|
Other
|
12,533
|
Total
expenses
|
658,805
|
Net
investment income
|
323,432,414
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
6,302
|
Net
realized gain
|
6,302
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
(412,809)
|
Net
change in unrealized appreciation (depreciation)
|
(412,809)
|
Net
realized and unrealized loss
|
(406,507)
|
Net
increase in net assets resulting from operations
|
$323,025,907
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Short-Term Cash Fund | Annual Report 2019
|
11
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$323,432,414
|
$216,350,642
|
Net
realized gain (loss)
|
6,302
|
(24)
|
Net
change in unrealized appreciation (depreciation)
|
(412,809)
|
(167,603)
|
Net
increase in net assets resulting from operations
|
323,025,907
|
216,183,015
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
(323,482,420)
|
|
Net
investment income
|
|
(216,450,638)
|
Total
distributions to shareholders (Note 2)
|
(323,482,420)
|
(216,450,638)
|
Increase
(decrease) in net assets from capital stock activity
|
(239,943,377)
|
674,233,489
|
Total
increase (decrease) in net assets
|
(240,399,890)
|
673,965,866
|
Net
assets at beginning of year
|
14,040,106,760
|
13,366,140,894
|
Net
assets at end of year
|
$13,799,706,870
|
$14,040,106,760
|
Excess
of distributions over net investment income
|
$(312,194)
|
$(262,188)
|
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
|
|
|
|
|
Subscriptions
|
80,239,114,635
|
80,231,209,910
|
74,214,199,405
|
74,211,616,274
|
Redemptions
|
(80,479,089,294)
|
(80,471,153,287)
|
(73,539,787,587)
|
(73,537,382,785)
|
Total
net increase (decrease)
|
(239,974,659)
|
(239,943,377)
|
674,411,818
|
674,233,489
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
12
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share held for the periods shown. Total return assumes reinvestment of all dividends and
distributions, if any. Total return is not annualized for periods of less than one year.
|
Year
Ended July 31,
|
2019
|
2018
|
2017
|
2016
|
2015
|
Per
share data
|
|
|
|
|
|
Net
asset value, beginning of period
|
$0.9999
|
$1.0000
|
$1.0000
|
$1.00
|
$1.00
|
Income
from investment operations:
|
|
|
|
|
|
Net
investment income
|
0.0234
|
0.0152
|
0.0069
|
0.00
(a)
|
0.00
(a)
|
Net
realized and unrealized gain (loss)
|
0.0001
|
(0.0002)
|
(0.0001)
|
(0.00)
(a)
|
0.00
(a)
|
Total
from investment operations
|
0.0235
|
0.0150
|
0.0068
|
0.00
(a)
|
0.00
(a)
|
Less
distributions to shareholders from:
|
|
|
|
|
|
Net
investment income
|
(0.0235)
|
(0.0151)
|
(0.0068)
|
(0.00)
(a)
|
(0.00)
(a)
|
Total
distributions to shareholders
|
(0.0235)
|
(0.0151)
|
(0.0068)
|
(0.00)
(a)
|
(0.00)
(a)
|
Net
asset value, end of period
|
$0.9999
|
$0.9999
|
$1.0000
|
$1.00
|
$1.00
|
Total
return
|
2.37%
|
1.52%
|
0.68%
|
0.32%
|
0.11%
|
Ratios
to average net assets
|
|
|
|
|
|
Total
gross expenses
|
0.00%
(a)
|
0.00%
(a)
|
0.01%
|
0.00%
(a)
|
0.00%
(a)
|
Total
net expenses
|
0.00%
(a)
|
0.00%
(a)
|
0.01%
|
0.00%
(a)
|
0.00%
(a)
|
Net
investment income
|
2.34%
|
1.52%
|
0.69%
|
0.32%
|
0.11%
|
Supplemental
data
|
|
|
|
|
|
Net
assets, end of period (in thousands)
|
$13,799,707
|
$14,040,107
|
$13,366,141
|
$12,073,055
|
$11,339,961
|
Notes
to Financial Highlights
|
(a)
|
Rounds to
zero.
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Short-Term Cash Fund | Annual Report 2019
|
13
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Short-Term Cash Fund (the Fund), a series of
Columbia Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business
trust.
The Trust may issue an unlimited number of shares
(without par value). Investments in the Fund may be made only by investment companies, common or commingled trust funds, or similar organizations or persons that are accredited investors within the meaning of Regulation D under the Securities Act of
1933, as amended.
Note 2. Summary of significant
accounting policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or not believed to be reflective of market
value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that management believes
does not approximate market value.
Asset- and
mortgage-backed securities are generally valued by pricing services, which utilize pricing models that incorporate the securities’ cash flow and loan performance data. These models also take into account available market data, including
trades, market quotations, and benchmark yield curves for identical or similar securities. Factors used to identify similar securities may include, but are not limited to, issuer, collateral type, vintage, prepayment speeds, collateral performance,
credit ratings, credit enhancement and expected life. Asset-backed securities for which quotations are readily available may also be valued based upon an over-the-counter or exchange bid quote from an approved independent broker-dealer.
The Fund calculates its net asset value to four decimals
(e.g., $1.0000) using market-based pricing and operates with a floating net asset value. Although the Fund is a money market fund, the net asset value of the Fund will fluctuate with changes in the values of the Fund’s portfolio securities. As
a result, the Fund’s net asset value may be above or below $1.0000. Prior to October 1, 2016, the Fund maintained a stable net asset value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Repurchase agreements
The Fund may invest in repurchase agreement transactions with
institutions that management has determined are creditworthy. The Fund, through the custodian, receives delivery of the underlying securities collateralizing a repurchase agreement. Management is responsible for determining that the collateral is at
least equal, at all times, to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or
14
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
insolvency of the
counterparty. These risks include possible delays in or restrictions on the Fund’s ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to
assert its rights.
Asset- and mortgage-backed
securities
The Fund may invest in asset-backed and
mortgage-backed securities. The maturity dates shown represent the original maturity of the underlying obligation. Actual maturity may vary based upon prepayment activity on these obligations. All, or a portion, of the obligation may be prepaid at
any time because the underlying asset may be prepaid. As a result, decreasing market interest rates could result in an increased level of prepayment. An increased prepayment rate will have the effect of shortening the maturity of the security.
Unless otherwise noted, the coupon rates presented are fixed rates.
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Offsetting of assets and liabilities
The following table presents the Fund’s gross and net
amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Fund as of July 31, 2019:
|
RBC
Capital
Markets ($)
|
TD
Securities ($)
|
Total
($)
|
Assets
|
|
|
|
Repurchase
agreements
|
50,000,000
|
100,000,000
|
150,000,000
|
Total
financial and derivative net assets
|
50,000,000
|
100,000,000
|
150,000,000
|
Total
collateral received (pledged) (a)
|
50,000,000
|
100,000,000
|
150,000,000
|
Net
amount (b)
|
-
|
-
|
-
|
(a)
|
In some
instances, the actual collateral received and/or pledged may be more than the amount shown due to overcollateralization.
|
(b)
|
Represents the
net amount due from/(to) counterparties in the event of default.
|
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income, including amortization of premium and
discount, is recognized daily.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund.
Federal income tax status
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its tax year, and as such will not be subject to federal
income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to federal excise tax.
Therefore, no federal income or excise tax provision is recorded.
Columbia
Short-Term Cash Fund | Annual Report 2019
|
15
|
Notes to Financial Statements (continued)
July 31, 2019
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually after the fiscal year in which the capital gains were earned, unless offset by any available capital loss carryforward. Income distributions and capital
gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods beginning after December 15, 2019 and interim periods within
those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a result of the amendments, management implemented disclosure
changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the level 3 valuation
processes, as well as modifications to the measurement uncertainty disclosure.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
16
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Note 3. Fees and other transactions with
affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, subject to the policies set by the Board of Trustees, the Investment
Manager provides the Fund with investment research and advice, as well as administrative and accounting services. The Fund does not pay a management fee for the investment advisory or administrative services provided to the Fund, but it may pay
taxes, brokerage commissions and nonadvisory expenses.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
The Fund has a Transfer and Dividend Disbursing Agent
Agreement with Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, under which the Fund does not pay an annual fee to the Transfer
Agent.
Distribution and service fees
The Fund has an agreement with Columbia Management Investment
Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. The Fund does not pay the Distributor a fee for the distribution services
it provides to the Fund.
Note 4. Federal tax
information
The timing and character of income and
capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for capital loss carryforwards, trustees’ deferred compensation and distributions. To the extent these differences were permanent, reclassifications were made among the components of the Fund’s net assets. Temporary
differences do not require reclassifications.
The Fund
did not have any permanent differences; therefore, no reclassifications were made.
The tax character of distributions paid during the years
indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
323,482,420
|
—
|
323,482,420
|
216,450,638
|
—
|
216,450,638
|
Columbia
Short-Term Cash Fund | Annual Report 2019
|
17
|
Notes to Financial Statements (continued)
July 31, 2019
Short-term capital gain distributions, if any, are considered
ordinary income distributions for tax purposes.
At July
31, 2019, the components of distributable earnings on a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
(depreciation) ($)
|
28,128,916
|
—
|
(30,297)
|
(876,704)
|
At July 31, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
(depreciation) ($)
|
13,542,977,957
|
479,757
|
(1,356,461)
|
(876,704)
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at July
31, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended July 31, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
No
expiration
short-term ($)
|
No
expiration
long-term ($)
|
Total
($)
|
Utilized
($)
|
Expired
($)
|
30,297
|
—
|
30,297
|
6,302
|
—
|
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Interfund
lending
Pursuant to an exemptive order granted by the
Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds,
borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
As noted above, the Fund may only participate in the Interfund
Program as a lending fund. The Fund did not lend money under the Interfund Program during the year ended July 31, 2019.
Note 6. Line of credit
The Fund has access to a revolving credit facility with a
syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility, which is
a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion. Interest is charged to each
participating fund based on its borrowings at a rate equal to the
18
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
higher of (i) the
federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is disclosed as Commitment fees for bank credit facility in the Statement of Operations. This agreement expires
annually in December unless extended or renewed.
The
Fund had no borrowings during the year ended July 31, 2019.
Note 7. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer 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 debt instruments to indicate their credit risk. Lower rated or unrated debt instruments held by the Fund may present increased credit risk as compared to higher-rated debt instruments.
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 interest rates may also affect the liquidity of
the Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, 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. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the longer the maturity or duration of a
debt security, the greater its sensitivity to changes in interest rates.
Money market fund risk
At times of (i) significant redemption activity by
shareholders, including, for example, when a single investor or a few large investors make a significant redemption of Fund shares, (ii) insufficient levels of cash in the Fund’s portfolio to satisfy redemption activity, and (iii) disruption
in the normal operation of the markets in which the Fund buys and sells portfolio securities, the Fund could be forced to sell portfolio securities at unfavorable prices in order to generate sufficient cash to pay redeeming shareholders. Sales of
portfolio securities at such times could result in losses to the Fund. In addition, neither the Investment Manager nor any of its affiliates has a legal obligation to provide financial support to the Fund, and you should not expect that they or any
person will provide financial support to the Fund at any time. The Fund may suspend redemptions or the payment of redemption proceeds when permitted by applicable regulations.
If, at any time, the Fund’s weekly liquid assets fall
below 30% of its total assets and the Board of Trustees determines it is in the best interests of the Fund, the Fund may, as early as the same day and at any time during the day, impose a fee of up to 2% of the value of all shares redeemed and/or
temporarily suspend redemptions (sometimes referred to as imposing redemption gates) for up to 10 business days. If, at the end of any business day, the Fund’s weekly liquid assets fall below 10% of its total assets, the Fund must impose a
fee, as of the beginning of the next business day, of 1% of the value of all shares redeemed, unless the Board of Trustees determines that imposing such a fee is not in the best interests of the Fund or the Board of Trustees determines that a lower
or higher fee (not to exceed 2% of the value of all shares redeemed) would be in the best interests of the Fund. These determinations may affect the composition of the investment portfolio, performance and operating expenses of the Fund.
Shareholder concentration risk
At July 31, 2019, affiliated shareholders of record owned
100.0% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be
forced to sell investments at inopportune times, including its
Columbia
Short-Term Cash Fund | Annual Report 2019
|
19
|
Notes to Financial Statements (continued)
July 31, 2019
liquid positions,
which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased operating expenses for non-redeeming Fund shareholders.
Note 8. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 9. Information regarding pending and settled
legal proceedings
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (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 Fund. Further, although we believe proceedings are not 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, 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.
20
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Short-Term Cash Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Short-Term Cash Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of operations for
the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the five years in the period ended July 31, 2019
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the five years in the period ended July 31, 2019 in conformity with accounting principles generally
accepted in the United States of America.
Basis for
Opinion
These financial statements are the
responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our
opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
Columbia
Short-Term Cash Fund | Annual Report 2019
|
21
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
22
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
Columbia
Short-Term Cash Fund | Annual Report 2019
|
23
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
24
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611 or contacting your financial intermediary.
Columbia
Short-Term Cash Fund | Annual Report 2019
|
25
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
26
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Short-Term Cash Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management Investment
Distributors, Inc. (collectively, the Funds).
On an
annual basis, the Fund’s Board of Trustees (the Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its
Contracts Committee in November 2018 and January, March, April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive
response to items of information requested by independent legal counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented
at these meetings were first supplied in draft form to designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who
is an Independent Trustee), and the final materials were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets
with portfolio management teams and senior management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the
work, deliberations and conclusions of the various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
Columbia
Short-Term Cash Fund | Annual Report 2019
|
27
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception), the performance of the Fund and the net assets of the Fund. The Board observed that the Fund’s investment performance met expectations.
Comparative fees, costs of services provided and the profits
realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board accorded particular weight to the notion that the primary objective of the level of fees is to achieve a rational pricing model applied consistently across the various product lines in the
Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the "pricing philosophy" currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower
than the median expense ratios of funds in the same Lipper comparison universe). The Board observed that the Fund, commonly referred to as a “cash pool fund,” was established for the exclusive use of managing the cash positions of other
funds managed by Columbia Threadneedle and, because Columbia Threadneedle collects management fees on funds that invest in the Fund, the Fund does not pay management fees. The Board also noted that the Fund does not pay transfer agency or
distribution fees.
The Board also considered the
profitability of Columbia Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the Profitability Report,
discussing the profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was reasonable and that the 2019
information shows that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted the report of its independent fee consultant, JDL Consultants, LLC (JDL) and JDL’s conclusion
that 2018 Columbia Threadneedle profitability relative to industry competitors was reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing
the Funds, such as the enhanced ability to offer various other financial products to Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Funds should permit the
Investment Manager to offer competitive compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
Economies of scale to be realized
Given that the Fund does not pay management fees, the Board
determined not to accord weight to the lack of any material economies of scale associated to the growth of the Fund.
Based on the foregoing, the Board, including all of the
Independent Trustees, concluded that the fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was determinative. On June 19, 2019, the Board, including all of the
Independent Trustees, approved the renewal of the Management Agreement.
28
|
Columbia Short-Term Cash Fund
| Annual Report 2019
|
Proxy
voting policies and procedures
The policy of the Board
of Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling
800.345.6611; contacting your financial intermediary or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities is filed with the SEC by
August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at sec.gov.
Monthly portfolio holdings
The Fund filed a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-Q for periods ended prior to April 30, 2019. The Fund’s Form N-Q is available on the SEC’s website at sec.gov. The Fund’s complete schedule of portfolio
holdings, as filed on Form N-Q, can also be obtained without charge, upon request, by calling 800.345.6611.
The Fund’s portfolio holdings are filed with the SEC
monthly on Form N-MFP. The Fund’s Form N-MFP is available on the SEC’s website at sec.gov and can be obtained without a charge, upon request by calling 800.345.6611.
Additional Fund information
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Columbia
Short-Term Cash Fund | Annual Report 2019
|
29
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Short-Term Cash Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers,
LLC.
Columbia Threadneedle Investments (Columbia
Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
Annual
Report
July 31, 2019
Columbia Disciplined Growth Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
5
|
|
7
|
|
8
|
|
12
|
|
14
|
|
15
|
|
18
|
|
22
|
|
33
|
|
34
|
|
35
|
|
40
|
|
43
|
Columbia Disciplined Growth Fund | Annual Report
2019
Investment objective
Columbia Disciplined Growth Fund (the
Fund) seeks to provide shareholders with long-term capital growth.
Portfolio
management
Brian Condon, CFA,
CAIA
Co-Portfolio
Manager
Managed Fund
since 2010
Peter
Albanese
Co-Portfolio
Manager
Managed Fund
since 2014
Morningstar
style boxTM
The Morningstar
Style Box is based on a fund’s portfolio holdings. For equity funds, the vertical axis shows the market capitalization of the stocks owned, and the horizontal axis shows investment style (value, blend, or growth). Information shown is based on
the most recent data provided by Morningstar.
© 2019
Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.
Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
Excluding
sales charges
|
05/17/07
|
4.98
|
12.48
|
14.75
|
|
Including
sales charges
|
|
-1.08
|
11.16
|
14.07
|
Advisor
Class*
|
06/01/15
|
5.17
|
12.71
|
14.87
|
Class
C
|
Excluding
sales charges
|
05/17/07
|
4.19
|
11.63
|
13.90
|
|
Including
sales charges
|
|
3.29
|
11.63
|
13.90
|
Institutional
Class*
|
09/27/10
|
5.26
|
12.79
|
14.98
|
Institutional
2 Class*
|
11/08/12
|
5.27
|
12.86
|
15.05
|
Institutional
3 Class*
|
06/01/15
|
5.35
|
12.86
|
14.95
|
Class
R
|
05/17/07
|
4.74
|
12.21
|
14.46
|
Russell
1000 Growth Index
|
|
10.82
|
14.25
|
15.74
|
Returns for Class A shares are shown
with and without the maximum initial sales charge of 5.75%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. Since the Fund launched more than one share class at its
inception, Class A shares were used. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit
columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
The Russell 1000 Growth Index, an unmanaged index, measures the
performance of those Russell 1000 Index companies with higher priceto-book ratios and higher forecasted growth values.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a
hypothetical $10,000 investment (July 31, 2009 — July 31, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Disciplined Growth Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the
redemption of Fund shares.
Top
10 holdings (%) (at July 31, 2019)
|
Apple,
Inc.
|
7.7
|
Alphabet,
Inc., Class A
|
6.4
|
Microsoft
Corp.
|
5.6
|
Facebook,
Inc., Class A
|
4.9
|
Amazon.com,
Inc.
|
4.7
|
Visa,
Inc., Class A
|
4.0
|
MasterCard,
Inc., Class A
|
3.5
|
Adobe,
Inc.
|
2.9
|
Boeing
Co. (The)
|
2.8
|
Starbucks
Corp.
|
2.7
|
Percentages indicated are based
upon total investments excluding Money Market Funds and investments in derivatives, if any.
For further detail about these holdings, please refer to the
section entitled “Portfolio of Investments.”
Fund holdings are as of the date given, are subject to change
at any time, and are not recommendations to buy or sell any security.
Portfolio
breakdown (%) (at July 31, 2019)
|
Common
Stocks
|
99.1
|
Money
Market Funds
|
0.9
|
Total
|
100.0
|
Percentages indicated are based
upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
Equity
sector breakdown (%) (at July 31, 2019)
|
Communication
Services
|
12.2
|
Consumer
Discretionary
|
14.8
|
Consumer
Staples
|
4.3
|
Energy
|
0.1
|
Financials
|
3.7
|
Health
Care
|
13.9
|
Industrials
|
10.0
|
Information
Technology
|
37.9
|
Materials
|
1.1
|
Real
Estate
|
2.0
|
Total
|
100.0
|
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
4
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Manager Discussion of Fund Performance
At July
31, 2019, approximately 36.50% of the Fund’s shares were owned in the aggregate by affiliated funds-of-funds managed by Columbia Management Investment Advisers, LLC (the Investment Manager). As a result of asset allocation decisions by the
Investment Manager, it is possible that the Fund may experience relatively large purchases or redemptions from affiliated funds-of-funds. The Investment Manager seeks to minimize the impact of these transactions by structuring them over a reasonable
period of time. The Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds.
For the 12-month period that ended July 31, 2019, the
Fund’s Class A shares gained 4.98% excluding sales charges. The Fund produced solid absolute gains but underperformed its benchmark, the Russell 1000 Growth Index, which rose 10.82% during the same time period. Stock selection detracted from
the Fund’s relative results, while sector allocation contributed positively, albeit modestly.
U.S. equity markets advanced despite heightened
volatility
As the 12-month period began in August
2018, U.S. equity markets were continuing their climb from earlier in the year, supported by a growing U.S. economy and strong corporate earnings, each in turn fueled in large part by December 2017’s tax reform legislation. The U.S. equity
market rally came to an end in the fourth quarter of 2018, as investors grappled with the U.S. Federal Reserve (the Fed) continuing to raise interest rates, the sharp slowdown in eurozone business confidence, weaker economic growth in China and
heightened geopolitical concerns, including trade and tariff tensions. Long dormant volatility spiked, and U.S. equity markets declined precipitously in the final weeks of calendar year 2018. This sharp sell-off then set the stage for the nearly
equally dramatic rally in the first quarter of 2019, as much of the ground lost in December 2018 was retraced. Following a relative calm in ongoing U.S.-China trade negotiations, volatility then returned in the second quarter of 2019 amid signs that
trade talks had soured. Offsetting this disappointment was the apparent change in the stance of the Fed, which had adopted a more dovish posture with respect to the direction of interest rates, a shift much applauded by the U.S. equity markets. On
July 31, 2019, the Fed lowered interest rates for the first time since 2008 to help stave off the possibility of an economic downturn.
For the reporting period overall, growth strategies
significantly outperformed value strategies across the capitalization spectrum.
Large-cap stocks led market higher
Generally, the U.S. equity markets tended to favor
capitalization during the period, as large-cap stocks significantly outperformed their smaller-cap counterparts. The Russell 1000 Index returned 8.00% compared to the -4.42% return of the Russell 2000 Index for the period. Stocks characterized by
low beta, low dividend yield and low volatility were also in favor during the period. Conversely, higher yielding stocks, high-growth stocks and stocks with relatively high beta were out of favor during the period, as was the liquidity factor.
Our stock selection model performed weakly during the period.
We divide the metrics for our stock selection model into three broad categories: valuation, catalyst and quality. We then rank the securities within a sector/industry from “1” (most attractive) to “5” (least attractive) based
upon the metrics within these categories. During the period, the valuation model was particularly weak during the period, while the quality and catalyst models outperformed the benchmark, showing some signs of strength toward the end of the period.
Notably, the valuation model was in the second-worst drawdown in the 16-year history of our proprietary models during the period. Emphasizing inexpensive and high-quality stocks is a key part of our investment strategy, and, despite this period of
underperformance, we currently remain committed to this strategy, maintaining a long-term perspective.
Stock selection overall detracted from returns
As usual, the Fund maintained a relatively neutral stance on
sector allocation, though sector allocation did contribute positively, albeit modestly, to relative performance during the period. Stock selection overall detracted from the Fund’s performance relative to the benchmark. Stock selection in the
consumer discretionary and consumer staples sectors hurt the Fund’s relative performance most.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance (continued)
Among the Fund’s greatest individual detractors were
Urban Outfitters, LyondellBasell Industries and Bristol-Myers Squibb. Shares of retailer Urban Outfitters traded lower during the period on disappointing same-store sales metrics, as demand for apparel trends were soft. Shares of chemicals
manufacturer LyondellBasell Industries declined on lower earnings estimates and disappointing results stemming from weakness in Europe, where rising feedstock costs and seasonally slow demand weighed on results. Pharmaceuticals company Bristol-Myers
Squibb saw its shares lose ground as its lung cancer drug, Opdivo, experienced mixed clinical results, while Merck’s competing lung cancer drug, Keytruda, delivered more favorable newsflow.
Information technology and financials stock selection
boosted returns
Stock selection in the information
technology and financials sectors contributed positively to the Fund’s relative performance during the period.
Among the individual stocks contributing most to relative
performance were VMware, Mastercard and VeriSign. VMware, the leading provider of virtualization software, delivered broad-based strength with robust license billings and license revenue growth, as customers utilized VMware technology to drive
hybrid cloud initiatives. Shares of Mastercard rose, as the financial transaction processing services provider executed well and benefited from the long-term secular shift to electronic forms of payment. Mastercard posted strong quarterly reports
that indicated a dominant competitive position with a notable network effect, including a long, durable growth runway in its core consumer payment market and a significant edge over Visa in many business-to-business opportunities. VeriSign is a
provider of domain name registry services and internet infrastructure. Its shares rose during the period on news of the extension of its cooperative agreement with the U.S. government for managing the “.com” domain name. The agreement
also provides a 7% price increase in each of the last four years of its six year “.com” contract. The company also benefited during the period from an increase in “.com” domain registrations. Having no position at all in
semiconductor company NVIDIA further boosted the Fund’s relative results, as its shares precipitously fell from all-time high levels after reporting two consecutive revenue disappointments driven in part by a weaker than consensus expected
gaming segment.
Portfolio construction process guided
investment changes
While there were some changes in
sector allocations and individual security positions during the period as a result of the Fund’s bottom-up stock selection process, all changes were quite modest, as we maintained our sector neutral investment approach. Within our stock
selection model, we replaced the Credit Suisse HOLT Adjusted Value Target signal in all 11 sector models with other value factors and bolstered many investment themes with complementary and efficacious indicators. The updated models are more
diversified and may exhibit better consistency of performance in different market regimes. We also completed a review of our utilities sector models and put more emphasis on forward-looking valuation multiples, dividend growth, cash flow generation
and business momentum. Finally, we adjusted factors to handle inconsistencies in the quarterly cash flow numbers for certain companies.
Market risk may affect a single
issuer, sector of the economy, industry or the market as a whole. 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. Investing in derivatives is a specialized activity that involves special risks, which may result in significant losses. The Fund may invest significantly in issuers within a particular
sector, which may be negatively affected by market, economic or other conditions, making the Fund more vulnerable to unfavorable developments in the sector. See the Fund’s prospectus for more
information on these and other risks.
The views
expressed in this report reflect the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results
may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be
relied on as investment advice and, because investment decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities
should not be construed as a recommendation or investment advice.
6
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,092.20
|
1,018.94
|
6.12
|
5.91
|
1.18
|
Advisor
Class
|
1,000.00
|
1,000.00
|
1,092.60
|
1,020.18
|
4.83
|
4.66
|
0.93
|
Class
C
|
1,000.00
|
1,000.00
|
1,087.40
|
1,015.22
|
9.99
|
9.64
|
1.93
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,093.50
|
1,020.18
|
4.83
|
4.66
|
0.93
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,093.50
|
1,020.53
|
4.46
|
4.31
|
0.86
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,093.60
|
1,020.78
|
4.20
|
4.06
|
0.81
|
Class
R
|
1,000.00
|
1,000.00
|
1,089.60
|
1,017.70
|
7.41
|
7.15
|
1.43
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
7
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Common
Stocks 98.8%
|
Issuer
|
Shares
|
Value
($)
|
Communication
Services 12.1%
|
Entertainment
0.6%
|
Electronic
Arts, Inc.(a)
|
30,700
|
2,839,750
|
Interactive
Media & Services 11.1%
|
Alphabet,
Inc., Class A(a)
|
24,290
|
29,590,078
|
Facebook,
Inc., Class A(a)
|
115,400
|
22,414,142
|
Total
|
|
52,004,220
|
Media
0.4%
|
AMC
Networks, Inc., Class A(a)
|
23,300
|
1,243,754
|
Sinclair
Broadcast Group, Inc., Class A
|
9,900
|
497,475
|
Total
|
|
1,741,229
|
Total
Communication Services
|
56,585,199
|
Consumer
Discretionary 14.6%
|
Hotels,
Restaurants & Leisure 2.6%
|
Starbucks
Corp.
|
129,600
|
12,271,824
|
Household
Durables 0.6%
|
NVR,
Inc.(a)
|
875
|
2,926,123
|
Internet
& Direct Marketing Retail 7.2%
|
Amazon.com,
Inc.(a)
|
11,535
|
21,533,307
|
eBay,
Inc.
|
184,200
|
7,587,198
|
Etsy,
Inc.(a)
|
67,600
|
4,530,552
|
Total
|
|
33,651,057
|
Specialty
Retail 2.1%
|
Advance
Auto Parts, Inc.
|
6,800
|
1,024,352
|
AutoZone,
Inc.(a)
|
6,475
|
7,271,684
|
Home
Depot, Inc. (The)
|
6,000
|
1,282,140
|
Total
|
|
9,578,176
|
Textiles,
Apparel & Luxury Goods 2.1%
|
Nike,
Inc., Class B
|
115,300
|
9,919,259
|
Total
Consumer Discretionary
|
68,346,439
|
Consumer
Staples 4.3%
|
Beverages
0.8%
|
PepsiCo,
Inc.
|
28,500
|
3,642,585
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Household
Products 0.6%
|
Kimberly-Clark
Corp.
|
8,600
|
1,166,590
|
Procter
& Gamble Co. (The)
|
15,900
|
1,876,836
|
Total
|
|
3,043,426
|
Personal
Products 0.8%
|
Herbalife
Nutrition Ltd.(a)
|
89,800
|
3,683,596
|
Tobacco
2.1%
|
Altria
Group, Inc.
|
204,400
|
9,621,108
|
Total
Consumer Staples
|
19,990,715
|
Energy
0.1%
|
Oil,
Gas & Consumable Fuels 0.1%
|
Cabot
Oil & Gas Corp.
|
24,100
|
461,756
|
Total
Energy
|
461,756
|
Financials
3.6%
|
Capital
Markets 2.1%
|
Intercontinental
Exchange, Inc.
|
58,600
|
5,148,596
|
LPL
Financial Holdings, Inc.
|
55,900
|
4,688,333
|
Total
|
|
9,836,929
|
Diversified
Financial Services 1.1%
|
Voya
Financial, Inc.
|
88,900
|
4,993,513
|
Insurance
0.4%
|
Progressive
Corp. (The)
|
25,500
|
2,064,990
|
Total
Financials
|
16,895,432
|
Health
Care 13.7%
|
Biotechnology
3.3%
|
AbbVie,
Inc.
|
65,000
|
4,330,300
|
Alexion
Pharmaceuticals, Inc.(a)
|
17,800
|
2,016,562
|
Amgen,
Inc.
|
3,800
|
709,004
|
BeiGene
Ltd., ADR(a)
|
5,000
|
686,700
|
BioMarin
Pharmaceutical, Inc.(a)
|
25,600
|
2,030,592
|
Exact
Sciences Corp.(a)
|
10,200
|
1,174,122
|
Sage
Therapeutics, Inc.(a)
|
6,000
|
962,040
|
Sarepta
Therapeutics, Inc.(a)
|
5,700
|
848,445
|
Vertex
Pharmaceuticals, Inc.(a)
|
15,600
|
2,599,272
|
Total
|
|
15,357,037
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
8
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Health
Care Equipment & Supplies 2.2%
|
Baxter
International, Inc.
|
55,600
|
4,668,732
|
Hologic,
Inc.(a)
|
108,600
|
5,565,750
|
Total
|
|
10,234,482
|
Health
Care Providers & Services 2.6%
|
HCA
Healthcare, Inc.
|
27,500
|
3,671,525
|
McKesson
Corp.
|
60,800
|
8,448,160
|
UnitedHealth
Group, Inc.
|
1,200
|
298,812
|
Total
|
|
12,418,497
|
Life
Sciences Tools & Services 0.5%
|
IQVIA
Holdings, Inc.(a)
|
2,900
|
461,593
|
Pra
Health Sciences, Inc.(a)
|
20,400
|
2,038,164
|
Total
|
|
2,499,757
|
Pharmaceuticals
5.1%
|
Bristol-Myers
Squibb Co.
|
182,200
|
8,091,502
|
Eli
Lilly & Co.
|
59,500
|
6,482,525
|
Johnson
& Johnson
|
4,200
|
546,924
|
Merck
& Co., Inc.
|
103,200
|
8,564,568
|
Total
|
|
23,685,519
|
Total
Health Care
|
64,195,292
|
Industrials
9.9%
|
Aerospace
& Defense 2.8%
|
Boeing
Co. (The)
|
38,250
|
13,050,135
|
Airlines
1.7%
|
Southwest
Airlines Co.
|
150,500
|
7,755,265
|
Electrical
Equipment 1.6%
|
Hubbell,
Inc.
|
57,400
|
7,455,112
|
Industrial
Conglomerates 0.6%
|
3M
Co.
|
10,300
|
1,799,616
|
Honeywell
International, Inc.
|
4,300
|
741,578
|
Total
|
|
2,541,194
|
Machinery
1.6%
|
Allison
Transmission Holdings, Inc.
|
166,800
|
7,664,460
|
Professional
Services 1.4%
|
Robert
Half International, Inc.
|
109,400
|
6,608,854
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Road
& Rail 0.2%
|
CSX
Corp.
|
14,600
|
1,027,840
|
Total
Industrials
|
46,102,860
|
Information
Technology 37.5%
|
Communications
Equipment 2.0%
|
Cisco
Systems, Inc.
|
47,500
|
2,631,500
|
F5
Networks, Inc.(a)
|
45,000
|
6,602,400
|
Total
|
|
9,233,900
|
IT
Services 11.3%
|
MasterCard,
Inc., Class A
|
60,200
|
16,390,654
|
PayPal
Holdings, Inc.(a)
|
76,900
|
8,489,760
|
VeriSign,
Inc.(a)
|
43,500
|
9,182,415
|
Visa,
Inc., Class A
|
104,500
|
18,601,000
|
Total
|
|
52,663,829
|
Semiconductors
& Semiconductor Equipment 3.9%
|
Broadcom,
Inc.
|
35,500
|
10,294,645
|
Lam
Research Corp.
|
39,200
|
8,177,512
|
Total
|
|
18,472,157
|
Software
12.7%
|
Adobe,
Inc.(a)
|
44,700
|
13,359,042
|
Fortinet,
Inc.(a)
|
99,700
|
8,006,907
|
Intuit,
Inc.
|
15,800
|
4,381,498
|
Microsoft
Corp.
|
191,390
|
26,080,715
|
VMware,
Inc., Class A
|
42,900
|
7,485,621
|
Total
|
|
59,313,783
|
Technology
Hardware, Storage & Peripherals 7.6%
|
Apple,
Inc.(b)
|
167,977
|
35,785,820
|
Total
Information Technology
|
175,469,489
|
Materials
1.0%
|
Chemicals
0.6%
|
LyondellBasell
Industries NV, Class A
|
19,600
|
1,640,324
|
PPG
Industries, Inc.
|
10,900
|
1,279,551
|
Total
|
|
2,919,875
|
Containers
& Packaging 0.4%
|
Sealed
Air Corp.
|
48,200
|
2,014,278
|
Total
Materials
|
4,934,153
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Real
Estate 2.0%
|
Equity
Real Estate Investment Trusts (REITS) 1.9%
|
American
Tower Corp.
|
2,700
|
571,374
|
Simon
Property Group, Inc.
|
51,200
|
8,304,640
|
Total
|
|
8,876,014
|
Real
Estate Management & Development 0.1%
|
CBRE
Group, Inc., Class A(a)
|
8,900
|
471,789
|
Total
Real Estate
|
9,347,803
|
Total
Common Stocks
(Cost $315,701,885)
|
462,329,138
|
|
Money
Market Funds 0.9%
|
|
Shares
|
Value
($)
|
Columbia
Short-Term Cash Fund, 2.361%(c),(d)
|
4,190,808
|
4,190,389
|
Total
Money Market Funds
(Cost $4,190,389)
|
4,190,389
|
Total
Investments in Securities
(Cost: $319,892,274)
|
466,519,527
|
Other
Assets & Liabilities, Net
|
|
1,254,577
|
Net
Assets
|
467,774,104
|
At July 31, 2019, securities and/or cash totaling
$404,776 were pledged as collateral.
Investments in derivatives
Long
futures contracts
|
Description
|
Number
of
contracts
|
Expiration
date
|
Trading
currency
|
Notional
amount
|
Value/Unrealized
appreciation ($)
|
Value/Unrealized
depreciation ($)
|
S&P
500 E-mini
|
43
|
09/2019
|
USD
|
6,411,945
|
147,171
|
—
|
Notes to Portfolio of
Investments
(a)
|
Non-income
producing investment.
|
(b)
|
This
security or a portion of this security has been pledged as collateral in connection with derivative contracts.
|
(c)
|
The rate
shown is the seven-day current annualized yield at July 31, 2019.
|
(d)
|
As
defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and
transactions in these affiliated companies during the year ended July 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized
gain
(loss) —
affiliated
issuers ($)
|
Net
change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends
—
affiliated
issuers ($)
|
Value
—
affiliated
issuers
at end of
period ($)
|
Columbia
Short-Term Cash Fund, 2.361%
|
|
6,704,464
|
59,932,931
|
(62,446,587)
|
4,190,808
|
(369)
|
353
|
159,732
|
4,190,389
|
Abbreviation
Legend
ADR
|
American
Depositary Receipt
|
Currency Legend
Fair value
measurements
The Fund categorizes its fair
value measurements according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that
market participants would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants
would use in
The accompanying Notes to Financial Statements are an integral part of this
statement.
10
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Fair value
measurements (continued)
pricing an investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the
asset’s or liability’s fair value measurement. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high
quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed
below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
The following table is a summary of the
inputs used to value the Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Common
Stocks
|
|
|
|
|
Communication
Services
|
56,585,199
|
—
|
—
|
56,585,199
|
Consumer
Discretionary
|
68,346,439
|
—
|
—
|
68,346,439
|
Consumer
Staples
|
19,990,715
|
—
|
—
|
19,990,715
|
Energy
|
461,756
|
—
|
—
|
461,756
|
Financials
|
16,895,432
|
—
|
—
|
16,895,432
|
Health
Care
|
64,195,292
|
—
|
—
|
64,195,292
|
Industrials
|
46,102,860
|
—
|
—
|
46,102,860
|
Information
Technology
|
175,469,489
|
—
|
—
|
175,469,489
|
Materials
|
4,934,153
|
—
|
—
|
4,934,153
|
Real
Estate
|
9,347,803
|
—
|
—
|
9,347,803
|
Total
Common Stocks
|
462,329,138
|
—
|
—
|
462,329,138
|
Money
Market Funds
|
4,190,389
|
—
|
—
|
4,190,389
|
Total
Investments in Securities
|
466,519,527
|
—
|
—
|
466,519,527
|
Investments
in Derivatives
|
|
|
|
|
Asset
|
|
|
|
|
Futures
Contracts
|
147,171
|
—
|
—
|
147,171
|
Total
|
466,666,698
|
—
|
—
|
466,666,698
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
Derivative instruments are valued at unrealized appreciation
(depreciation).
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
11
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $315,701,885)
|
$462,329,138
|
Affiliated
issuers (cost $4,190,389)
|
4,190,389
|
Receivable
for:
|
|
Investments
sold
|
24,351,677
|
Capital
shares sold
|
136,847
|
Dividends
|
180,923
|
Prepaid
expenses
|
4,659
|
Total
assets
|
491,193,633
|
Liabilities
|
|
Payable
for:
|
|
Investments
purchased
|
22,715,730
|
Capital
shares purchased
|
489,852
|
Variation
margin for futures contracts
|
64,500
|
Management
services fees
|
9,741
|
Distribution
and/or service fees
|
1,418
|
Transfer
agent fees
|
28,170
|
Compensation
of board members
|
62,701
|
Other
expenses
|
47,417
|
Total
liabilities
|
23,419,529
|
Net
assets applicable to outstanding capital stock
|
$467,774,104
|
Represented
by
|
|
Paid
in capital
|
305,057,206
|
Total
distributable earnings (loss) (Note 2)
|
162,716,898
|
Total
- representing net assets applicable to outstanding capital stock
|
$467,774,104
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
12
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Statement of Assets and Liabilities (continued)
July 31, 2019
Class
A
|
|
Net
assets
|
$129,677,965
|
Shares
outstanding
|
14,039,801
|
Net
asset value per share
|
$9.24
|
Maximum
sales charge
|
5.75%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares)
|
$9.80
|
Advisor
Class
|
|
Net
assets
|
$8,471,446
|
Shares
outstanding
|
908,578
|
Net
asset value per share
|
$9.32
|
Class
C
|
|
Net
assets
|
$17,963,532
|
Shares
outstanding
|
2,062,439
|
Net
asset value per share
|
$8.71
|
Institutional
Class
|
|
Net
assets
|
$86,536,508
|
Shares
outstanding
|
9,248,269
|
Net
asset value per share
|
$9.36
|
Institutional
2 Class
|
|
Net
assets
|
$10,234,859
|
Shares
outstanding
|
1,054,036
|
Net
asset value per share
|
$9.71
|
Institutional
3 Class
|
|
Net
assets
|
$213,692,889
|
Shares
outstanding
|
22,597,451
|
Net
asset value per share
|
$9.46
|
Class
R
|
|
Net
assets
|
$1,196,905
|
Shares
outstanding
|
129,543
|
Net
asset value per share
|
$9.24
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
13
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Dividends
— unaffiliated issuers
|
$7,521,737
|
Dividends
— affiliated issuers
|
159,732
|
Total
income
|
7,681,469
|
Expenses:
|
|
Management
services fees
|
3,727,393
|
Distribution
and/or service fees
|
|
Class
A
|
318,664
|
Class
C
|
191,552
|
Class
R
|
6,401
|
Class
T
|
852
|
Transfer
agent fees
|
|
Class
A
|
156,336
|
Advisor
Class
|
9,899
|
Class
C
|
23,458
|
Institutional
Class
|
122,703
|
Institutional
2 Class
|
7,338
|
Institutional
3 Class
|
17,130
|
Class
R
|
1,569
|
Class
T
|
286
|
Compensation
of board members
|
19,311
|
Custodian
fees
|
9,838
|
Printing
and postage fees
|
36,727
|
Registration
fees
|
105,060
|
Audit
fees
|
38,201
|
Legal
fees
|
11,379
|
Compensation
of chief compliance officer
|
114
|
Other
|
17,184
|
Total
expenses
|
4,821,395
|
Fees
waived by transfer agent
|
|
Institutional
2 Class
|
(1,065)
|
Institutional
3 Class
|
(6,154)
|
Total
net expenses
|
4,814,176
|
Net
investment income
|
2,867,293
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
38,085,995
|
Investments
— affiliated issuers
|
(369)
|
Futures
contracts
|
133,087
|
Net
realized gain
|
38,218,713
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
(22,177,349)
|
Investments
— affiliated issuers
|
353
|
Futures
contracts
|
17,040
|
Net
change in unrealized appreciation (depreciation)
|
(22,159,956)
|
Net
realized and unrealized gain
|
16,058,757
|
Net
increase in net assets resulting from operations
|
$18,926,050
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
14
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$2,867,293
|
$1,748,306
|
Net
realized gain
|
38,218,713
|
62,274,666
|
Net
change in unrealized appreciation (depreciation)
|
(22,159,956)
|
38,459,757
|
Net
increase in net assets resulting from operations
|
18,926,050
|
102,482,729
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(15,543,057)
|
|
Advisor
Class
|
(990,383)
|
|
Class
C
|
(2,537,826)
|
|
Institutional
Class
|
(12,729,165)
|
|
Institutional
2 Class
|
(1,442,964)
|
|
Institutional
3 Class
|
(31,081,758)
|
|
Class
R
|
(155,458)
|
|
Class
T
|
(106,849)
|
|
Net
investment income
|
|
|
Class
A
|
|
(361,155)
|
Advisor
Class
|
|
(43,563)
|
Institutional
Class
|
|
(613,386)
|
Institutional
2 Class
|
|
(36,308)
|
Institutional
3 Class
|
|
(1,631,375)
|
Class
K
|
|
(13)
|
Class
R
|
|
(1,080)
|
Class
T
|
|
(3,203)
|
Net
realized gains
|
|
|
Class
A
|
|
(14,373,536)
|
Advisor
Class
|
|
(973,359)
|
Class
C
|
|
(2,895,576)
|
Institutional
Class
|
|
(13,608,326)
|
Institutional
2 Class
|
|
(711,732)
|
Institutional
3 Class
|
|
(29,985,515)
|
Class
K
|
|
(371)
|
Class
R
|
|
(168,850)
|
Class
T
|
|
(125,818)
|
Total
distributions to shareholders (Note 2)
|
(64,587,460)
|
(65,533,166)
|
Increase
(decrease) in net assets from capital stock activity
|
(50,318,285)
|
25,206,723
|
Total
increase (decrease) in net assets
|
(95,979,695)
|
62,156,286
|
Net
assets at beginning of year
|
563,753,799
|
501,597,513
|
Net
assets at end of year
|
$467,774,104
|
$563,753,799
|
Undistributed
net investment income
|
$2,017,657
|
$150,614
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
15
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
2,413,745
|
21,847,272
|
2,385,442
|
23,291,771
|
Distributions
reinvested
|
1,865,334
|
15,165,163
|
1,544,286
|
14,315,518
|
Redemptions
|
(3,167,852)
|
(28,430,278)
|
(3,034,710)
|
(29,559,995)
|
Net
increase
|
1,111,227
|
8,582,157
|
895,018
|
8,047,294
|
Advisor
Class
|
|
|
|
|
Subscriptions
|
126,630
|
1,202,963
|
649,051
|
6,411,056
|
Distributions
reinvested
|
119,994
|
983,949
|
109,075
|
1,016,580
|
Redemptions
|
(118,744)
|
(1,066,420)
|
(417,962)
|
(4,109,101)
|
Net
increase
|
127,880
|
1,120,492
|
340,164
|
3,318,535
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(271)
|
(2,617)
|
Net
decrease
|
—
|
—
|
(271)
|
(2,617)
|
Class
C
|
|
|
|
|
Subscriptions
|
412,096
|
3,538,204
|
384,389
|
3,582,053
|
Distributions
reinvested
|
306,358
|
2,362,024
|
300,503
|
2,677,479
|
Redemptions
|
(848,253)
|
(7,220,086)
|
(1,002,255)
|
(9,479,711)
|
Net
decrease
|
(129,799)
|
(1,319,858)
|
(317,363)
|
(3,220,179)
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
2,598,693
|
24,137,919
|
2,941,635
|
28,853,074
|
Distributions
reinvested
|
1,294,707
|
10,655,439
|
1,337,142
|
12,502,280
|
Redemptions
|
(6,714,956)
|
(61,550,755)
|
(3,670,884)
|
(35,855,261)
|
Net
increase (decrease)
|
(2,821,556)
|
(26,757,397)
|
607,893
|
5,500,093
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
239,238
|
2,238,686
|
808,401
|
8,113,798
|
Distributions
reinvested
|
169,121
|
1,442,605
|
77,478
|
747,665
|
Redemptions
|
(509,369)
|
(4,626,789)
|
(226,882)
|
(2,283,683)
|
Net
increase (decrease)
|
(101,010)
|
(945,498)
|
658,997
|
6,577,780
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
1,129,034
|
10,555,298
|
2,746,108
|
27,484,772
|
Distributions
reinvested
|
3,740,244
|
31,081,430
|
3,352,762
|
31,616,548
|
Redemptions
|
(8,099,895)
|
(71,824,528)
|
(5,394,632)
|
(53,956,478)
|
Net
increase (decrease)
|
(3,230,617)
|
(30,187,800)
|
704,238
|
5,144,842
|
Class
K
|
|
|
|
|
Redemptions
|
—
|
—
|
(304)
|
(3,045)
|
Net
decrease
|
—
|
—
|
(304)
|
(3,045)
|
Class
R
|
|
|
|
|
Subscriptions
|
57,210
|
521,137
|
82,084
|
790,977
|
Distributions
reinvested
|
10,065
|
82,029
|
7,516
|
69,972
|
Redemptions
|
(71,126)
|
(657,159)
|
(67,773)
|
(650,205)
|
Net
increase (decrease)
|
(3,851)
|
(53,993)
|
21,827
|
210,744
|
Class
T
|
|
|
|
|
Distributions
reinvested
|
12,987
|
106,491
|
13,789
|
128,650
|
Redemptions
|
(105,863)
|
(862,879)
|
(50,567)
|
(495,374)
|
Net
decrease
|
(92,876)
|
(756,388)
|
(36,778)
|
(366,724)
|
Total
net increase (decrease)
|
(5,140,602)
|
(50,318,285)
|
2,873,421
|
25,206,723
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
16
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia
Disciplined Growth Fund | Annual Report 2019
|
17
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of
period
|
Net
investment
income
(loss)
|
Net
realized
and
unrealized
gain
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$10.11
|
0.03
|
0.31
|
0.34
|
—
|
(1.21)
|
(1.21)
|
Year
Ended 7/31/2018
|
$9.50
|
0.01
|
1.85
|
1.86
|
(0.03)
|
(1.22)
|
(1.25)
|
Year
Ended 7/31/2017
|
$8.51
|
0.04
|
1.45
|
1.49
|
(0.04)
|
(0.46)
|
(0.50)
|
Year
Ended 7/31/2016
|
$9.39
|
0.04
|
0.20
|
0.24
|
(0.06)
|
(1.06)
|
(1.12)
|
Year
Ended 7/31/2015
|
$9.04
|
0.05
|
1.36
|
1.41
|
(0.03)
|
(1.03)
|
(1.06)
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$10.18
|
0.06
|
0.30
|
0.36
|
(0.01)
|
(1.21)
|
(1.22)
|
Year
Ended 7/31/2018
|
$9.56
|
0.03
|
1.87
|
1.90
|
(0.06)
|
(1.22)
|
(1.28)
|
Year
Ended 7/31/2017
|
$8.56
|
0.05
|
1.47
|
1.52
|
(0.06)
|
(0.46)
|
(0.52)
|
Year
Ended 7/31/2016
|
$9.43
|
0.04
|
0.23
|
0.27
|
(0.08)
|
(1.06)
|
(1.14)
|
Year
Ended 7/31/2015(d)
|
$9.33
|
(0.01)
|
0.11
|
0.10
|
—
|
—
|
—
|
Class
C
|
Year
Ended 7/31/2019
|
$9.67
|
(0.03)
|
0.28
|
0.25
|
—
|
(1.21)
|
(1.21)
|
Year
Ended 7/31/2018
|
$9.18
|
(0.06)
|
1.77
|
1.71
|
—
|
(1.22)
|
(1.22)
|
Year
Ended 7/31/2017
|
$8.26
|
(0.03)
|
1.41
|
1.38
|
—
|
(0.46)
|
(0.46)
|
Year
Ended 7/31/2016
|
$9.14
|
(0.02)
|
0.20
|
0.18
|
—
|
(1.06)
|
(1.06)
|
Year
Ended 7/31/2015
|
$8.86
|
(0.02)
|
1.33
|
1.31
|
—
|
(1.03)
|
(1.03)
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$10.21
|
0.06
|
0.31
|
0.37
|
(0.01)
|
(1.21)
|
(1.22)
|
Year
Ended 7/31/2018
|
$9.59
|
0.04
|
1.86
|
1.90
|
(0.06)
|
(1.22)
|
(1.28)
|
Year
Ended 7/31/2017
|
$8.58
|
0.05
|
1.48
|
1.53
|
(0.06)
|
(0.46)
|
(0.52)
|
Year
Ended 7/31/2016
|
$9.46
|
0.06
|
0.20
|
0.26
|
(0.08)
|
(1.06)
|
(1.14)
|
Year
Ended 7/31/2015
|
$9.09
|
0.07
|
1.39
|
1.46
|
(0.06)
|
(1.03)
|
(1.09)
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$10.55
|
0.07
|
0.32
|
0.39
|
(0.02)
|
(1.21)
|
(1.23)
|
Year
Ended 7/31/2018
|
$9.87
|
0.04
|
1.92
|
1.96
|
(0.06)
|
(1.22)
|
(1.28)
|
Year
Ended 7/31/2017
|
$8.82
|
0.06
|
1.52
|
1.58
|
(0.07)
|
(0.46)
|
(0.53)
|
Year
Ended 7/31/2016
|
$9.69
|
0.08
|
0.21
|
0.29
|
(0.10)
|
(1.06)
|
(1.16)
|
Year
Ended 7/31/2015
|
$9.30
|
0.03
|
1.46
|
1.49
|
(0.07)
|
(1.03)
|
(1.10)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
18
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income (loss)
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$9.24
|
4.98%
|
1.17%
|
1.17%
|
0.37%
|
78%
|
$129,678
|
Year
Ended 7/31/2018
|
$10.11
|
20.79%
|
1.17%
|
1.17%
(c)
|
0.12%
|
82%
|
$130,693
|
Year
Ended 7/31/2017
|
$9.50
|
18.37%
|
1.22%
|
1.20%
(c)
|
0.43%
|
81%
|
$114,369
|
Year
Ended 7/31/2016
|
$8.51
|
3.05%
|
1.27%
|
1.23%
|
0.46%
|
86%
|
$140,658
|
Year
Ended 7/31/2015
|
$9.39
|
16.41%
|
1.24%
|
1.24%
|
0.55%
|
102%
|
$247,170
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$9.32
|
5.17%
|
0.92%
|
0.92%
|
0.62%
|
78%
|
$8,471
|
Year
Ended 7/31/2018
|
$10.18
|
21.06%
|
0.92%
|
0.92%
(c)
|
0.34%
|
82%
|
$7,947
|
Year
Ended 7/31/2017
|
$9.56
|
18.68%
|
0.95%
|
0.94%
(c)
|
0.58%
|
81%
|
$4,213
|
Year
Ended 7/31/2016
|
$8.56
|
3.39%
|
1.02%
|
0.96%
|
0.53%
|
86%
|
$305
|
Year
Ended 7/31/2015(d)
|
$9.43
|
1.07%
|
1.05%
(e)
|
1.05%
(e)
|
(0.60%)
(e)
|
102%
|
$59
|
Class
C
|
Year
Ended 7/31/2019
|
$8.71
|
4.19%
|
1.92%
|
1.92%
|
(0.38%)
|
78%
|
$17,964
|
Year
Ended 7/31/2018
|
$9.67
|
19.77%
|
1.92%
|
1.92%
(c)
|
(0.62%)
|
82%
|
$21,203
|
Year
Ended 7/31/2017
|
$9.18
|
17.44%
|
1.96%
|
1.95%
(c)
|
(0.35%)
|
81%
|
$23,034
|
Year
Ended 7/31/2016
|
$8.26
|
2.43%
|
2.03%
|
1.97%
|
(0.25%)
|
86%
|
$19,878
|
Year
Ended 7/31/2015
|
$9.14
|
15.47%
|
1.99%
|
1.99%
|
(0.23%)
|
102%
|
$11,825
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$9.36
|
5.26%
|
0.92%
|
0.92%
|
0.61%
|
78%
|
$86,537
|
Year
Ended 7/31/2018
|
$10.21
|
20.99%
|
0.92%
|
0.92%
(c)
|
0.37%
|
82%
|
$123,250
|
Year
Ended 7/31/2017
|
$9.59
|
18.76%
|
0.95%
|
0.94%
(c)
|
0.56%
|
81%
|
$109,911
|
Year
Ended 7/31/2016
|
$8.58
|
3.30%
|
1.03%
|
0.96%
|
0.73%
|
86%
|
$23,950
|
Year
Ended 7/31/2015
|
$9.46
|
16.80%
|
1.00%
|
1.00%
|
0.76%
|
102%
|
$10,456
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$9.71
|
5.27%
|
0.86%
|
0.85%
|
0.70%
|
78%
|
$10,235
|
Year
Ended 7/31/2018
|
$10.55
|
21.10%
|
0.87%
|
0.85%
|
0.38%
|
82%
|
$12,184
|
Year
Ended 7/31/2017
|
$9.87
|
18.83%
|
0.87%
|
0.85%
|
0.69%
|
81%
|
$4,895
|
Year
Ended 7/31/2016
|
$8.82
|
3.49%
|
0.86%
|
0.84%
|
0.90%
|
86%
|
$2,620
|
Year
Ended 7/31/2015
|
$9.69
|
16.82%
|
0.86%
|
0.86%
|
0.33%
|
102%
|
$1,316
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
19
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
(loss)
|
Net
realized
and
unrealized
gain
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$10.31
|
0.07
|
0.31
|
0.38
|
(0.02)
|
(1.21)
|
(1.23)
|
Year
Ended 7/31/2018
|
$9.67
|
0.05
|
1.88
|
1.93
|
(0.07)
|
(1.22)
|
(1.29)
|
Year
Ended 7/31/2017
|
$8.65
|
0.06
|
1.50
|
1.56
|
(0.08)
|
(0.46)
|
(0.54)
|
Year
Ended 7/31/2016
|
$9.53
|
0.08
|
0.21
|
0.29
|
(0.11)
|
(1.06)
|
(1.17)
|
Year
Ended 7/31/2015(f)
|
$9.42
|
0.01
|
0.10
|
0.11
|
—
|
—
|
—
|
Class
R
|
Year
Ended 7/31/2019
|
$10.13
|
0.01
|
0.31
|
0.32
|
—
|
(1.21)
|
(1.21)
|
Year
Ended 7/31/2018
|
$9.53
|
(0.01)
|
1.84
|
1.83
|
(0.01)
|
(1.22)
|
(1.23)
|
Year
Ended 7/31/2017
|
$8.53
|
0.01
|
1.47
|
1.48
|
(0.02)
|
(0.46)
|
(0.48)
|
Year
Ended 7/31/2016
|
$9.41
|
0.02
|
0.20
|
0.22
|
(0.04)
|
(1.06)
|
(1.10)
|
Year
Ended 7/31/2015
|
$9.05
|
0.02
|
1.38
|
1.40
|
(0.01)
|
(1.03)
|
(1.04)
|
Notes
to Financial Highlights
|
(a)
|
In
addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense
ratios.
|
(b)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(c)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
(d)
|
Advisor
Class shares commenced operations on June 1, 2015. Per share data and total return reflect activity from that date.
|
(e)
|
Annualized.
|
(f)
|
Institutional
3 Class shares commenced operations on June 1, 2015. Per share data and total return reflect activity from that date.
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
20
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income (loss)
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$9.46
|
5.35%
|
0.80%
|
0.80%
|
0.75%
|
78%
|
$213,693
|
Year
Ended 7/31/2018
|
$10.31
|
21.17%
|
0.81%
|
0.80%
|
0.49%
|
82%
|
$266,180
|
Year
Ended 7/31/2017
|
$9.67
|
18.91%
|
0.81%
|
0.81%
|
0.62%
|
81%
|
$242,867
|
Year
Ended 7/31/2016
|
$8.65
|
3.54%
|
0.81%
|
0.79%
|
0.92%
|
86%
|
$6
|
Year
Ended 7/31/2015(f)
|
$9.53
|
1.17%
|
0.75%
(e)
|
0.75%
(e)
|
0.64%
(e)
|
102%
|
$3
|
Class
R
|
Year
Ended 7/31/2019
|
$9.24
|
4.74%
|
1.42%
|
1.42%
|
0.12%
|
78%
|
$1,197
|
Year
Ended 7/31/2018
|
$10.13
|
20.32%
|
1.42%
|
1.42%
(c)
|
(0.13%)
|
82%
|
$1,352
|
Year
Ended 7/31/2017
|
$9.53
|
18.18%
|
1.46%
|
1.44%
(c)
|
0.11%
|
81%
|
$1,063
|
Year
Ended 7/31/2016
|
$8.53
|
2.77%
|
1.53%
|
1.47%
|
0.23%
|
86%
|
$459
|
Year
Ended 7/31/2015
|
$9.41
|
16.22%
|
1.49%
|
1.49%
|
0.20%
|
102%
|
$96
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
21
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Disciplined Growth Fund (the Fund), a series of
Columbia Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business
trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Advisor Class, Institutional Class, Institutional 2 Class, Institutional 3 Class and Class R shares are available for purchase through authorized investment professionals to omnibus
retirement plans or to institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years. Effective December 14, 2018, Class T shares merged, in a
tax-free transaction, into Class A shares of the Fund and are no longer offered for sale.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
All equity securities are valued at the close of business of
the New York Stock Exchange. Equity securities are valued at the official closing price on the principal exchange or market on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the
mean of the latest quoted bid and ask prices on such exchanges or markets.
Foreign equity securities are valued based on the closing
price on the foreign exchange in which such securities are primarily traded. If any foreign equity security closing prices are not readily available, the securities are valued at the mean of the latest quoted bid and ask prices on such exchanges or
markets. Foreign currency exchange rates are determined at the scheduled closing time of the New York Stock Exchange. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange; therefore, the
closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. In those situations, foreign securities will be fair valued pursuant to
a policy adopted by the Board of Trustees, including, if available, utilizing a third party pricing service to determine these fair values. The third-party pricing service takes into account multiple factors, including, but not limited to, movements
in the U.S. securities markets, certain depositary receipts, futures contracts and foreign exchange rates that have occurred subsequent to the close of the foreign exchange or market, to determine a good faith estimate that reasonably reflects the
current market conditions as of the close of the New York Stock Exchange. The fair value of a security is likely to be different from the quoted or published price, if available.
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
22
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Futures and options on futures contracts are valued based upon
the settlement price at the close of regular trading on their principal exchanges or, in the absence of transactions, at the mean of the latest quoted bid and ask prices.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Derivative instruments
The Fund invests in certain derivative instruments, as
detailed below, to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more securities, currencies, commodities, indices, or other assets or instruments.
Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to
pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including
the potential inability of the counterparty to fulfill its obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the
potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial
statements.
A derivative instrument may suffer a
marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its obligations under the contract. The
Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund and the amount of any variation margin held by the
counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk to the Fund since the clearinghouse or central counterparty (CCP) provides some protection
in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract; therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in
exchange-traded or centrally cleared derivatives with respect to initial and variation margin that is held in a broker’s customer account. While brokers are required to segregate customer margin from their own assets, in the event that a
broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across
all the broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its contractual rights and to secure
rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivatives contract
counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a
default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative instrument’s payables and/or receivables with collateral held and/or posted and create
one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
23
|
Notes to Financial Statements (continued)
July 31, 2019
Collateral (margin) requirements differ by type of derivative.
Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain circumstances. Collateral terms for most over-the-counter
derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral
requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally,
the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (e.g., $250,000) before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized,
contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any interest expense paid by the Fund is shown on the Statement of
Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those
counterparties.
Certain ISDA Master Agreements allow
counterparties of over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified time period or if the Fund fails to meet
certain terms of the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination rights if the counterparty fails to meet certain terms of the ISDA Master
Agreement. In determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk, whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes, the Fund does not offset
derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are exchange-traded and represent
commitments for the future purchase or sale of an asset at a specified price on a specified date. The Fund bought and sold futures contracts to maintain appropriate equity market exposure while keeping sufficient cash to accommodate daily
redemptions. These instruments may be used for other purposes in future periods. Upon entering into futures contracts, the Fund bears risks that it may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional
risks include counterparty credit risk, the possibility of an illiquid market, and that a change in the value of the contract or option may not correlate with changes in the value of the underlying asset.
Upon entering into a futures contract, the Fund deposits cash
or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be maintained at an established level over the life of the contract. Cash
deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are designated in the Portfolio of Investments. Subsequent payments (variation margin) are made or received
by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund recognizes a realized gain or
loss when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Effects of derivative transactions in the financial
statements
The following tables are intended to provide
additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the
impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules following the Portfolio of Investments present additional information regarding
derivative instruments outstanding at the end of the period, if any.
24
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
following table is a summary of the fair value of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) at July 31, 2019:
|
Asset
derivatives
|
|
Risk
exposure
category
|
Statement
of assets and liabilities
location
|
Fair
value ($)
|
Equity
risk
|
Component
of total distributable earnings (loss) — unrealized appreciation on futures contracts
|
147,171*
|
*
|
Includes
cumulative appreciation (depreciation) as reported in the tables following the Portfolio of Investments. Only the current day’s variation margin is reported in receivables or payables in the Statement of Assets and Liabilities.
|
The following table indicates the
effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended July 31, 2019:
Amount
of realized gain (loss) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Equity
risk
|
133,087
|
|
Change
in unrealized appreciation (depreciation) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Equity
risk
|
17,040
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended July 31, 2019:
Derivative
instrument
|
Average
notional
amounts ($)*
|
Futures
contracts — long
|
7,281,653
|
*
|
Based on
the ending quarterly outstanding amounts for the year ended July 31, 2019.
|
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Corporate actions and dividend income are generally recorded
net of any non-reclaimable tax withholdings, on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities.
The Fund may receive distributions from holdings in equity
securities, business development companies (BDCs), exchange-traded funds (ETFs), limited partnerships (LPs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information on the tax character of
their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. Return of capital is recorded as a reduction of the cost basis of securities held. If the
Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. With respect to REITs, to the extent actual information has not yet been reported, estimates for return of capital are made by the Fund’s
management. Management’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a proportionate change in return of capital to shareholders.
Awards from class action litigation are recorded as a
reduction of cost basis if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
25
|
Notes to Financial Statements (continued)
July 31, 2019
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Distributions to shareholders
Distributions from net investment income, if any, are declared
and paid annually. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods beginning after December 15, 2019 and interim periods within
those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a result of the amendments, management implemented disclosure
changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the level 3 valuation
processes, as well as modifications to the measurement uncertainty disclosure.
26
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.75% to 0.55% as the Fund’s net assets increase. The
effective management services fee rate for the year ended July 31, 2019 was 0.75% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transactions with affiliates
For the year ended July 31, 2019, the Fund engaged in purchase
and/or sale transactions with affiliates and/or accounts that have a common investment manager (or affiliated investment managers), common directors/trustees, and/or common officers. Those purchase and sale transactions complied with provisions of
Rule 17a-7 under the 1940 Act and were $0 and $11,068,417, respectively. The sale transactions resulted in a net realized loss of $89,556.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
Columbia
Disciplined Growth Fund | Annual Report 2019
|
27
|
Notes to Financial Statements (continued)
July 31, 2019
The
Fund pays the Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of
accounts or on a percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to
time.
The Transfer Agent also receives compensation from
the Fund for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class. In addition, effective December 1, 2018 through November 30, 2019, Institutional 2 Class shares are subject to a contractual transfer agency fee annual limitation of not
more than 0.06% of the average daily net assets attributable to Institutional 2 Class shares. Prior to December 1, 2018, Institutional 2 Class shares were subject to a contractual transfer agency fee annual limitation of not more than 0.05% and
Institutional 3 Class shares were subject to a contractual transfer agency fee annual limitation of not more than 0.00% of the average daily net assets attributable to each share class.
For the year ended July 31, 2019, the Fund’s effective
transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.12
|
Advisor
Class
|
0.12
|
Class
C
|
0.12
|
Institutional
Class
|
0.12
|
Institutional
2 Class
|
0.06
|
Institutional
3 Class
|
0.00
|
Class
R
|
0.12
|
Class
T
|
0.03
(a)
|
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at the maximum annual rates of up to 0.25%, 1.00%, 0.50% and 0.25% of the Fund’s average daily net assets attributable to Class A, Class C, Class R and Class T shares, respectively. For Class C shares, of the 1.00% fee, up to 0.75%
can be reimbursed for distribution expenses and up to an additional 0.25% can be reimbursed for shareholder servicing expenses. For Class R shares, of the 0.50% fee, up to 0.25% can be reimbursed for shareholder servicing expenses. For Class T
shares, of the 0.25% fee, up to 0.25% can be reimbursed for distribution and/or shareholder servicing expenses. As a result of all Class T shares of the Fund being redeemed or converted to Class A shares, December 14, 2018 was the last day the Fund
paid a distribution and shareholder services fee for Class T shares.
The amount of distribution and shareholder services expenses
incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $59,000 for Class C shares. This amount is based on the most recent information available as of June 30, 2019, and may be recovered from future payments
under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
28
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Sales
charges (unaudited)
Sales charges, including front-end
charges and CDSCs, received by the Distributor for distributing Fund shares for the year ended July 31, 2019, if any, are listed below:
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
5.75
|
0.50 - 1.00
(a)
|
264,435
|
Class
C
|
—
|
1.00
(b)
|
1,089
|
Class
T
|
2.50
|
—
|
—
|
(a)
|
This
charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months after purchase, as follows: 1.00% if redeemed within 12 months after 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 12 months after purchase, with certain limited exceptions.
|
The Fund’s other share classes are not subject to sales
charges.
Expenses waived/reimbursed by the Investment
Manager and its affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of
Trustees, 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 following annual rate(s) as a
percentage of the class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to
December 1, 2018
|
Class
A
|
1.19%
|
1.19%
|
Advisor
Class
|
0.94
|
0.94
|
Class
C
|
1.94
|
1.94
|
Institutional
Class
|
0.94
|
0.94
|
Institutional
2 Class
|
0.88
|
0.87
|
Institutional
3 Class
|
0.83
|
0.82
|
Class
R
|
1.44
|
1.44
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), 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, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Reflected in the contractual cap commitment, effective December 1, 2018
through November 30, 2019, is the Transfer Agent’s contractual agreement to limit total transfer agency fees to an annual rate of not more than 0.06% for Institutional 2 Class of the average daily net assets attributable to that share class,
unless sooner terminated at the sole discretion of the Board of Trustees. Reflected in the contractual cap commitment, prior to December 1, 2018 is the Transfer Agent’s contractual agreement to limit total transfer agency fees to an annual
rate of not more than 0.05% for Institutional 2 Class and 0.00% for Institutional 3 Class of the average daily net assets attributable to each share class. Any fees waived and/or expenses reimbursed under the expense reimbursement arrangements
described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
29
|
Notes to Financial Statements (continued)
July 31, 2019
At
July 31, 2019, these differences were primarily due to differing treatment for deferral/reversal of wash sale losses, re-characterization of distributions for investments, derivative investments, post-October capital losses, trustees’ deferred
compensation, earnings and profits distributed to shareholders on the redemption of shares and investments in partnerships. To the extent these differences were permanent, reclassifications were made among the components of the Fund’s net
assets. Temporary differences do not require reclassifications.
The following reclassifications were made:
Undistributed
net
investment
income ($)
|
Accumulated
net realized
gain ($)
|
Paid
in
capital ($)
|
(276,441)
|
(4,137,591)
|
4,414,032
|
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification.
The tax character of distributions paid during the years
indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
17,027,095
|
47,560,365
|
64,587,460
|
17,974,947
|
47,558,219
|
65,533,166
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At July 31, 2019, the components of distributable earnings on
a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
appreciation ($)
|
2,079,822
|
31,715,527
|
—
|
145,807,899
|
At July 31, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
appreciation ($)
|
320,858,799
|
153,141,816
|
(7,333,917)
|
145,807,899
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
Under current tax rules, regulated investment companies can
elect to treat certain late-year ordinary losses incurred and post-October capital losses (capital losses realized after October 31) as arising on the first day of the following taxable year. As of July 31, 2019, the Fund will elect to treat the
following late-year ordinary losses and post-October capital losses as arising on August 1, 2019.
Late
year
ordinary losses ($)
|
Post-October
capital losses ($)
|
—
|
16,824,185
|
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
30
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Note 5. Portfolio information
The cost of purchases and proceeds from sales of securities,
excluding short-term investments and derivatives, if any, aggregated to $388,849,050 and $499,326,245, respectively, for the year ended July 31, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the
Financial Highlights.
Note 6. Affiliated money
market fund
The Fund invests in Columbia Short-Term
Cash Fund, an affiliated money market fund established for the exclusive use by the Fund and other affiliated funds (the Affiliated MMF). The income earned by the Fund from such investments is included as Dividends - affiliated issuers in the
Statement of Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of the Affiliated MMF. The Affiliated MMF prices its shares with a floating net asset value. In addition, the Board of Trustees of the
Affiliated MMF may impose a fee on redemptions (sometimes referred to as a liquidity fee) or temporarily suspend redemptions (sometimes referred to as imposing a redemption gate) in the event its liquidity falls below regulatory limits.
Note 7. Interfund lending
Pursuant to an exemptive order granted by the Securities and
Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds, borrow money
directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended July 31, 2019.
Note
8. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion.
Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each
borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment
fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
Note 9. Significant risks
Shareholder concentration risk
At July 31, 2019, affiliated shareholders of record owned
69.4% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced
to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased
operating expenses for non-redeeming Fund shareholders.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
31
|
Notes to Financial Statements (continued)
July 31, 2019
Technology and technology-related investment risk
The Fund may be more susceptible to the particular risks that
may affect companies in the information technology sector, 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.
Note 10. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 11. Information regarding pending and settled
legal proceedings
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (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 Fund. Further, although we believe proceedings are not 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, 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.
32
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Disciplined Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Disciplined Growth Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of operations for
the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
33
|
Federal Income Tax Information
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended July 31, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
Qualified
dividend
income
|
Dividends
received
deduction
|
Capital
gain
dividend
|
40.85%
|
38.99%
|
$56,211,387
|
Qualified dividend income. For
taxable, non-corporate shareholders, the percentage of ordinary income distributed during the fiscal year that represents qualified dividend income subject to reduced tax rates.
Dividends received deduction. The percentage of ordinary
income distributed during the fiscal year that qualifies for the corporate dividends received deduction.
Capital gain dividend. The Fund designates as a capital gain
dividend the amount reflected above, or if subsequently determined to be different, the net capital gain of such fiscal period.
34
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
Columbia
Disciplined Growth Fund | Annual Report 2019
|
35
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
36
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
Columbia
Disciplined Growth Fund | Annual Report 2019
|
37
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
38
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
Columbia
Disciplined Growth Fund | Annual Report 2019
|
39
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Disciplined Growth Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management Investment
Distributors, Inc. (collectively, the Funds).
On an
annual basis, the Fund’s Board of Trustees (the Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its
Contracts Committee in November 2018 and January, March, April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive
response to items of information requested by independent legal counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented
at these meetings were first supplied in draft form to designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who
is an Independent Trustee), and the final materials were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets
with portfolio management teams and senior management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the
work, deliberations and conclusions of the various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
40
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group, the product score of the
Fund (taking into account performance relative to peers and benchmarks) and the net assets of the Fund. The Board observed that the Fund’s investment performance was understandable in light of the particular management style involved and the
particular market environment.
Comparative fees, costs
of services provided and the profits realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability.
The Board considered the reports of its independent fee
consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to industry competitors,
the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of the level of fees is to
achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the "pricing philosophy"
currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s total expense ratio
(after considering proposed expense caps/waivers) approximated the median ratio. Based on its review, the Board concluded that the Fund’s management fee was fair and reasonable in light of the extent and quality of services that the Fund
receives.
The Board also considered the profitability of
Columbia Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the Profitability Report, discussing the
profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was reasonable and that the 2019 information shows
that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle profitability relative to industry competitors was
reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced ability to offer various other financial products to
Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Fund should permit the Investment Manager to offer competitive compensation to its personnel, make necessary
investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
Columbia
Disciplined Growth Fund | Annual Report 2019
|
41
|
Approval of Management Agreement (continued)
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
42
|
Columbia Disciplined Growth
Fund | Annual Report 2019
|
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT filings are available on the SEC’s website at
sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Columbia
Disciplined Growth Fund | Annual Report 2019
|
43
|
Columbia Disciplined Growth Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Annual
Report
July 31, 2019
Columbia Disciplined Value Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
5
|
|
7
|
|
8
|
|
13
|
|
15
|
|
16
|
|
18
|
|
22
|
|
33
|
|
34
|
|
35
|
|
40
|
|
43
|
Columbia Disciplined Value Fund | Annual Report 2019
Investment objective
Columbia Disciplined Value Fund (the
Fund) seeks to provide shareholders with long-term capital growth.
Portfolio
management
Brian Condon, CFA,
CAIA
Co-Portfolio
Manager
Managed Fund
since 2010
Peter
Albanese
Co-Portfolio
Manager
Managed Fund
since 2014
Morningstar
style boxTM
The Morningstar
Style Box is based on a fund’s portfolio holdings. For equity funds, the vertical axis shows the market capitalization of the stocks owned, and the horizontal axis shows investment style (value, blend, or growth). Information shown is based on
the most recent data provided by Morningstar.
© 2019
Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely.
Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
Excluding
sales charges
|
08/01/08
|
-0.87
|
6.99
|
12.28
|
|
Including
sales charges
|
|
-6.57
|
5.73
|
11.62
|
Advisor
Class*
|
06/01/15
|
-0.57
|
7.23
|
12.40
|
Class
C
|
Excluding
sales charges
|
08/01/08
|
-1.66
|
6.19
|
11.42
|
|
Including
sales charges
|
|
-2.55
|
6.19
|
11.42
|
Institutional
Class*
|
09/27/10
|
-0.57
|
7.28
|
12.53
|
Institutional
2 Class*
|
06/01/15
|
-0.44
|
7.31
|
12.44
|
Institutional
3 Class*
|
06/01/15
|
-0.37
|
7.37
|
12.47
|
Class
R
|
08/01/08
|
-1.05
|
6.74
|
11.98
|
Class
V*
|
Excluding
sales charges
|
03/07/11
|
-0.87
|
7.00
|
12.24
|
|
Including
sales charges
|
|
-6.58
|
5.75
|
11.58
|
Russell
1000 Value Index
|
|
5.20
|
8.01
|
12.40
|
Returns for Class A and Class V
shares are shown with and without the maximum initial sales charge of 5.75%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not
subject to sales charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results
shown assume reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee
waivers or reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. Since the Fund launched more than one share class at its
inception, Class A shares were used. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit
columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
The Russell 1000 Value Index, an unmanaged index, measures the
performance of those stocks in the Russell 1000 Index with lower price-to-book ratios and lower forecasted growth values.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
Columbia
Disciplined Value Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a
hypothetical $10,000 investment (July 31, 2009 — July 31, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Disciplined Value Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the
redemption of Fund shares.
Top
10 holdings (%) (at July 31, 2019)
|
Verizon
Communications, Inc.
|
3.4
|
Citigroup,
Inc.
|
3.1
|
Honeywell
International, Inc.
|
2.2
|
Home
Depot, Inc. (The)
|
2.1
|
ConocoPhillips
Co.
|
2.1
|
Baxter
International, Inc.
|
2.0
|
Intercontinental
Exchange, Inc.
|
2.0
|
Comcast
Corp., Class A
|
2.0
|
Chevron
Corp.
|
2.0
|
Bristol-Myers
Squibb Co.
|
2.0
|
Percentages indicated are based
upon total investments excluding Money Market Funds and investments in derivatives, if any.
For further detail about these holdings, please refer to the
section entitled “Portfolio of Investments.”
Fund holdings are as of the date given, are subject to change
at any time, and are not recommendations to buy or sell any security.
Portfolio
breakdown (%) (at July 31, 2019)
|
Common
Stocks
|
98.9
|
Money
Market Funds
|
1.1
|
Total
|
100.0
|
Percentages indicated are based
upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
Equity
sector breakdown (%) (at July 31, 2019)
|
Communication
Services
|
7.5
|
Consumer
Discretionary
|
5.5
|
Consumer
Staples
|
9.2
|
Energy
|
8.7
|
Financials
|
23.9
|
Health
Care
|
13.2
|
Industrials
|
9.8
|
Information
Technology
|
6.6
|
Materials
|
4.3
|
Real
Estate
|
4.7
|
Utilities
|
6.6
|
Total
|
100.0
|
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
4
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Manager Discussion of Fund Performance
At July
31, 2019, approximately 62.65% of the Fund’s shares were owned in the aggregate by affiliated funds-of-funds managed by Columbia Management Investment Advisers, LLC (the Investment Manager). As a result of asset allocation decisions by the
Investment Manager, it is possible that the Fund may experience relatively large purchases or redemptions from affiliated funds-of-funds. The Investment Manager seeks to minimize the impact of these transactions by structuring them over a reasonable
period of time. The Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds.
For the 12-month period that ended July 31, 2019, the
Fund’s Class A shares returned -0.87% excluding sales charges. The Fund’s returns underperformed its benchmark, the Russell 1000 Value Index, which rose 5.20% for the same time period. The Fund’s relative results can be attributed
primarily to stock selection.
U.S. equity markets
advanced despite heightened volatility
As the annual
period began in August 2018, U.S. equity markets were continuing their climb from earlier in the year, supported by a growing U.S. economy and strong corporate earnings, each in turn fueled in large part by December 2017’s tax reform
legislation. The U.S. equity market rally came to an end in the fourth quarter of 2018, as investors grappled with the U.S. Federal Reserve (the Fed) continuing to raise interest rates, the sharp slowdown in eurozone business confidence, weaker
economic growth in China and heightened geopolitical concerns, including trade and tariff tensions. Long dormant volatility spiked, and U.S. equity markets declined precipitously in the final weeks of the calendar year. This sharp sell-off then set
the stage for the nearly equally dramatic rally in the first quarter of 2019, as much of the ground lost in December 2018 was retraced. Following a relative calm in ongoing U.S.-China trade negotiations, volatility then returned in the second
quarter of 2019 amid signs that trade talks had soured. Offsetting this disappointment was the apparent change in the stance of the Fed, which had adopted a more dovish posture with respect to the direction of interest rates, a shift much applauded
by the U.S. equity markets. On July 31, 2019, the Fed lowered interest rates for the first time since 2008 to help stave off the possibility of an economic downturn.
For the reporting period overall, growth strategies
significantly outperformed value strategies across the capitalization spectrum.
Large-cap stocks led market higher
Generally, the U.S. equity markets tended to favor
capitalization during the period, as large-cap stocks significantly outperformed their smaller cap counterparts. The Russell 1000 Index returned 8.00% compared to the -4.42% return of the Russell 2000 Index for the period. Stocks characterized by
low beta, low dividend yield and low volatility were also in favor during the period. Conversely, higher yielding stocks, high-growth stocks and stocks with relatively high beta were out of favor during the period, as was the liquidity factor.
Our stock selection model performed weakly during the period.
We divide the metrics for our stock selection model into three broad categories: valuation, catalyst and quality. We then rank the securities within a sector/industry from “1” (most attractive) to “5” (least attractive) based
upon the metrics within these categories. During the period, the valuation and quality models were particularly weak during the period, while the catalyst model outperformed the benchmark, showing some signs of strength toward the end of the period.
Notably, the valuation model was in the second-worst drawdown in the 16-year history of our proprietary models during the period. Emphasizing inexpensive and high-quality stocks is a key part of our investment strategy, and, despite this period of
underperformance, we currently remain committed to this strategy, maintaining a long-term perspective.
Stock selection overall detracted from returns
As usual, the Fund maintained a relatively neutral stance on
sector allocation, though sector allocation did detract modestly from relative performance during the period. Stock selection overall detracted most from the Fund’s performance relative to the benchmark. Stock selection in the real estate,
consumer discretionary and industrials sectors hurt the Fund’s relative performance most.
Columbia
Disciplined Value Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance (continued)
Among the Fund’s greatest individual detractors were its
underweight in Procter & Gamble and its overweights in Valero Energy and Bristol-Myers Squibb. The Fund’s underweight in Procter & Gamble detracted, as the consumer goods giant delivered solid results throughout the period. Oil refiner
Valero Energy’s stock traded lower through the period in concert with falling energy commodity prices. Pharmaceuticals company Bristol-Myers Squibb saw its shares lose ground as its lung cancer drug, Opdivo, experienced mixed clinical results,
while Merck’s competing lung cancer drug, Keytruda, delivered more favorable newsflow.
Information technology stock selection boosted returns
Stock selection in the information technology sector
contributed positively to the Fund’s relative performance during the period.
Among the individual stocks contributing most to relative
performance were Cisco Systems, Inc., Pfizer, Inc. and QUALCOMM. Shares of Cisco Systems outperformed the benchmark during the period, leveraging its position as the world’s leading networking vendor to expand into security, collaboration and
management. The company also saw strength in its campus switching upgrade cycle. Pharmaceuticals company Pfizer saw its shares gain, as it delivered better than consensus expected earnings throughout the period based on higher than anticipated
revenues from some of its legacy drugs, including Lipitor, Lyrica and Prevna. Semiconductor company QUALCOMM’s shares traded higher after settling ongoing lawsuits with Apple, putting an end to the major legal battle that saw the two
technology giants suing one another across the globe. As part of the settlement, Apple will make a payment to QUALCOMM for an undisclosed amount. Additionally, the companies reached a six-year global patent licensing agreement, which may be extended
for another two years.
Portfolio construction process
guided investment changes
While there were some
changes in sector allocations and individual security positions during the period as a result of the Fund’s bottom-up stock selection process, all changes were quite modest, as we maintained our sector neutral investment approach. Within our
stock selection model, we replaced the Credit Suisse HOLT Adjusted Value Target signal in all 11 sector models with other value factors and bolstered many investment themes with complementary and efficacious indicators. The updated models are more
diversified with the goal of exhibiting better consistency of performance in different market regimes. We also completed a full review of our utilities sector models and put more emphasis on forward-looking valuation multiples, dividend growth, cash
flow generation and business momentum. Finally, we adjusted factors to handle quarterly cash flow numbers for managed care companies which are intended to improve stability and comparability.
Derivative positions in the Fund
The Fund used index futures to equitize cash during the
period. On a stand-alone basis, the use of index futures had a positive effect on results during the period.
Market risk may affect a single
issuer, sector of the economy, industry or the market as a whole. Value securities may be unprofitable if the market fails to recognize their intrinsic worth or the portfolio manager misgauged that worth.
Investing in derivatives is a specialized activity that involves special risks, which may result in significant losses. The Fund may invest significantly in issuers within a particular sector, which may be negatively affected by market, economic or other conditions, making the Fund more vulnerable to unfavorable developments in the sector. See the Fund’s prospectus for more information on these and
other risks.
The views expressed in this report
reflect the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly
from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment
advice and, because investment decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed
as a recommendation or investment advice.
6
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,043.30
|
1,019.09
|
5.83
|
5.76
|
1.15
|
Advisor
Class
|
1,000.00
|
1,000.00
|
1,045.10
|
1,020.33
|
4.56
|
4.51
|
0.90
|
Class
C
|
1,000.00
|
1,000.00
|
1,040.00
|
1,015.37
|
9.61
|
9.49
|
1.90
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,045.10
|
1,020.33
|
4.56
|
4.51
|
0.90
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,046.30
|
1,021.03
|
3.86
|
3.81
|
0.76
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,046.20
|
1,021.27
|
3.60
|
3.56
|
0.71
|
Class
R
|
1,000.00
|
1,000.00
|
1,043.20
|
1,017.85
|
7.09
|
7.00
|
1.40
|
Class
V
|
1,000.00
|
1,000.00
|
1,043.50
|
1,019.09
|
5.83
|
5.76
|
1.15
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
Columbia
Disciplined Value Fund | Annual Report 2019
|
7
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Common
Stocks 98.8%
|
Issuer
|
Shares
|
Value
($)
|
Communication
Services 7.4%
|
Diversified
Telecommunication Services 5.2%
|
AT&T,
Inc.
|
394,500
|
13,432,725
|
Verizon
Communications, Inc.
|
427,900
|
23,650,033
|
Total
|
|
37,082,758
|
Media
2.2%
|
Comcast
Corp., Class A
|
325,200
|
14,038,884
|
Sinclair
Broadcast Group, Inc., Class A
|
28,400
|
1,427,100
|
Total
|
|
15,465,984
|
Total
Communication Services
|
52,548,742
|
Consumer
Discretionary 5.4%
|
Auto
Components 1.3%
|
Gentex
Corp.
|
82,800
|
2,270,376
|
Lear
Corp.
|
54,300
|
6,884,154
|
Total
|
|
9,154,530
|
Diversified
Consumer Services 1.5%
|
H&R
Block, Inc.
|
383,200
|
10,610,808
|
Specialty
Retail 2.6%
|
Advance
Auto Parts, Inc.
|
8,200
|
1,235,248
|
AutoZone,
Inc.(a)
|
2,300
|
2,582,992
|
Home
Depot, Inc. (The)
|
69,100
|
14,765,979
|
Total
|
|
18,584,219
|
Total
Consumer Discretionary
|
38,349,557
|
Consumer
Staples 9.1%
|
Food
& Staples Retailing 3.7%
|
Walgreens
Boots Alliance, Inc.
|
233,900
|
12,745,211
|
Walmart,
Inc.
|
122,500
|
13,521,550
|
Total
|
|
26,266,761
|
Food
Products 0.5%
|
General
Mills, Inc.
|
73,200
|
3,887,652
|
Household
Products 3.1%
|
Kimberly-Clark
Corp.
|
101,100
|
13,714,215
|
Procter
& Gamble Co. (The)
|
67,200
|
7,932,288
|
Total
|
|
21,646,503
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Tobacco
1.8%
|
Philip
Morris International, Inc.
|
151,600
|
12,675,276
|
Total
Consumer Staples
|
64,476,192
|
Energy
8.7%
|
Energy
Equipment & Services 0.2%
|
Schlumberger
Ltd.
|
26,700
|
1,067,199
|
Oil,
Gas & Consumable Fuels 8.5%
|
Chevron
Corp.
|
113,000
|
13,911,430
|
ConocoPhillips
Co.
|
243,700
|
14,397,796
|
EOG
Resources, Inc.
|
35,700
|
3,064,845
|
Exxon
Mobil Corp.(b)
|
77,300
|
5,748,028
|
Marathon
Petroleum Corp.
|
86,900
|
4,900,291
|
PBF
Energy, Inc., Class A
|
258,100
|
7,208,733
|
Valero
Energy Corp.
|
129,800
|
11,065,450
|
Total
|
|
60,296,573
|
Total
Energy
|
61,363,772
|
Financials
23.6%
|
Banks
9.2%
|
Bank
of America Corp.
|
451,500
|
13,852,020
|
Citigroup,
Inc.
|
306,700
|
21,824,772
|
JPMorgan
Chase & Co.
|
65,100
|
7,551,600
|
Popular,
Inc.
|
220,700
|
12,703,492
|
Wells
Fargo & Co.
|
100,400
|
4,860,364
|
Zions
Bancorp
|
95,200
|
4,290,664
|
Total
|
|
65,082,912
|
Capital
Markets 3.1%
|
Bank
of New York Mellon Corp. (The)
|
76,600
|
3,594,072
|
Franklin
Resources, Inc.
|
138,900
|
4,532,307
|
Intercontinental
Exchange, Inc.
|
161,400
|
14,180,604
|
Total
|
|
22,306,983
|
Consumer
Finance 3.1%
|
Ally
Financial, Inc.
|
30,900
|
1,016,919
|
Capital
One Financial Corp.
|
119,600
|
11,053,432
|
Navient
Corp.
|
435,500
|
6,162,325
|
Synchrony
Financial
|
98,700
|
3,541,356
|
Total
|
|
21,774,032
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
8
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Diversified
Financial Services 1.2%
|
Berkshire
Hathaway, Inc., Class B(a)
|
41,700
|
8,566,431
|
Insurance
7.0%
|
Allstate
Corp. (The)
|
99,400
|
10,675,560
|
Marsh
& McLennan Companies, Inc.
|
129,000
|
12,745,200
|
MetLife,
Inc.
|
266,700
|
13,180,314
|
Prudential
Financial, Inc.
|
132,100
|
13,383,051
|
Total
|
|
49,984,125
|
Total
Financials
|
167,714,483
|
Health
Care 13.1%
|
Biotechnology
1.2%
|
Alexion
Pharmaceuticals, Inc.(a)
|
17,150
|
1,942,923
|
bluebird
bio, Inc.(a)
|
11,400
|
1,496,022
|
Gilead
Sciences, Inc.
|
56,800
|
3,721,536
|
Regeneron
Pharmaceuticals, Inc.(a)
|
4,500
|
1,371,420
|
Total
|
|
8,531,901
|
Health
Care Equipment & Supplies 3.1%
|
Abbott
Laboratories
|
87,500
|
7,621,250
|
Baxter
International, Inc.
|
171,100
|
14,367,267
|
Total
|
|
21,988,517
|
Health
Care Providers & Services 2.8%
|
Cardinal
Health, Inc.
|
178,700
|
8,171,951
|
HCA
Healthcare, Inc.
|
9,500
|
1,268,345
|
McKesson
Corp.
|
76,800
|
10,671,360
|
Total
|
|
20,111,656
|
Pharmaceuticals
6.0%
|
Allergan
PLC
|
42,600
|
6,837,300
|
Bristol-Myers
Squibb Co.
|
312,300
|
13,869,243
|
Eli
Lilly & Co.
|
14,600
|
1,590,670
|
Johnson
& Johnson
|
37,600
|
4,896,272
|
Merck
& Co., Inc.
|
165,100
|
13,701,649
|
Pfizer,
Inc.
|
35,700
|
1,386,588
|
Total
|
|
42,281,722
|
Total
Health Care
|
92,913,796
|
Industrials
9.6%
|
Airlines
1.6%
|
Southwest
Airlines Co.
|
223,700
|
11,527,261
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Commercial
Services & Supplies 0.5%
|
Waste
Management, Inc.
|
32,000
|
3,744,000
|
Electrical
Equipment 0.9%
|
Eaton
Corp. PLC
|
10,800
|
887,652
|
Emerson
Electric Co.
|
31,700
|
2,056,696
|
Hubbell,
Inc.
|
23,600
|
3,065,168
|
Total
|
|
6,009,516
|
Industrial
Conglomerates 3.7%
|
3M
Co.
|
63,900
|
11,164,608
|
Honeywell
International, Inc.
|
89,200
|
15,383,432
|
Total
|
|
26,548,040
|
Machinery
1.7%
|
Cummins,
Inc.
|
72,900
|
11,955,600
|
Road
& Rail 1.2%
|
CSX
Corp.
|
122,400
|
8,616,960
|
Total
Industrials
|
68,401,377
|
Information
Technology 6.5%
|
Communications
Equipment 0.8%
|
Cisco
Systems, Inc.
|
98,900
|
5,479,060
|
IT
Services 1.0%
|
VeriSign,
Inc.(a)
|
34,300
|
7,240,387
|
Semiconductors
& Semiconductor Equipment 2.5%
|
Analog
Devices, Inc.
|
63,300
|
7,435,218
|
Broadcom,
Inc.
|
17,000
|
4,929,830
|
Lam
Research Corp.
|
24,300
|
5,069,223
|
Total
|
|
17,434,271
|
Software
0.8%
|
Microsoft
Corp.
|
23,500
|
3,202,345
|
Oracle
Corp.
|
41,800
|
2,353,340
|
Total
|
|
5,555,685
|
Technology
Hardware, Storage & Peripherals 1.4%
|
HP,
Inc.
|
489,800
|
10,305,392
|
Total
Information Technology
|
46,014,795
|
Materials
4.2%
|
Chemicals
1.6%
|
LyondellBasell
Industries NV, Class A
|
138,400
|
11,582,696
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Disciplined Value Fund | Annual Report 2019
|
9
|
Portfolio of Investments
(continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Metals
& Mining 1.2%
|
Nucor
Corp.
|
32,900
|
1,789,102
|
Steel
Dynamics, Inc.
|
222,700
|
7,017,277
|
Total
|
|
8,806,379
|
Paper
& Forest Products 1.4%
|
Domtar
Corp.
|
225,300
|
9,563,985
|
Total
Materials
|
29,953,060
|
Real
Estate 4.7%
|
Equity
Real Estate Investment Trusts (REITS) 4.7%
|
Park
Hotels & Resorts, Inc.
|
315,600
|
8,334,996
|
Simon
Property Group, Inc.
|
72,800
|
11,808,160
|
Spirit
Realty Capital, Inc.
|
294,200
|
12,980,104
|
Total
|
|
33,123,260
|
Total
Real Estate
|
33,123,260
|
Utilities
6.5%
|
Electric
Utilities 3.3%
|
American
Electric Power Co., Inc.
|
118,000
|
10,361,580
|
Exelon
Corp.
|
285,800
|
12,878,148
|
Total
|
|
23,239,728
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Independent
Power and Renewable Electricity Producers 1.3%
|
AES
Corp. (The)
|
565,500
|
9,494,745
|
Multi-Utilities
1.9%
|
Public
Service Enterprise Group, Inc.
|
235,700
|
13,470,255
|
Total
Utilities
|
46,204,728
|
Total
Common Stocks
(Cost $607,171,621)
|
701,063,762
|
|
Money
Market Funds 1.1%
|
|
Shares
|
Value
($)
|
Columbia
Short-Term Cash Fund, 2.361%(c),(d)
|
7,471,281
|
7,470,534
|
Total
Money Market Funds
(Cost $7,470,534)
|
7,470,534
|
Total
Investments in Securities
(Cost: $614,642,155)
|
708,534,296
|
Other
Assets & Liabilities, Net
|
|
796,848
|
Net
Assets
|
709,331,144
|
At July 31, 2019, securities and/or cash totaling
$855,140 were pledged as collateral.
Investments in derivatives
Long
futures contracts
|
Description
|
Number
of
contracts
|
Expiration
date
|
Trading
currency
|
Notional
amount
|
Value/Unrealized
appreciation ($)
|
Value/Unrealized
depreciation ($)
|
S&P
500 E-mini
|
59
|
09/2019
|
USD
|
8,797,785
|
257,831
|
—
|
Notes to Portfolio of
Investments
(a)
|
Non-income
producing investment.
|
(b)
|
This
security or a portion of this security has been pledged as collateral in connection with derivative contracts.
|
(c)
|
The rate
shown is the seven-day current annualized yield at July 31, 2019.
|
(d)
|
As
defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and
transactions in these affiliated companies during the year ended July 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized
gain
(loss) —
affiliated
issuers ($)
|
Net
change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends
—
affiliated
issuers ($)
|
Value
—
affiliated
issuers
at end of
period ($)
|
Columbia
Short-Term Cash Fund, 2.361%
|
|
10,257,091
|
187,919,169
|
(190,704,979)
|
7,471,281
|
33
|
—
|
262,268
|
7,470,534
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
10
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Currency Legend
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
The following table is a summary of
the inputs used to value the Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Common
Stocks
|
|
|
|
|
Communication
Services
|
52,548,742
|
—
|
—
|
52,548,742
|
Consumer
Discretionary
|
38,349,557
|
—
|
—
|
38,349,557
|
Consumer
Staples
|
64,476,192
|
—
|
—
|
64,476,192
|
Energy
|
61,363,772
|
—
|
—
|
61,363,772
|
Financials
|
167,714,483
|
—
|
—
|
167,714,483
|
Health
Care
|
92,913,796
|
—
|
—
|
92,913,796
|
Industrials
|
68,401,377
|
—
|
—
|
68,401,377
|
Information
Technology
|
46,014,795
|
—
|
—
|
46,014,795
|
Materials
|
29,953,060
|
—
|
—
|
29,953,060
|
Real
Estate
|
33,123,260
|
—
|
—
|
33,123,260
|
Utilities
|
46,204,728
|
—
|
—
|
46,204,728
|
Total
Common Stocks
|
701,063,762
|
—
|
—
|
701,063,762
|
Money
Market Funds
|
7,470,534
|
—
|
—
|
7,470,534
|
Total
Investments in Securities
|
708,534,296
|
—
|
—
|
708,534,296
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Value Fund | Annual Report 2019
|
11
|
Portfolio of Investments (continued)
July 31, 2019
Fair value
measurements (continued)
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Derivatives
|
|
|
|
|
Asset
|
|
|
|
|
Futures
Contracts
|
257,831
|
—
|
—
|
257,831
|
Total
|
708,792,127
|
—
|
—
|
708,792,127
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
Derivative instruments are valued at unrealized appreciation
(depreciation).
The accompanying Notes to Financial Statements are an integral part of this
statement.
12
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $607,171,621)
|
$701,063,762
|
Affiliated
issuers (cost $7,470,534)
|
7,470,534
|
Receivable
for:
|
|
Capital
shares sold
|
360,198
|
Dividends
|
957,063
|
Variation
margin for futures contracts
|
35,915
|
Expense
reimbursement due from Investment Manager
|
1,074
|
Prepaid
expenses
|
5,598
|
Total
assets
|
709,894,144
|
Liabilities
|
|
Payable
for:
|
|
Capital
shares purchased
|
275,739
|
Variation
margin for futures contracts
|
121,500
|
Management
services fees
|
14,491
|
Distribution
and/or service fees
|
1,407
|
Transfer
agent fees
|
45,767
|
Compensation
of board members
|
54,560
|
Audit
fees
|
29,000
|
Other
expenses
|
20,536
|
Total
liabilities
|
563,000
|
Net
assets applicable to outstanding capital stock
|
$709,331,144
|
Represented
by
|
|
Paid
in capital
|
572,816,127
|
Total
distributable earnings (loss) (Note 2)
|
136,515,017
|
Total
- representing net assets applicable to outstanding capital stock
|
$709,331,144
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Value Fund | Annual Report 2019
|
13
|
Statement of Assets and Liabilities (continued)
July 31, 2019
Class
A
|
|
Net
assets
|
$74,649,675
|
Shares
outstanding
|
7,749,407
|
Net
asset value per share
|
$9.63
|
Maximum
sales charge
|
5.75%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares)
|
$10.22
|
Advisor
Class
|
|
Net
assets
|
$3,026,157
|
Shares
outstanding
|
311,051
|
Net
asset value per share
|
$9.73
|
Class
C
|
|
Net
assets
|
$11,834,918
|
Shares
outstanding
|
1,264,018
|
Net
asset value per share
|
$9.36
|
Institutional
Class
|
|
Net
assets
|
$111,873,235
|
Shares
outstanding
|
11,490,269
|
Net
asset value per share
|
$9.74
|
Institutional
2 Class
|
|
Net
assets
|
$1,213,189
|
Shares
outstanding
|
124,834
|
Net
asset value per share
|
$9.72
|
Institutional
3 Class
|
|
Net
assets
|
$428,446,546
|
Shares
outstanding
|
44,001,689
|
Net
asset value per share
|
$9.74
|
Class
R
|
|
Net
assets
|
$2,750,476
|
Shares
outstanding
|
285,120
|
Net
asset value per share
|
$9.65
|
Class
V
|
|
Net
assets
|
$75,536,948
|
Shares
outstanding
|
7,865,861
|
Net
asset value per share
|
$9.60
|
Maximum
sales charge
|
5.75%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class V shares)
|
$10.19
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
14
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Dividends
— unaffiliated issuers
|
$20,354,566
|
Dividends
— affiliated issuers
|
262,268
|
Foreign
taxes withheld
|
(19,200)
|
Total
income
|
20,597,634
|
Expenses:
|
|
Management
services fees
|
5,557,694
|
Distribution
and/or service fees
|
|
Class
A
|
188,931
|
Class
C
|
134,011
|
Class
R
|
15,302
|
Class
T
|
1,343
|
Class
V
|
193,602
|
Transfer
agent fees
|
|
Class
A
|
162,035
|
Advisor
Class
|
8,259
|
Class
C
|
28,693
|
Institutional
Class
|
311,318
|
Institutional
2 Class
|
757
|
Institutional
3 Class
|
31,888
|
Class
R
|
6,570
|
Class
T
|
1,113
|
Class
V
|
165,904
|
Compensation
of board members
|
22,436
|
Custodian
fees
|
12,811
|
Printing
and postage fees
|
36,020
|
Registration
fees
|
120,508
|
Audit
fees
|
34,201
|
Legal
fees
|
13,733
|
Compensation
of chief compliance officer
|
172
|
Other
|
21,853
|
Total
expenses
|
7,069,154
|
Fees
waived or expenses reimbursed by Investment Manager and its affiliates
|
(554,574)
|
Total
net expenses
|
6,514,580
|
Net
investment income
|
14,083,054
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
42,750,884
|
Investments
— affiliated issuers
|
33
|
Futures
contracts
|
691,794
|
Net
realized gain
|
43,442,711
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
(64,083,203)
|
Futures
contracts
|
6,782
|
Net
change in unrealized appreciation (depreciation)
|
(64,076,421)
|
Net
realized and unrealized loss
|
(20,633,710)
|
Net
decrease in net assets resulting from operations
|
$(6,550,656)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Disciplined Value Fund | Annual Report 2019
|
15
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$14,083,054
|
$13,504,588
|
Net
realized gain
|
43,442,711
|
66,376,193
|
Net
change in unrealized appreciation (depreciation)
|
(64,076,421)
|
22,348,297
|
Net
increase (decrease) in net assets resulting from operations
|
(6,550,656)
|
102,229,078
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(7,359,386)
|
|
Advisor
Class
|
(396,274)
|
|
Class
C
|
(1,293,880)
|
|
Institutional
Class
|
(13,467,138)
|
|
Institutional
2 Class
|
(124,052)
|
|
Institutional
3 Class
|
(43,366,409)
|
|
Class
R
|
(315,945)
|
|
Class
T
|
(135,304)
|
|
Class
V
|
(7,739,309)
|
|
Net
investment income
|
|
|
Class
A
|
|
(1,436,602)
|
Advisor
Class
|
|
(285,120)
|
Class
C
|
|
(203,027)
|
Institutional
Class
|
|
(3,897,680)
|
Institutional
2 Class
|
|
(23,212)
|
Institutional
3 Class
|
|
(10,484,296)
|
Class
K
|
|
(68)
|
Class
R
|
|
(56,378)
|
Class
T
|
|
(35,237)
|
Class
V
|
|
(1,637,782)
|
Net
realized gains
|
|
|
Class
A
|
|
(3,844,377)
|
Advisor
Class
|
|
(680,615)
|
Class
C
|
|
(853,143)
|
Institutional
Class
|
|
(9,304,218)
|
Institutional
2 Class
|
|
(53,336)
|
Institutional
3 Class
|
|
(23,559,250)
|
Class
K
|
|
(174)
|
Class
R
|
|
(171,651)
|
Class
T
|
|
(94,561)
|
Class
V
|
|
(4,382,740)
|
Total
distributions to shareholders (Note 2)
|
(74,197,697)
|
(61,003,467)
|
Increase
(decrease) in net assets from capital stock activity
|
(68,588,481)
|
14,280,860
|
Total
increase (decrease) in net assets
|
(149,336,834)
|
55,506,471
|
Net
assets at beginning of year
|
858,667,978
|
803,161,507
|
Net
assets at end of year
|
$709,331,144
|
$858,667,978
|
Undistributed
net investment income
|
$7,629,215
|
$7,066,301
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
16
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
2,656,282
|
24,955,316
|
1,420,171
|
15,073,509
|
Distributions
reinvested
|
605,855
|
5,458,757
|
376,696
|
3,959,075
|
Redemptions
|
(2,750,807)
|
(26,184,261)
|
(1,602,142)
|
(17,031,250)
|
Net
increase
|
511,330
|
4,229,812
|
194,725
|
2,001,334
|
Advisor
Class
|
|
|
|
|
Subscriptions
|
26,932
|
278,184
|
831,595
|
9,221,752
|
Distributions
reinvested
|
43,613
|
396,005
|
91,174
|
965,529
|
Redemptions
|
(490,509)
|
(5,152,202)
|
(753,227)
|
(8,457,479)
|
Net
increase (decrease)
|
(419,964)
|
(4,478,013)
|
169,542
|
1,729,802
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(310)
|
(3,530)
|
Net
decrease
|
—
|
—
|
(310)
|
(3,530)
|
Class
C
|
|
|
|
|
Subscriptions
|
208,415
|
1,940,046
|
341,721
|
3,575,173
|
Distributions
reinvested
|
127,278
|
1,120,049
|
87,958
|
904,212
|
Redemptions
|
(472,539)
|
(4,440,155)
|
(404,532)
|
(4,196,064)
|
Net
increase (decrease)
|
(136,846)
|
(1,380,060)
|
25,147
|
283,321
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
3,195,401
|
31,130,145
|
4,492,353
|
48,095,136
|
Distributions
reinvested
|
1,307,322
|
11,883,558
|
1,119,735
|
11,869,191
|
Redemptions
|
(11,943,487)
|
(121,370,022)
|
(3,546,936)
|
(37,830,678)
|
Net
increase (decrease)
|
(7,440,764)
|
(78,356,319)
|
2,065,152
|
22,133,649
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
17,874
|
174,036
|
21,607
|
230,964
|
Distributions
reinvested
|
13,647
|
123,780
|
7,222
|
76,340
|
Redemptions
|
(24,581)
|
(239,938)
|
(4,912)
|
(52,883)
|
Net
increase
|
6,940
|
57,878
|
23,917
|
254,421
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
6,056,371
|
56,693,519
|
562,131
|
6,011,678
|
Distributions
reinvested
|
4,776,006
|
43,366,135
|
3,217,707
|
34,043,337
|
Redemptions
|
(9,001,203)
|
(88,002,583)
|
(4,604,523)
|
(49,850,004)
|
Net
increase (decrease)
|
1,831,174
|
12,057,071
|
(824,685)
|
(9,794,989)
|
Class
K
|
|
|
|
|
Redemptions
|
—
|
—
|
(307)
|
(3,346)
|
Net
decrease
|
—
|
—
|
(307)
|
(3,346)
|
Class
R
|
|
|
|
|
Subscriptions
|
85,484
|
881,926
|
63,292
|
677,278
|
Distributions
reinvested
|
25,569
|
231,140
|
16,244
|
171,212
|
Redemptions
|
(109,665)
|
(1,059,717)
|
(79,417)
|
(851,456)
|
Net
increase (decrease)
|
1,388
|
53,349
|
119
|
(2,966)
|
Class
T
|
|
|
|
|
Distributions
reinvested
|
14,883
|
134,989
|
12,257
|
129,559
|
Redemptions
|
(152,597)
|
(1,375,863)
|
(87,397)
|
(936,139)
|
Net
decrease
|
(137,714)
|
(1,240,874)
|
(75,140)
|
(806,580)
|
Class
V
|
|
|
|
|
Subscriptions
|
57,042
|
534,929
|
54,343
|
584,685
|
Distributions
reinvested
|
753,164
|
6,763,411
|
496,559
|
5,203,935
|
Redemptions
|
(704,087)
|
(6,829,665)
|
(690,741)
|
(7,298,876)
|
Net
increase (decrease)
|
106,119
|
468,675
|
(139,839)
|
(1,510,256)
|
Total
net increase (decrease)
|
(5,678,337)
|
(68,588,481)
|
1,438,321
|
14,280,860
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Value Fund | Annual Report 2019
|
17
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$10.82
|
0.15
|
(0.31)
|
(0.16)
|
(0.16)
|
(0.87)
|
(1.03)
|
Year
Ended 7/31/2018
|
$10.32
|
0.14
|
1.14
|
1.28
|
(0.21)
|
(0.57)
|
(0.78)
|
Year
Ended 7/31/2017
|
$9.17
|
0.19
|
1.11
|
1.30
|
(0.15)
|
—
|
(0.15)
|
Year
Ended 7/31/2016
|
$9.56
|
0.15
|
0.04
|
0.19
|
(0.13)
|
(0.45)
|
(0.58)
|
Year
Ended 7/31/2015
|
$9.45
|
0.13
|
0.56
|
0.69
|
(0.11)
|
(0.47)
|
(0.58)
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$10.92
|
0.18
|
(0.32)
|
(0.14)
|
(0.18)
|
(0.87)
|
(1.05)
|
Year
Ended 7/31/2018
|
$10.41
|
0.16
|
1.16
|
1.32
|
(0.24)
|
(0.57)
|
(0.81)
|
Year
Ended 7/31/2017
|
$9.25
|
0.23
|
1.10
|
1.33
|
(0.17)
|
—
|
(0.17)
|
Year
Ended 7/31/2016
|
$9.63
|
0.10
|
0.13
|
0.23
|
(0.16)
|
(0.45)
|
(0.61)
|
Year
Ended 7/31/2015(d)
|
$9.80
|
0.02
|
(0.19)
(e)
|
(0.17)
|
—
|
—
|
—
|
Class
C
|
Year
Ended 7/31/2019
|
$10.54
|
0.08
|
(0.32)
|
(0.24)
|
(0.07)
|
(0.87)
|
(0.94)
|
Year
Ended 7/31/2018
|
$10.07
|
0.06
|
1.11
|
1.17
|
(0.13)
|
(0.57)
|
(0.70)
|
Year
Ended 7/31/2017
|
$8.96
|
0.11
|
1.08
|
1.19
|
(0.08)
|
—
|
(0.08)
|
Year
Ended 7/31/2016
|
$9.34
|
0.08
|
0.05
|
0.13
|
(0.06)
|
(0.45)
|
(0.51)
|
Year
Ended 7/31/2015
|
$9.25
|
0.05
|
0.55
|
0.60
|
(0.04)
|
(0.47)
|
(0.51)
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$10.93
|
0.18
|
(0.32)
|
(0.14)
|
(0.18)
|
(0.87)
|
(1.05)
|
Year
Ended 7/31/2018
|
$10.42
|
0.17
|
1.15
|
1.32
|
(0.24)
|
(0.57)
|
(0.81)
|
Year
Ended 7/31/2017
|
$9.26
|
0.23
|
1.10
|
1.33
|
(0.17)
|
—
|
(0.17)
|
Year
Ended 7/31/2016
|
$9.64
|
0.18
|
0.05
|
0.23
|
(0.16)
|
(0.45)
|
(0.61)
|
Year
Ended 7/31/2015
|
$9.52
|
0.15
|
0.57
|
0.72
|
(0.13)
|
(0.47)
|
(0.60)
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$10.91
|
0.19
|
(0.31)
|
(0.12)
|
(0.20)
|
(0.87)
|
(1.07)
|
Year
Ended 7/31/2018
|
$10.39
|
0.18
|
1.15
|
1.33
|
(0.24)
|
(0.57)
|
(0.81)
|
Year
Ended 7/31/2017
|
$9.24
|
0.29
|
1.04
|
1.33
|
(0.18)
|
—
|
(0.18)
|
Year
Ended 7/31/2016
|
$9.63
|
0.19
|
0.04
|
0.23
|
(0.17)
|
(0.45)
|
(0.62)
|
Year
Ended 7/31/2015(g)
|
$9.80
|
0.02
|
(0.19)
(e)
|
(0.17)
|
—
|
—
|
—
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$10.93
|
0.20
|
(0.32)
|
(0.12)
|
(0.20)
|
(0.87)
|
(1.07)
|
Year
Ended 7/31/2018
|
$10.41
|
0.19
|
1.15
|
1.34
|
(0.25)
|
(0.57)
|
(0.82)
|
Year
Ended 7/31/2017
|
$9.25
|
0.32
|
1.02
|
1.34
|
(0.18)
|
—
|
(0.18)
|
Year
Ended 7/31/2016
|
$9.64
|
0.18
|
0.06
|
0.24
|
(0.18)
|
(0.45)
|
(0.63)
|
Year
Ended 7/31/2015(h)
|
$9.81
|
0.02
|
(0.19)
(e)
|
(0.17)
|
—
|
—
|
—
|
The accompanying Notes to Financial Statements are an integral
part of this statement.
18
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$9.63
|
(0.87%)
|
1.23%
|
1.15%
|
1.57%
|
90%
|
$74,650
|
Year
Ended 7/31/2018
|
$10.82
|
12.62%
|
1.22%
|
1.15%
(c)
|
1.33%
|
86%
|
$78,335
|
Year
Ended 7/31/2017
|
$10.32
|
14.23%
|
1.21%
|
1.16%
(c)
|
1.94%
|
78%
|
$72,684
|
Year
Ended 7/31/2016
|
$9.17
|
2.51%
|
1.21%
|
1.19%
(c)
|
1.72%
|
82%
|
$96,040
|
Year
Ended 7/31/2015
|
$9.56
|
7.25%
|
1.20%
|
1.18%
(c)
|
1.32%
|
89%
|
$103,691
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$9.73
|
(0.57%)
|
0.98%
|
0.90%
|
1.81%
|
90%
|
$3,026
|
Year
Ended 7/31/2018
|
$10.92
|
12.87%
|
0.98%
|
0.90%
(c)
|
1.51%
|
86%
|
$7,986
|
Year
Ended 7/31/2017
|
$10.41
|
14.47%
|
0.97%
|
0.91%
(c)
|
2.35%
|
78%
|
$5,845
|
Year
Ended 7/31/2016
|
$9.25
|
2.89%
|
0.97%
|
0.94%
(c)
|
1.16%
|
82%
|
$2,132
|
Year
Ended 7/31/2015(d)
|
$9.63
|
(1.73%)
|
0.92%
(f)
|
0.92%
(c),(f)
|
1.11%
(f)
|
89%
|
$2
|
Class
C
|
Year
Ended 7/31/2019
|
$9.36
|
(1.66%)
|
1.98%
|
1.90%
|
0.83%
|
90%
|
$11,835
|
Year
Ended 7/31/2018
|
$10.54
|
11.82%
|
1.97%
|
1.90%
(c)
|
0.59%
|
86%
|
$14,761
|
Year
Ended 7/31/2017
|
$10.07
|
13.34%
|
1.96%
|
1.91%
(c)
|
1.18%
|
78%
|
$13,852
|
Year
Ended 7/31/2016
|
$8.96
|
1.83%
|
1.96%
|
1.94%
(c)
|
0.97%
|
82%
|
$16,270
|
Year
Ended 7/31/2015
|
$9.34
|
6.40%
|
1.95%
|
1.93%
(c)
|
0.57%
|
89%
|
$16,710
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$9.74
|
(0.57%)
|
0.98%
|
0.90%
|
1.80%
|
90%
|
$111,873
|
Year
Ended 7/31/2018
|
$10.93
|
12.86%
|
0.97%
|
0.90%
(c)
|
1.58%
|
86%
|
$206,950
|
Year
Ended 7/31/2017
|
$10.42
|
14.46%
|
0.97%
|
0.91%
(c)
|
2.33%
|
78%
|
$175,663
|
Year
Ended 7/31/2016
|
$9.26
|
2.88%
|
0.95%
|
0.94%
(c)
|
1.98%
|
82%
|
$118,722
|
Year
Ended 7/31/2015
|
$9.64
|
7.55%
|
0.94%
|
0.93%
(c)
|
1.55%
|
89%
|
$149,791
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$9.72
|
(0.44%)
|
0.83%
|
0.76%
|
1.96%
|
90%
|
$1,213
|
Year
Ended 7/31/2018
|
$10.91
|
13.09%
|
0.83%
|
0.78%
|
1.70%
|
86%
|
$1,286
|
Year
Ended 7/31/2017
|
$10.39
|
14.50%
|
0.85%
|
0.82%
|
2.90%
|
78%
|
$977
|
Year
Ended 7/31/2016
|
$9.24
|
2.91%
|
0.82%
|
0.82%
|
2.14%
|
82%
|
$9
|
Year
Ended 7/31/2015(g)
|
$9.63
|
(1.73%)
|
0.80%
(f)
|
0.80%
(f)
|
1.23%
(f)
|
89%
|
$2
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$9.74
|
(0.37%)
|
0.78%
|
0.71%
|
2.01%
|
90%
|
$428,447
|
Year
Ended 7/31/2018
|
$10.93
|
13.13%
|
0.77%
|
0.72%
|
1.76%
|
86%
|
$461,028
|
Year
Ended 7/31/2017
|
$10.41
|
14.63%
|
0.78%
|
0.77%
|
3.11%
|
78%
|
$447,684
|
Year
Ended 7/31/2016
|
$9.25
|
2.96%
|
0.80%
|
0.80%
|
2.04%
|
82%
|
$909
|
Year
Ended 7/31/2015(h)
|
$9.64
|
(1.73%)
|
0.75%
(f)
|
0.75%
(f)
|
1.28%
(f)
|
89%
|
$2
|
The accompanying Notes to Financial Statements are an integral
part of this statement.
Columbia
Disciplined Value Fund | Annual Report 2019
|
19
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class
R
|
Year
Ended 7/31/2019
|
$10.83
|
0.13
|
(0.31)
|
(0.18)
|
(0.13)
|
(0.87)
|
(1.00)
|
Year
Ended 7/31/2018
|
$10.33
|
0.12
|
1.13
|
1.25
|
(0.18)
|
(0.57)
|
(0.75)
|
Year
Ended 7/31/2017
|
$9.19
|
0.17
|
1.10
|
1.27
|
(0.13)
|
—
|
(0.13)
|
Year
Ended 7/31/2016
|
$9.57
|
0.13
|
0.05
|
0.18
|
(0.11)
|
(0.45)
|
(0.56)
|
Year
Ended 7/31/2015
|
$9.46
|
0.10
|
0.56
|
0.66
|
(0.08)
|
(0.47)
|
(0.55)
|
Class
V
|
Year
Ended 7/31/2019
|
$10.79
|
0.15
|
(0.31)
|
(0.16)
|
(0.16)
|
(0.87)
|
(1.03)
|
Year
Ended 7/31/2018
|
$10.29
|
0.14
|
1.14
|
1.28
|
(0.21)
|
(0.57)
|
(0.78)
|
Year
Ended 7/31/2017
|
$9.15
|
0.19
|
1.10
|
1.29
|
(0.15)
|
—
|
(0.15)
|
Year
Ended 7/31/2016
|
$9.54
|
0.15
|
0.04
|
0.19
|
(0.13)
|
(0.45)
|
(0.58)
|
Year
Ended 7/31/2015
|
$9.42
|
0.12
|
0.57
|
0.69
|
(0.10)
|
(0.47)
|
(0.57)
|
Notes
to Financial Highlights
|
(a)
|
In
addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense
ratios.
|
(b)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(c)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
(d)
|
Advisor
Class shares commenced operations on June 1, 2015. Per share data and total return reflect activity from that date.
|
(e)
|
Calculation
of the net gain (loss) per share (both realized and unrealized) does not correlate to the aggregate realized and unrealized gain (loss) presented in the Statement of Operations due to the timing of subscriptions and redemptions of Fund shares in
relation to fluctuations in the market value of the portfolio.
|
(f)
|
Annualized.
|
(g)
|
Institutional
2 Class shares commenced operations on June 1, 2015. Per share data and total return reflect activity from that date.
|
(h)
|
Institutional
3 Class shares commenced operations on June 1, 2015. Per share data and total return reflect activity from that date.
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
20
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
R
|
Year
Ended 7/31/2019
|
$9.65
|
(1.05%)
|
1.48%
|
1.40%
|
1.33%
|
90%
|
$2,750
|
Year
Ended 7/31/2018
|
$10.83
|
12.34%
|
1.47%
|
1.40%
(c)
|
1.08%
|
86%
|
$3,074
|
Year
Ended 7/31/2017
|
$10.33
|
13.84%
|
1.47%
|
1.41%
(c)
|
1.75%
|
78%
|
$2,930
|
Year
Ended 7/31/2016
|
$9.19
|
2.34%
|
1.46%
|
1.44%
(c)
|
1.45%
|
82%
|
$2,604
|
Year
Ended 7/31/2015
|
$9.57
|
6.98%
|
1.45%
|
1.43%
(c)
|
1.02%
|
89%
|
$2,083
|
Class
V
|
Year
Ended 7/31/2019
|
$9.60
|
(0.87%)
|
1.23%
|
1.15%
|
1.57%
|
90%
|
$75,537
|
Year
Ended 7/31/2018
|
$10.79
|
12.66%
|
1.22%
|
1.15%
(c)
|
1.33%
|
86%
|
$83,747
|
Year
Ended 7/31/2017
|
$10.29
|
14.15%
|
1.22%
|
1.16%
(c)
|
1.98%
|
78%
|
$81,312
|
Year
Ended 7/31/2016
|
$9.15
|
2.50%
|
1.21%
|
1.19%
(c)
|
1.72%
|
82%
|
$79,008
|
Year
Ended 7/31/2015
|
$9.54
|
7.33%
|
1.21%
|
1.20%
(c)
|
1.29%
|
89%
|
$84,026
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Disciplined Value Fund | Annual Report 2019
|
21
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Disciplined Value Fund (the Fund), a series of
Columbia Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business
trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Advisor Class, Institutional Class, Institutional 2 Class, Institutional 3 Class and Class R shares are available for purchase through authorized investment professionals to omnibus
retirement plans or to institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years. Effective December 14, 2018, Class T shares merged, in a
tax-free transaction, into Class A shares of the Fund and are no longer offered for sale. Class V shares are available only to investors who received (and who continuously held) Class V shares in connection with previous fund reorganizations.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
All equity securities are valued at the close of business of
the New York Stock Exchange. Equity securities are valued at the official closing price on the principal exchange or market on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the
mean of the latest quoted bid and ask prices on such exchanges or markets.
Foreign equity securities are valued based on the closing
price on the foreign exchange in which such securities are primarily traded. If any foreign equity security closing prices are not readily available, the securities are valued at the mean of the latest quoted bid and ask prices on such exchanges or
markets. Foreign currency exchange rates are determined at the scheduled closing time of the New York Stock Exchange. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange; therefore, the
closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. In those situations, foreign securities will be fair valued pursuant to
a policy adopted by the Board of Trustees, including, if available, utilizing a third party pricing service to determine these fair values. The third-party pricing service takes into account multiple factors, including, but not limited to, movements
in the U.S. securities markets, certain depositary receipts, futures contracts and foreign exchange rates that have occurred subsequent to the close of the foreign exchange or market, to determine a good faith estimate that reasonably reflects the
current market conditions as of the close of the New York Stock Exchange. The fair value of a security is likely to be different from the quoted or published price, if available.
22
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
Futures and options on futures contracts are valued based upon
the settlement price at the close of regular trading on their principal exchanges or, in the absence of transactions, at the mean of the latest quoted bid and ask prices.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Derivative instruments
The Fund invests in certain derivative instruments, as
detailed below, to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more securities, currencies, commodities, indices, or other assets or instruments.
Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to
pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including
the potential inability of the counterparty to fulfill its obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the
potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial
statements.
A derivative instrument may suffer a
marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its obligations under the contract. The
Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund and the amount of any variation margin held by the
counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk to the Fund since the clearinghouse or central counterparty (CCP) provides some protection
in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract; therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in
exchange-traded or centrally cleared derivatives with respect to initial and variation margin that is held in a broker’s customer account. While brokers are required to segregate customer margin from their own assets, in the event that a
broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across
all the broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its contractual rights and to secure
rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivatives contract
counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a
default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative instrument’s payables and/or receivables with collateral held and/or posted and create
one single net payment. The provisions of the ISDA Master Agreement typically
Columbia
Disciplined Value Fund | Annual Report 2019
|
23
|
Notes to Financial Statements (continued)
July 31, 2019
permit a single net
payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the
right of offset or netting in bankruptcy, insolvency or other events.
Collateral (margin) requirements differ by type of derivative.
Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain circumstances. Collateral terms for most over-the-counter
derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral
requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally,
the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (e.g., $250,000) before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized,
contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any interest expense paid by the Fund is shown on the Statement of
Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those
counterparties.
Certain ISDA Master Agreements allow
counterparties of over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified time period or if the Fund fails to meet
certain terms of the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination rights if the counterparty fails to meet certain terms of the ISDA Master
Agreement. In determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk, whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes, the Fund does not offset
derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are exchange-traded and represent
commitments for the future purchase or sale of an asset at a specified price on a specified date. The Fund bought and sold futures contracts to maintain appropriate equity market exposure while keeping sufficient cash to accommodate daily
redemptions. These instruments may be used for other purposes in future periods. Upon entering into futures contracts, the Fund bears risks that it may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional
risks include counterparty credit risk, the possibility of an illiquid market, and that a change in the value of the contract or option may not correlate with changes in the value of the underlying asset.
Upon entering into a futures contract, the Fund deposits cash
or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be maintained at an established level over the life of the contract. Cash
deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are designated in the Portfolio of Investments. Subsequent payments (variation margin) are made or received
by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund recognizes a realized gain or
loss when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Effects of derivative transactions in the financial
statements
The following tables are intended to provide
additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the
impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules following the Portfolio of Investments present additional information regarding
derivative instruments outstanding at the end of the period, if any.
24
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
following table is a summary of the fair value of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) at July 31, 2019:
|
Asset
derivatives
|
|
Risk
exposure
category
|
Statement
of assets and liabilities
location
|
Fair
value ($)
|
Equity
risk
|
Component
of total distributable earnings (loss) — unrealized appreciation on futures contracts
|
257,831*
|
*
|
Includes
cumulative appreciation (depreciation) as reported in the tables following the Portfolio of Investments. Only the current day’s variation margin is reported in receivables or payables in the Statement of Assets and Liabilities.
|
The following table indicates the
effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended July 31, 2019:
Amount
of realized gain (loss) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Equity
risk
|
691,794
|
|
Change
in unrealized appreciation (depreciation) on derivatives recognized in income
|
Risk
exposure category
|
Futures
contracts
($)
|
Equity
risk
|
6,782
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended July 31, 2019:
Derivative
instrument
|
Average
notional
amounts ($)*
|
Futures
contracts — long
|
11,304,977
|
*
|
Based on
the ending quarterly outstanding amounts for the year ended July 31, 2019.
|
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Corporate actions and dividend income are generally recorded
net of any non-reclaimable tax withholdings, on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities.
The Fund may receive distributions from holdings in equity
securities, business development companies (BDCs), exchange-traded funds (ETFs), limited partnerships (LPs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information on the tax character of
their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. Return of capital is recorded as a reduction of the cost basis of securities held. If the
Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. With respect to REITs, to the extent actual information has not yet been reported, estimates for return of capital are made by the Fund’s
management. Management’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a proportionate change in return of capital to shareholders.
Awards from class action litigation are recorded as a
reduction of cost basis if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains.
Columbia
Disciplined Value Fund | Annual Report 2019
|
25
|
Notes to Financial Statements (continued)
July 31, 2019
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Foreign taxes
The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries, as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it
invests.
Realized gains in certain countries may be
subject to foreign taxes at the Fund level, based on statutory rates. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction, as applicable. The amount, if any, is disclosed as a
liability on the Statement of Assets and Liabilities.
Distributions to shareholders
Distributions from net investment income, if any, are declared
and paid annually. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
26
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
In
August 2018, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods
beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a
result of the amendments, management implemented disclosure changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between
levels, removal of the description of the level 3 valuation processes, as well as modifications to the measurement uncertainty disclosure.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.75% to 0.55% as the Fund’s net assets increase. The
effective management services fee rate for the year ended July 31, 2019 was 0.73% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transactions with affiliates
For the year ended July 31, 2019, the Fund engaged in purchase
and/or sale transactions with affiliates and/or accounts that have a common investment manager (or affiliated investment managers), common directors/trustees, and/or common officers. Those purchase and sale transactions complied with provisions of
Rule 17a-7 under the 1940 Act and were $11,068,417 and $0, respectively.
Columbia
Disciplined Value Fund | Annual Report 2019
|
27
|
Notes to Financial Statements (continued)
July 31, 2019
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
For the year ended July 31, 2019, the Fund’s effective
transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.21
|
Advisor
Class
|
0.21
|
Class
C
|
0.21
|
Institutional
Class
|
0.21
|
Institutional
2 Class
|
0.06
|
Institutional
3 Class
|
0.01
|
Class
R
|
0.21
|
Class
T
|
0.08
(a)
|
Class
V
|
0.21
|
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at the maximum annual rates of up to 0.25%, 1.00%, 0.50% and 0.25% of the Fund’s average daily net assets attributable to Class A, Class C, Class R and Class T shares, respectively. For Class C shares, of the 1.00% fee, up to 0.75%
can be reimbursed for distribution expenses and up to an additional 0.25% can be reimbursed for shareholder servicing expenses. For Class R shares, of the 0.50% fee, up to 0.25% can be reimbursed for shareholder servicing expenses. For Class T
shares, of the 0.25% fee, up to 0.25% can be reimbursed for distribution and/or shareholder servicing expenses. As a result of all Class T shares of the Fund being redeemed or converted to Class A shares, December 14, 2018 was the last day the Fund
paid a distribution and shareholder services fee for Class T shares.
28
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
amount of distribution and shareholder services expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $54,000 for Class C shares. This amount is based on the most recent information available as of June
30, 2019, and may be recovered from future payments under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
Shareholder services fees
The Fund has adopted a shareholder services plan that permits
it to pay for certain services provided to Class V shareholders by their selling and/or servicing agents. The Fund may pay shareholder servicing fees up to an aggregate annual rate of 0.50% of the Fund’s average daily net assets attributable
to Class V shares (comprised of up to 0.25% for shareholder liaison services and up to 0.25% for administrative support services). These fees are currently limited to an aggregate annual rate of not more than 0.25% of the Fund’s average daily
net assets attributable to Class V shares.
Sales charges
(unaudited)
Sales charges, including front-end charges
and CDSCs, received by the Distributor for distributing Fund shares for the year ended July 31, 2019, if any, are listed below:
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
5.75
|
0.50 - 1.00
(a)
|
42,388
|
Class
C
|
—
|
1.00
(b)
|
2,559
|
Class
T
|
2.50
|
—
|
—
|
Class
V
|
5.75
|
0.50 - 1.00
(a)
|
8,031
|
(a)
|
This
charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months after purchase, as follows: 1.00% if redeemed within 12 months after 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 12 months after purchase, with certain limited exceptions.
|
The Fund’s other share classes are not subject to sales
charges.
Expenses waived/reimbursed by the Investment
Manager and its affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of
Trustees, 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 following annual rate(s) as a
percentage of the class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to
December 1, 2018
|
Class
A
|
1.15%
|
1.15%
|
Advisor
Class
|
0.90
|
0.90
|
Class
C
|
1.90
|
1.90
|
Institutional
Class
|
0.90
|
0.90
|
Institutional
2 Class
|
0.76
|
0.77
|
Institutional
3 Class
|
0.71
|
0.71
|
Class
R
|
1.40
|
1.40
|
Class
V
|
1.15
|
1.15
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), 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, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This
Columbia
Disciplined Value Fund | Annual Report 2019
|
29
|
Notes to Financial Statements (continued)
July 31, 2019
agreement may be
modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or expenses reimbursed under the expense reimbursement arrangements described above are not recoverable by the Investment
Manager or its affiliates in future periods.
Note
4. Federal tax information
The timing and
character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for deferral/reversal of wash sale losses, derivative investments, post-October capital losses, trustees’ deferred compensation, distribution reclassifications and investments in partnerships. To the extent these
differences were permanent, reclassifications were made among the components of the Fund’s net assets. Temporary differences do not require reclassifications.
The following reclassifications were made:
Undistributed
net
investment
income ($)
|
Accumulated
net realized
gain ($)
|
Paid
in
capital ($)
|
(259,811)
|
(235,761)
|
495,572
|
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by these reclassifications.
The tax character of distributions paid during the years
indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
25,267,990
|
48,929,707
|
74,197,697
|
18,459,800
|
42,543,667
|
61,003,467
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At July 31, 2019, the components of distributable earnings on
a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
appreciation ($)
|
7,683,122
|
58,090,925
|
—
|
90,659,688
|
At July 31, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
appreciation ($)
|
618,132,439
|
104,859,542
|
(14,199,854)
|
90,659,688
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
Under current tax rules, regulated investment companies can
elect to treat certain late-year ordinary losses incurred and post-October capital losses (capital losses realized after October 31) as arising on the first day of the following taxable year. As of July 31, 2019, the Fund will elect to treat the
following late-year ordinary losses and post-October capital losses as arising on August 1, 2019.
Late
year
ordinary losses ($)
|
Post-October
capital losses ($)
|
—
|
19,864,811
|
30
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Management of the Fund has concluded that there are no
significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors including, but not limited
to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue
Service.
Note 5. Portfolio information
The cost of purchases and proceeds from sales of securities,
excluding short-term investments and derivatives, if any, aggregated to $671,570,511 and $797,810,217, respectively, for the year ended July 31, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the
Financial Highlights.
Note 6. Affiliated money
market fund
The Fund invests in Columbia Short-Term
Cash Fund, an affiliated money market fund established for the exclusive use by the Fund and other affiliated funds (the Affiliated MMF). The income earned by the Fund from such investments is included as Dividends - affiliated issuers in the
Statement of Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of the Affiliated MMF. The Affiliated MMF prices its shares with a floating net asset value. In addition, the Board of Trustees of the
Affiliated MMF may impose a fee on redemptions (sometimes referred to as a liquidity fee) or temporarily suspend redemptions (sometimes referred to as imposing a redemption gate) in the event its liquidity falls below regulatory limits.
Note 7. Interfund lending
Pursuant to an exemptive order granted by the Securities and
Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds, borrow money
directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended July 31, 2019.
Note
8. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion.
Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each
borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment
fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
Columbia
Disciplined Value Fund | Annual Report 2019
|
31
|
Notes to Financial Statements (continued)
July 31, 2019
Note 9. Significant risks
Financial sector risk
The Fund may be more susceptible to the particular risks that
may affect companies in the financial services 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.
Shareholder concentration risk
At July 31, 2019, affiliated shareholders of record owned
72.9% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced
to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased
operating expenses for non-redeeming Fund shareholders.
Note 10. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 11. Information regarding pending and settled
legal proceedings
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (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 Fund. Further, although we believe proceedings are not 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, 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.
32
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Disciplined Value Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Disciplined Value Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of operations for
the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
Columbia
Disciplined Value Fund | Annual Report 2019
|
33
|
Federal Income Tax Information
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended July 31, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
Qualified
dividend
income
|
Dividends
received
deduction
|
Capital
gain
dividend
|
26.18%
|
26.18%
|
$66,426,226
|
Qualified dividend income. For
taxable, non-corporate shareholders, the percentage of ordinary income distributed during the fiscal year that represents qualified dividend income subject to reduced tax rates.
Dividends received deduction. The percentage of ordinary
income distributed during the fiscal year that qualifies for the corporate dividends received deduction.
Capital gain dividend. The Fund designates as a capital gain
dividend the amount reflected above, or if subsequently determined to be different, the net capital gain of such fiscal period.
34
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
Columbia
Disciplined Value Fund | Annual Report 2019
|
35
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
36
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
Columbia
Disciplined Value Fund | Annual Report 2019
|
37
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
38
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
Columbia
Disciplined Value Fund | Annual Report 2019
|
39
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Disciplined Value Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management Investment
Distributors, Inc. (collectively, the Funds).
On an
annual basis, the Fund’s Board of Trustees (the Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its
Contracts Committee in November 2018 and January, March, April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive
response to items of information requested by independent legal counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented
at these meetings were first supplied in draft form to designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who
is an Independent Trustee), and the final materials were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets
with portfolio management teams and senior management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the
work, deliberations and conclusions of the various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
40
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group, the product score of the
Fund (taking into account performance relative to peers and benchmarks) and the net assets of the Fund. The Board observed that the Fund’s investment performance met expectations.
Comparative fees, costs of services provided and the profits
realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability.
The Board considered the reports of its independent fee
consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to industry competitors,
the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of the level of fees is to
achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the "pricing philosophy"
currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s total expense ratio
(after considering proposed expense caps/waivers) was somewhat higher than the median ratio, but lower than the 60th percentile of the Fund’s peer universe. Based on its review, the Board concluded that the Fund’s management fee was fair
and reasonable in light of the extent and quality of services that the Fund receives.
The Board also considered the profitability of Columbia
Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the Profitability Report, discussing the
profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was reasonable and that the 2019 information shows
that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle profitability relative to industry competitors was
reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced ability to offer various other financial products to
Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Fund should permit the Investment Manager to offer competitive compensation to its personnel, make necessary
investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
Columbia
Disciplined Value Fund | Annual Report 2019
|
41
|
Approval of Management Agreement (continued)
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
42
|
Columbia Disciplined Value
Fund | Annual Report 2019
|
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT filings are available on the SEC’s website at
sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Columbia
Disciplined Value Fund | Annual Report 2019
|
43
|
Columbia Disciplined Value Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Annual
Report
July 31, 2019
Columbia Inflation Protected Securities
Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
6
|
|
8
|
|
9
|
|
14
|
|
16
|
|
17
|
|
20
|
|
24
|
|
39
|
|
40
|
|
41
|
|
46
|
|
49
|
Columbia Inflation Protected Securities Fund | Annual
Report 2019
Investment objective
Columbia Inflation Protected
Securities Fund (the Fund) seeks to provide shareholders with total return that exceeds the rate of inflation over the long term.
Portfolio
management
David Kennedy
Portfolio
Manager
Managed Fund
since 2015
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
Excluding
sales charges
|
03/04/04
|
4.55
|
1.20
|
3.14
|
|
Including
sales charges
|
|
1.40
|
0.59
|
2.82
|
Advisor
Class*
|
03/01/18
|
4.79
|
1.29
|
3.18
|
Class
C
|
Excluding
sales charges
|
03/04/04
|
3.74
|
0.44
|
2.36
|
|
Including
sales charges
|
|
2.74
|
0.44
|
2.36
|
Institutional
Class*
|
09/27/10
|
4.68
|
1.46
|
3.36
|
Institutional
2 Class*
|
11/08/12
|
4.78
|
1.55
|
3.38
|
Institutional
3 Class*
|
03/01/17
|
4.90
|
1.38
|
3.23
|
Class
R*
|
08/03/09
|
4.21
|
0.95
|
2.84
|
Bloomberg
Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index
|
|
5.72
|
1.82
|
3.67
|
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. Since the Fund launched more than one share class at its
inception, Class A shares were used. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit
columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
The Bloomberg Barclays U.S. Treasury Inflation Protected
Securities (TIPS) Index includes all publicly issued, U.S. Treasury inflation-protected securities that have at least one year remaining to maturity, are rated investment grade, and have $250 million or more of outstanding face value.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a
hypothetical $10,000 investment (July 31, 2009 — July 31, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Inflation Protected Securities Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on
the redemption of Fund shares.
Portfolio
breakdown (%) (at July 31, 2019)
|
Corporate
Bonds & Notes
|
8.8
|
Foreign
Government Obligations
|
0.4
|
Inflation-Indexed
Bonds
|
90.1
|
Money
Market Funds
|
0.6
|
Residential
Mortgage-Backed Securities - Non-Agency
|
0.1
|
Total
|
100.0
|
Percentages indicated are based
upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
Quality
breakdown (%) (at July 31, 2019)
|
AAA
rating
|
88.7
|
A
rating
|
1.5
|
BBB
rating
|
6.3
|
BB
rating
|
0.5
|
Not
rated
|
3.0
|
Total
|
100.0
|
Percentages indicated are based
upon total fixed income investments (excluding Money Market Funds and all other investments in derivatives, if any).
Bond ratings apply to the underlying holdings of the Fund and
not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the rating of Moody’s, S&P or Fitch, whichever rating agency rates the security highest. When ratings are available from
only two rating agencies, the higher of the two ratings is used. When a rating is available from only one rating agency, that rating is used. When a bond is not rated by any rating agency, it is designated as "Not rated." Credit quality ratings
assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily. The ratings assigned by credit rating agencies are but one of the considerations that the Investment Manager and/or Fund’s
subadviser incorporates into its credit analysis process, along with such other issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage (repay) through free cash flow, quality of management, market
positioning and access to capital, as well as such security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any collateral.
4
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Fund at a Glance (continued)
Market
exposure through derivatives investments (% of notional exposure) (at July 31, 2019)(a)
|
|
Long
|
Short
|
Net
|
Fixed
Income Derivative Contracts
|
46.2
|
(138.9)
|
(92.7)
|
Foreign
Currency Derivative Contracts
|
-
|
(7.3)
|
(7.3)
|
Total
Notional Market Value of Derivative Contracts
|
46.2
|
(146.2)
|
(100.0)
|
(a) The Fund has market exposure
(long and/or short) to fixed income and foreign currency through its investments in derivatives. The notional exposure of a financial instrument is the nominal or face amount that is used to calculate payments made on that instrument and/or changes
in value for the instrument. The notional exposure is a hypothetical underlying quantity upon which payment obligations are computed. Notional exposures provide a gauge for how the Fund may behave given changes in individual markets. For a
description of the Fund’s investments in derivatives, see Investments in derivatives following the Portfolio of Investments, and Note 2 of the Notes to Financial Statements.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance
At
July 31, 2019, approximately 55.91% of the Fund’s shares were owned in the aggregate by affiliated funds-of-funds managed by Columbia Management Investment Advisers, LLC (the Investment Manager). As a result of asset allocation decisions by
the Investment Manager, it is possible that the Fund may experience relatively large purchases or redemptions from affiliated funds-of-funds. The Investment Manager seeks to minimize the impact of these transactions by structuring them over a
reasonable period of time. The Fund may experience increased expenses as it buys and sells securities as a result of purchases or redemptions by affiliated funds-of-funds.
For the 12-month period that ended July 31, 2019, the
Fund’s Class A shares returned 4.55% excluding sales charges. The Fund’s benchmark, the Bloomberg Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index, returned 5.72% over the same period. The Fund’s performance
relative to the benchmark was constrained by its exposure to breakeven rates within its core inflation allocation, while out-of-benchmark exposure to corporate bonds supported performance.
Falling nominal U.S. Treasury yields boosted TIPS
returns
Returns for treasury inflation-protected
securities (TIPS) are influenced both by changes in inflation expectations and the direction of U.S. Treasury yields. Over the 12 months ended July 2019, the backdrop with respect to interest rates was supportive of performance for fixed-income
instruments, including TIPS, as Treasury yields declined substantially. The Treasury curve steepened as yield declines were less significant on the long end of the curve. To illustrate, the two-year Treasury yield declined 78 basis points from 2.67%
to 1.89% and the 10-year yield declined 94 basis points from 2.96% to 2.02%, while the 30-year yield declined 55 basis points from 3.08% to 2.53%.
The other piece of TIPS performance is the impact of shifting
inflation expectations. A TIPS investor accepts a lower yield than could be accessed via a nominal Treasury of comparable maturity, in hopes the inflation outlook will support TIPS valuations and allow the investor to earn a total return that is at
least equal to nominal Treasuries. When market inflation expectations rise, TIPS prices generally strengthen relative to nominal Treasury prices, resulting in a higher “breakeven rate” of actual inflation required for a subsequent TIPS
purchaser to match the return on Treasuries. In short, rising breakeven rates support TIPS performance, and vice versa.
The U.S. 10-year breakeven rate hovered around the 2.10% level
early in the period, as inflation expectations continued to be supported by the economic “sugar high” provided by the tax cuts enacted at the end of 2017. Core inflation for July of 2018 was gauged at 2.4%, suggesting that the domestic
economy may have reached a sustainable growth rate that would allow long-absent inflation to finally take hold. Strong consumer sentiment also supported expectations that inflation would trend close to the Federal Reserve’s (Fed’s) 2%
target rate. The Fed’s continued tightening of monetary policy signaled to investors the central bank’s comfort level with the economic growth trajectory.
Economic data released in the fourth quarter of 2018 took a
bearish turn, leading TIPS to underperform nominal Treasury securities. The 10-year breakeven declined from above 2% at the end of October to 1.70% by year-end. Core inflation failed to return to its July 2018 and finished at 2.2% for the calendar
year 2018. After raising the target for its benchmark overnight lending rate in December, the Fed pivoted to a more cautious stance following what could be described as a “mini-recession” at the end of 2018 and into the first quarter of
2019. The Fed’s adoption of a more dovish tone temporarily supported a rise in breakeven rates. However, beginning in early May breakevens retraced their decline on the back of resurgent fears related to global trade, with the 10-year reaching
a three-year low of 1.62% in mid-June 2019.
At the end
of July 2019, the inflation breakeven rate on 10-year TIPS versus comparable maturity U.S. Treasuries was 1.75%, down from 2.13% 12 months earlier. With the narrowing of breakevens, TIPS underperformed nominal Treasuries during the period.
Narrowing breakeven rates and curve flattening constrained
performance
The Fund’s core U.S. inflation
positioning, which includes both the allocation to TIPS and the use of inflation swaps, detracted from performance as breakevens narrowed. The sell-off in breakevens seen in late 2018 was particularly negative for performance. Positioning with
respect to nominal interest rates also detracted, as the Fund was positioned with a bias toward a flattening yield curve as the curve steepened.
6
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Manager Discussion of Fund Performance (continued)
The Fund held a position in investment-grade and high-yield
corporate debt throughout the period, with a focus on inflation-sensitive areas of the market. This out-of-benchmark exposure modestly supported performance as corporate bonds outperformed TIPS for the period, despite significant interim volatility
in credit spreads. While corporate credit suffered in late 2018 as the market assumed a sharp risk-off tone, the segment essentially recovered its losses in early 2019 as the Fed shifted to a more accommodative stance.
During the period, the Fund utilized inflation swaps to
partially offset its underweight to TIPS. In addition, the Fund used highly liquid Treasury futures contracts to isolate breakeven exposures, as well as to help manage both portfolio duration and yield curve exposures. We also used derivatives,
specifically forward foreign currency exchange contracts, to hedge currency risk on inflation linked investments denominated in foreign currencies, seeking to mitigate the impact of changes in exchange rates on Fund returns. On a stand-alone basis,
the use of these derivatives had a negative impact on the Fund’s performance during the period.
At period’s end
At the close of the reporting period, the Fund’s core
allocation to inflation linked securities stood at 89.6% of assets, with U.S. TIPs at 87.6% of assets. The Fund held an approximately 9.3% position in corporate credit with a tilt toward inflation-sensitive sectors, most notably energy followed by
chemicals, metals and mining. While we believed that the potential for further spread compression to support corporate bond performance was potentially limited, we remained constructive on credit fundamentals. We viewed corporate credit as offering
the Fund a valuable diversification opportunity as well as a yield advantage in the low rate environment.
With little evidence of inflation on the horizon at the close
of the reporting period, domestically or globally, the Fund remained underweight TIPS. Yield curve positioning retained a slight flattening bias between 10 and 30 years. We believed a number of factors including uncertainties related to global trade
and the U.K.’s proposed exit from the European Union had the potential to disrupt the global economy. Given the preponderance of negative nominal yields globally and with U.S. interest rates high relative to those on offer overseas, the Fund
had an above-benchmark stance with respect to overall portfolio duration and corresponding interest rate sensitivity.
Market risk may affect a single
issuer, sector of the economy, industry or the market as a whole. Fixed-income securities present issuer default risk. A rise in interest rates may result in a price
decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt instruments, lowering the Fund’s income and yield. These risks may be
heightened for longer maturity and duration securities. Prepayment and extension risk exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or
decelerate when interest rates rise which may reduce investment opportunities and potential returns. Interest payments on inflation-protected securities may be more volatile than interest payments on ordinary
bonds. In periods of deflation, these securities may provide no income. Investing in derivatives is a specialized activity that involves special risks that subject the Fund to significant loss potential,
including when used as leverage, and may result in greater fluctuation in Fund value. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
7
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,047.60
|
1,020.83
|
4.06
|
4.01
|
0.80
|
Advisor
Class
|
1,000.00
|
1,000.00
|
1,049.60
|
1,022.07
|
2.80
|
2.76
|
0.55
|
Class
C
|
1,000.00
|
1,000.00
|
1,044.20
|
1,017.11
|
7.86
|
7.75
|
1.55
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,048.40
|
1,022.07
|
2.79
|
2.76
|
0.55
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,049.60
|
1,022.51
|
2.34
|
2.31
|
0.46
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,049.00
|
1,022.81
|
2.03
|
2.01
|
0.40
|
Class
R
|
1,000.00
|
1,000.00
|
1,045.80
|
1,019.59
|
5.33
|
5.26
|
1.05
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Had Columbia Management Investment Advisers, LLC and/or certain
of its affiliates not waived/reimbursed certain fees and expenses, account value at the end of the period would have been reduced.
8
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Corporate
Bonds & Notes 8.7%
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Aerospace
& Defense 0.2%
|
L3Harris
Technologies, Inc.(a)
|
12/15/2026
|
3.850%
|
|
350,000
|
369,343
|
Automotive
0.2%
|
General
Motors Co.
|
04/01/2046
|
6.750%
|
|
250,000
|
285,854
|
Banking
1.1%
|
Bank
of America Corp.
|
Subordinated
|
01/22/2025
|
4.000%
|
|
250,000
|
262,293
|
Capital
One Financial Corp.
|
01/29/2024
|
3.900%
|
|
75,000
|
78,434
|
Citigroup,
Inc.
|
Subordinated
|
07/25/2028
|
4.125%
|
|
150,000
|
158,744
|
Goldman
Sachs Group, Inc. (The)
|
Subordinated
|
10/01/2037
|
6.750%
|
|
200,000
|
264,593
|
JPMorgan
Chase & Co.(b)
|
Junior
Subordinated
|
12/31/2049
|
5.300%
|
|
750,000
|
759,190
|
Synchrony
Financial
|
03/19/2029
|
5.150%
|
|
240,000
|
262,908
|
Total
|
1,786,162
|
Cable
and Satellite 0.4%
|
Charter
Communications Operating LLC/Capital
|
07/23/2025
|
4.908%
|
|
250,000
|
270,223
|
07/01/2049
|
5.125%
|
|
225,000
|
228,938
|
Comcast
Corp.
|
10/15/2048
|
4.700%
|
|
155,000
|
181,890
|
Total
|
681,051
|
Chemicals
0.2%
|
LYB
International Finance II BV
|
03/02/2027
|
3.500%
|
|
100,000
|
101,277
|
LyondellBasell
Industries NV
|
04/15/2024
|
5.750%
|
|
275,000
|
308,110
|
Total
|
409,387
|
Electric
1.2%
|
Consumers
Energy Co.
|
02/15/2050
|
3.750%
|
|
500,000
|
535,888
|
Duke
Energy Corp.
|
09/01/2026
|
2.650%
|
|
430,000
|
425,788
|
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Emera
U.S. Finance LP
|
06/15/2046
|
4.750%
|
|
250,000
|
280,334
|
FirstEnergy
Corp.
|
11/15/2031
|
7.375%
|
|
500,000
|
689,977
|
Total
|
1,931,987
|
Environmental
0.2%
|
Waste
Management, Inc.
|
07/15/2049
|
4.150%
|
|
325,000
|
358,101
|
Food
and Beverage 0.6%
|
Anheuser-Busch
InBev Worldwide, Inc.
|
04/15/2048
|
4.600%
|
|
200,000
|
218,139
|
Bacardi
Ltd.(a)
|
05/15/2025
|
4.450%
|
|
200,000
|
211,450
|
Conagra
Brands, Inc.
|
11/01/2028
|
4.850%
|
|
250,000
|
276,779
|
Molson
Coors Brewing Co.
|
07/15/2046
|
4.200%
|
|
250,000
|
241,246
|
Total
|
947,614
|
Health
Care 0.2%
|
CVS
Health Corp.
|
03/25/2048
|
5.050%
|
|
240,000
|
259,783
|
Independent
Energy 0.5%
|
Apache
Corp.
|
10/15/2028
|
4.375%
|
|
250,000
|
253,845
|
Canadian
Natural Resources Ltd.
|
02/01/2039
|
6.750%
|
|
500,000
|
650,491
|
Total
|
904,336
|
Integrated
Energy 0.3%
|
BP
Capital Markets America, Inc.
|
04/14/2027
|
3.588%
|
|
400,000
|
421,621
|
Metals
and Mining 1.4%
|
Freeport-McMoRan,
Inc.
|
03/15/2023
|
3.875%
|
|
500,000
|
501,786
|
Glencore
Finance Canada Ltd.(a),(b)
|
10/25/2042
|
5.300%
|
|
500,000
|
522,087
|
Teck
Resources Ltd.
|
02/01/2043
|
5.400%
|
|
650,000
|
671,115
|
Vale
Overseas Ltd.
|
01/11/2022
|
4.375%
|
|
32,000
|
33,038
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
July 31, 2019
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Vale
SA
|
09/11/2042
|
5.625%
|
|
500,000
|
542,294
|
Total
|
2,270,320
|
Midstream
1.3%
|
APT
Pipelines Ltd.(a)
|
07/15/2027
|
4.250%
|
|
85,000
|
89,422
|
Energy
Transfer Partners LP
|
03/15/2045
|
5.150%
|
|
300,000
|
306,884
|
Kinder
Morgan Energy Partners LP
|
11/01/2042
|
4.700%
|
|
350,000
|
359,354
|
Plains
All American Pipeline LP/Finance Corp.
|
02/15/2045
|
4.900%
|
|
300,000
|
299,381
|
TransCanada
Trust(b)
|
Subordinated
|
03/15/2077
|
5.300%
|
|
250,000
|
248,794
|
Western
Gas Partners LP
|
08/15/2028
|
4.750%
|
|
330,000
|
330,138
|
Williams
Companies, Inc. (The)
|
01/15/2025
|
3.900%
|
|
500,000
|
522,143
|
Total
|
2,156,116
|
Pharmaceuticals
0.2%
|
Bristol-Myers
Squibb Co.(a)
|
10/26/2049
|
4.250%
|
|
240,000
|
263,993
|
Railroads
0.2%
|
Burlington
Northern Santa Fe LLC
|
12/15/2048
|
4.150%
|
|
350,000
|
391,699
|
Wirelines
0.5%
|
AT&T,
Inc.
|
08/15/2026
|
7.300%
|
|
500,000
|
615,081
|
Verizon
Communications, Inc.
|
08/21/2046
|
4.862%
|
|
250,000
|
291,549
|
Total
|
906,630
|
Total
Corporate Bonds & Notes
(Cost $13,149,686)
|
14,343,997
|
|
Foreign
Government Obligations(c) 0.4%
|
|
|
|
|
|
Brazil
0.2%
|
Petrobras
Global Finance BV
|
05/20/2043
|
5.625%
|
|
250,000
|
254,733
|
Foreign
Government Obligations(c) (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Mexico
0.2%
|
Petroleos
Mexicanos
|
03/13/2027
|
6.500%
|
|
375,000
|
374,484
|
Total
Foreign Government Obligations
(Cost $600,419)
|
629,217
|
|
Inflation-Indexed
Bonds(d) 89.4%
|
|
|
|
|
|
Brazil
0.6%
|
Brazil
Notas do Tesouro Nacional
|
08/15/2040
|
6.000%
|
BRL
|
2,980,932
|
1,077,436
|
New
Zealand 1.3%
|
New
Zealand Government Inflation-Linked Bond(a)
|
09/20/2025
|
2.000%
|
NZD
|
2,975,198
|
2,154,348
|
United
States 87.5%
|
U.S.
Treasury Inflation-Indexed Bond
|
01/15/2022
|
0.125%
|
|
2,319,514
|
2,298,296
|
04/15/2022
|
0.125%
|
|
9,108,709
|
9,017,917
|
07/15/2022
|
0.125%
|
|
3,619,265
|
3,600,083
|
01/15/2023
|
0.125%
|
|
10,928,378
|
10,846,907
|
04/15/2023
|
0.625%
|
|
8,943,925
|
9,024,872
|
01/15/2024
|
0.625%
|
|
12,073,050
|
12,258,732
|
04/15/2024
|
0.500%
|
|
13,961,750
|
14,108,483
|
01/15/2025
|
0.250%
|
|
11,082,505
|
11,074,454
|
07/15/2025
|
0.375%
|
|
10,583,020
|
10,685,972
|
01/15/2027
|
2.375%
|
|
5,524,021
|
6,377,865
|
01/15/2028
|
0.500%
|
|
6,359,036
|
6,472,601
|
01/15/2028
|
1.750%
|
|
7,090,036
|
7,941,308
|
01/15/2029
|
2.500%
|
|
15,118,613
|
18,190,310
|
02/15/2042
|
0.750%
|
|
1,530,023
|
1,556,086
|
02/15/2043
|
0.625%
|
|
1,503,725
|
1,476,612
|
02/15/2047
|
0.875%
|
|
9,654,099
|
9,977,405
|
02/15/2048
|
1.000%
|
|
7,788,825
|
8,308,049
|
Total
|
143,215,952
|
Total
Inflation-Indexed Bonds
(Cost $144,068,856)
|
146,447,736
|
|
Residential
Mortgage-Backed Securities - Non-Agency 0.1%
|
|
|
|
|
|
Deutsche
Mortgage Securities, Inc. Mortgage Loan Trust
|
CMO
Series 2003-1 Class 1A7
|
04/25/2033
|
5.500%
|
|
127,615
|
128,509
|
Total
Residential Mortgage-Backed Securities - Non-Agency
(Cost $128,272)
|
128,509
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
10
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Money
Market Funds 0.6%
|
|
Shares
|
Value
($)
|
Columbia
Short-Term Cash Fund, 2.361%(e),(f)
|
923,226
|
923,134
|
Total
Money Market Funds
(Cost $923,134)
|
923,134
|
Total
Investments in Securities
(Cost: $158,870,367)
|
162,472,593
|
Other
Assets & Liabilities, Net
|
|
1,271,334
|
Net
Assets
|
163,743,927
|
At July 31, 2019, securities and/or cash totaling $453,258 were
pledged as collateral.
Investments in derivatives
Forward
foreign currency exchange contracts
|
Currency
to
be sold
|
Currency
to
be purchased
|
Counterparty
|
Settlement
date
|
Unrealized
appreciation ($)
|
Unrealized
depreciation ($)
|
2,926,000 NZD
|
1,953,752 USD
|
HSBC
|
08/28/2019
|
31,399
|
—
|
3,274,587 BRL
|
868,406 USD
|
Standard
Chartered
|
08/28/2019
|
11,920
|
—
|
Total
|
|
|
|
43,319
|
—
|
Long
futures contracts
|
Description
|
Number
of
contracts
|
Expiration
date
|
Trading
currency
|
Notional
amount
|
Value/Unrealized
appreciation ($)
|
Value/Unrealized
depreciation ($)
|
U.S.
Treasury 2-Year Note
|
36
|
09/2019
|
USD
|
7,718,625
|
2,563
|
—
|
U.S.
Treasury Ultra 10-Year Note
|
73
|
09/2019
|
USD
|
10,062,594
|
124,805
|
—
|
Total
|
|
|
|
|
127,368
|
—
|
Short
futures contracts
|
Description
|
Number
of
contracts
|
Expiration
date
|
Trading
currency
|
Notional
amount
|
Value/Unrealized
appreciation ($)
|
Value/Unrealized
depreciation ($)
|
U.S.
Treasury 5-Year Note
|
(37)
|
09/2019
|
USD
|
(4,349,523)
|
—
|
(51,812)
|
U.S.
Ultra Treasury Bond
|
(23)
|
09/2019
|
USD
|
(4,083,938)
|
—
|
(190,712)
|
Total
|
|
|
|
|
—
|
(242,524)
|
Interest
rate swap contracts
|
Fund
receives
|
Fund
pays
|
Payment
frequency
|
Counterparty
|
Maturity
date
|
Notional
currency
|
Notional
amount
|
Value
($)
|
Periodic
payments
receivable
(payable)
($)
|
Upfront
payments
($)
|
Upfront
receipts
($)
|
Unrealized
appreciation
($)
|
Unrealized
depreciation
($)
|
U.S.
CPI Urban Consumers NSA
|
Fixed
rate of 1.448%
|
Receives
at Maturity, Pays at Maturity
|
Goldman
Sachs International
|
01/14/2021
|
USD
|
10,000,000
|
223,020
|
—
|
—
|
—
|
223,020
|
—
|
U.S.
CPI Urban Consumers NSA
|
Fixed
rate of 1.490%
|
Receives
at Maturity, Pays at Maturity
|
JPMorgan
|
01/13/2021
|
USD
|
20,000,000
|
401,705
|
—
|
—
|
—
|
401,705
|
—
|
U.S.
CPI Urban Consumers NSA
|
Fixed
rate of 1.810%
|
Receives
at Maturity, Pays at Maturity
|
JPMorgan
|
01/09/2025
|
USD
|
10,000,000
|
(63,917)
|
—
|
—
|
—
|
—
|
(63,917)
|
Total
|
|
|
|
|
|
|
560,808
|
—
|
—
|
—
|
624,725
|
(63,917)
|
The
accompanying Notes to Financial Statements are an integral part of this statement.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
11
|
Portfolio of Investments (continued)
July 31, 2019
Cleared
interest rate swap contracts
|
Fund
receives
|
Fund
pays
|
Payment
frequency
|
Counterparty
|
Maturity
date
|
Notional
currency
|
Notional
amount
|
Value
($)
|
Upfront
payments
($)
|
Upfront
receipts
($)
|
Unrealized
appreciation
($)
|
Unrealized
depreciation
($)
|
3-Month
USD LIBOR
|
Fixed
rate of 1.782%
|
Receives
Quarterly, Pays Semi annually
|
Morgan
Stanley
|
08/22/2046
|
USD
|
2,500,000
|
205,623
|
—
|
—
|
205,623
|
—
|
3-Month
USD LIBOR
|
Fixed
rate of 1.761%
|
Receives
Quarterly, Pays Semi annually
|
Morgan
Stanley
|
09/30/2046
|
USD
|
1,500,000
|
129,146
|
—
|
—
|
129,146
|
—
|
3-Month
USD LIBOR
|
Fixed
rate of 1.785%
|
Receives
Quarterly, Pays Semi annually
|
Morgan
Stanley
|
10/03/2046
|
USD
|
1,000,000
|
80,933
|
—
|
—
|
80,933
|
—
|
Total
|
|
|
|
|
|
|
415,702
|
—
|
—
|
415,702
|
—
|
Reference
index and values for swap contracts as of period end
|
Reference
index
|
|
Reference
rate
|
3-Month
USD LIBOR
|
London
Interbank Offered Rate
|
2.266%
|
U.S.
CPI Urban Consumers NSA
|
United
States Consumer Price All Urban Non-Seasonally Adjusted Index
|
1.811%
|
Notes to Portfolio of
Investments
(a)
|
Represents
privately placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified
institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees.
At July 31, 2019, the total value of these securities amounted to $3,610,643, which represents 2.21% of total net assets.
|
(b)
|
Represents a
variable rate security with a step coupon where the rate adjusts according to a schedule for a series of periods, typically lower for an initial period and then increasing to a higher coupon rate thereafter. The interest rate shown was the current
rate as of July 31, 2019.
|
(c)
|
Principal
and interest may not be guaranteed by the government.
|
(d)
|
Principal
amounts are denominated in United States Dollars unless otherwise noted.
|
(e)
|
The rate
shown is the seven-day current annualized yield at July 31, 2019.
|
(f)
|
As
defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and
transactions in these affiliated companies during the year ended July 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized
gain
(loss) —
affiliated
issuers ($)
|
Net
change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends
—
affiliated
issuers ($)
|
Value
—
affiliated
issuers
at end of
period ($)
|
Columbia
Short-Term Cash Fund, 2.361%
|
|
2,955,009
|
78,385,315
|
(80,417,098)
|
923,226
|
(224)
|
205
|
39,496
|
923,134
|
Abbreviation Legend
CMO
|
Collateralized Mortgage
Obligation
|
Currency Legend
BRL
|
Brazilian
Real
|
NZD
|
New Zealand
Dollar
|
USD
|
US Dollar
|
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in
The accompanying Notes
to Financial Statements are an integral part of this statement.
12
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Fair value
measurements (continued)
pricing an investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the
asset’s or liability’s fair value measurement. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high
quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed
below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
The following table is a summary of the
inputs used to value the Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Corporate
Bonds & Notes
|
—
|
14,343,997
|
—
|
14,343,997
|
Foreign
Government Obligations
|
—
|
629,217
|
—
|
629,217
|
Inflation-Indexed
Bonds
|
—
|
146,447,736
|
—
|
146,447,736
|
Residential
Mortgage-Backed Securities - Non-Agency
|
—
|
128,509
|
—
|
128,509
|
Money
Market Funds
|
923,134
|
—
|
—
|
923,134
|
Total
Investments in Securities
|
923,134
|
161,549,459
|
—
|
162,472,593
|
Investments
in Derivatives
|
|
|
|
|
Asset
|
|
|
|
|
Forward
Foreign Currency Exchange Contracts
|
—
|
43,319
|
—
|
43,319
|
Futures
Contracts
|
127,368
|
—
|
—
|
127,368
|
Swap
Contracts
|
—
|
1,040,427
|
—
|
1,040,427
|
Liability
|
|
|
|
|
Futures
Contracts
|
(242,524)
|
—
|
—
|
(242,524)
|
Swap
Contracts
|
—
|
(63,917)
|
—
|
(63,917)
|
Total
|
807,978
|
162,569,288
|
—
|
163,377,266
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
Derivative instruments are valued at unrealized appreciation
(depreciation).
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
13
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $157,947,233)
|
$161,549,459
|
Affiliated
issuers (cost $923,134)
|
923,134
|
Foreign
currency (cost $60,251)
|
60,102
|
Margin
deposits on:
|
|
Futures
contracts
|
48,805
|
Swap
contracts
|
404,453
|
Unrealized
appreciation on forward foreign currency exchange contracts
|
43,319
|
Unrealized
appreciation on swap contracts
|
624,725
|
Receivable
for:
|
|
Capital
shares sold
|
84,383
|
Dividends
|
2,223
|
Interest
|
372,151
|
Foreign
tax reclaims
|
711
|
Variation
margin for futures contracts
|
33,109
|
Expense
reimbursement due from Investment Manager
|
1,130
|
Prepaid
expenses
|
3,535
|
Total
assets
|
164,151,239
|
Liabilities
|
|
Unrealized
depreciation on swap contracts
|
63,917
|
Payable
for:
|
|
Capital
shares purchased
|
111,998
|
Variation
margin for futures contracts
|
48,156
|
Variation
margin for swap contracts
|
39,769
|
Management
services fees
|
2,283
|
Distribution
and/or service fees
|
473
|
Transfer
agent fees
|
9,501
|
Compensation
of board members
|
50,333
|
Audit
fees
|
44,000
|
Custodian
fees
|
30,948
|
Other
expenses
|
5,934
|
Total
liabilities
|
407,312
|
Net
assets applicable to outstanding capital stock
|
$163,743,927
|
Represented
by
|
|
Paid
in capital
|
171,778,274
|
Total
distributable earnings (loss) (Note 2)
|
(8,034,347)
|
Total
- representing net assets applicable to outstanding capital stock
|
$163,743,927
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
14
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Statement of Assets and Liabilities (continued)
July 31, 2019
Class
A
|
|
Net
assets
|
$43,588,538
|
Shares
outstanding
|
4,604,594
|
Net
asset value per share
|
$9.47
|
Maximum
sales charge
|
3.00%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares)
|
$9.76
|
Advisor
Class
|
|
Net
assets
|
$109,307
|
Shares
outstanding
|
11,476
|
Net
asset value per share(a)
|
$9.53
|
Class
C
|
|
Net
assets
|
$2,850,802
|
Shares
outstanding
|
309,569
|
Net
asset value per share
|
$9.21
|
Institutional
Class
|
|
Net
assets
|
$12,722,039
|
Shares
outstanding
|
1,334,623
|
Net
asset value per share
|
$9.53
|
Institutional
2 Class
|
|
Net
assets
|
$1,289,159
|
Shares
outstanding
|
135,427
|
Net
asset value per share
|
$9.52
|
Institutional
3 Class
|
|
Net
assets
|
$95,972,421
|
Shares
outstanding
|
9,954,313
|
Net
asset value per share
|
$9.64
|
Class
R
|
|
Net
assets
|
$7,211,661
|
Shares
outstanding
|
769,449
|
Net
asset value per share
|
$9.37
|
(a)
|
Net
asset value per share rounds to this amount due to fractional shares outstanding.
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
15
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Dividends
— affiliated issuers
|
$39,496
|
Interest
|
3,695,757
|
Total
income
|
3,735,253
|
Expenses:
|
|
Management
services fees
|
660,945
|
Distribution
and/or service fees
|
|
Class
A
|
112,759
|
Class
C
|
38,824
|
Class
R
|
34,130
|
Class
T
|
130
|
Transfer
agent fees
|
|
Class
A
|
73,007
|
Advisor
Class
|
133
|
Class
C
|
6,298
|
Institutional
Class
|
25,712
|
Institutional
2 Class
|
426
|
Institutional
3 Class
|
4,389
|
Class
R
|
11,039
|
Class
T
|
85
|
Compensation
of board members
|
13,731
|
Custodian
fees
|
53,634
|
Printing
and postage fees
|
22,211
|
Registration
fees
|
99,390
|
Audit
fees
|
48,963
|
Legal
fees
|
8,082
|
Interest
on collateral
|
17,781
|
Compensation
of chief compliance officer
|
26
|
Other
|
19,526
|
Total
expenses
|
1,251,221
|
Fees
waived or expenses reimbursed by Investment Manager and its affiliates
|
(438,214)
|
Total
net expenses
|
813,007
|
Net
investment income
|
2,922,246
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
(1,781,236)
|
Investments
— affiliated issuers
|
(224)
|
Foreign
currency translations
|
(122,917)
|
Forward
foreign currency exchange contracts
|
(50,428)
|
Futures
contracts
|
(318,084)
|
Swap
contracts
|
(243,127)
|
Net
realized loss
|
(2,516,016)
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
6,877,743
|
Investments
— affiliated issuers
|
205
|
Foreign
currency translations
|
(3,296)
|
Forward
foreign currency exchange contracts
|
463,322
|
Futures
contracts
|
(84,594)
|
Swap
contracts
|
(1,286,040)
|
Net
change in unrealized appreciation (depreciation)
|
5,967,340
|
Net
realized and unrealized gain
|
3,451,324
|
Net
increase in net assets resulting from operations
|
$6,373,570
|
The accompanying Notes to Financial Statements are an integral
part of this statement.
16
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$2,922,246
|
$3,649,331
|
Net
realized gain (loss)
|
(2,516,016)
|
1,202,017
|
Net
change in unrealized appreciation (depreciation)
|
5,967,340
|
(2,423,442)
|
Net
increase in net assets resulting from operations
|
6,373,570
|
2,427,906
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(1,404,311)
|
|
Advisor
Class
|
(982)
|
|
Class
C
|
(106,942)
|
|
Institutional
Class
|
(603,507)
|
|
Institutional
2 Class
|
(15,361)
|
|
Institutional
3 Class
|
(1,646,960)
|
|
Class
R
|
(184,274)
|
|
Class
T
|
(4,316)
|
|
Net
investment income
|
|
|
Class
A
|
|
(1,161,178)
|
Class
C
|
|
(111,274)
|
Institutional
Class
|
|
(484,547)
|
Institutional
2 Class
|
|
(17,680)
|
Institutional
3 Class
|
|
(1,150,159)
|
Class
K
|
|
(1,108)
|
Class
R
|
|
(121,059)
|
Class
T
|
|
(4,178)
|
Total
distributions to shareholders (Note 2)
|
(3,966,653)
|
(3,051,183)
|
Increase
in net assets from capital stock activity
|
34,756,392
|
4,344,768
|
Total
increase in net assets
|
37,163,309
|
3,721,491
|
Net
assets at beginning of year
|
126,580,618
|
122,859,127
|
Net
assets at end of year
|
$163,743,927
|
$126,580,618
|
Undistributed
(excess of distributions over) net investment income
|
$(651,135)
|
$2,403,469
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
17
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018 (a)
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
638,870
|
5,822,751
|
672,524
|
6,264,393
|
Distributions
reinvested
|
148,862
|
1,342,738
|
119,742
|
1,111,202
|
Redemptions
|
(1,207,586)
|
(11,039,303)
|
(1,239,954)
|
(11,548,964)
|
Net
decrease
|
(419,854)
|
(3,873,814)
|
(447,688)
|
(4,173,369)
|
Advisor
Class
|
|
|
|
|
Subscriptions
|
10,655
|
95,573
|
33,176
|
308,427
|
Distributions
reinvested
|
72
|
654
|
—
|
—
|
Redemptions
|
(5,500)
|
(51,906)
|
(26,927)
|
(252,536)
|
Net
increase
|
5,227
|
44,321
|
6,249
|
55,891
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(1,135)
|
(9,848)
|
Net
decrease
|
—
|
—
|
(1,135)
|
(9,848)
|
Class
C
|
|
|
|
|
Subscriptions
|
63,361
|
562,777
|
98,820
|
897,650
|
Distributions
reinvested
|
10,025
|
88,525
|
10,371
|
94,270
|
Redemptions
|
(274,967)
|
(2,441,741)
|
(378,688)
|
(3,444,003)
|
Net
decrease
|
(201,581)
|
(1,790,439)
|
(269,497)
|
(2,452,083)
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
608,473
|
5,584,363
|
1,488,295
|
13,909,785
|
Distributions
reinvested
|
66,143
|
599,254
|
51,487
|
479,863
|
Redemptions
|
(1,322,611)
|
(12,103,210)
|
(1,510,546)
|
(14,101,613)
|
Net
increase (decrease)
|
(647,995)
|
(5,919,593)
|
29,236
|
288,035
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
141,892
|
1,316,685
|
13,092
|
122,356
|
Distributions
reinvested
|
1,661
|
15,016
|
1,869
|
17,404
|
Redemptions
|
(46,933)
|
(427,157)
|
(46,098)
|
(429,892)
|
Net
increase (decrease)
|
96,620
|
904,544
|
(31,137)
|
(290,132)
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
6,041,400
|
56,838,054
|
1,396,126
|
13,248,210
|
Distributions
reinvested
|
179,959
|
1,646,624
|
122,069
|
1,149,891
|
Redemptions
|
(1,444,545)
|
(13,548,287)
|
(437,513)
|
(4,140,447)
|
Net
increase
|
4,776,814
|
44,936,391
|
1,080,682
|
10,257,654
|
Class
K
|
|
|
|
|
Subscriptions
|
—
|
—
|
374
|
3,491
|
Distributions
reinvested
|
—
|
—
|
93
|
861
|
Redemptions
|
—
|
—
|
(5,309)
|
(49,127)
|
Net
decrease
|
—
|
—
|
(4,842)
|
(44,775)
|
Class
R
|
|
|
|
|
Subscriptions
|
268,975
|
2,418,717
|
327,081
|
3,018,975
|
Distributions
reinvested
|
8,927
|
79,892
|
2,057
|
18,945
|
Redemptions
|
(211,288)
|
(1,902,781)
|
(247,288)
|
(2,279,935)
|
Net
increase
|
66,614
|
595,828
|
81,850
|
757,985
|
Class
T
|
|
|
|
|
Distributions
reinvested
|
444
|
4,008
|
423
|
3,938
|
Redemptions
|
(16,296)
|
(144,854)
|
(5,190)
|
(48,528)
|
Net
decrease
|
(15,852)
|
(140,846)
|
(4,767)
|
(44,590)
|
Total
net increase
|
3,659,993
|
34,756,392
|
438,951
|
4,344,768
|
(a)
|
Advisor
Class shares are based on operations from March 1, 2018 (commencement of operations) through the stated period end.
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
18
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
19
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Increase
from
payment
by affiliate
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$9.34
|
0.18
|
0.23
|
—
|
0.41
|
(0.28)
|
(0.28)
|
Year
Ended 7/31/2018
|
$9.39
|
0.26
|
(0.09)
|
—
|
0.17
|
(0.22)
|
(0.22)
|
Year
Ended 7/31/2017
|
$9.24
|
0.21
|
(0.07)
|
0.01
|
0.15
|
—
|
—
|
Year
Ended 7/31/2016
|
$8.85
|
0.22
|
0.17
|
—
|
0.39
|
—
|
—
|
Year
Ended 7/31/2015
|
$9.46
|
0.11
|
(0.68)
|
—
|
(0.57)
|
(0.04)
|
(0.04)
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$9.40
|
0.24
|
0.19
|
—
|
0.43
|
(0.30)
|
(0.30)
|
Year
Ended 7/31/2018(f)
|
$9.29
|
0.16
|
(0.05)
|
—
|
0.11
|
—
|
—
|
Class
C
|
Year
Ended 7/31/2019
|
$9.09
|
0.10
|
0.23
|
—
|
0.33
|
(0.21)
|
(0.21)
|
Year
Ended 7/31/2018
|
$9.15
|
0.17
|
(0.08)
|
—
|
0.09
|
(0.15)
|
(0.15)
|
Year
Ended 7/31/2017
|
$9.06
|
0.14
|
(0.06)
|
0.01
|
0.09
|
—
|
—
|
Year
Ended 7/31/2016
|
$8.74
|
0.15
|
0.17
|
—
|
0.32
|
—
|
—
|
Year
Ended 7/31/2015
|
$9.40
|
0.04
|
(0.67)
|
—
|
(0.63)
|
(0.03)
|
(0.03)
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$9.41
|
0.19
|
0.23
|
—
|
0.42
|
(0.30)
|
(0.30)
|
Year
Ended 7/31/2018
|
$9.46
|
0.28
|
(0.09)
|
—
|
0.19
|
(0.24)
|
(0.24)
|
Year
Ended 7/31/2017
|
$9.28
|
0.25
|
(0.08)
|
0.01
|
0.18
|
—
|
—
|
Year
Ended 7/31/2016
|
$8.86
|
0.24
|
0.18
|
—
|
0.42
|
—
|
—
|
Year
Ended 7/31/2015
|
$9.45
|
0.12
|
(0.66)
|
—
|
(0.54)
|
(0.05)
|
(0.05)
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$9.40
|
0.22
|
0.21
|
—
|
0.43
|
(0.31)
|
(0.31)
|
Year
Ended 7/31/2018
|
$9.44
|
0.28
|
(0.07)
|
—
|
0.21
|
(0.25)
|
(0.25)
|
Year
Ended 7/31/2017
|
$9.26
|
0.23
|
(0.06)
|
0.01
|
0.18
|
—
|
—
|
Year
Ended 7/31/2016
|
$8.84
|
0.25
|
0.17
|
—
|
0.42
|
—
|
—
|
Year
Ended 7/31/2015
|
$9.42
|
0.13
|
(0.66)
|
—
|
(0.53)
|
(0.05)
|
(0.05)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
20
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$9.47
|
4.55%
|
1.15%
(c)
|
0.80%
(c)
|
1.92%
|
25%
|
$43,589
|
Year
Ended 7/31/2018
|
$9.34
|
1.82%
|
1.18%
(c)
|
0.79%
(c)
|
2.74%
|
17%
|
$46,950
|
Year
Ended 7/31/2017
|
$9.39
|
1.62%
(d)
|
1.10%
|
0.80%
|
2.23%
|
26%
|
$51,405
|
Year
Ended 7/31/2016
|
$9.24
|
4.41%
|
1.03%
|
0.79%
(e)
|
2.51%
|
60%
|
$58,151
|
Year
Ended 7/31/2015
|
$8.85
|
(6.01%)
|
1.21%
|
0.82%
(e)
|
1.16%
|
88%
|
$70,528
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$9.53
|
4.79%
|
0.89%
(c)
|
0.55%
(c)
|
2.65%
|
25%
|
$109
|
Year
Ended 7/31/2018(f)
|
$9.40
|
1.18%
|
0.95%
(c),(g)
|
0.54%
(c),(g)
|
4.08%
(g)
|
17%
|
$59
|
Class
C
|
Year
Ended 7/31/2019
|
$9.21
|
3.74%
|
1.90%
(c)
|
1.55%
(c)
|
1.09%
|
25%
|
$2,851
|
Year
Ended 7/31/2018
|
$9.09
|
0.97%
|
1.93%
(c)
|
1.54%
(c)
|
1.91%
|
17%
|
$4,649
|
Year
Ended 7/31/2017
|
$9.15
|
0.99%
(d)
|
1.86%
|
1.55%
|
1.51%
|
26%
|
$7,140
|
Year
Ended 7/31/2016
|
$9.06
|
3.66%
|
1.79%
|
1.54%
(e)
|
1.75%
|
60%
|
$6,864
|
Year
Ended 7/31/2015
|
$8.74
|
(6.77%)
|
1.96%
|
1.57%
(e)
|
0.41%
|
88%
|
$10,399
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$9.53
|
4.68%
|
0.90%
(c)
|
0.55%
(c)
|
2.03%
|
25%
|
$12,722
|
Year
Ended 7/31/2018
|
$9.41
|
2.06%
|
0.93%
(c)
|
0.54%
(c)
|
2.99%
|
17%
|
$18,653
|
Year
Ended 7/31/2017
|
$9.46
|
1.94%
(d)
|
0.87%
|
0.55%
|
2.64%
|
26%
|
$18,473
|
Year
Ended 7/31/2016
|
$9.28
|
4.74%
|
0.78%
|
0.54%
(e)
|
2.74%
|
60%
|
$8,919
|
Year
Ended 7/31/2015
|
$8.86
|
(5.74%)
|
0.96%
|
0.57%
(e)
|
1.29%
|
88%
|
$9,618
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$9.52
|
4.78%
|
0.79%
(c)
|
0.46%
(c)
|
2.39%
|
25%
|
$1,289
|
Year
Ended 7/31/2018
|
$9.40
|
2.24%
|
0.83%
(c)
|
0.45%
(c)
|
2.98%
|
17%
|
$365
|
Year
Ended 7/31/2017
|
$9.44
|
1.94%
(d)
|
0.74%
|
0.48%
|
2.44%
|
26%
|
$661
|
Year
Ended 7/31/2016
|
$9.26
|
4.75%
|
0.68%
|
0.45%
|
2.85%
|
60%
|
$56
|
Year
Ended 7/31/2015
|
$8.84
|
(5.62%)
|
0.68%
|
0.42%
|
1.47%
|
88%
|
$77
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
21
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Increase
from
payment
by affiliate
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Total
distributions to
shareholders
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$9.51
|
0.25
|
0.20
|
—
|
0.45
|
(0.32)
|
(0.32)
|
Year
Ended 7/31/2018
|
$9.56
|
0.30
|
(0.10)
|
—
|
0.20
|
(0.25)
|
(0.25)
|
Year
Ended 7/31/2017(h)
|
$9.48
|
0.12
|
(0.04)
|
—
|
0.08
|
—
|
—
|
Class
R
|
Year
Ended 7/31/2019
|
$9.25
|
0.15
|
0.23
|
—
|
0.38
|
(0.26)
|
(0.26)
|
Year
Ended 7/31/2018
|
$9.30
|
0.24
|
(0.09)
|
—
|
0.15
|
(0.20)
|
(0.20)
|
Year
Ended 7/31/2017
|
$9.17
|
0.18
|
(0.06)
|
0.01
|
0.13
|
—
|
—
|
Year
Ended 7/31/2016
|
$8.81
|
0.20
|
0.16
|
—
|
0.36
|
—
|
—
|
Year
Ended 7/31/2015
|
$9.43
|
0.08
|
(0.66)
|
—
|
(0.58)
|
(0.04)
|
(0.04)
|
Notes
to Financial Highlights
|
(a)
|
In
addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense
ratios.
|
(b)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(c)
|
Ratios
include interest on collateral expense. For the periods indicated below, if interest on collateral expense had been excluded, expenses would have been lower by:
|
Class
|
7/31/2019
|
7/31/2018
|
Class
A
|
0.01%
|
less
than 0.01%
|
Advisor
Class
|
0.01%
|
0.01%
|
Class
C
|
0.01%
|
less
than 0.01%
|
Institutional
Class
|
0.01%
|
less
than 0.01%
|
Institutional
2 Class
|
0.01%
|
less
than 0.01%
|
Institutional
3 Class
|
0.01%
|
less
than 0.01%
|
Class
R
|
0.01%
|
less
than 0.01%
|
(d)
|
The Fund
received a payment from an affiliate. Had the Fund not received this payment, the total return would have been lower by 0.09%.
|
(e)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
(f)
|
Advisor
Class shares commenced operations on March 1, 2018. Per share data and total return reflect activity from that date.
|
(g)
|
Annualized.
|
(h)
|
Institutional
3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date.
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
22
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$9.64
|
4.90%
|
0.73%
(c)
|
0.40%
(c)
|
2.72%
|
25%
|
$95,972
|
Year
Ended 7/31/2018
|
$9.51
|
2.16%
|
0.78%
(c)
|
0.39%
(c)
|
3.19%
|
17%
|
$49,254
|
Year
Ended 7/31/2017(h)
|
$9.56
|
0.84%
|
0.72%
(g)
|
0.43%
(g)
|
2.91%
(g)
|
26%
|
$39,152
|
Class
R
|
Year
Ended 7/31/2019
|
$9.37
|
4.21%
|
1.39%
(c)
|
1.05%
(c)
|
1.71%
|
25%
|
$7,212
|
Year
Ended 7/31/2018
|
$9.25
|
1.58%
|
1.43%
(c)
|
1.04%
(c)
|
2.55%
|
17%
|
$6,504
|
Year
Ended 7/31/2017
|
$9.30
|
1.42%
(d)
|
1.36%
|
1.05%
|
1.99%
|
26%
|
$5,778
|
Year
Ended 7/31/2016
|
$9.17
|
4.09%
|
1.28%
|
1.04%
(e)
|
2.27%
|
60%
|
$5,760
|
Year
Ended 7/31/2015
|
$8.81
|
(6.20%)
|
1.46%
|
1.07%
(e)
|
0.93%
|
88%
|
$5,272
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
23
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Inflation Protected Securities Fund (the Fund), a
series of Columbia Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts
business trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Advisor Class, Institutional Class, Institutional 2 Class, Institutional 3 Class and Class R shares are available for purchase through authorized investment professionals to omnibus
retirement plans or to institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years. Effective December 14, 2018, Class T shares merged, in a
tax-free transaction, into Class A shares of the Fund and are no longer offered for sale.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or not believed to be reflective of market
value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that management believes
does not approximate market value.
Asset- and
mortgage-backed securities are generally valued by pricing services, which utilize pricing models that incorporate the securities’ cash flow and loan performance data. These models also take into account available market data, including
trades, market quotations, and benchmark yield curves for identical or similar securities. Factors used to identify similar securities may include, but are not limited to, issuer, collateral type, vintage, prepayment speeds, collateral performance,
credit ratings, credit enhancement and expected life. Asset-backed securities for which quotations are readily available may also be valued based upon an over-the-counter or exchange bid quote from an approved independent broker-dealer.
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
Forward foreign currency exchange contracts are
marked-to-market based upon foreign currency exchange rates provided by a pricing service.
24
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Futures and options on futures contracts are valued based upon
the settlement price at the close of regular trading on their principal exchanges or, in the absence of transactions, at the mean of the latest quoted bid and ask prices.
Swap transactions are valued through an independent pricing
service or broker, or if neither is available, through an internal model based upon observable inputs.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Foreign currency transactions and translations
The values of all assets and liabilities denominated in
foreign currencies are generally translated into U.S. dollars at exchange rates determined at the close of regular trading on the New York Stock Exchange. Net realized and unrealized gains (losses) on foreign currency transactions and translations
include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and
payment dates on dividends, interest income and foreign withholding taxes.
For financial statement purposes, the Fund does not
distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized
gains (losses) on investments in the Statement of Operations.
Derivative instruments
The Fund invests in certain derivative instruments, as
detailed below, to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more securities, currencies, commodities, indices, or other assets or instruments.
Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to
pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including
the potential inability of the counterparty to fulfill its obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the
potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial
statements.
A derivative instrument may suffer a
marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its obligations under the contract. The
Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund and the amount of any variation margin held by the
counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk to the Fund since the clearinghouse or central counterparty (CCP) provides some protection
in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract; therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in
exchange-traded or centrally cleared derivatives with respect to initial and variation margin that is held in a broker’s customer account. While brokers are required to segregate customer margin from their own assets, in the event
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
25
|
Notes to Financial Statements (continued)
July 31, 2019
that a broker
becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across all the
broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its contractual rights and to secure
rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivatives contract
counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a
default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative instrument’s payables and/or receivables with collateral held and/or posted and create
one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
Collateral (margin) requirements differ by type of derivative.
Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain circumstances. Collateral terms for most over-the-counter
derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral
requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally,
the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (e.g., $250,000) before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized,
contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any interest expense paid by the Fund is shown on the Statement of
Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those
counterparties.
Certain ISDA Master Agreements allow
counterparties of over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified time period or if the Fund fails to meet
certain terms of the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination rights if the counterparty fails to meet certain terms of the ISDA Master
Agreement. In determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk, whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes, the Fund does not offset
derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Forward foreign currency exchange contracts
Forward foreign currency exchange contracts are
over-the-counter agreements between two parties to buy and sell a currency at a set price on a future date. The Fund utilized forward foreign currency exchange contracts to hedge the currency exposure associated with some or all of the Fund’s
securities, to shift foreign currency exposure back to U.S. dollars and to generate total return through long and short positions versus the U.S. dollar. These instruments may be used for other purposes in future periods.
The values of forward foreign currency exchange contracts
fluctuate daily with changes in foreign currency exchange rates. Changes in the value of these contracts are recorded as unrealized appreciation or depreciation until the contract is exercised or has expired. The Fund will realize a gain or loss
when the forward foreign currency exchange contract is closed or expires. Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in U.S. dollars without delivery of foreign currency.
26
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
use of forward foreign currency exchange contracts does not eliminate fluctuations in the prices of the Fund’s portfolio securities. The risks of forward foreign currency exchange contracts include movement in the values of the foreign
currencies relative to the U.S. dollar (or other foreign currencies) and the possibility that counterparties will not complete their contractual obligations, which may be in excess of the amount reflected, if any, in the Statement of Assets and
Liabilities.
Futures contracts
Futures contracts are exchange-traded and represent
commitments for the future purchase or sale of an asset at a specified price on a specified date. The Fund bought and sold futures contracts to produce incremental earnings, to manage the duration and yield curve exposure of the Fund versus the
benchmark and to manage exposure to movements in interest rates. These instruments may be used for other purposes in future periods. Upon entering into futures contracts, the Fund bears risks that it may not achieve the anticipated benefits of the
futures contracts and may realize a loss. Additional risks include counterparty credit risk, the possibility of an illiquid market, and that a change in the value of the contract or option may not correlate with changes in the value of the
underlying asset.
Upon entering into a futures contract,
the Fund deposits cash or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be maintained at an established level over the life
of the contract. Cash deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are designated in the Portfolio of Investments. Subsequent payments (variation
margin) are made or received by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund
recognizes a realized gain or loss when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Swap contracts
Swap contracts are negotiated in the over-the-counter market
and may be entered into as a bilateral contract or centrally cleared (centrally cleared swap contract). In a centrally cleared swap contract, immediately following execution of the swap contract with a broker, the swap contract is novated to a
central counterparty (the CCP) and the CCP becomes the Fund’s counterparty to the centrally cleared swap contract. The Fund is required to deposit initial margin with the futures commission merchant (FCM), which pledges it through to the CCP
in the form of cash or securities in an amount that varies depending on the size and risk profile of the particular swap contract. Securities deposited as initial margin are designated in the Portfolio of Investments and cash deposited is recorded
in the Statement of Assets and Liabilities as margin deposits. Unlike a bilateral swap contract, for centrally cleared swap contracts, the Fund has minimal credit exposure to the FCM because the CCP stands between the Fund and the relevant
buyer/seller on the other side of the contract. Swap contracts are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). The daily change in valuation of centrally cleared swap contracts, if any, is
recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities.
Entering into these contracts involves, to varying degrees,
elements of interest, liquidity and counterparty credit risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks involve the possibility that there may be unfavorable changes in interest rates, market
conditions or other conditions, that it may be difficult to initiate a swap transaction or liquidate a position at an advantageous time or price which may result in significant losses, and that the FCM or CCP may not fulfill its obligation under the
contract.
Interest rate swap contracts
The Fund entered into interest rate swap transactions which
may include inflation rate swap contracts to produce incremental earnings, to manage interest rate and market risk exposure to produce incremental earnings, to gain exposure to or protect itself from market rate changes, to synthetically add or
subtract principal exposure to a market, to manage long or short exposure to an inflation index and to hedge the portfolio risk associated with some or all of the Fund’s securities. These instruments may be used for other purposes in future
periods. An interest rate swap is an agreement between two parties where there are two flows and payments are made between the two counterparties and the payments are dependent upon changes in an interest rate, inflation rate or inflation index
calculated on a nominal amount. Interest rate swaps are agreements between two parties that involve the exchange of one type of interest rate for another type of interest rate cash
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
27
|
Notes to Financial Statements (continued)
July 31, 2019
flow on specified
dates in the future, based on a predetermined, specified notional amount. Certain interest rate swaps are considered forward-starting, whereby the accrual for the exchange of cash flows does not begin until a specified date in the future. The net
cash flow for a standard interest rate swap transaction is generally the difference between a floating market interest rate versus a fixed interest rate.
Interest rate swaps are valued daily and unrealized
appreciation (depreciation) is recorded. Certain interest rate swaps may accrue periodic interest on a daily basis as a component of unrealized appreciation (depreciation); the Fund will realize a gain or loss upon the payment or receipt of accrued
interest. The Fund will realize a gain or a loss when the interest rate swap is terminated.
Effects of derivative transactions in the financial
statements
The following tables are intended to provide
additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the
impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules following the Portfolio of Investments present additional information regarding
derivative instruments outstanding at the end of the period, if any.
The following table is a summary of the fair value of
derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) at July 31, 2019:
|
Asset
derivatives
|
|
Risk
exposure
category
|
Statement
of assets and liabilities
location
|
Fair
value ($)
|
Foreign
exchange risk
|
Unrealized
appreciation on forward foreign currency exchange contracts
|
43,319
|
Interest
rate risk
|
Component
of total distributable earnings (loss) — unrealized appreciation on futures contracts
|
127,368*
|
Interest
rate risk
|
Component
of total distributable earnings (loss) — unrealized appreciation on swap contracts
|
1,040,427*
|
Total
|
|
1,211,114
|
|
Liability
derivatives
|
|
Risk
exposure
category
|
Statement
of assets and liabilities
location
|
Fair
value ($)
|
Interest
rate risk
|
Component
of total distributable earnings (loss) — unrealized depreciation on futures contracts
|
242,524*
|
Interest
rate risk
|
Component
of total distributable earnings (loss) — unrealized depreciation on swap contracts
|
63,917*
|
Total
|
|
306,441
|
*
|
Includes
cumulative appreciation (depreciation) as reported in the tables following the Portfolio of Investments. Only the current day’s variation margin is reported in receivables or payables in the Statement of Assets and Liabilities.
|
28
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
following table indicates the effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended July 31, 2019:
Amount
of realized gain (loss) on derivatives recognized in income
|
Risk
exposure category
|
|
|
Forward
foreign
currency
exchange
contracts
($)
|
Futures
contracts
($)
|
Swap
contracts
($)
|
Total
($)
|
Foreign
exchange risk
|
|
|
(50,428)
|
—
|
—
|
(50,428)
|
Interest
rate risk
|
|
|
—
|
(318,084)
|
(243,127)
|
(561,211)
|
Total
|
|
|
(50,428)
|
(318,084)
|
(243,127)
|
(611,639)
|
|
Change
in unrealized appreciation (depreciation) on derivatives recognized in income
|
Risk
exposure category
|
|
|
Forward
foreign
currency
exchange
contracts
($)
|
Futures
contracts
($)
|
Swap
contracts
($)
|
Total
($)
|
Foreign
exchange risk
|
|
|
463,322
|
—
|
—
|
463,322
|
Interest
rate risk
|
|
|
—
|
(84,594)
|
(1,286,040)
|
(1,370,634)
|
Total
|
|
|
463,322
|
(84,594)
|
(1,286,040)
|
(907,312)
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended July 31, 2019:
Derivative
instrument
|
Average
notional
amounts ($)*
|
Futures
contracts — long
|
17,597,454
|
Futures
contracts — short
|
15,112,296
|
Derivative
instrument
|
Average
unrealized
appreciation ($)*
|
Average
unrealized
depreciation ($)*
|
Forward
foreign currency exchange contracts
|
36,496
|
(19,456)
|
Interest
rate swap contracts
|
1,710,041
|
(49,924)
|
*
|
Based on
the ending quarterly outstanding amounts for the year ended July 31, 2019.
|
Asset- and mortgage-backed securities
The Fund may invest in asset-backed and mortgage-backed
securities. The maturity dates shown represent the original maturity of the underlying obligation. Actual maturity may vary based upon prepayment activity on these obligations. All, or a portion, of the obligation may be prepaid at any time because
the underlying asset may be prepaid. As a result, decreasing market interest rates could result in an increased level of prepayment. An increased prepayment rate will have the effect of shortening the maturity of the security. Unless otherwise
noted, the coupon rates presented are fixed rates.
Treasury inflation protected securities
The Fund may invest in treasury inflation protected securities
(TIPS). The principal amount of TIPS is adjusted periodically and is increased for inflation or decreased for deflation based on a monthly published index. These adjustments are recorded as interest income in the Statement of Operations. Coupon
payments are based on the adjusted principal at the time the interest is paid.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
29
|
Notes to Financial Statements (continued)
July 31, 2019
Offsetting of assets and liabilities
The following table presents the Fund’s gross and net
amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Fund as of July 31, 2019:
|
Goldman
Sachs
International ($)
|
HSBC
($)
|
JPMorgan
($)
|
Morgan
Stanley ($)
|
Standard
Chartered ($)
|
Total
($)
|
Assets
|
|
|
|
|
|
|
Forward
foreign currency exchange contracts
|
-
|
31,399
|
-
|
-
|
11,920
|
43,319
|
OTC
interest rate swap contracts (a)
|
223,020
|
-
|
401,705
|
-
|
-
|
624,725
|
Total
assets
|
223,020
|
31,399
|
401,705
|
-
|
11,920
|
668,044
|
Liabilities
|
|
|
|
|
|
|
Centrally
cleared interest rate swap contracts (b)
|
-
|
-
|
-
|
39,769
|
-
|
39,769
|
OTC
interest rate swap contracts (a)
|
-
|
-
|
63,917
|
-
|
-
|
63,917
|
Total
liabilities
|
-
|
-
|
63,917
|
39,769
|
-
|
103,686
|
Total
financial and derivative net assets
|
223,020
|
31,399
|
337,788
|
(39,769)
|
11,920
|
564,358
|
Total
collateral received (pledged) (c)
|
223,020
|
-
|
280,000
|
(39,769)
|
-
|
463,251
|
Net
amount (d)
|
-
|
31,399
|
57,788
|
-
|
11,920
|
101,107
|
(a)
|
Over-the-Counter
(OTC) swap contracts are presented at market value plus periodic payments receivable (payable), which is comprised of unrealized appreciation, unrealized depreciation, upfront payments and upfront receipts.
|
(a)
|
Centrally
cleared swaps are included within payable/receivable for variation margin on the Statement of Assets and Liabilities.
|
(c)
|
In some
instances, the actual collateral received and/or pledged may be more than the amount shown due to overcollateralization.
|
(d)
|
Represents the
net amount due from/(to) counterparties in the event of default.
|
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Dividend income is recorded on the ex-dividend date.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
30
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Federal income tax status
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its tax year, and as such will not be subject to federal
income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to federal excise tax.
Therefore, no federal income or excise tax provision is recorded.
Distributions to shareholders
Distributions from net investment income, if any, are declared
and paid each calendar quarter. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from
GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods beginning after December 15, 2019 and interim periods within
those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a result of the amendments, management implemented disclosure
changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the level 3 valuation
processes, as well as modifications to the measurement uncertainty disclosure.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
31
|
Notes to Financial Statements (continued)
July 31, 2019
Note 3. Fees and other transactions with
affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.51% to 0.29% as the Fund’s net assets increase. The
effective management services fee rate for the year ended July 31, 2019 was 0.51% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
32
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
For
the year ended July 31, 2019, the Fund’s effective transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.16
|
Advisor
Class
|
0.16
|
Class
C
|
0.16
|
Institutional
Class
|
0.16
|
Institutional
2 Class
|
0.07
|
Institutional
3 Class
|
0.01
|
Class
R
|
0.16
|
Class
T
|
0.06
(a)
|
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at the maximum annual rates of up to 0.25%, 1.00%, 0.50% and 0.25% of the Fund’s average daily net assets attributable to Class A, Class C, Class R and Class T shares, respectively. For Class C shares, of the 1.00% fee, up to 0.75%
can be reimbursed for distribution expenses and up to an additional 0.25% can be reimbursed for shareholder servicing expenses. For Class R shares, of the 0.50% fee, up to 0.25% can be reimbursed for shareholder servicing expenses. For Class T
shares, of the 0.25% fee, up to 0.25% can be reimbursed for distribution and/or shareholder servicing expenses. As a result of all Class T shares of the Fund being redeemed or converted to Class A shares, December 14, 2018 was the last day the Fund
paid a distribution and shareholder services fee for Class T shares.
The amount of distribution and shareholder services expenses
incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $152,000 for Class C shares. This amount is based on the most recent information available as of June 30, 2019, and may be recovered from future payments
under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended July 31, 2019, if any, are listed below:
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
3.00
|
0.50 - 1.00
(a)
|
14,544
|
Class
C
|
—
|
1.00
(b)
|
167
|
Class
T
|
2.50
|
—
|
—
|
(a)
|
This
charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months after purchase, as follows: 1.00% if redeemed within 12 months after 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 12 months after purchase, with certain limited exceptions.
|
The Fund’s other share classes are not subject to sales
charges.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
33
|
Notes to Financial Statements (continued)
July 31, 2019
Expenses waived/reimbursed by the Investment Manager and its
affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of Trustees, 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 following annual rate(s) as a percentage of the
class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to
December 1, 2018
|
Class
A
|
0.80%
|
0.80%
|
Advisor
Class
|
0.55
|
0.55
|
Class
C
|
1.55
|
1.55
|
Institutional
Class
|
0.55
|
0.55
|
Institutional
2 Class
|
0.45
|
0.44
|
Institutional
3 Class
|
0.39
|
0.38
|
Class
R
|
1.05
|
1.05
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), 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, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. In addition to the contractual agreement, the Investment Manager and
certain of its affiliates have voluntarily agreed to waive fees and/or reimburse Fund expenses (excluding certain fees and expenses described above) so that Fund level expenses (expenses directly attributable to the Fund and not to a specific share
class) are waived proportionately across all share classes, but the Fund’s net operating expenses shall not exceed the contractual annual rates listed in the table above. This arrangement may be revised or discontinued at any time. Any fees
waived and/or expenses reimbursed under the expense reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for deferral/reversal of wash sale losses, derivative investments, tax straddles, swap investments, late-year ordinary losses, capital loss carryforwards, trustees’ deferred compensation, principal and/or interest from
fixed income securities and foreign currency transactions. To the extent these differences were permanent, reclassifications were made among the components of the Fund’s net assets. Temporary differences do not require reclassifications.
The following reclassifications were made:
Excess
of distributions
over net investment
income ($)
|
Accumulated
net realized
(loss) ($)
|
Paid
in
capital ($)
|
(2,010,197)
|
2,010,197
|
—
|
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification.
34
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
tax character of distributions paid during the years indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
3,966,653
|
—
|
3,966,653
|
3,051,183
|
—
|
3,051,183
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At July 31, 2019, the components of distributable earnings on
a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
appreciation ($)
|
—
|
—
|
(11,334,441)
|
3,402,414
|
At July 31, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
appreciation ($)
|
159,974,852
|
4,390,960
|
(988,546)
|
3,402,414
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at July
31, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended July 31, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
No
expiration
short-term ($)
|
No
expiration
long-term ($)
|
Total
($)
|
Utilized
($)
|
Expired
($)
|
1,339,874
|
9,994,567
|
11,334,441
|
202,832
|
—
|
Under current tax rules, regulated
investment companies can elect to treat certain late-year ordinary losses incurred and post-October capital losses (capital losses realized after October 31) as arising on the first day of the following taxable year. As of July 31, 2019, the Fund
will elect to treat the following late-year ordinary losses and post-October capital losses as arising on August 1, 2019.
Late
year
ordinary losses ($)
|
Post-October
capital losses ($)
|
52,150
|
—
|
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and proceeds from
sales of securities, excluding short-term investments and derivatives, if any, aggregated to $64,599,520 and $31,933,557, respectively, for the year ended July 31, 2019, of which $59,949,477 and $19,192,181, respectively, were U.S. government
securities. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the Financial Highlights.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
35
|
Notes to Financial Statements (continued)
July 31, 2019
Note 6. Affiliated money market fund
The Fund invests in Columbia Short-Term Cash Fund, an
affiliated money market fund established for the exclusive use by the Fund and other affiliated funds (the Affiliated MMF). The income earned by the Fund from such investments is included as Dividends - affiliated issuers in the Statement of
Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of the Affiliated MMF. The Affiliated MMF prices its shares with a floating net asset value. In addition, the Board of Trustees of the Affiliated MMF
may impose a fee on redemptions (sometimes referred to as a liquidity fee) or temporarily suspend redemptions (sometimes referred to as imposing a redemption gate) in the event its liquidity falls below regulatory limits.
Note 7. Interfund lending
Pursuant to an exemptive order granted by the Securities and
Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds, borrow money
directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended July 31, 2019.
Note
8. Line of credit
The Fund has access to a
revolving credit facility with a syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility, which is a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion.
Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each
borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment
fee is included in other expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
Note 9. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer 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 debt instruments to indicate their credit risk. Lower rated or unrated debt instruments held by the Fund may present increased credit risk as compared to higher-rated debt instruments.
Derivatives risk
Losses involving derivative instruments may be substantial,
because a relatively small movement in the underlying reference (which is generally the price, rate or other economic indicator associated with a security(ies), commodity, currency or index or other instrument or asset) may result in a substantial
loss for the Fund. In addition to the potential for increased losses, the
36
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
use of derivative
instruments may lead to increased volatility within the Fund. Derivatives 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, liquidity risk and pricing risk.
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.
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 interest rates may also affect the liquidity of
the Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, 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. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the longer the maturity or duration of a
debt security, the greater its sensitivity to changes in interest rates.
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. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may 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. 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. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
Shareholder concentration risk
At July 31, 2019, affiliated shareholders of record owned
83.2% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced
to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased
operating expenses for non-redeeming Fund shareholders.
Note 10. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 11. Information regarding pending and settled
legal proceedings
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (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.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
37
|
Notes to Financial Statements (continued)
July 31, 2019
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 Fund. Further, although we believe proceedings are not 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, 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.
38
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Inflation Protected Securities Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Inflation Protected Securities Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of
operations for the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein
(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
39
|
Federal Income Tax Information
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended July 31, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
40
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
41
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
42
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
43
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
44
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
45
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Inflation Protected Securities Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management
Investment Distributors, Inc. (collectively, the Funds).
On an annual basis, the Fund’s Board of Trustees (the
Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its Contracts Committee in November 2018 and January, March,
April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive response to items of information requested by independent legal
counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented at these meetings were first supplied in draft form to
designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who is an Independent Trustee), and the final materials
were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets with portfolio management teams and senior
management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the work, deliberations and conclusions of the
various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
46
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group, the product score of the
Fund (taking into account performance relative to peers and benchmarks) and the net assets of the Fund. The Board observed that the Fund’s investment performance was understandable in light of the particular management style involved and the
particular market environment.
Comparative fees, costs
of services provided and the profits realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability.
The Board considered the reports of its independent fee
consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to industry competitors,
the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of the level of fees is to
achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the "pricing philosophy"
currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s total expense ratio
(after considering proposed expense caps/waivers) approximated the peer universe’s median expense ratio. Based on its review, the Board concluded that the Fund’s management fee was fair and reasonable in light of the extent and quality
of services that the Fund receives.
The Board also
considered the profitability of Columbia Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the
Profitability Report, discussing the profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was
reasonable and that the 2019 information shows that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle
profitability relative to industry competitors was reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced
ability to offer various other financial products to Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Fund should permit the Investment Manager to offer competitive
compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
47
|
Approval of Management Agreement (continued)
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
48
|
Columbia Inflation Protected
Securities Fund | Annual Report 2019
|
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT filings are available on the SEC’s website at
sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Columbia
Inflation Protected Securities Fund | Annual Report 2019
|
49
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Inflation Protected Securities Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Annual
Report
July 31, 2019
Columbia Global Opportunities Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
6
|
|
8
|
|
9
|
|
23
|
|
25
|
|
26
|
|
28
|
|
32
|
|
50
|
|
51
|
|
52
|
|
57
|
|
60
|
Columbia Global Opportunities Fund | Annual Report
2019
Investment objective
Columbia Global Opportunities Fund
(the Fund) seeks to provide shareholders maximum total return through a combination of growth of capital and current income.
Portfolio
management
Anwiti Bahuguna,
Ph.D.
Lead
Portfolio Manager
Managed Fund
since 2010
Dan Boncarosky,
CFA
Portfolio
Manager
Managed Fund
since 2017
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
Excluding
sales charges
|
01/23/85
|
1.88
|
4.35
|
7.24
|
|
Including
sales charges
|
|
-3.97
|
3.12
|
6.60
|
Advisor
Class*
|
11/08/12
|
2.06
|
4.58
|
7.40
|
Class
C
|
Excluding
sales charges
|
06/26/00
|
1.13
|
3.57
|
6.43
|
|
Including
sales charges
|
|
0.13
|
3.57
|
6.43
|
Institutional
Class*
|
09/27/10
|
2.14
|
4.60
|
7.49
|
Institutional
2 Class*
|
11/08/12
|
2.17
|
4.67
|
7.48
|
Institutional
3 Class*
|
03/01/17
|
2.21
|
4.51
|
7.32
|
Class
R
|
12/11/06
|
1.63
|
4.04
|
6.93
|
Blended
Benchmark
|
|
4.17
|
4.01
|
6.18
|
MSCI
ACWI All Cap Index (Net)
|
|
1.93
|
6.40
|
9.42
|
Bloomberg
Barclays Global Aggregate Index
|
|
5.73
|
1.33
|
2.63
|
Returns for Class A shares are shown
with and without the maximum initial sales charge of 5.75%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related
operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
The Fund’s performance prior to December 14, 2012
reflects returns achieved pursuant to different principal investment strategies.
The Blended Benchmark consists of 50% MSCI ACWI All Cap Index
(Net) and 50% Bloomberg Barclays Global Aggregate Index.
The MSCI ACWI All Cap Index (Net) captures large-, mid-, small-
and micro-cap representation across 24 developed markets countries and large-, mid- and small-cap representation across 21 emerging markets countries.
The Bloomberg Barclays Global Aggregate Index is a broad-based
benchmark that measures the global investment-grade fixed-rate debt markets.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes (except the MSCI ACWI All Cap Index (Net), which reflects reinvested dividends net of withholding taxes) or other expenses of investing. Securities in the
Fund may not match those in an index.
Columbia
Global Opportunities Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a
hypothetical $10,000 investment (July 31, 2009 — July 31, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Global Opportunities Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the
redemption of Fund shares.
Top
10 holdings (%) (at July 31, 2019)
|
Columbia
Commodity Strategy Fund, Institutional 3 Class (United States)
|
3.4
|
Columbia
Mortgage Opportunities Fund, Institutional 3 Class
(United States)
|
2.7
|
Microsoft
Corp. (United States)
|
2.2
|
Alphabet,
Inc., Class C (United States)
|
1.7
|
Amazon.com,
Inc. (United States)
|
1.6
|
Bank
of America Corp. (United States)
|
1.3
|
Federal
National Mortgage Association
08/13/2049 3.000% (United States)
|
1.2
|
Johnson
& Johnson (United States)
|
1.2
|
Japan
Government 30-Year Bond
03/20/2047 0.800% (Japan)
|
1.1
|
JPMorgan
Chase & Co. (United States)
|
1.1
|
Percentages indicated are based
upon total investments including options purchased and excluding Money Market Funds and all other investments in derivatives, if any.
For further detail about these holdings, please refer to the
section entitled “Portfolio of Investments.”
Fund holdings are as of the date given, are subject to change
at any time, and are not recommendations to buy or sell any security.
Equity
sector breakdown (%) (at July 31, 2019)
|
Communication
Services
|
9.6
|
Consumer
Discretionary
|
11.7
|
Consumer
Staples
|
8.2
|
Energy
|
6.8
|
Financials
|
14.8
|
Health
Care
|
12.3
|
Industrials
|
11.2
|
Information
Technology
|
15.3
|
Materials
|
3.6
|
Real
Estate
|
4.1
|
Utilities
|
2.4
|
Total
|
100.0
|
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
4
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Fund at a Glance (continued)
Country
breakdown (%) (at July 31, 2019)
|
Argentina
|
0.0
(a)
|
Australia
|
0.3
|
Bermuda
|
0.0
(a)
|
Brazil
|
1.0
|
Canada
|
2.2
|
China
|
2.8
|
Finland
|
0.5
|
France
|
1.9
|
Germany
|
0.7
|
Hong
Kong
|
0.7
|
Hungary
|
0.0
(a)
|
India
|
0.8
|
Indonesia
|
0.7
|
Ireland
|
1.1
|
Israel
|
0.4
|
Italy
|
0.8
|
Japan
|
7.8
|
Luxembourg
|
0.0
(a)
|
Malta
|
0.0
(a)
|
Mexico
|
0.1
|
Netherlands
|
1.9
|
New
Zealand
|
0.5
|
Norway
|
0.5
|
Pakistan
|
0.1
|
Panama
|
0.1
|
Peru
|
0.1
|
Philippines
|
0.2
|
Poland
|
0.0
(a)
|
Portugal
|
0.0
(a)
|
Puerto
Rico
|
0.2
|
Russian
Federation
|
0.6
|
South
Africa
|
1.1
|
South
Korea
|
1.8
|
Spain
|
0.7
|
Sweden
|
0.4
|
Switzerland
|
0.8
|
Taiwan
|
0.4
|
Thailand
|
0.3
|
United
Kingdom
|
3.3
|
United
States(b)
|
65.2
|
Total
|
100.0
|
(a)
|
Rounds
to zero.
|
(b)
|
Includes
investments in Money Market Funds.
|
Country breakdown is based primarily on issuer’s place
of organization/incorporation. Percentages indicated are based upon total investments including options purchased and excluding all other investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
The Fund may use place of organization/incorporation or other
factors in determining whether an issuer is domestic (U.S.) or foreign for purposes of its investment policies. At July 31, 2019, the Fund invested at least 40% of its net assets in foreign companies in accordance with its principal investment
strategy.
Market
exposure through derivatives investments (% of notional exposure) (at July 31, 2019)(a)
|
|
Long
|
Short
|
Net
|
Fixed
Income Derivative Contracts
|
75.0
|
(0.7)
|
74.3
|
Equity
Derivative Contracts
|
10.4
|
(22.6)
|
(12.2)
|
Foreign
Currency Derivative Contracts
|
45.7
|
(7.8)
|
37.9
|
Total
Notional Market Value of Derivative Contracts
|
131.1
|
(31.1)
|
100.0
|
(a) The Fund has market exposure
(long and/or short) to fixed income and equity asset classes and foreign currency through its investments in derivatives. The notional exposure of a financial instrument is the nominal or face amount that is used to calculate payments made on that
instrument and/or changes in value for the instrument. The notional exposure is a hypothetical underlying quantity upon which payment obligations are computed. Notional exposures provide a gauge for how the Fund may behave given changes in
individual markets. For a description of the Fund’s investments in derivatives, see Investments in derivatives following the Portfolio of Investments, and Note 2 of the Notes to Financial Statements.
Columbia
Global Opportunities Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance
For
the 12-month period that ended July 31, 2019, the Fund’s Class A shares returned 1.88% excluding sales charges. The Fund underperformed its Blended Benchmark, which returned 4.17% for the same time period. Over the same 12 months, the MSCI
ACWI All Cap Index (Net) returned 1.93% and the Bloomberg Barclays Global Aggregate Index returned 5.73%. An overweight in equities and an underweight in fixed income detracted from returns relative to the Fund’s Blended Benchmark. Security
selection among small-cap stocks weighed on relative results as did an out-of-benchmark allocation to commodities, which posted negative returns for the period.
Trade issues, interest rate concerns drove financial
markets
Optimism prevailed early in the 12-month
period ended July 31, 2019 as positive global economic conditions, broad U.S. corporate tax cuts and moves to reduce regulation in a number of industries buoyed confidence. However, the economic backdrop looked less rosy as the period wore on. U.S.
economic growth slowed to 2.3% (annualized), and European economies transitioned to a slower pace of growth, struggling with rising interest rates, trade tensions and uncertainty surrounding Brexit (the U.K.’s departure from the European
Union). At the same time, China’s economic conditions weakened and emerging markets came under pressure, driven by trade and tariff concerns and a rising U.S. dollar.
With global uncertainties on the rise, investors sold stocks
and other risky assets late in 2018. Stock markets rebounded early in 2019 but dipped again in May, as trade concerns amplified, pressuring global demand. Central banks in the United States, Europe and China took notice, aiming to ease monetary
policy before weakness became entrenched. The U.S. Federal Reserve (Fed) lowered a key short-term interest rate by 25 basis points on the last day of July 2019. China has eased monetary policy, as have several major Latin American countries.
Consensus appears to favor a rate cut by the European Central Bank before the end of summer, while Japan sits on the fence and the United Kingdom sits tight.
For the 12-month period, global bonds generally outperformed
global equities. The Bloomberg Barclays U.S. Aggregate Bond Index, a broad measure of investment-grade bonds, returned 8.08%. The Bloomberg Barclays Global Aggregate Index returned 5.73%. The S&P 500 Index, a broad measure of U.S. stock returns,
gained 7.99%. The MSCI ACWI ex USA (Net) Index declined 2.27%.
Contributors and detractors
The Fund’s overweight in U.S. and international
developed market equities detracted from relative results. However, style factors and underlying security selection within U.S. large-cap equities and international developed market equities aided results and more than offset the impact of the
Fund’s overweight in these asset classes. An overweight in small-cap stocks and disappointing security selection within the sector weighed on relative results. Security selection within emerging market equities, however, was particularly
strong and was one of the largest contributors to relative performance for the period.
The Fund’s underweight in fixed income, combined with
underlying security selection, were among the biggest detractors from relative results for the period as global fixed income outperformed global equity markets. An out-of-benchmark allocation to commodities also hurt relative performance as
commodities posted negative returns for the period.
The
Fund employed the use of forward foreign currency contracts, futures contracts, options and swap contracts during the period to achieve its investment strategies. On a stand-alone basis, the use of these derivatives had an overall positive impact on
the Fund’s performance.
Portfolio changes and
positioning
During the period, we adjusted the
Fund’s positioning in response to market activity. We increased the Fund’s allocation to U.S. large-cap equities and reduced the allocation to international developed markets equities. Throughout the period, we increased the Fund’s
allocation to fixed income, to end the period closer to a neutral weight relative to the Blended Benchmark. While we decreased exposure to absolute return and commodities strategies, we maintained exposure to these out-of-benchmark asset classes
because we view them as important diversifiers over the long term.
Market risk may affect a single
issuer, sector of the economy, industry or the market as a whole. The Fund’s investment in other funds subjects it to the investment performance (positive or negative), risks and expenses of these
underlying funds. There are risks associated with fixed-income investments, including credit risk, interest rate risk, and prepayment and extension risk. In general, bond prices rise when interest rates fall
and vice versa. This effect is usually more pronounced for longer term securities. Non-investment-grade (high-yield or junk) securities present greater price volatility and more risk to
6
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Manager Discussion of Fund Performance (continued)
principal and income than higher rated securities. A rise in interest rates may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt
instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities. Market or other (e.g., interest rate) environments may adversely affect the liquidity
of Fund investments, negatively impacting their price. Generally, the less liquid the market at the time the Fund sells a holding, the greater the risk of loss or decline of value to the Fund. Foreign
investments subject the Fund to risks, including political, economic, market, social and others within a particular country, as well as to currency instabilities and less stringent financial and accounting standards generally applicable to
U.S. issuers. Risks are enhanced for emerging market issuers. Investing in derivatives is a specialized activity that involves special risks that subject the Fund to
significant loss potential, including when used as leverage, and may result in greater fluctuation in Fund value. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
Columbia
Global Opportunities Fund | Annual Report 2019
|
7
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,045.50
|
1,019.14
|
5.78
|
5.71
|
1.14
|
Advisor
Class
|
1,000.00
|
1,000.00
|
1,045.90
|
1,020.38
|
4.51
|
4.46
|
0.89
|
Class
C
|
1,000.00
|
1,000.00
|
1,041.20
|
1,015.42
|
9.57
|
9.44
|
1.89
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,046.00
|
1,020.38
|
4.51
|
4.46
|
0.89
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,046.50
|
1,020.58
|
4.31
|
4.26
|
0.85
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,046.70
|
1,020.78
|
4.11
|
4.06
|
0.81
|
Class
R
|
1,000.00
|
1,000.00
|
1,043.70
|
1,017.90
|
7.04
|
6.95
|
1.39
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
8
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Alternative
Strategies Funds 2.7%
|
|
Shares
|
Value
($)
|
United
States 2.7%
|
Columbia
Commodity Strategy Fund, Institutional 3 Class(a)
|
3,377,841
|
14,794,945
|
Total
Alternative Strategies Funds
(Cost $17,948,693)
|
14,794,945
|
|
Common
Stocks 64.3%
|
Issuer
|
Shares
|
Value
($)
|
Argentina
0.0%
|
MercadoLibre,
Inc.(b)
|
372
|
231,168
|
Australia
0.3%
|
Ansell
Ltd.
|
85,278
|
1,622,319
|
Bermuda
0.0%
|
Bank
of NT Butterfield & Son Ltd. (The)
|
2,075
|
65,217
|
Brazil
0.9%
|
Arco
Platform Ltd., Class A(b)
|
4,578
|
202,073
|
BK
Brasil Operacao e Assessoria a Restaurantes SA
|
135,600
|
732,301
|
Itaú
Unibanco Holding SA, ADR
|
104,434
|
955,571
|
Localiza
Rent a Car SA
|
56,493
|
648,366
|
Lojas
Renner SA
|
18,700
|
231,524
|
Magazine
Luiza SA
|
3,700
|
254,982
|
Notre
Dame Intermedica Participacoes SA
|
39,800
|
451,046
|
Pagseguro
Digital Ltd., Class A(b)
|
5,294
|
230,183
|
Petrobras
Distribuidora SA
|
29,900
|
206,288
|
Petroleo
Brasileiro SA, ADR
|
51,898
|
781,065
|
Stone
Co., Ltd., Class A(b)
|
6,604
|
231,206
|
Total
|
4,924,605
|
Canada
2.3%
|
Alimentation
Couche-Tard, Inc., Class B
|
34,373
|
2,106,968
|
Barrick
Gold Corp.
|
121,743
|
1,979,541
|
Canada
Goose Holdings, Inc.(b)
|
16,486
|
771,380
|
Cott
Corp.
|
162,724
|
2,081,240
|
Masonite
International Corp.(b)
|
900
|
47,970
|
Novanta,
Inc.(b)
|
310
|
26,068
|
Parex
Resources(b)
|
27,624
|
472,191
|
Stars
Group, Inc. (The)(b)
|
68,761
|
1,070,125
|
Suncor
Energy, Inc.
|
79,622
|
2,285,151
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Yamana
Gold, Inc.
|
570,894
|
1,684,137
|
Total
|
12,524,771
|
China
2.8%
|
58.Com,
Inc., ADR(b)
|
4,827
|
272,146
|
Alibaba
Group Holding Ltd., ADR(b)
|
19,190
|
3,321,981
|
BeiGene
Ltd., ADR(b)
|
5,097
|
700,022
|
China
International Travel Service Corp., Ltd., Class A
|
11,800
|
154,002
|
China
Resources Cement Holdings Ltd.
|
352,000
|
321,692
|
CNOOC
Ltd.
|
321,000
|
529,254
|
Ctrip.com
International Ltd., ADR(b)
|
9,758
|
380,367
|
Industrial
& Commercial Bank of China Ltd., Class H
|
416,000
|
279,363
|
Jiangsu
Yanghe Brewery Joint-Stock Co., Ltd., Class A
|
21,100
|
353,743
|
Kingdee
International Software Group Co., Ltd.
|
157,000
|
149,554
|
Kweichow
Moutai Co., Ltd., Class A
|
1,400
|
196,341
|
Midea
Group Co., Ltd., Class A
|
39,800
|
313,486
|
NetEase,
Inc., ADR
|
2,095
|
483,568
|
New
Oriental Education & Technology Group, Inc., ADR(b)
|
3,611
|
376,663
|
Nexteer
Automotive Group Ltd.
|
91,000
|
94,576
|
Ping
An Insurance Group Co. of China Ltd., Class H
|
83,500
|
984,115
|
Shenzhou
International Group Holdings Ltd.
|
30,000
|
413,781
|
TAL
Education Group, ADR(b)
|
17,138
|
551,844
|
Tencent
Holdings Ltd.
|
97,400
|
4,538,156
|
Tencent
Music Entertainment Group, ADR(b)
|
26,291
|
375,173
|
WuXi
AppTec Co., Ltd., Class H
|
24,500
|
227,218
|
Wuxi
Biologics Cayman, Inc.(b)
|
54,500
|
579,186
|
Total
|
15,596,231
|
Finland
0.5%
|
Neste
OYJ
|
29,280
|
969,060
|
UPM-Kymmene
OYJ
|
62,730
|
1,690,889
|
Total
|
2,659,949
|
France
1.6%
|
AXA
SA
|
69,256
|
1,744,438
|
Capgemini
SE
|
16,336
|
2,074,091
|
DBV
Technologies SA, ADR(b)
|
7,809
|
73,951
|
Eiffage
SA
|
14,675
|
1,450,072
|
Sanofi
|
28,102
|
2,341,792
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
9
|
Portfolio of Investments
(continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Total
SA
|
22,209
|
1,151,097
|
Total
|
8,835,441
|
Germany
0.7%
|
Aroundtown
SA
|
153,629
|
1,225,610
|
Bayer
AG, Registered Shares
|
14,484
|
938,114
|
Covestro
AG
|
23,636
|
1,066,010
|
Duerr
AG
|
17,888
|
532,012
|
Total
|
3,761,746
|
Hong
Kong 0.7%
|
AIA
Group Ltd.
|
106,200
|
1,087,039
|
Galaxy
Entertainment Group Ltd.
|
101,000
|
687,537
|
Link
REIT (The)
|
37,000
|
430,354
|
Techtronic
Industries Co., Ltd.
|
56,000
|
416,453
|
WH
Group Ltd.
|
1,329,500
|
1,294,095
|
Total
|
3,915,478
|
Hungary
0.0%
|
Richter
Gedeon Nyrt
|
11,829
|
208,177
|
India
0.8%
|
Apollo
Hospitals Enterprise Ltd.
|
10,577
|
207,240
|
Asian
Paints Ltd.
|
17,718
|
390,303
|
Bajaj
Finance Ltd.
|
3,829
|
180,080
|
Balkrishna
Industries Ltd.
|
15,040
|
152,970
|
Biocon
Ltd.
|
55,732
|
182,921
|
Eicher
Motors Ltd.
|
1,247
|
294,798
|
HDFC
Bank Ltd., ADR
|
8,298
|
954,104
|
HDFC
Life Insurance Co., Ltd.
|
50,541
|
361,230
|
Indraprastha
Gas Ltd.
|
51,714
|
227,068
|
Jubilant
Foodworks Ltd.
|
24,368
|
422,922
|
Maruti
Suzuki India Ltd.
|
1,720
|
136,261
|
Reliance
Industries Ltd.(b)
|
53,174
|
896,391
|
Tech
Mahindra Ltd.
|
24,717
|
227,733
|
Total
|
4,634,021
|
Indonesia
0.7%
|
PT
Ace Hardware Indonesia Tbk
|
3,154,700
|
412,187
|
PT
Astra International Tbk
|
818,100
|
405,475
|
PT
Bank Central Asia Tbk
|
597,700
|
1,312,178
|
PT
Bank Rakyat Indonesia Persero Tbk
|
4,220,600
|
1,337,415
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
PT
Pakuwon Jati Tbk
|
6,725,200
|
351,353
|
Total
|
3,818,608
|
Ireland
1.2%
|
Allergan
PLC
|
7,060
|
1,133,130
|
Amarin
Corp. PLC, ADR(b)
|
9,616
|
178,761
|
Horizon
Therapeutics PLC(b)
|
1,320
|
32,855
|
Ingersoll-Rand
PLC
|
16,647
|
2,058,568
|
Medtronic
PLC
|
29,037
|
2,960,032
|
Total
|
6,363,346
|
Israel
0.4%
|
Bank
Hapoalim BM(b)
|
219,537
|
1,660,261
|
Bezeq
Israeli Telecommunication Corp., Ltd.
|
870,551
|
592,269
|
Total
|
2,252,530
|
Italy
0.3%
|
Esprinet
SpA
|
96,093
|
322,848
|
Recordati
SpA
|
32,911
|
1,473,914
|
Total
|
1,796,762
|
Japan
5.3%
|
Amano
Corp.
|
61,900
|
1,862,112
|
BayCurrent
Consulting, Inc.
|
27,200
|
1,242,087
|
CYBERDYNE,
Inc.(b)
|
13,800
|
77,733
|
Elecom
Co., Ltd.
|
15,800
|
572,101
|
Invincible
Investment Corp.
|
2,591
|
1,487,129
|
ITOCHU
Corp.
|
94,800
|
1,805,061
|
Kinden
Corp.
|
49,400
|
747,301
|
Koito
Manufacturing Co., Ltd.
|
10,400
|
519,931
|
Matsumotokiyoshi
Holdings Co., Ltd.
|
55,700
|
1,854,080
|
Meitec
Corp.
|
15,300
|
788,516
|
Nihon
M&A Center, Inc.
|
78,800
|
2,114,643
|
Nippon
Telegraph & Telephone Corp.
|
44,100
|
1,990,281
|
ORIX
Corp.
|
113,100
|
1,614,156
|
Round
One Corp.
|
56,000
|
851,166
|
Shionogi
& Co., Ltd.
|
24,500
|
1,356,443
|
Ship
Healthcare Holdings, Inc.
|
14,100
|
633,602
|
SoftBank
Group Corp.
|
13,100
|
668,862
|
Sony
Corp.
|
34,400
|
1,956,463
|
Subaru
Corp.
|
22,100
|
515,068
|
Sumitomo
Mitsui Financial Group, Inc.
|
41,200
|
1,440,756
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
10
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Takeda
Pharmaceutical Co., Ltd.
|
70,251
|
2,417,752
|
Takuma
Co., Ltd.
|
102,400
|
1,215,096
|
Toyota
Motor Corp.
|
13,100
|
846,433
|
ValueCommerce
Co., Ltd.
|
26,400
|
457,078
|
Total
|
29,033,850
|
Luxembourg
0.1%
|
Ternium
SA, ADR
|
12,761
|
269,640
|
Malta
0.0%
|
BGP
Holdings PLC(b),(c),(d)
|
581,000
|
1
|
Mexico
0.1%
|
Grupo
Financiero Banorte SAB de CV, Class O
|
62,100
|
310,666
|
Mexichem
SAB de CV
|
166,100
|
303,533
|
Total
|
614,199
|
Netherlands
1.9%
|
ABN
AMRO Bank NV
|
92,407
|
1,849,757
|
ASR
Nederland NV
|
41,744
|
1,568,596
|
ING
Groep NV
|
88,497
|
981,941
|
Koninklijke
Ahold Delhaize NV
|
100,905
|
2,291,848
|
NXP
Semiconductors NV
|
20,927
|
2,163,642
|
Signify
NV
|
60,196
|
1,635,938
|
uniQure
NV(b)
|
1,100
|
64,515
|
Total
|
10,556,237
|
Norway
0.5%
|
BW
LPG Ltd.(b)
|
237,075
|
1,084,644
|
SalMar
ASA
|
36,632
|
1,691,986
|
Total
|
2,776,630
|
Pakistan
0.1%
|
Lucky
Cement Ltd.
|
111,950
|
265,103
|
Oil
& Gas Development Co., Ltd.
|
295,800
|
234,734
|
Total
|
499,837
|
Panama
0.1%
|
Copa
Holdings SA, Class A
|
2,799
|
282,979
|
Peru
0.1%
|
Credicorp
Ltd.
|
1,892
|
412,437
|
Philippines
0.2%
|
Ayala
Land, Inc.
|
917,200
|
894,341
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Poland
0.0%
|
KRUK
SA
|
4,103
|
195,762
|
Portugal
0.0%
|
Banco
Espirito Santo SA, Registered Shares(b),(c),(d)
|
641,287
|
1
|
Puerto
Rico 0.2%
|
EVERTEC,
Inc.
|
4,350
|
139,287
|
Popular,
Inc.
|
19,425
|
1,118,103
|
Total
|
1,257,390
|
Russian
Federation 0.6%
|
Detsky
Mir PJSC
|
171,772
|
242,029
|
Lukoil
PJSC, ADR
|
3,418
|
280,508
|
Mail.ru
Group Ltd., GDR(b),(e)
|
17,720
|
454,463
|
Sberbank
of Russia PJSC, ADR
|
76,848
|
1,140,737
|
TCS
Group Holding PLC, GDR(e)
|
20,300
|
404,376
|
Yandex
NV, Class A(b)
|
18,322
|
718,589
|
Total
|
3,240,702
|
South
Africa 0.4%
|
AVI
Ltd.
|
48,182
|
291,334
|
Capitec
Bank Holdings Ltd.
|
2,158
|
177,530
|
Naspers
Ltd., Class N
|
7,089
|
1,728,017
|
Total
|
2,196,881
|
South
Korea 1.2%
|
GS
Home Shopping, Inc.
|
2,670
|
377,560
|
Hyundai
Home Shopping Network Corp.
|
6,721
|
530,022
|
KB
Financial Group, Inc.
|
8,643
|
315,831
|
LG
Chem Ltd.
|
664
|
187,798
|
Pearl
Abyss Corp.(b)
|
819
|
118,274
|
Samsung
Electronics Co., Ltd.
|
88,707
|
3,359,752
|
SK
Hynix, Inc.
|
9,738
|
623,370
|
SK
Telecom Co., Ltd.
|
804
|
168,302
|
Youngone
Corp.
|
38,354
|
1,090,873
|
Total
|
6,771,782
|
Spain
0.7%
|
ACS
Actividades de Construccion y Servicios SA
|
50,643
|
2,046,319
|
Endesa
SA
|
43,885
|
1,084,328
|
Tecnicas
Reunidas SA(b)
|
36,777
|
886,776
|
Total
|
4,017,423
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
11
|
Portfolio of Investments (continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Sweden
0.4%
|
Granges
AB
|
80,458
|
801,137
|
Hemfosa
Fastigheter AB
|
158,420
|
1,426,005
|
Total
|
2,227,142
|
Switzerland
0.8%
|
Autoneum
Holding AG
|
3,647
|
400,723
|
Nestlé
SA, Registered Shares
|
14,228
|
1,509,409
|
Roche
Holding AG, Genusschein Shares
|
8,907
|
2,384,094
|
Total
|
4,294,226
|
Taiwan
0.4%
|
ASMedia
Technology, Inc.
|
16,000
|
271,092
|
Taiwan
Semiconductor Manufacturing Co., Ltd.
|
215,530
|
1,772,314
|
Total
|
2,043,406
|
Thailand
0.3%
|
Fabrinet
(b)
|
2,700
|
144,936
|
Mega
Lifesciences PCL, Foreign Registered Shares
|
145,800
|
166,039
|
Muangthai
Capital PCL, Foreign Registered Shares
|
503,000
|
983,129
|
Tisco
Financial Group PCL, Foreign Registered Shares
|
91,700
|
300,041
|
Total
|
1,594,145
|
United
Kingdom 3.1%
|
BP
PLC
|
223,087
|
1,476,110
|
British
American Tobacco PLC
|
47,848
|
1,704,946
|
BT
Group PLC
|
446,160
|
1,045,064
|
Cardtronics
PLC, Class A(b)
|
3,925
|
111,784
|
Crest
Nicholson Holdings PLC
|
147,026
|
653,811
|
DCC
PLC
|
24,319
|
2,050,790
|
Greene
King PLC
|
76,319
|
579,493
|
GW
Pharmaceuticals PLC, ADR(b)
|
1,482
|
240,529
|
John
Wood Group PLC
|
150,272
|
968,309
|
Just
Group PLC(b)
|
917,109
|
525,974
|
Legal
& General Group PLC
|
453,168
|
1,437,131
|
LivaNova
PLC(b)
|
590
|
45,459
|
Royal
Dutch Shell PLC, Class B
|
131,524
|
4,154,189
|
TP
ICAP PLC
|
423,561
|
1,613,034
|
WPP
PLC
|
41,909
|
493,664
|
Total
|
17,100,287
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
United
States 34.6%
|
Abbott
Laboratories
|
34,332
|
2,990,317
|
Acacia
Communications, Inc.(b)
|
1,310
|
87,993
|
ACADIA
Pharmaceuticals, Inc.(b)
|
9,646
|
237,099
|
Adobe,
Inc.(b)
|
12,258
|
3,663,426
|
ADTRAN,
Inc.
|
5,390
|
59,883
|
Advanced
Drainage Systems, Inc.
|
4,250
|
139,952
|
Aerie
Pharmaceuticals, Inc.(b)
|
8,916
|
193,210
|
Alder
Biopharmaceuticals, Inc.(b)
|
5,817
|
58,868
|
Alexion
Pharmaceuticals, Inc.(b)
|
16,687
|
1,890,470
|
Allstate
Corp. (The)
|
34,467
|
3,701,756
|
Alphabet,
Inc., Class C(b)
|
6,216
|
7,562,883
|
Amazon.com,
Inc.(b)
|
3,862
|
7,209,504
|
Amedisys,
Inc.(b)
|
190
|
26,199
|
Ameren
Corp.
|
27,955
|
2,115,914
|
American
Assets Trust, Inc.
|
2,650
|
122,960
|
American
Electric Power Co., Inc.
|
26,751
|
2,349,005
|
American
Equity Investment Life Holding Co.
|
3,900
|
100,620
|
American
Tower Corp.
|
12,762
|
2,700,694
|
American
Woodmark Corp.(b)
|
1,450
|
123,032
|
Amkor
Technology, Inc.(b)
|
15,910
|
146,849
|
AMN
Healthcare Services, Inc.(b)
|
900
|
48,042
|
ANI
Pharmaceuticals, Inc.(b)
|
1,615
|
136,613
|
Apellis
Pharmaceuticals, Inc.(b)
|
1,780
|
49,715
|
Apple,
Inc.
|
18,743
|
3,993,009
|
Applied
Industrial Technologies, Inc.
|
2,150
|
130,806
|
ArcBest
Corp.
|
2,115
|
63,302
|
Arena
Pharmaceuticals, Inc.(b)
|
1,110
|
69,575
|
ArQule,
Inc.(b)
|
2,000
|
20,180
|
Arrowhead
Pharmaceuticals, Inc.(b)
|
1,030
|
29,932
|
Ascent
Resources, Class B(b),(c),(d)
|
195,286
|
43,744
|
Atara
Biotherapeutics, Inc.(b)
|
2,050
|
29,254
|
Atkore
International Group, Inc.(b)
|
5,300
|
144,637
|
AVX
Corp.
|
3,250
|
49,498
|
Badger
Meter, Inc.
|
275
|
14,710
|
Bancorp,
Inc. (The)(b)
|
12,400
|
120,032
|
Bank
of America Corp.
|
189,277
|
5,807,018
|
Barnes
Group, Inc.
|
1,200
|
62,448
|
Barrett
Business Services, Inc.
|
560
|
49,000
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
12
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Baxter
International, Inc.
|
28,660
|
2,406,580
|
Bed
Bath & Beyond, Inc.
|
6,950
|
67,485
|
Belden,
Inc.
|
1,625
|
73,873
|
Benchmark
Electronics, Inc.
|
550
|
14,883
|
BioMarin
Pharmaceutical, Inc.(b)
|
12,653
|
1,003,636
|
bluebird
bio, Inc.(b)
|
470
|
61,678
|
Blueprint
Medicines Corp.(b)
|
920
|
92,138
|
BMC
Stock Holdings, Inc.(b)
|
5,800
|
122,670
|
Bottomline
Technologies de, Inc.(b)
|
750
|
31,568
|
Boyd
Gaming Corp.
|
550
|
14,570
|
Braemar
Hotels & Resorts, Inc.
|
3,700
|
33,744
|
Brinker
International, Inc.
|
2,900
|
115,565
|
Bristol-Myers
Squibb Co.
|
30,441
|
1,351,885
|
Broadcom,
Inc.
|
12,379
|
3,589,786
|
Brookline
Bancorp, Inc.
|
1,050
|
15,572
|
Builders
FirstSource, Inc.(b)
|
8,200
|
140,876
|
C&J
Energy Services, Inc.(b)
|
3,200
|
35,008
|
Cactus,
Inc., Class A(b)
|
1,425
|
41,852
|
Cadence
BanCorp
|
2,850
|
48,849
|
California
Resources Corp.(b)
|
4,875
|
74,636
|
CareTrust
REIT, Inc.
|
2,150
|
49,945
|
Cass
Information Systems, Inc.
|
473
|
24,080
|
Cathay
General Bancorp
|
3,950
|
147,019
|
Chase
Corp.
|
430
|
44,539
|
Chesapeake
Utilities Corp.
|
1,320
|
123,367
|
Chewy,
Inc., Class A(b)
|
26,085
|
875,413
|
Cigna
Corp.
|
13,691
|
2,326,375
|
Cirrus
Logic, Inc.(b)
|
3,175
|
155,734
|
Cisco
Systems, Inc.
|
79,648
|
4,412,499
|
Citigroup,
Inc.
|
55,983
|
3,983,750
|
Clovis
Oncology, Inc.(b)
|
1,400
|
14,770
|
Cohen
& Steers, Inc.
|
1,350
|
70,700
|
Collectors
Universe, Inc.
|
1,200
|
28,452
|
CommVault
Systems, Inc.(b)
|
2,275
|
103,376
|
ConocoPhillips
Co.
|
39,820
|
2,352,566
|
Continental
Building Product(b)
|
4,145
|
101,884
|
CoreCivic,
Inc.
|
6,450
|
109,456
|
Core-Mark
Holding Co., Inc.
|
2,375
|
88,896
|
CorEnergy
Infrastructure Trust, Inc.
|
3,093
|
125,174
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Corvel
Corp.(b)
|
1,310
|
111,612
|
Crocs,
Inc.(b)
|
550
|
12,568
|
CryoLife,
Inc.(b)
|
1,900
|
54,758
|
CSW
Industrials, Inc.
|
1,025
|
72,375
|
Customers
Bancorp, Inc.(b)
|
5,290
|
109,080
|
CVR
Energy, Inc.
|
2,650
|
140,635
|
Dana,
Inc.
|
1,925
|
32,167
|
Dave
& Buster’s Entertainment, Inc.
|
2,625
|
106,706
|
Deckers
Outdoor Corp.(b)
|
830
|
129,712
|
Delek
U.S. Holdings, Inc.
|
2,575
|
110,931
|
Delta
Air Lines, Inc.
|
47,462
|
2,897,080
|
Deluxe
Corp.
|
1,385
|
61,799
|
Denbury
Resources, Inc.(b)
|
17,200
|
19,436
|
Dine
Brands Global, Inc.
|
1,420
|
116,568
|
Diodes,
Inc.(b)
|
2,990
|
127,374
|
Discovery,
Inc., Class A(b)
|
75,084
|
2,275,796
|
DISH
Network Corp., Class A(b)
|
26,889
|
910,462
|
Dow,
Inc.
|
42,547
|
2,060,977
|
Dynavax
Technologies Corp.(b)
|
3,855
|
10,640
|
EastGroup
Properties, Inc.
|
990
|
119,275
|
Echo
Global Logistics, Inc.(b)
|
2,450
|
51,597
|
Edgewell
Personal Care Co.(b)
|
2,275
|
69,228
|
Electronic
Arts, Inc.(b)
|
23,539
|
2,177,357
|
Ellington
Financial, Inc.
|
4,500
|
78,660
|
EMCOR
Group, Inc.
|
1,170
|
98,736
|
Employers
Holdings, Inc.
|
3,000
|
131,700
|
Endo
International PLC(b)
|
12,800
|
40,576
|
Ennis,
Inc.
|
2,750
|
55,908
|
Enova
International, Inc.(b)
|
5,150
|
138,792
|
EnPro
Industries, Inc.
|
1,850
|
131,424
|
Ensign
Group, Inc. (The)
|
1,825
|
109,974
|
Enterprise
Financial Services Corp.
|
1,650
|
68,772
|
Entravision
Communications Corp., Class A
|
13,400
|
43,684
|
EOG
Resources, Inc.
|
24,555
|
2,108,047
|
Equity
LifeStyle Properties, Inc.
|
19,308
|
2,399,019
|
Essent
Group Ltd.(b)
|
3,425
|
158,098
|
Ethan
Allen Interiors, Inc.
|
1,050
|
21,609
|
Everi
Holdings, Inc.(b)
|
11,000
|
132,110
|
EW
Scripps Co. (The), Class A
|
1,300
|
19,929
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
13
|
Portfolio of Investments (continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Extreme
Networks, Inc.(b)
|
9,500
|
77,330
|
Federal
Agricultural Mortgage Corp.
|
1,660
|
128,268
|
Federal
Signal Corp.
|
4,200
|
130,830
|
Federated
Investors, Inc., Class B
|
4,700
|
163,325
|
FibroGen,
Inc.(b)
|
800
|
37,808
|
First
BanCorp
|
12,800
|
137,728
|
Fossil
Group, Inc.(b)
|
7,350
|
81,144
|
Fulton
Financial Corp.
|
3,950
|
67,150
|
Funko,
Inc., Class A(b)
|
3,750
|
93,788
|
General
Motors Co.
|
67,164
|
2,709,396
|
Genesco,
Inc.(b)
|
2,100
|
82,698
|
Genworth
Financial, Inc., Class A(b)
|
13,200
|
52,668
|
GEO
Group, Inc. (The)
|
6,150
|
109,531
|
Gibraltar
Industries, Inc.(b)
|
550
|
22,792
|
G-III
Apparel Group Ltd.(b)
|
350
|
10,031
|
Glu
Mobile, Inc.(b)
|
15,400
|
114,884
|
Gorman-Rupp
Co.
|
750
|
24,915
|
Gossamer
Bio, Inc.(b)
|
1,935
|
38,410
|
Gray
Television, Inc.(b)
|
2,850
|
50,588
|
Great
Lakes Dredge & Dock Corp.(b)
|
12,050
|
129,296
|
Greenhill
& Co., Inc.
|
800
|
13,280
|
Hancock
Whitney Corp.
|
3,600
|
149,472
|
HealthStream,
Inc.(b)
|
1,100
|
31,064
|
Heidrick
& Struggles International, Inc.
|
3,550
|
105,435
|
Herman
Miller, Inc.
|
3,025
|
137,153
|
Hibbett
Sports, Inc.(b)
|
2,500
|
46,000
|
Hillenbrand,
Inc.
|
3,200
|
107,808
|
Hilltop
Holdings, Inc.
|
2,750
|
62,370
|
HNI
Corp.
|
3,050
|
104,432
|
Home
Depot, Inc. (The)
|
21,754
|
4,648,612
|
Hope
Bancorp, Inc.
|
6,900
|
101,775
|
Host
Hotels & Resorts, Inc.
|
107,743
|
1,873,651
|
Iberiabank
Corp.
|
2,030
|
159,497
|
Immersion
Corp.(b)
|
8,800
|
70,752
|
Immunomedics,
Inc.(b)
|
7,860
|
115,935
|
Industrial
Logistics Properties Trust
|
300
|
6,414
|
Ingevity
Corp.(b)
|
1,480
|
145,839
|
Ingles
Markets, Inc., Class A
|
2,125
|
66,895
|
Insight
Enterprises, Inc.(b)
|
2,275
|
125,170
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Insmed,
Inc.(b)
|
9,068
|
199,043
|
Insperity,
Inc.
|
130
|
13,826
|
Integer
Holdings Corp.(b)
|
1,750
|
153,177
|
Intelligent
Systems Corp.(b)
|
875
|
42,954
|
International
Bancshares Corp.
|
3,435
|
129,259
|
International
Business Machines Corp.
|
26,512
|
3,930,139
|
Investors
Real Estate Trust
|
1,923
|
122,591
|
j2
Global, Inc.
|
1,860
|
165,707
|
John
B. Sanfilippo & Son, Inc.
|
1,340
|
116,459
|
Johnson
& Johnson
|
38,822
|
5,055,401
|
JPMorgan
Chase & Co.
|
41,335
|
4,794,860
|
K12,
Inc.(b)
|
2,625
|
78,356
|
Kaman
Corp.
|
685
|
43,429
|
KBR,
Inc.
|
4,550
|
120,029
|
Keane
Group, Inc.(b)
|
16,900
|
106,301
|
Kforce,
Inc.
|
3,525
|
120,167
|
Kimberly-Clark
Corp.
|
22,962
|
3,114,795
|
Korn/Ferry
International
|
2,375
|
93,290
|
L3
Harris Technologies, Inc.
|
11,935
|
2,477,706
|
Lantheus
Holdings, Inc.(b)
|
4,500
|
101,790
|
Lexington
Realty Trust
|
9,100
|
89,817
|
Liberty
Global PLC, Class C(b)
|
63,968
|
1,665,727
|
Liberty
Oilfield Services, Inc., Class A
|
2,350
|
33,253
|
Lithia
Motors, Inc., Class A
|
850
|
112,098
|
Louisiana-Pacific
Corp.
|
6,050
|
158,147
|
M/I
Homes, Inc.(b)
|
800
|
28,296
|
MACOM
Technology Solutions Holdings, Inc.(b)
|
2,950
|
57,879
|
Magellan
Health, Inc.(b)
|
1,760
|
123,798
|
Malibu
Boats, Inc., Class A(b)
|
3,525
|
106,208
|
Mammoth
Energy Services, Inc.
|
825
|
5,346
|
Masco
Corp.
|
42,086
|
1,715,846
|
MasterCard,
Inc., Class A
|
15,421
|
4,198,676
|
MasterCraft
Boat Holdings, Inc.(b)
|
2,650
|
43,990
|
Materion
Corp.
|
2,035
|
126,435
|
Matrix
Service Co.(b)
|
5,900
|
108,383
|
MAXIMUS,
Inc.
|
1,145
|
84,169
|
Medicines
Co. (The)(b)
|
1,680
|
60,211
|
Medifast,
Inc.
|
1,050
|
117,232
|
Medpace
Holdings, Inc.(b)
|
2,275
|
179,179
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
14
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Meet
Group, Inc. (The)(b)
|
28,900
|
99,416
|
Merchants
Bancorp
|
1,350
|
24,152
|
Meridian
Bioscience, Inc.
|
9,500
|
113,525
|
Metropolitan
Bank Holding Corp.(b)
|
350
|
14,690
|
Microsoft
Corp.
|
71,469
|
9,739,081
|
Milacron
Holdings Corp.(b)
|
4,550
|
76,622
|
Mirati
Therapeutics, Inc.(b)
|
830
|
87,814
|
Modine
Manufacturing Co.(b)
|
2,750
|
37,730
|
Mondelez
International, Inc., Class A
|
51,432
|
2,751,098
|
Movado
Group, Inc.
|
1,215
|
31,991
|
MSG
Networks, Inc., Class A(b)
|
4,250
|
80,708
|
Mueller
Industries, Inc.
|
1,000
|
30,190
|
Nabors
Industries Ltd.
|
5,300
|
15,688
|
National
CineMedia, Inc.
|
13,400
|
95,408
|
Natus
Medical, Inc.(b)
|
700
|
21,749
|
Nelnet,
Inc., Class A
|
2,220
|
138,883
|
New
York Mortgage Trust, Inc.
|
6,300
|
38,493
|
NMI
Holdings, Inc., Class A(b)
|
4,300
|
106,984
|
Norfolk
Southern Corp.
|
13,021
|
2,488,574
|
Northrop
Grumman Corp.
|
9,282
|
3,207,581
|
NorthWestern
Corp.
|
1,620
|
113,270
|
NVIDIA
Corp.
|
10,074
|
1,699,685
|
Odonate
Therapeutics, Inc.(b)
|
2,200
|
89,650
|
Office
Depot, Inc.
|
40,500
|
82,620
|
OFG
Bancorp
|
5,800
|
131,254
|
Otter
Tail Corp.
|
250
|
13,345
|
Palo
Alto Networks, Inc.(b)
|
9,536
|
2,160,285
|
PC
Connection, Inc.
|
3,025
|
98,948
|
Penn
National Gaming, Inc.(b)
|
3,650
|
71,248
|
PennyMac
Mortgage Investment Trust
|
5,400
|
118,962
|
PepsiCo,
Inc.
|
27,960
|
3,573,568
|
Philip
Morris International, Inc.
|
43,460
|
3,633,691
|
Piedmont
Office Realty Trust, Inc.
|
2,500
|
52,025
|
PNM
Resources, Inc.
|
2,675
|
132,867
|
Portland
General Electric Co.
|
3,205
|
175,794
|
Precision
BioSciences, Inc.(b)
|
3,662
|
47,130
|
Preferred
Bank
|
2,435
|
131,953
|
Progress
Software Corp.
|
3,250
|
140,692
|
Prudential
Financial, Inc.
|
33,067
|
3,350,018
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
PS
Business Parks, Inc.
|
921
|
161,175
|
Puma
Biotechnology, Inc.(b)
|
3,578
|
34,528
|
Quaker
Chemical Corp.
|
205
|
38,415
|
Qualys,
Inc.(b)
|
790
|
68,382
|
Quanex
Building Products Corp.
|
6,150
|
114,513
|
Quidel
Corp.(b)
|
2,215
|
130,751
|
Quotient
Ltd.(b)
|
71,441
|
754,417
|
Radian
Group, Inc.
|
7,400
|
168,720
|
RE/MAX
Holdings, Inc., Class A
|
425
|
12,359
|
Reata
Pharmaceuticals, Inc., Class A(b)
|
740
|
67,081
|
Renewable
Energy Group, Inc.(b)
|
950
|
12,911
|
Rent-A-Center,
Inc.(b)
|
3,800
|
102,714
|
Repligen
Corp.(b)
|
510
|
48,139
|
REX
American Resources Corp.(b)
|
437
|
32,600
|
Rexnord
Corp.(b)
|
5,200
|
152,308
|
RMR
Group, Inc. (The), Class A
|
2,150
|
105,866
|
Rubius
Therapeutics, Inc.(b)
|
2,890
|
38,437
|
Ryman
Hospitality Properties, Inc.
|
360
|
27,000
|
Sage
Therapeutics, Inc.(b)
|
1,510
|
242,113
|
Sarepta
Therapeutics, Inc.(b)
|
535
|
79,635
|
Schnitzer
Steel Industries, Inc., Class A
|
4,775
|
127,158
|
SeaWorld
Entertainment, Inc.(b)
|
4,325
|
132,215
|
Selective
Insurance Group, Inc.
|
340
|
25,568
|
Shenandoah
Telecommunications Co.
|
2,775
|
109,224
|
Shoe
Carnival, Inc.
|
1,450
|
36,801
|
SJW
Corp.
|
425
|
27,578
|
Southwest
Gas Holdings, Inc.
|
1,820
|
161,816
|
Southwestern
Energy Co.(b)
|
11,700
|
25,740
|
SP
Plus Corp.(b)
|
225
|
7,769
|
SpartanNash
Co.
|
7,200
|
85,104
|
Spirit
AeroSystems Holdings, Inc., Class A
|
11,630
|
893,649
|
SPS
Commerce, Inc.(b)
|
1,150
|
128,604
|
Stamps.com,
Inc.(b)
|
1,040
|
49,660
|
Steel
Dynamics, Inc.
|
33,980
|
1,070,710
|
Stepan
Co.
|
940
|
93,201
|
Sturm
Ruger & Co., Inc.
|
2,175
|
122,887
|
Supernus
Pharmaceuticals, Inc.(b)
|
1,430
|
47,719
|
Synaptics,
Inc.(b)
|
3,550
|
114,239
|
Syneos
Health, Inc.(b)
|
3,125
|
159,656
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
15
|
Portfolio of Investments
(continued)
July 31, 2019
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Tapestry,
Inc.
|
44,375
|
1,372,519
|
Taylor
Morrison Home Corp., Class A(b)
|
1,900
|
42,788
|
TCF
Financial Corp.
|
175
|
7,357
|
TCR2
Therapeutics, Inc.(b)
|
3,650
|
56,721
|
Tech
Data Corp.(b)
|
1,130
|
114,514
|
Teekay
Tankers Ltd., Class A(b)
|
357,088
|
439,218
|
TEGNA,
Inc.
|
2,650
|
40,254
|
Tenable
Holdings, Inc.(b)
|
1,300
|
32,578
|
Tenet
Healthcare Corp.(b)
|
2,550
|
60,104
|
Titan
Machinery, Inc.(b)
|
1,700
|
35,258
|
TiVo
Corp.
|
12,600
|
95,508
|
T-Mobile
U.S.A., Inc.(b)
|
26,892
|
2,144,099
|
TriNet
Group, Inc.(b)
|
1,580
|
116,193
|
Triple-S
Management Corp., Class B(b)
|
2,549
|
61,124
|
TTEC
Holdings, Inc.
|
2,650
|
124,338
|
Turning
Point Therapeutics, Inc.(b)
|
1,193
|
47,529
|
U.S.
Concrete, Inc.(b)
|
800
|
37,672
|
Ultragenyx
Pharmaceutical, Inc.(b)
|
550
|
33,143
|
Union
Pacific Corp.
|
18,907
|
3,402,315
|
United
Community Banks, Inc.
|
2,950
|
84,665
|
Uniti
Group, Inc.
|
14,500
|
122,090
|
Universal
Corp.
|
1,155
|
68,723
|
Universal
Insurance Holdings, Inc.
|
3,838
|
95,221
|
Usana
Health Sciences, Inc.(b)
|
1,425
|
96,971
|
Valero
Energy Corp.
|
25,687
|
2,189,817
|
Varex
Imaging Corp.(b)
|
3,650
|
116,033
|
Vector
Group Ltd.
|
2,300
|
26,565
|
Vectrus,
Inc.(b)
|
350
|
14,154
|
Vera
Bradley, Inc.(b)
|
1,400
|
16,450
|
Verso
Corp., Class A(b)
|
2,275
|
36,810
|
Vertex
Pharmaceuticals, Inc.(b)
|
6,661
|
1,109,856
|
W&T
Offshore, Inc.(b)
|
1,800
|
8,082
|
Wabash
National Corp.
|
7,450
|
117,933
|
Waddell
& Reed Financial, Inc., Class A
|
7,000
|
122,500
|
Walt
Disney Co. (The)
|
30,164
|
4,313,754
|
Washington
Federal, Inc.
|
2,200
|
80,476
|
Washington
Prime Group, Inc.
|
21,000
|
76,230
|
Western
Asset Mortgage Capital Corp.
|
4,100
|
41,656
|
World
Fuel Services Corp.
|
950
|
37,088
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Xcel
Energy, Inc.
|
34,045
|
2,029,422
|
Xenia
Hotels & Resorts, Inc.
|
4,450
|
95,364
|
YRC
Worldwide, Inc.(b)
|
15,500
|
50,530
|
Zagg,
Inc.(b)
|
4,200
|
27,846
|
Zynex,
Inc.
|
2,300
|
19,136
|
Total
|
190,749,620
|
Total
Common Stocks
(Cost $311,568,962)
|
354,239,287
|
|
Exchange-Traded
Funds 1.4%
|
|
Shares
|
Value
($)
|
United
States 1.4%
|
Invesco
DB Gold Fund
|
71,000
|
3,067,200
|
iShares
MSCI Canada ETF
|
156,328
|
4,438,152
|
Total
|
7,505,352
|
Total
Exchange-Traded Funds
(Cost $6,555,439)
|
7,505,352
|
|
Fixed-Income
Funds 2.2%
|
|
|
|
United
States 2.2%
|
Columbia
Mortgage Opportunities Fund, Institutional 3 Class(a)
|
1,174,033
|
11,986,878
|
Total
Fixed-Income Funds
(Cost $11,703,023)
|
11,986,878
|
Foreign
Government Obligations(f),(g) 4.6%
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
France
0.3%
|
French
Republic Government Bond OAT(e)
|
05/25/2045
|
3.250%
|
EUR
|
1,019,000
|
1,850,636
|
Italy
0.2%
|
Italy
Buoni Poliennali Del Tesoro(e)
|
09/01/2044
|
4.750%
|
EUR
|
567,000
|
883,785
|
Japan
2.1%
|
Japan
Government 20-Year Bond
|
12/20/2027
|
2.100%
|
JPY
|
374,800,000
|
4,124,660
|
Japan
Government 30-Year Bond
|
03/20/2047
|
0.800%
|
JPY
|
485,400,000
|
5,022,607
|
06/20/2048
|
0.700%
|
JPY
|
161,650,000
|
1,631,469
|
09/20/2048
|
0.900%
|
JPY
|
78,600,000
|
833,405
|
Total
|
11,612,141
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
16
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Foreign
Government Obligations(f),(g) (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
New
Zealand 0.5%
|
New
Zealand Government Bond
|
04/15/2025
|
2.750%
|
NZD
|
1,720,000
|
1,229,375
|
04/20/2029
|
3.000%
|
NZD
|
1,032,000
|
772,590
|
New
Zealand Government Bond(e)
|
04/15/2027
|
4.500%
|
NZD
|
1,220,000
|
988,279
|
Total
|
2,990,244
|
South
Africa 0.7%
|
Republic
of South Africa Government Bond
|
12/21/2026
|
10.500%
|
ZAR
|
47,000,000
|
3,671,362
|
South
Korea 0.6%
|
Korea
Treasury Bond
|
12/10/2028
|
2.375%
|
KRW
|
3,412,000,000
|
3,138,302
|
United
Kingdom 0.2%
|
United
Kingdom Gilt(e)
|
01/22/2044
|
3.250%
|
GBP
|
612,297
|
1,048,575
|
Total
Foreign Government Obligations
(Cost $23,377,447)
|
25,195,045
|
|
Inflation-Indexed
Bonds(f) 1.6%
|
|
|
|
|
|
Italy
0.4%
|
Italy
Buoni Poliennali Del Tesoro(e)
|
09/15/2026
|
3.100%
|
EUR
|
1,568,972
|
2,062,054
|
Japan
0.5%
|
Japanese
Government CPI-Linked Bond
|
03/10/2027
|
0.100%
|
JPY
|
278,572,924
|
2,661,300
|
United
Kingdom 0.1%
|
United
Kingdom Gilt Inflation-Linked Bond(e)
|
03/22/2052
|
0.250%
|
GBP
|
197,140
|
482,718
|
United
States 0.6%
|
U.S.
Treasury Inflation-Indexed Bond
|
07/15/2027
|
0.375%
|
|
1,812,184
|
1,831,485
|
01/15/2028
|
0.500%
|
|
1,716,161
|
1,746,809
|
Total
|
3,578,294
|
Total
Inflation-Indexed Bonds
(Cost $8,322,670)
|
8,784,366
|
Preferred
Stocks 0.1%
|
Issuer
|
|
Shares
|
Value
($)
|
Brazil
0.1%
|
Azul
SA(b)
|
|
29,900
|
406,465
|
Lojas
Americanas SA
|
|
41,700
|
198,319
|
Total
|
604,784
|
Total
Preferred Stocks
(Cost $429,909)
|
604,784
|
Residential
Mortgage-Backed Securities - Agency 3.2%
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
United
States 3.2%
|
Federal
National Mortgage Association(h)
|
08/19/2034
- 08/13/2049
|
3.000%
|
|
6,250,000
|
6,314,551
|
08/13/2049
|
3.500%
|
|
2,000,000
|
2,048,594
|
08/13/2049
|
4.000%
|
|
2,000,000
|
2,070,259
|
08/13/2049
|
4.500%
|
|
2,000,000
|
2,097,500
|
08/13/2049
|
5.000%
|
|
1,000,000
|
1,062,578
|
Government
National Mortgage Association(h)
|
08/21/2049
|
3.500%
|
|
3,000,000
|
3,102,070
|
08/21/2049
|
4.000%
|
|
1,000,000
|
1,042,617
|
Total
|
17,738,169
|
Total
Residential Mortgage-Backed Securities - Agency
(Cost $17,697,275)
|
17,738,169
|
|
U.S.
Treasury Obligations 0.3%
|
|
|
|
|
|
United
States 0.3%
|
U.S.
Treasury
|
11/15/2028
|
3.125%
|
|
1,599,000
|
1,748,656
|
Total
U.S. Treasury Obligations
(Cost $1,666,096)
|
1,748,656
|
Options
Purchased Puts 0.1%
|
|
|
|
|
|
Value
($)
|
(Cost
$458,156)
|
640,320
|
Money
Market Funds 20.9%
|
|
Shares
|
Value
($)
|
Columbia
Short-Term Cash Fund, 2.361%(a),(i)
|
115,483,480
|
115,471,931
|
Total
Money Market Funds
(Cost $115,472,595)
|
115,471,931
|
Total
Investments in Securities
(Cost $515,200,265)
|
558,709,733
|
Other
Assets & Liabilities, Net
|
|
(7,760,272)
|
Net
Assets
|
$550,949,461
|
At July 31, 2019, securities and/or cash totaling
$9,082,039 were pledged as collateral.
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
17
|
Portfolio of Investments (continued)
July 31, 2019
Investments in derivatives
Forward
foreign currency exchange contracts
|
Currency
to
be sold
|
Currency
to
be purchased
|
Counterparty
|
Settlement
date
|
Unrealized
appreciation ($)
|
Unrealized
depreciation ($)
|
1,644,490,000 KRW
|
1,392,833 USD
|
Citi
|
08/28/2019
|
6,859
|
—
|
2,225,000 NZD
|
1,485,679 USD
|
HSBC
|
08/28/2019
|
23,876
|
—
|
11,338,108 USD
|
9,074,000 GBP
|
HSBC
|
08/28/2019
|
—
|
(288,275)
|
25,560,492 USD
|
2,769,346,365 JPY
|
HSBC
|
08/28/2019
|
—
|
(53,502)
|
893,294 USD
|
17,092,000 MXN
|
HSBC
|
08/28/2019
|
—
|
(5,506)
|
5,758,107 USD
|
49,841,803 NOK
|
HSBC
|
08/28/2019
|
—
|
(125,992)
|
5,390,512 USD
|
8,073,000 NZD
|
HSBC
|
08/28/2019
|
—
|
(86,631)
|
427,936 USD
|
1,632,000 PLN
|
HSBC
|
08/28/2019
|
—
|
(6,593)
|
676,874 USD
|
6,372,000 SEK
|
HSBC
|
08/28/2019
|
—
|
(15,960)
|
53,873,000 ZAR
|
3,816,793 USD
|
HSBC
|
08/28/2019
|
73,366
|
—
|
2,251,000 EUR
|
2,495,504 USD
|
Morgan
Stanley
|
08/28/2019
|
—
|
(1,855)
|
1,290,000 GBP
|
1,610,875 USD
|
Morgan
Stanley
|
08/28/2019
|
39,981
|
—
|
8,831,491 USD
|
12,682,000 AUD
|
Morgan
Stanley
|
08/28/2019
|
—
|
(150,003)
|
7,751,767 USD
|
10,179,000 CAD
|
Morgan
Stanley
|
08/28/2019
|
—
|
(34,927)
|
1,349,243 USD
|
1,332,000 CHF
|
Morgan
Stanley
|
08/28/2019
|
—
|
(6,655)
|
525,770 USD
|
3,511,000 DKK
|
Morgan
Stanley
|
08/28/2019
|
—
|
(4,059)
|
60,825,884 USD
|
54,402,572 EUR
|
Morgan
Stanley
|
08/28/2019
|
—
|
(469,272)
|
1,777,404 USD
|
1,458,000 GBP
|
Morgan
Stanley
|
08/28/2019
|
—
|
(1,929)
|
4,707,000 ZAR
|
333,397 USD
|
Morgan
Stanley
|
08/28/2019
|
6,326
|
—
|
4,842,000 CAD
|
3,683,797 USD
|
Morgan
Stanley
|
09/11/2019
|
12,083
|
—
|
849,000 GBP
|
1,060,995 USD
|
Morgan
Stanley
|
09/11/2019
|
26,413
|
—
|
5,713,000 ILS
|
1,625,329 USD
|
Morgan
Stanley
|
09/11/2019
|
—
|
(5,669)
|
217,300,000 JPY
|
2,012,130 USD
|
Morgan
Stanley
|
09/11/2019
|
8,526
|
—
|
3,681,057,000 KRW
|
3,121,685 USD
|
Morgan
Stanley
|
09/11/2019
|
19,673
|
—
|
15,019,000 NOK
|
1,738,652 USD
|
Morgan
Stanley
|
09/11/2019
|
40,880
|
—
|
5,149,423 USD
|
7,358,000 AUD
|
Morgan
Stanley
|
09/11/2019
|
—
|
(110,247)
|
1,958,125 USD
|
1,920,000 CHF
|
Morgan
Stanley
|
09/11/2019
|
—
|
(20,143)
|
782,055 USD
|
5,223,000 DKK
|
Morgan
Stanley
|
09/11/2019
|
—
|
(5,028)
|
1,005,816 USD
|
900,000 EUR
|
Morgan
Stanley
|
09/11/2019
|
—
|
(6,177)
|
1,566,066 USD
|
2,134,000 SGD
|
Morgan
Stanley
|
09/11/2019
|
—
|
(12,137)
|
Total
|
|
|
|
257,983
|
(1,410,560)
|
Long
futures contracts
|
Description
|
Number
of
contracts
|
Expiration
date
|
Trading
currency
|
Notional
amount
|
Value/Unrealized
appreciation ($)
|
Value/Unrealized
depreciation ($)
|
Australian
10-Year Bond
|
59
|
09/2019
|
AUD
|
8,568,082
|
90,676
|
—
|
Canadian
Government 10-Year Bond
|
137
|
09/2019
|
CAD
|
19,496,470
|
—
|
(23,360)
|
Euro
Buxl
|
3
|
09/2019
|
EUR
|
626,940
|
27,174
|
—
|
Euro-BTP
|
68
|
09/2019
|
EUR
|
9,507,080
|
811,280
|
—
|
Euro-Bund
|
8
|
09/2019
|
EUR
|
1,400,560
|
36,202
|
—
|
Euro-OAT
|
34
|
09/2019
|
EUR
|
5,685,820
|
196,200
|
—
|
Japanese
10-Year Government Bond
|
22
|
09/2019
|
JPY
|
3,383,600,000
|
55,521
|
—
|
Long
Gilt
|
118
|
09/2019
|
GBP
|
15,673,940
|
708,848
|
—
|
Russell
2000 E-mini
|
4
|
09/2019
|
USD
|
315,340
|
6,066
|
—
|
S&P/TSX
60 Index
|
29
|
09/2019
|
CAD
|
5,675,300
|
20,799
|
—
|
U.S.
Long Bond
|
7
|
09/2019
|
USD
|
1,089,156
|
10,048
|
—
|
U.S.
Treasury 10-Year Note
|
251
|
09/2019
|
USD
|
31,982,891
|
640,139
|
—
|
U.S.
Treasury 5-Year Note
|
444
|
09/2019
|
USD
|
52,194,281
|
616,594
|
—
|
U.S.
Treasury Ultra 10-Year Note
|
9
|
09/2019
|
USD
|
1,240,594
|
37,317
|
—
|
U.S.
Ultra Treasury Bond
|
76
|
09/2019
|
USD
|
13,494,750
|
166,225
|
—
|
Total
|
|
|
|
|
3,423,089
|
(23,360)
|
The
accompanying Notes to Financial Statements are an integral part of this statement.
18
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Short
futures contracts
|
Description
|
Number
of
contracts
|
Expiration
date
|
Trading
currency
|
Notional
amount
|
Value/Unrealized
appreciation ($)
|
Value/Unrealized
depreciation ($)
|
MSCI
EAFE Index Future
|
(154)
|
09/2019
|
USD
|
(14,516,810)
|
—
|
(108,964)
|
MSCI
Emerging Markets Index
|
(272)
|
09/2019
|
USD
|
(13,948,160)
|
—
|
(263,185)
|
Russell
2000 E-mini
|
(25)
|
09/2019
|
USD
|
(1,970,875)
|
—
|
(60,342)
|
S&P
500 E-mini
|
(134)
|
09/2019
|
USD
|
(19,981,410)
|
—
|
(586,247)
|
SPI
200 Index
|
(24)
|
09/2019
|
AUD
|
(4,051,200)
|
—
|
(114,175)
|
TOPIX
Index
|
(115)
|
09/2019
|
JPY
|
(1,800,900,000)
|
—
|
(39,609)
|
U.S.
Ultra Treasury Bond
|
(11)
|
09/2019
|
USD
|
(1,953,188)
|
—
|
(99,109)
|
Total
|
|
|
|
|
—
|
(1,271,631)
|
Put
option contracts purchased
|
Description
|
Counterparty
|
Trading
currency
|
Notional
amount
|
Number
of
contracts
|
Exercise
price/Rate
|
Expiration
date
|
Cost
($)
|
Value
($)
|
S&P
500 E-mini
|
JPMorgan
|
USD
|
27,437,160
|
184
|
3,010.00
|
09/20/2019
|
458,156
|
640,320
|
Call
option contracts written
|
Description
|
Counterparty
|
Trading
currency
|
Notional
amount
|
Number
of
contracts
|
Exercise
price/Rate
|
Expiration
date
|
Premium
received ($)
|
Value
($)
|
Puma
Biotechnology, Inc.
|
Deutsche
Bank
|
USD
|
(33,775)
|
(35)
|
11.00
|
8/16/2019
|
(2,639)
|
(2,800)
|
Cleared
credit default swap contracts - sell protection
|
Reference
entity
|
Counterparty
|
Maturity
date
|
Receive
fixed
rate
(%)
|
Payment
frequency
|
Implied
credit
spread
(%)*
|
Notional
currency
|
Notional
amount
|
Value
($)
|
Upfront
payments
($)
|
Upfront
receipts
($)
|
Unrealized
appreciation
($)
|
Unrealized
depreciation
($)
|
Markit
CDX Emerging Markets Index, Series 31
|
Morgan
Stanley
|
06/20/2024
|
1.000
|
Quarterly
|
1.594
|
USD
|
13,129,000
|
54,640
|
—
|
—
|
54,640
|
—
|
Markit
CDX North America High Yield Index, Series 32
|
Morgan
Stanley
|
06/20/2024
|
5.000
|
Quarterly
|
3.236
|
USD
|
10,645,470
|
275,166
|
—
|
—
|
275,166
|
—
|
Markit
CDX North America Investment Grade Index, Series 32
|
Morgan
Stanley
|
06/20/2024
|
1.000
|
Quarterly
|
0.542
|
USD
|
15,000,000
|
91,457
|
—
|
—
|
91,457
|
—
|
Markit
iTraxx Europe Main Index, Series 31
|
Morgan
Stanley
|
06/20/2024
|
1.000
|
Quarterly
|
0.502
|
EUR
|
3,000,000
|
30,011
|
—
|
—
|
30,011
|
—
|
Total
|
|
|
|
|
|
|
|
451,274
|
—
|
—
|
451,274
|
—
|
*
|
Implied
credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate or sovereign issues as of period end serve as an indicator of the current status of the payment/performance risk
and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into
the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.
|
Notes to Portfolio of
Investments
(a)
|
As defined
in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and
transactions in these affiliated companies during the year ended July 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Capital
gain
distributions —
affiliated
issuers ($)
|
Realized
gain
(loss) —
affiliated
issuers ($)
|
Net
change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends
—
affiliated
issuers ($)
|
Value
—
affiliated
issuers
at end of
period ($)
|
Columbia
Commodity Strategy Fund, Institutional 3 Class
|
|
5,717,081
|
508,827
|
(2,848,067)
|
3,377,841
|
—
|
(263,789)
|
(3,543,980)
|
2,223,572
|
14,794,945
|
Columbia
Diversified Absolute Return Fund, Institutional 3 Class
|
|
1,128,306
|
—
|
(1,128,306)
|
—
|
—
|
(483,086)
|
415,389
|
—
|
—
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
19
|
Portfolio of Investments (continued)
July 31, 2019
Notes to Portfolio of
Investments (continued)
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Capital
gain
distributions —
affiliated
issuers ($)
|
Realized
gain
(loss) —
affiliated
issuers ($)
|
Net
change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends
—
affiliated
issuers ($)
|
Value
—
affiliated
issuers
at end of
period ($)
|
Columbia
Mortgage Opportunities Fund, Institutional 3 Class
|
|
1,120,947
|
53,086
|
—
|
1,174,033
|
35,839
|
—
|
337,797
|
493,443
|
11,986,878
|
Columbia
Short-Term Cash Fund, 2.361%
|
|
106,083,632
|
311,719,516
|
(302,319,668)
|
115,483,480
|
—
|
(4,798)
|
5,132
|
2,671,666
|
115,471,931
|
Total
|
|
|
|
|
35,839
|
(751,673)
|
(2,785,662)
|
5,388,681
|
142,253,754
|
(b)
|
Non-income
producing investment.
|
(c)
|
Represents fair
value as determined in good faith under procedures approved by the Board of Trustees. At July 31, 2019, the total value of these securities amounted to $43,746, which represents 0.01% of total net assets.
|
(d)
|
Valuation
based on significant unobservable inputs.
|
(e)
|
Represents privately
placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified
institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees.
At July 31, 2019, the total value of these securities amounted to $8,174,886, which represents 1.48% of total net assets.
|
(f)
|
Principal
amounts are denominated in United States Dollars unless otherwise noted.
|
(g)
|
Principal
and interest may not be guaranteed by the government.
|
(h)
|
Represents a
security purchased on a when-issued basis.
|
(i)
|
The rate
shown is the seven-day current annualized yield at July 31, 2019.
|
Abbreviation Legend
ADR
|
American
Depositary Receipt
|
GDR
|
Global
Depositary Receipt
|
Currency
Legend
AUD
|
Australian
Dollar
|
CAD
|
Canada
Dollar
|
CHF
|
Swiss Franc
|
DKK
|
Danish
Krone
|
EUR
|
Euro
|
GBP
|
British
Pound
|
ILS
|
New Israeli
Sheqel
|
JPY
|
Japanese
Yen
|
KRW
|
South
Korean Won
|
MXN
|
Mexican
Peso
|
NOK
|
Norwegian
Krone
|
NZD
|
New Zealand
Dollar
|
PLN
|
Polish
Zloty
|
SEK
|
Swedish
Krona
|
SGD
|
Singapore
Dollar
|
USD
|
US Dollar
|
ZAR
|
South
African Rand
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
20
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Foreign equity securities actively traded in markets where
there is a significant delay in the local close relative to the New York Stock Exchange are classified as Level 2. The values of these securities may include an adjustment to reflect the impact of significant market movements following the close of
local trading, as described in Note 2 to the financial statements – Security valuation.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly to review and approve
valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and
procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing
methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third
party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or
approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those
described earlier.
The following table is a summary of
the inputs used to value the Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Alternative
Strategies Funds
|
14,794,945
|
—
|
—
|
14,794,945
|
Common
Stocks
|
|
|
|
|
Argentina
|
231,168
|
—
|
—
|
231,168
|
Australia
|
—
|
1,622,319
|
—
|
1,622,319
|
Bermuda
|
65,217
|
—
|
—
|
65,217
|
Brazil
|
4,924,605
|
—
|
—
|
4,924,605
|
Canada
|
12,524,771
|
—
|
—
|
12,524,771
|
China
|
6,461,764
|
9,134,467
|
—
|
15,596,231
|
Finland
|
—
|
2,659,949
|
—
|
2,659,949
|
France
|
73,951
|
8,761,490
|
—
|
8,835,441
|
Germany
|
—
|
3,761,746
|
—
|
3,761,746
|
Hong
Kong
|
—
|
3,915,478
|
—
|
3,915,478
|
Hungary
|
—
|
208,177
|
—
|
208,177
|
India
|
954,104
|
3,679,917
|
—
|
4,634,021
|
Indonesia
|
—
|
3,818,608
|
—
|
3,818,608
|
Ireland
|
6,363,346
|
—
|
—
|
6,363,346
|
Israel
|
—
|
2,252,530
|
—
|
2,252,530
|
Italy
|
—
|
1,796,762
|
—
|
1,796,762
|
Japan
|
—
|
29,033,850
|
—
|
29,033,850
|
Luxembourg
|
269,640
|
—
|
—
|
269,640
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
21
|
Portfolio of Investments (continued)
July 31, 2019
Fair value
measurements (continued)
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Malta
|
—
|
—
|
1
|
1
|
Mexico
|
614,199
|
—
|
—
|
614,199
|
Netherlands
|
2,228,157
|
8,328,080
|
—
|
10,556,237
|
Norway
|
—
|
2,776,630
|
—
|
2,776,630
|
Pakistan
|
—
|
499,837
|
—
|
499,837
|
Panama
|
282,979
|
—
|
—
|
282,979
|
Peru
|
412,437
|
—
|
—
|
412,437
|
Philippines
|
—
|
894,341
|
—
|
894,341
|
Poland
|
—
|
195,762
|
—
|
195,762
|
Portugal
|
—
|
—
|
1
|
1
|
Puerto
Rico
|
1,257,390
|
—
|
—
|
1,257,390
|
Russian
Federation
|
718,589
|
2,522,113
|
—
|
3,240,702
|
South
Africa
|
—
|
2,196,881
|
—
|
2,196,881
|
South
Korea
|
—
|
6,771,782
|
—
|
6,771,782
|
Spain
|
—
|
4,017,423
|
—
|
4,017,423
|
Sweden
|
—
|
2,227,142
|
—
|
2,227,142
|
Switzerland
|
—
|
4,294,226
|
—
|
4,294,226
|
Taiwan
|
—
|
2,043,406
|
—
|
2,043,406
|
Thailand
|
144,936
|
1,449,209
|
—
|
1,594,145
|
United
Kingdom
|
397,772
|
16,702,515
|
—
|
17,100,287
|
United
States
|
190,705,876
|
—
|
43,744
|
190,749,620
|
Total
Common Stocks
|
228,630,901
|
125,564,640
|
43,746
|
354,239,287
|
Exchange-Traded
Funds
|
7,505,352
|
—
|
—
|
7,505,352
|
Fixed-Income
Funds
|
11,986,878
|
—
|
—
|
11,986,878
|
Foreign
Government Obligations
|
—
|
25,195,045
|
—
|
25,195,045
|
Inflation-Indexed
Bonds
|
—
|
8,784,366
|
—
|
8,784,366
|
Preferred
Stocks
|
|
|
|
|
Brazil
|
604,784
|
—
|
—
|
604,784
|
Total
Preferred Stocks
|
604,784
|
—
|
—
|
604,784
|
Residential
Mortgage-Backed Securities - Agency
|
—
|
17,738,169
|
—
|
17,738,169
|
U.S.
Treasury Obligations
|
1,748,656
|
—
|
—
|
1,748,656
|
Options
Purchased Puts
|
640,320
|
—
|
—
|
640,320
|
Money
Market Funds
|
115,471,931
|
—
|
—
|
115,471,931
|
Total
Investments in Securities
|
381,383,767
|
177,282,220
|
43,746
|
558,709,733
|
Investments
in Derivatives
|
|
|
|
|
Asset
|
|
|
|
|
Forward
Foreign Currency Exchange Contracts
|
—
|
257,983
|
—
|
257,983
|
Futures
Contracts
|
3,423,089
|
—
|
—
|
3,423,089
|
Swap
Contracts
|
—
|
451,274
|
—
|
451,274
|
Liability
|
|
|
|
|
Forward
Foreign Currency Exchange Contracts
|
—
|
(1,410,560)
|
—
|
(1,410,560)
|
Futures
Contracts
|
(1,294,991)
|
—
|
—
|
(1,294,991)
|
Options
Contracts Written
|
(2,800)
|
—
|
—
|
(2,800)
|
Total
|
383,509,065
|
176,580,917
|
43,746
|
560,133,728
|
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets. These assets include certain foreign securities for
which a third party statistical pricing service may be employed for purposes of fair market valuation. The model utilized by such third party statistical pricing service takes into account a security’s correlation to available market data
including, but not limited to, intraday index, ADR, and exchange-traded fund movements.
Forward foreign currency exchange contracts, futures contracts
and swap contracts are valued at unrealized appreciation (depreciation).
The Fund does not hold any significant investments (greater
than one percent of net assets) categorized as Level 3.
The accompanying Notes to Financial Statements are an integral part of this
statement.
22
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $369,617,798)
|
$415,815,659
|
Affiliated
issuers (cost $145,124,311)
|
142,253,754
|
Options
purchased (cost $458,156)
|
640,320
|
Foreign
currency (cost $408,802)
|
405,349
|
Margin
deposits on:
|
|
Futures
contracts
|
6,498,960
|
Swap
contracts
|
2,583,079
|
Unrealized
appreciation on forward foreign currency exchange contracts
|
257,983
|
Receivable
for:
|
|
Investments
sold
|
4,934,967
|
Capital
shares sold
|
87,958
|
Dividends
|
411,092
|
Interest
|
157,840
|
Foreign
tax reclaims
|
208,788
|
Variation
margin for futures contracts
|
1,093,421
|
Variation
margin for swap contracts
|
1,115
|
Prepaid
expenses
|
5,029
|
Total
assets
|
575,355,314
|
Liabilities
|
|
Option
contracts written, at value (premiums received $2,639)
|
2,800
|
Due
to custodian
|
473
|
Unrealized
depreciation on forward foreign currency exchange contracts
|
1,410,560
|
Payable
for:
|
|
Investments
purchased
|
4,015,485
|
Investments
purchased on a delayed delivery basis
|
17,721,748
|
Capital
shares purchased
|
488,675
|
Variation
margin for futures contracts
|
410,028
|
Variation
margin for swap contracts
|
49,417
|
Foreign
capital gains taxes deferred
|
3,654
|
Management
services fees
|
10,383
|
Distribution
and/or service fees
|
3,864
|
Transfer
agent fees
|
47,667
|
Compensation
of board members
|
81,418
|
Other
expenses
|
159,681
|
Total
liabilities
|
24,405,853
|
Net
assets applicable to outstanding capital stock
|
$550,949,461
|
Represented
by
|
|
Paid
in capital
|
502,632,618
|
Total
distributable earnings (loss) (Note 2)
|
48,316,843
|
Total
- representing net assets applicable to outstanding capital stock
|
$550,949,461
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
23
|
Statement of Assets and Liabilities (continued)
July 31, 2019
Class
A
|
|
Net
assets
|
$504,182,260
|
Shares
outstanding
|
35,998,454
|
Net
asset value per share
|
$14.01
|
Maximum
sales charge
|
5.75%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares)
|
$14.86
|
Advisor
Class
|
|
Net
assets
|
$5,605,972
|
Shares
outstanding
|
396,679
|
Net
asset value per share
|
$14.13
|
Class
C
|
|
Net
assets
|
$12,935,185
|
Shares
outstanding
|
965,672
|
Net
asset value per share
|
$13.40
|
Institutional
Class
|
|
Net
assets
|
$22,218,993
|
Shares
outstanding
|
1,576,086
|
Net
asset value per share
|
$14.10
|
Institutional
2 Class
|
|
Net
assets
|
$3,864,135
|
Shares
outstanding
|
272,547
|
Net
asset value per share
|
$14.18
|
Institutional
3 Class
|
|
Net
assets
|
$139,008
|
Shares
outstanding
|
9,847
|
Net
asset value per share
|
$14.12
|
Class
R
|
|
Net
assets
|
$2,003,908
|
Shares
outstanding
|
144,711
|
Net
asset value per share
|
$13.85
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
24
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Dividends
— unaffiliated issuers
|
$8,591,197
|
Dividends
— affiliated issuers
|
5,388,681
|
Interest
|
1,157,103
|
Foreign
taxes withheld
|
(459,056)
|
Total
income
|
14,677,925
|
Expenses:
|
|
Management
services fees
|
3,839,115
|
Distribution
and/or service fees
|
|
Class
A
|
1,289,608
|
Class
C
|
148,336
|
Class
R
|
15,072
|
Class
T
|
3
|
Transfer
agent fees
|
|
Class
A
|
556,967
|
Advisor
Class
|
5,308
|
Class
C
|
16,016
|
Institutional
Class
|
24,162
|
Institutional
2 Class
|
2,329
|
Institutional
3 Class
|
11
|
Class
R
|
3,262
|
Class
T
|
1
|
Compensation
of board members
|
20,888
|
Custodian
fees
|
158,222
|
Printing
and postage fees
|
73,909
|
Registration
fees
|
102,905
|
Audit
fees
|
115,526
|
Legal
fees
|
12,011
|
Compensation
of chief compliance officer
|
124
|
Other
|
27,906
|
Total
expenses
|
6,411,681
|
Net
investment income
|
8,266,244
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
21,190,096
|
Investments
— affiliated issuers
|
(751,673)
|
Capital
gain distributions from underlying affiliated funds
|
35,839
|
Foreign
currency translations
|
(260,741)
|
Forward
foreign currency exchange contracts
|
(5,556,102)
|
Futures
contracts
|
4,386,365
|
Options
purchased
|
(243,657)
|
Options
contracts written
|
60,998
|
Swap
contracts
|
(156,357)
|
Net
realized gain
|
18,704,768
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
(17,216,230)
|
Investments
— affiliated issuers
|
(2,785,662)
|
Foreign
currency translations
|
60,195
|
Forward
foreign currency exchange contracts
|
(1,500,136)
|
Futures
contracts
|
2,797,031
|
Options
purchased
|
195,874
|
Options
contracts written
|
(161)
|
Swap
contracts
|
428,781
|
Foreign
capital gains tax
|
14,989
|
Net
change in unrealized appreciation (depreciation)
|
(18,005,319)
|
Net
realized and unrealized gain
|
699,449
|
Net
increase in net assets resulting from operations
|
$8,965,693
|
The accompanying Notes to Financial Statements are an integral
part of this statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
25
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$8,266,244
|
$4,358,340
|
Net
realized gain
|
18,704,768
|
35,097,376
|
Net
change in unrealized appreciation (depreciation)
|
(18,005,319)
|
(1,550,277)
|
Net
increase in net assets resulting from operations
|
8,965,693
|
37,905,439
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(1,733,437)
|
—
|
Advisor
Class
|
(19,555)
|
—
|
Institutional
Class
|
(130,570)
|
—
|
Institutional
2 Class
|
(19,336)
|
—
|
Institutional
3 Class
|
(18)
|
—
|
Class
R
|
(2,614)
|
—
|
Total
distributions to shareholders (Note 2)
|
(1,905,530)
|
—
|
Decrease
in net assets from capital stock activity
|
(63,374,306)
|
(50,893,407)
|
Total
decrease in net assets
|
(56,314,143)
|
(12,987,968)
|
Net
assets at beginning of year
|
607,263,604
|
620,251,572
|
Net
assets at end of year
|
$550,949,461
|
$607,263,604
|
Undistributed
net investment income
|
$5,779,758
|
$662,459
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
26
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
724,703
|
9,776,555
|
1,931,802
|
26,596,226
|
Distributions
reinvested
|
135,170
|
1,722,071
|
—
|
—
|
Redemptions
|
(5,170,210)
|
(69,954,972)
|
(5,623,594)
|
(76,801,596)
|
Net
decrease
|
(4,310,337)
|
(58,456,346)
|
(3,691,792)
|
(50,205,370)
|
Advisor
Class
|
|
|
|
|
Subscriptions
|
207,241
|
2,811,950
|
408,673
|
5,699,755
|
Distributions
reinvested
|
1,523
|
19,538
|
—
|
—
|
Redemptions
|
(179,228)
|
(2,428,057)
|
(54,468)
|
(766,438)
|
Net
increase
|
29,536
|
403,431
|
354,205
|
4,933,317
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(216)
|
(2,735)
|
Net
decrease
|
—
|
—
|
(216)
|
(2,735)
|
Class
C
|
|
|
|
|
Subscriptions
|
107,738
|
1,394,958
|
304,592
|
4,036,834
|
Redemptions
|
(447,715)
|
(5,808,578)
|
(1,093,726)
|
(14,488,771)
|
Net
decrease
|
(339,977)
|
(4,413,620)
|
(789,134)
|
(10,451,937)
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
556,669
|
7,545,263
|
923,347
|
12,668,918
|
Distributions
reinvested
|
9,582
|
122,652
|
—
|
—
|
Redemptions
|
(636,124)
|
(8,654,189)
|
(683,195)
|
(9,375,394)
|
Net
increase (decrease)
|
(69,873)
|
(986,274)
|
240,152
|
3,293,524
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
129,136
|
1,779,696
|
136,447
|
1,917,190
|
Distributions
reinvested
|
1,501
|
19,318
|
—
|
—
|
Redemptions
|
(38,613)
|
(523,989)
|
(10,267)
|
(143,108)
|
Net
increase
|
92,024
|
1,275,025
|
126,180
|
1,774,082
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
11,650
|
161,438
|
—
|
—
|
Redemptions
|
(2,009)
|
(28,491)
|
—
|
—
|
Net
increase
|
9,641
|
132,947
|
—
|
—
|
Class
K
|
|
|
|
|
Redemptions
|
—
|
—
|
(17,631)
|
(238,396)
|
Net
decrease
|
—
|
—
|
(17,631)
|
(238,396)
|
Class
R
|
|
|
|
|
Subscriptions
|
84,798
|
1,123,932
|
78,316
|
1,058,024
|
Distributions
reinvested
|
45
|
563
|
—
|
—
|
Redemptions
|
(180,345)
|
(2,451,240)
|
(77,837)
|
(1,053,916)
|
Net
increase (decrease)
|
(95,502)
|
(1,326,745)
|
479
|
4,108
|
Class
T
|
|
|
|
|
Redemptions
|
(212)
|
(2,724)
|
—
|
—
|
Net
decrease
|
(212)
|
(2,724)
|
—
|
—
|
Total
net decrease
|
(4,684,700)
|
(63,374,306)
|
(3,777,757)
|
(50,893,407)
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
27
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$13.80
|
0.20
|
0.06
|
0.26
|
(0.05)
|
(0.05)
|
Year
Ended 7/31/2018
|
$12.99
|
0.10
|
0.71
|
0.81
|
—
|
—
|
Year
Ended 7/31/2017
|
$12.09
|
0.14
|
1.08
|
1.22
|
(0.32)
|
(0.32)
|
Year
Ended 7/31/2016
|
$11.73
|
0.15
|
0.21
|
0.36
|
—
|
—
|
Year
Ended 7/31/2015
|
$11.68
|
0.11
|
(0.06)
|
0.05
|
—
|
—
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$13.93
|
0.22
|
0.06
|
0.28
|
(0.08)
|
(0.08)
|
Year
Ended 7/31/2018
|
$13.07
|
0.16
|
0.70
|
0.86
|
—
|
—
|
Year
Ended 7/31/2017
|
$12.17
|
0.16
|
1.09
|
1.25
|
(0.35)
|
(0.35)
|
Year
Ended 7/31/2016
|
$11.77
|
0.17
|
0.23
|
0.40
|
—
|
—
|
Year
Ended 7/31/2015
|
$11.71
|
0.17
|
(0.11)
|
0.06
|
—
|
—
|
Class
C
|
Year
Ended 7/31/2019
|
$13.25
|
0.09
|
0.06
|
0.15
|
—
|
—
|
Year
Ended 7/31/2018
|
$12.57
|
(0.00)
(e)
|
0.68
|
0.68
|
—
|
—
|
Year
Ended 7/31/2017
|
$11.71
|
0.04
|
1.06
|
1.10
|
(0.24)
|
(0.24)
|
Year
Ended 7/31/2016
|
$11.44
|
0.06
|
0.21
|
0.27
|
—
|
—
|
Year
Ended 7/31/2015
|
$11.48
|
0.03
|
(0.07)
|
(0.04)
|
—
|
—
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$13.89
|
0.24
|
0.05
|
0.29
|
(0.08)
|
(0.08)
|
Year
Ended 7/31/2018
|
$13.04
|
0.14
|
0.71
|
0.85
|
—
|
—
|
Year
Ended 7/31/2017
|
$12.14
|
0.17
|
1.08
|
1.25
|
(0.35)
|
(0.35)
|
Year
Ended 7/31/2016
|
$11.75
|
0.18
|
0.21
|
0.39
|
—
|
—
|
Year
Ended 7/31/2015
|
$11.67
|
0.15
|
(0.07)
|
0.08
|
—
|
—
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$13.97
|
0.24
|
0.05
|
0.29
|
(0.08)
|
(0.08)
|
Year
Ended 7/31/2018
|
$13.11
|
0.13
|
0.73
|
0.86
|
—
|
—
|
Year
Ended 7/31/2017
|
$12.20
|
0.15
|
1.12
|
1.27
|
(0.36)
|
(0.36)
|
Year
Ended 7/31/2016
|
$11.80
|
0.19
|
0.21
|
0.40
|
—
|
—
|
Year
Ended 7/31/2015
|
$11.71
|
0.17
|
(0.08)
|
0.09
|
—
|
—
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
28
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income (loss)
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$14.01
|
1.88%
|
1.13%
|
1.13%
|
1.47%
|
104%
|
$504,182
|
Year
Ended 7/31/2018
|
$13.80
|
6.24%
|
1.10%
(c)
|
1.10%
(c)
|
0.72%
|
97%
|
$556,184
|
Year
Ended 7/31/2017
|
$12.99
|
10.43%
|
1.12%
|
1.12%
|
1.11%
|
103%
|
$571,392
|
Year
Ended 7/31/2016
|
$12.09
|
3.07%
|
1.14%
|
1.14%
(d)
|
1.30%
|
127%
|
$603,849
|
Year
Ended 7/31/2015
|
$11.73
|
0.43%
|
1.15%
|
1.15%
|
0.98%
|
104%
|
$659,873
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$14.13
|
2.06%
|
0.88%
|
0.88%
|
1.64%
|
104%
|
$5,606
|
Year
Ended 7/31/2018
|
$13.93
|
6.58%
|
0.85%
(c)
|
0.85%
(c)
|
1.20%
|
97%
|
$5,113
|
Year
Ended 7/31/2017
|
$13.07
|
10.63%
|
0.88%
|
0.88%
|
1.27%
|
103%
|
$169
|
Year
Ended 7/31/2016
|
$12.17
|
3.40%
|
0.89%
|
0.89%
(d)
|
1.51%
|
127%
|
$41
|
Year
Ended 7/31/2015
|
$11.77
|
0.51%
|
0.92%
|
0.92%
|
1.47%
|
104%
|
$60
|
Class
C
|
Year
Ended 7/31/2019
|
$13.40
|
1.13%
|
1.88%
|
1.88%
|
0.72%
|
104%
|
$12,935
|
Year
Ended 7/31/2018
|
$13.25
|
5.41%
|
1.85%
(c)
|
1.85%
(c)
|
(0.02%)
|
97%
|
$17,299
|
Year
Ended 7/31/2017
|
$12.57
|
9.59%
|
1.87%
|
1.87%
|
0.36%
|
103%
|
$26,322
|
Year
Ended 7/31/2016
|
$11.71
|
2.36%
|
1.89%
|
1.89%
(d)
|
0.55%
|
127%
|
$27,133
|
Year
Ended 7/31/2015
|
$11.44
|
(0.35%)
|
1.90%
|
1.90%
|
0.23%
|
104%
|
$29,100
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$14.10
|
2.14%
|
0.88%
|
0.88%
|
1.73%
|
104%
|
$22,219
|
Year
Ended 7/31/2018
|
$13.89
|
6.52%
|
0.85%
(c)
|
0.85%
(c)
|
0.99%
|
97%
|
$22,863
|
Year
Ended 7/31/2017
|
$13.04
|
10.66%
|
0.88%
|
0.88%
|
1.38%
|
103%
|
$18,332
|
Year
Ended 7/31/2016
|
$12.14
|
3.32%
|
0.89%
|
0.89%
(d)
|
1.62%
|
127%
|
$6,820
|
Year
Ended 7/31/2015
|
$11.75
|
0.69%
|
0.90%
|
0.90%
|
1.25%
|
104%
|
$5,216
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$14.18
|
2.17%
|
0.84%
|
0.84%
|
1.76%
|
104%
|
$3,864
|
Year
Ended 7/31/2018
|
$13.97
|
6.56%
|
0.81%
(c)
|
0.81%
(c)
|
0.97%
|
97%
|
$2,522
|
Year
Ended 7/31/2017
|
$13.11
|
10.77%
|
0.83%
|
0.83%
|
1.24%
|
103%
|
$713
|
Year
Ended 7/31/2016
|
$12.20
|
3.39%
|
0.81%
|
0.81%
|
1.64%
|
127%
|
$128
|
Year
Ended 7/31/2015
|
$11.80
|
0.77%
|
0.80%
|
0.80%
|
1.44%
|
104%
|
$26
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
29
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Total
distributions to
shareholders
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$13.91
|
0.24
|
0.06
|
0.30
|
(0.09)
|
(0.09)
|
Year
Ended 7/31/2018
|
$13.05
|
0.15
|
0.71
|
0.86
|
—
|
—
|
Year
Ended 7/31/2017(f)
|
$12.11
|
0.07
|
0.87
|
0.94
|
—
|
—
|
Class
R
|
Year
Ended 7/31/2019
|
$13.64
|
0.17
|
0.05
|
0.22
|
(0.01)
|
(0.01)
|
Year
Ended 7/31/2018
|
$12.87
|
0.06
|
0.71
|
0.77
|
—
|
—
|
Year
Ended 7/31/2017
|
$11.99
|
0.08
|
1.09
|
1.17
|
(0.29)
|
(0.29)
|
Year
Ended 7/31/2016
|
$11.67
|
0.15
|
0.17
|
0.32
|
—
|
—
|
Year
Ended 7/31/2015
|
$11.66
|
0.07
|
(0.06)
|
0.01
|
—
|
—
|
Notes
to Financial Highlights
|
(a)
|
In
addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense
ratios.
|
(b)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(c)
|
Ratios
include interfund lending expense which is less than 0.01%.
|
(d)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
(e)
|
Rounds to
zero.
|
(f)
|
Institutional
3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date.
|
(g)
|
Annualized.
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
30
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income (loss)
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$14.12
|
2.21%
|
0.81%
|
0.81%
|
1.71%
|
104%
|
$139
|
Year
Ended 7/31/2018
|
$13.91
|
6.59%
|
0.78%
(c)
|
0.78%
(c)
|
1.07%
|
97%
|
$3
|
Year
Ended 7/31/2017(f)
|
$13.05
|
7.76%
|
0.81%
(g)
|
0.81%
(g)
|
1.42%
(g)
|
103%
|
$3
|
Class
R
|
Year
Ended 7/31/2019
|
$13.85
|
1.63%
|
1.38%
|
1.38%
|
1.25%
|
104%
|
$2,004
|
Year
Ended 7/31/2018
|
$13.64
|
5.98%
|
1.35%
(c)
|
1.35%
(c)
|
0.47%
|
97%
|
$3,277
|
Year
Ended 7/31/2017
|
$12.87
|
10.08%
|
1.38%
|
1.38%
|
0.62%
|
103%
|
$3,086
|
Year
Ended 7/31/2016
|
$11.99
|
2.74%
|
1.39%
|
1.39%
(d)
|
1.33%
|
127%
|
$299
|
Year
Ended 7/31/2015
|
$11.67
|
0.09%
|
1.48%
|
1.48%
|
0.65%
|
104%
|
$19
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
31
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Global Opportunities Fund (the Fund), a series of
Columbia Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business
trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Advisor Class, Institutional Class, Institutional 2 Class, Institutional 3 Class and Class R shares are available for purchase through authorized investment professionals to omnibus
retirement plans or to institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years. Effective December 14, 2018, Class T shares merged, in a
tax-free transaction, into Class A shares of the Fund and are no longer offered for sale.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
All equity securities and exchange-traded funds are valued at
the close of business of the New York Stock Exchange. Equity securities and exchange-traded funds are valued at the official closing price on the principal exchange or market on which they trade. Unlisted securities or listed securities for which
there were no sales during the day are valued at the mean of the latest quoted bid and ask prices on such exchanges or markets.
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or not believed to be reflective of market
value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that management believes
does not approximate market value.
Asset- and
mortgage-backed securities are generally valued by pricing services, which utilize pricing models that incorporate the securities’ cash flow and loan performance data. These models also take into account available market data, including
trades, market quotations, and benchmark yield curves for identical or similar securities. Factors used to identify similar securities may include, but are not limited to, issuer, collateral type, vintage, prepayment speeds, collateral performance,
credit ratings, credit enhancement and expected life. Asset-backed securities for which quotations are readily available may also be valued based upon an over-the-counter or exchange bid quote from an approved independent broker-dealer.
32
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Foreign equity securities are valued based on the closing
price on the foreign exchange in which such securities are primarily traded. If any foreign equity security closing prices are not readily available, the securities are valued at the mean of the latest quoted bid and ask prices on such exchanges or
markets. Foreign currency exchange rates are determined at the scheduled closing time of the New York Stock Exchange. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange; therefore, the
closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the close of the New York Stock Exchange. In those situations, foreign securities will be fair valued pursuant to
a policy adopted by the Board of Trustees, including, if available, utilizing a third party pricing service to determine these fair values. The third-party pricing service takes into account multiple factors, including, but not limited to, movements
in the U.S. securities markets, certain depositary receipts, futures contracts and foreign exchange rates that have occurred subsequent to the close of the foreign exchange or market, to determine a good faith estimate that reasonably reflects the
current market conditions as of the close of the New York Stock Exchange. The fair value of a security is likely to be different from the quoted or published price, if available.
Investments in affiliated funds managed by the Investment
Manager, its affiliates, or third-party advised (unaffiliated) funds, including exchange-traded funds (collectively, Underlying Funds), with the exception of exchange-traded funds, are valued at the net asset value of the applicable class of the
Underlying Fund determined as of the close of the New York Stock Exchange on the valuation date.
Forward foreign currency exchange contracts are
marked-to-market based upon foreign currency exchange rates provided by a pricing service.
Futures and options on futures contracts are valued based upon
the settlement price at the close of regular trading on their principal exchanges or, in the absence of transactions, at the mean of the latest quoted bid and ask prices.
Option contracts are valued at the mean of the latest quoted
bid and ask prices on their primary exchanges. Option contracts, including over-the-counter option contracts, with no readily available market quotations are valued using mid-market evaluations from independent third-party vendors.
Swap transactions are valued through an independent pricing
service or broker, or if neither is available, through an internal model based upon observable inputs.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Foreign currency transactions and translations
The values of all assets and liabilities denominated in
foreign currencies are generally translated into U.S. dollars at exchange rates determined at the close of regular trading on the New York Stock Exchange. Net realized and unrealized gains (losses) on foreign currency transactions and translations
include gains (losses) arising from the fluctuation in exchange rates between trade and settlement dates on securities transactions, gains (losses) arising from the disposition of foreign currency and currency gains (losses) between the accrual and
payment dates on dividends, interest income and foreign withholding taxes.
For financial statement purposes, the Fund does not
distinguish that portion of gains (losses) on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized
gains (losses) on investments in the Statement of Operations.
Columbia
Global Opportunities Fund | Annual Report 2019
|
33
|
Notes to Financial Statements (continued)
July 31, 2019
Derivative instruments
The Fund invests in certain derivative instruments, as
detailed below, to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more securities, currencies, commodities, indices, or other assets or instruments.
Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to certain assets), for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to
pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks, such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including
the potential inability of the counterparty to fulfill its obligations under the terms of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the
potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial
statements.
A derivative instrument may suffer a
marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its obligations under the contract. The
Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by the Fund and the amount of any variation margin held by the
counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk to the Fund since the clearinghouse or central counterparty (CCP) provides some protection
in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract; therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in
exchange-traded or centrally cleared derivatives with respect to initial and variation margin that is held in a broker’s customer account. While brokers are required to segregate customer margin from their own assets, in the event that a
broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across
all the broker’s customers (including the Fund), potentially resulting in losses to the Fund.
In order to better define its contractual rights and to secure
rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement) or similar agreement with its derivatives contract
counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a
default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative instrument’s payables and/or receivables with collateral held and/or posted and create
one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or
insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
Collateral (margin) requirements differ by type of derivative.
Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain circumstances. Collateral terms for most over-the-counter
derivatives are subject to regulatory requirements to exchange variation margin with trading counterparties and may have contract specific margin terms as well. For over-the-counter derivatives traded under an ISDA Master Agreement, the collateral
requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any variation margin currently pledged by the Fund and/or the counterparty. Generally,
the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (e.g., $250,000) before a transfer has to be made. To the extent amounts due to the Fund from its counterparties are not fully collateralized,
contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral received from the broker. Any interest expense paid by the Fund is shown on the Statement of
Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those
counterparties.
34
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Certain ISDA Master Agreements allow counterparties of
over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified time period or if the Fund fails to meet certain terms of
the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination rights if the counterparty fails to meet certain terms of the ISDA Master Agreement. In
determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk, whether termination would result in a net liability owed from the counterparty.
For financial reporting purposes, the Fund does not offset
derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Forward foreign currency exchange contracts
Forward foreign currency exchange contracts are
over-the-counter agreements between two parties to buy and sell a currency at a set price on a future date. The Fund utilized forward foreign currency exchange contracts to hedge the currency exposure associated with some or all of the Fund’s
securities, to shift foreign currency exposure back to U.S. dollars, to shift investment exposure from one currency to another, to shift U.S. dollar exposure to achieve a representative weighted mix of major currencies in its benchmark, to recover
an underweight country exposure in its portfolio or to gain market exposure to various foreign currencies. These instruments may be used for other purposes in future periods.
The values of forward foreign currency exchange contracts
fluctuate daily with changes in foreign currency exchange rates. Changes in the value of these contracts are recorded as unrealized appreciation or depreciation until the contract is exercised or has expired. The Fund will realize a gain or loss
when the forward foreign currency exchange contract is closed or expires. Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in U.S. dollars without delivery of foreign currency.
The use of forward foreign currency exchange contracts does
not eliminate fluctuations in the prices of the Fund’s portfolio securities. The risks of forward foreign currency exchange contracts include movement in the values of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that counterparties will not complete their contractual obligations, which may be in excess of the amount reflected, if any, in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are exchange-traded and represent
commitments for the future purchase or sale of an asset at a specified price on a specified date. The Fund bought and sold futures contracts to produce incremental earnings, to manage the duration and yield curve exposure of the Fund versus the
benchmark, to manage exposure to movements in interest rates, to manage exposure to the securities market, to maintain appropriate equity market exposure while keeping sufficient cash to accommodate daily redemptions and to gain market exposure to
various currency, interest rate and equity markets. These instruments may be used for other purposes in future periods. Upon entering into futures contracts, the Fund bears risks that it may not achieve the anticipated benefits of the futures
contracts and may realize a loss. Additional risks include counterparty credit risk, the possibility of an illiquid market, and that a change in the value of the contract or option may not correlate with changes in the value of the underlying
asset.
Upon entering into a futures contract, the Fund
deposits cash or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be maintained at an established level over the life of the
contract. Cash deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are designated in the Portfolio of Investments. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund recognizes a
realized gain or loss when the contract is closed or expires. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Columbia
Global Opportunities Fund | Annual Report 2019
|
35
|
Notes to Financial Statements (continued)
July 31, 2019
Options contracts
Options are contracts which entitle the holder to purchase or
sell securities or other identified assets at a specified price, or in the case of index option contracts, to receive or pay the difference between the index value and the strike price of the index option contract. Option contracts can be either
exchange-traded or over-the-counter. The Fund purchased and wrote option contracts to produce incremental earnings, to decrease the Fund’s exposure to equity market risk, to increase return on investments, to protect gains and to facilitate
buying and selling of securities for investments. These instruments may be used for other purposes in future periods. Completion of transactions for option contracts traded in the over-the-counter market depends upon the performance of the other
party. Cash collateral may be collected or posted by the Fund to secure certain over-the-counter option contract trades. Cash collateral held or posted by the Fund for such option contract trades must be returned to the broker or the Fund upon
closure, exercise or expiration of the contract.
Options
contracts purchased are recorded as investments. When the Fund writes an options contract, the premium received is recorded as an asset and an amount equivalent to the premium is recorded as a liability in the Statement of Assets and Liabilities and
is subsequently adjusted to reflect the current fair value of the option written. Changes in the fair value of the written option are recorded as unrealized appreciation or depreciation until the contract is exercised or has expired. The Fund will
realize a gain or loss when the option contract is closed or expires. When option contracts are exercised, the proceeds on sales for a written call or purchased put option contract, or the purchase cost for a written put or purchased call option
contract, is adjusted by the amount of premium received or paid.
For over-the-counter options purchased, the Fund bears the
risk of loss of the amount of the premiums paid plus the positive change in market values net of any collateral held by the Fund should the counterparty fail to perform under the contracts. Option contracts written by the Fund do not typically give
rise to significant counterparty credit risk, as options written generally obligate the Fund and not the counterparty to perform. The risk in writing a call option contract is that the Fund gives up the opportunity for profit if the market price of
the security increases above the strike price and the option contract is exercised. The risk in writing a put option contract is that the Fund may incur a loss if the market price of the security decreases below the strike price and the option
contract is exercised. Exercise of a written option could result in the Fund purchasing or selling a security or foreign currency when it otherwise would not, or at a price different from the current market value. In purchasing and writing options,
the Fund bears the risk of an unfavorable change in the value of the underlying instrument or the risk that the Fund may not be able to enter into a closing transaction due to an illiquid market.
Swap contracts
Swap contracts are negotiated in the over-the-counter market
and may be entered into as a bilateral contract or centrally cleared (centrally cleared swap contract). In a centrally cleared swap contract, immediately following execution of the swap contract with a broker, the swap contract is novated to a
central counterparty (the CCP) and the CCP becomes the Fund’s counterparty to the centrally cleared swap contract. The Fund is required to deposit initial margin with the futures commission merchant (FCM), which pledges it through to the CCP
in the form of cash or securities in an amount that varies depending on the size and risk profile of the particular swap contract. Securities deposited as initial margin are designated in the Portfolio of Investments and cash deposited is recorded
in the Statement of Assets and Liabilities as margin deposits. Unlike a bilateral swap contract, for centrally cleared swap contracts, the Fund has minimal credit exposure to the FCM because the CCP stands between the Fund and the relevant
buyer/seller on the other side of the contract. Swap contracts are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). The daily change in valuation of centrally cleared swap contracts, if any, is
recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities.
Entering into these contracts involves, to varying degrees,
elements of interest, liquidity and counterparty credit risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks involve the possibility that there may be unfavorable changes in interest rates, market
conditions or other conditions, that it may be difficult to initiate a swap transaction or liquidate a position at an advantageous time or price which may result in significant losses, and that the FCM or CCP may not fulfill its obligation under the
contract.
36
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Credit
default swap contracts
The Fund entered into credit
default swap contracts to increase or decrease its credit exposure to an index. These instruments may be used for other purposes in future periods. Credit default swap contracts are agreements in which one party pays fixed periodic payments to a
counterparty in consideration for an agreement from the counterparty to make a specific payment should a specified credit event(s) take place. Although specified credit events are contract specific, credit events are generally defined as bankruptcy,
failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium.
As the purchaser of a credit default swap contract, the Fund
purchases protection by paying a periodic interest rate on the notional amount to the counterparty. The interest amount is accrued daily as a component of unrealized appreciation (depreciation) and is recorded as a realized loss upon payment. If a
credit event as specified in the contract occurs, the Fund may have the option either to deliver the reference obligation to the seller in exchange for a cash payment of its par amount, or to receive a net cash settlement equal to the par amount
less an agreed-upon value of the reference obligation as of the date of the credit event. The difference between the value of the obligation or cash delivered and the notional amount received will be recorded as a realized gain (loss).
As the seller of a credit default swap contract, the Fund
sells protection to a buyer and will generally receive a periodic interest rate on a notional amount. The interest amount is accrued daily as a component of unrealized appreciation (depreciation) and is recorded as a realized gain upon receipt of
the payment. If a credit event as specified in the contract with the counterparty occurs, the Fund may either be required to accept the reference obligation from the buyer in exchange for a cash payment of its notional amount, or to pay the buyer a
net cash settlement equal to the notional amount less an agreed-upon value of the reference obligation (recovery value) as of the date of the credit event. The difference between the value of the obligation or cash received and the notional amount
paid will be recorded as a realized gain (loss). The maximum potential amount of undiscounted future payments the Fund could be required to make as the seller of protection under a credit default swap contract is equal to the notional amount of the
reference obligation. These potential amounts may be partially offset by any recovery values of the respective reference obligations or upfront receipts upon entering into the agreement. The notional amounts and market values of all credit default
swap contracts in which the Fund is the seller of protection, if any, are disclosed in the Credit Default Swap Contracts Outstanding schedule following the Portfolio of Investments.
As a protection seller, the Fund bears the risk of loss from
the credit events specified in the contract with the counterparty. For credit default swap contracts on credit indices, quoted market prices and resulting market values serve as an indicator of the current status of the payment/performance risk.
Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the reference entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as
defined under the terms of the contract.
Any upfront
payments or receipts by the Fund upon entering into a credit default swap contract is recorded as an asset or liability, respectively, and amortized daily as a component of realized gain (loss) in the Statement of Operations. Credit default swap
contracts are valued daily, and the change in value is recorded as unrealized appreciation (depreciation) until the termination of the swap, at which time a realized gain (loss) is recorded.
Credit default swap contracts can involve greater risks than
if a fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to counterparty credit risk, leverage risk, hedging risk, correlation risk and liquidity risk.
Interest rate swap contracts
The Fund entered into interest rate swap transactions which
may include inflation rate swap contracts to manage interest rate and market risk exposure to produce incremental earnings. These instruments may be used for other purposes in future periods. An interest rate swap is an agreement between two parties
where there are two flows and payments are made between the two counterparties and the payments are dependent upon changes in an interest rate, inflation rate or inflation index calculated on a nominal amount. Interest rate swaps are agreements
between two parties that involve the exchange of
Columbia
Global Opportunities Fund | Annual Report 2019
|
37
|
Notes to Financial Statements (continued)
July 31, 2019
one type of
interest rate for another type of interest rate cash flow on specified dates in the future, based on a predetermined, specified notional amount. Certain interest rate swaps are considered forward-starting, whereby the accrual for the exchange of
cash flows does not begin until a specified date in the future. The net cash flow for a standard interest rate swap transaction is generally the difference between a floating market interest rate versus a fixed interest rate.
Interest rate swaps are valued daily and unrealized
appreciation (depreciation) is recorded. Certain interest rate swaps may accrue periodic interest on a daily basis as a component of unrealized appreciation (depreciation); the Fund will realize a gain or loss upon the payment or receipt of accrued
interest. The Fund will realize a gain or a loss when the interest rate swap is terminated.
Effects of derivative transactions in the financial
statements
The following tables are intended to provide
additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the Statement of Assets and Liabilities; and the
impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules following the Portfolio of Investments present additional information regarding
derivative instruments outstanding at the end of the period, if any.
The following table is a summary of the fair value of
derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) at July 31, 2019:
|
Asset
derivatives
|
|
Risk
exposure
category
|
Statement
of assets and liabilities
location
|
Fair
value ($)
|
Credit
risk
|
Component
of total distributable earnings (loss) — unrealized appreciation on swap contracts
|
451,274*
|
Equity
risk
|
Component
of total distributable earnings (loss) — unrealized appreciation on futures contracts
|
26,865*
|
Equity
risk
|
Investments,
at value — Options Purchased
|
640,320
|
Foreign
exchange risk
|
Unrealized
appreciation on forward foreign currency exchange contracts
|
257,983
|
Interest
rate risk
|
Component
of total distributable earnings (loss) — unrealized appreciation on futures contracts
|
3,396,224*
|
Total
|
|
4,772,666
|
|
Liability
derivatives
|
|
Risk
exposure
category
|
Statement
of assets and liabilities
location
|
Fair
value ($)
|
Equity
risk
|
Component
of total distributable earnings (loss) — unrealized depreciation on futures contracts
|
1,172,522*
|
Equity
risk
|
Options
contracts written, at value
|
2,800
|
Foreign
exchange risk
|
Unrealized
depreciation on forward foreign currency exchange contracts
|
1,410,560
|
Interest
rate risk
|
Component
of total distributable earnings (loss) — unrealized depreciation on futures contracts
|
122,469*
|
Total
|
|
2,708,351
|
*
|
Includes
cumulative appreciation (depreciation) as reported in the tables following the Portfolio of Investments. Only the current day’s variation margin is reported in receivables or payables in the Statement of Assets and Liabilities.
|
38
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
following table indicates the effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended July 31, 2019:
Amount
of realized gain (loss) on derivatives recognized in income
|
Risk
exposure category
|
Forward
foreign
currency
exchange
contracts
($)
|
Futures
contracts
($)
|
Options
contracts
written
($)
|
Options
contracts
purchased
($)
|
Swap
contracts
($)
|
Total
($)
|
Credit
risk
|
—
|
—
|
—
|
—
|
(68,537)
|
(68,537)
|
Equity
risk
|
—
|
(295,780)
|
60,998
|
(243,657)
|
—
|
(478,439)
|
Foreign
exchange risk
|
(5,556,102)
|
—
|
—
|
—
|
—
|
(5,556,102)
|
Interest
rate risk
|
—
|
4,682,145
|
—
|
—
|
(87,820)
|
4,594,325
|
Total
|
(5,556,102)
|
4,386,365
|
60,998
|
(243,657)
|
(156,357)
|
(1,508,753)
|
|
Change
in unrealized appreciation (depreciation) on derivatives recognized in income
|
Risk
exposure category
|
Forward
foreign
currency
exchange
contracts
($)
|
Futures
contracts
($)
|
Options
contracts
written
($)
|
Options
contracts
purchased
($)
|
Swap
contracts
($)
|
Total
($)
|
Credit
risk
|
—
|
—
|
—
|
—
|
428,781
|
428,781
|
Equity
risk
|
—
|
(1,043,989)
|
(161)
|
195,874
|
—
|
(848,276)
|
Foreign
exchange risk
|
(1,500,136)
|
—
|
—
|
—
|
—
|
(1,500,136)
|
Interest
rate risk
|
—
|
3,841,020
|
—
|
—
|
—
|
3,841,020
|
Total
|
(1,500,136)
|
2,797,031
|
(161)
|
195,874
|
428,781
|
1,921,389
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended July 31, 2019:
Derivative
instrument
|
Average
notional
amounts ($)*
|
Futures
contracts — long
|
188,385,741
|
Futures
contracts — short
|
105,340,592
|
Credit
default swap contracts — buy protection
|
10,592,500
|
Credit
default swap contracts — sell protection
|
34,667,161
|
Derivative
instrument
|
Average
value ($)*
|
Options
contracts — purchased
|
175,345
|
Options
contracts — written
|
(13,900)
|
Derivative
instrument
|
Average
unrealized
appreciation ($)
|
Average
unrealized
depreciation ($)
|
Forward
foreign currency exchange contracts
|
559,338*
|
(956,698)*
|
Interest
rate swap contracts
|
268**
|
(17,437)**
|
*
|
Based on
the ending quarterly outstanding amounts for the year ended July 31, 2019.
|
**
|
Based on
the ending daily outstanding amounts for the year ended July 31, 2019.
|
Columbia
Global Opportunities Fund | Annual Report 2019
|
39
|
Notes to Financial Statements (continued)
July 31, 2019
Asset- and mortgage-backed securities
The Fund may invest in asset-backed and mortgage-backed
securities. The maturity dates shown represent the original maturity of the underlying obligation. Actual maturity may vary based upon prepayment activity on these obligations. All, or a portion, of the obligation may be prepaid at any time because
the underlying asset may be prepaid. As a result, decreasing market interest rates could result in an increased level of prepayment. An increased prepayment rate will have the effect of shortening the maturity of the security. Unless otherwise
noted, the coupon rates presented are fixed rates.
Delayed
delivery securities
The Fund may trade securities on
other than normal settlement terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could
cause the Fund to subsequently invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
To be announced securities
The Fund may trade securities on a To Be Announced (TBA)
basis. 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.
In some cases, Master Securities
Forward Transaction Agreements (MSFTAs) may be used to govern transactions of certain forward-settling agency mortgage-backed securities, such as delayed-delivery and TBAs, between the Fund and counterparty. The MSFTA maintains provisions for, among
other things, initiation and confirmation, payment and transfer, events of default, termination, and maintenance of collateral relating to such transactions.
Mortgage dollar roll transactions
The Fund may enter into mortgage “dollar rolls” in
which the Fund sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar but not identical securities (same type, coupon and maturity) on a specified future date. During the roll
period, the Fund loses the right to receive principal and interest paid on the securities sold. However, the Fund will benefit because it receives negotiated amounts in the form of reductions of the purchase price for the future purchase plus the
interest earned on the cash proceeds of the securities sold until the settlement date of the forward purchase. The Fund records the incremental difference between the forward purchase and sale of each forward roll as a realized gain or loss. Unless
any realized gains exceed the income, capital appreciation, and gain or loss due to mortgage prepayments that would have been realized on the securities sold as part of the mortgage dollar roll, the use of this technique will diminish the investment
performance of the Fund compared to what the performance would have been without the use of mortgage dollar rolls. All cash proceeds will be invested in instruments that are permissible investments for the Fund. The Fund identifies cash or liquid
securities in an amount equal to the forward purchase price.
For financial reporting and tax purposes, the Fund treats
“to be announced” mortgage dollar rolls as two separate transactions, one involving the purchase of a security and a separate transaction involving a sale. These transactions may increase the Fund’s portfolio turnover rate. The
Fund does not currently enter into mortgage dollar rolls that are accounted for as financing transactions.
Mortgage 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.
Treasury inflation protected securities
The Fund may invest in treasury inflation protected securities
(TIPS). The principal amount of TIPS is adjusted periodically and is increased for inflation or decreased for deflation based on a monthly published index. These adjustments are recorded as interest income in the Statement of Operations. Coupon
payments are based on the adjusted principal at the time the interest is paid.
40
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Offsetting of assets and liabilities
The following table presents the Fund’s gross and net
amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Fund as of July 31, 2019:
|
Citi
($)
|
Deutsche
Bank ($)
|
HSBC
($)
|
JPMorgan
($)
|
Morgan
Stanley ($) (a)
|
Morgan
Stanley ($) (a)
|
Total
($)
|
Assets
|
|
|
|
|
|
|
|
Centrally
cleared credit default swap contracts (b)
|
-
|
-
|
-
|
-
|
-
|
1,115
|
1,115
|
Forward
foreign currency exchange contracts
|
6,859
|
-
|
97,242
|
-
|
153,882
|
-
|
257,983
|
Options
purchased puts
|
-
|
-
|
-
|
640,320
|
-
|
-
|
640,320
|
Total
assets
|
6,859
|
-
|
97,242
|
640,320
|
153,882
|
1,115
|
899,418
|
Liabilities
|
|
|
|
|
|
|
|
Centrally
cleared credit default swap contracts (b)
|
-
|
-
|
-
|
-
|
-
|
49,417
|
49,417
|
Forward
foreign currency exchange contracts
|
-
|
-
|
582,459
|
-
|
828,101
|
-
|
1,410,560
|
Options
contracts written
|
-
|
2,800
|
-
|
-
|
-
|
-
|
2,800
|
Total
liabilities
|
-
|
2,800
|
582,459
|
-
|
828,101
|
49,417
|
1,462,777
|
Total
financial and derivative net assets
|
6,859
|
(2,800)
|
(485,217)
|
640,320
|
(674,219)
|
(48,302)
|
(563,359)
|
Total
collateral received (pledged) (c)
|
-
|
-
|
-
|
-
|
-
|
(48,302)
|
(48,302)
|
Net
amount (d)
|
6,859
|
(2,800)
|
(485,217)
|
640,320
|
(674,219)
|
-
|
(515,057)
|
(a)
|
Exposure
can only be netted across transactions governed under the same master agreement with the same legal entity.
|
(b)
|
Centrally
cleared swaps are included within payable/receivable for variation margin on the Statement of Assets and Liabilities.
|
(c)
|
In some
instances, the actual collateral received and/or pledged may be more than the amount shown due to overcollateralization.
|
(d)
|
Represents the
net amount due from/(to) counterparties in the event of default.
|
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted. The Fund classifies gains and losses realized on prepayments
received on mortgage-backed securities as adjustments to interest income.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Corporate actions and dividend income are generally recorded
net of any non-reclaimable tax withholdings, on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities.
The Fund may receive distributions from holdings in equity
securities, business development companies (BDCs), exchange-traded funds (ETFs), limited partnerships (LPs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information on the tax character of
their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. Return of capital is recorded as a reduction of the cost basis of securities held. If the
Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. With respect to REITs, to the extent actual information has not yet been reported, estimates for return of capital are made by the Fund’s
management. Management’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a proportionate change in return of capital to shareholders.
Columbia
Global Opportunities Fund | Annual Report 2019
|
41
|
Notes to Financial Statements (continued)
July 31, 2019
Awards from class action litigation are recorded as a
reduction of cost basis if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains.
Income and capital gain distributions from the Underlying
Funds, if any, are recorded on the ex-dividend date.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
Federal
income tax status
The Fund intends to qualify each year
as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its tax year, and as such will not be
subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to
federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Foreign taxes
The Fund may be subject to foreign taxes on income, gains on
investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries, as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it
invests.
Realized gains in certain countries may be
subject to foreign taxes at the Fund level, based on statutory rates. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction, as applicable. The amount, if any, is disclosed as a
liability on the Statement of Assets and Liabilities.
Distributions to shareholders
Distributions from net investment income, if any, are declared
and paid annually. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset
42
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
dates. The standard
is effective for annual periods beginning after December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote
disclosures.
Accounting Standards Update 2018-13
Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods beginning after December 15, 2019 and interim periods within
those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a result of the amendments, management implemented disclosure
changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the level 3 valuation
processes, as well as modifications to the measurement uncertainty disclosure.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Note
3. Fees and other transactions with affiliates
Management services fees and underlying fund fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is a blend of (i) 0.00% on assets invested in Columbia proprietary funds, including exchange-traded funds, that pay an investment management
fee to the Investment Manager, and (ii) a fee that declines from 0.72% to 0.52%, depending on asset levels, on assets invested in securities, instruments and other assets not described above, including other funds advised by the Investment Manager
that do not pay a management services fee, derivatives and individual securities. The effective management services fee rate for the year ended July 31, 2019 was 0.68% of the Fund’s average daily net assets.
In addition to the fees and expenses which the Fund bears
directly, the Fund indirectly bears a pro rata share of the fees and expenses of the Underlying Funds in which the Fund invests. Because the Underlying Funds have varied expense and fee levels and the Fund may own different proportions of Underlying
Funds at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. These expenses are not reflected in the expenses shown in Statement of Operations and are not included in the ratios to average net assets shown in
the Financial Highlights.
Compensation of board
members
Members of the Board of Trustees who are not
officers or employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of
Trustees may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for
these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Columbia
Global Opportunities Fund | Annual Report 2019
|
43
|
Notes to Financial Statements (continued)
July 31, 2019
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transactions with affiliates
For the year ended July 31, 2019, the Fund engaged in purchase
and/or sale transactions with affiliates and/or accounts that have a common investment manager (or affiliated investment managers), common directors/trustees, and/or common officers. Those purchase and sale transactions complied with provisions of
Rule 17a-7 under the 1940 Act and were $0 and $13,751, respectively. The sale transactions resulted in a net realized loss of $25,437.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
For the year ended July 31, 2019, the Fund’s effective
transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.11
|
Advisor
Class
|
0.11
|
Class
C
|
0.11
|
Institutional
Class
|
0.11
|
Institutional
2 Class
|
0.07
|
Institutional
3 Class
|
0.02
|
Class
R
|
0.11
|
Class
T
|
0.05
(a)
|
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at the maximum annual rates of up to 0.25%,
44
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
1.00%, 0.50% and
0.25% of the Fund’s average daily net assets attributable to Class A, Class C, Class R and Class T shares, respectively. For Class C shares, of the 1.00% fee, up to 0.75% can be reimbursed for distribution expenses and up to an additional
0.25% can be reimbursed for shareholder servicing expenses. For Class R shares, of the 0.50% fee, up to 0.25% can be reimbursed for shareholder servicing expenses. For Class T shares, of the 0.25% fee, up to 0.25% can be reimbursed for distribution
and/or shareholder servicing expenses. As a result of all Class T shares of the Fund being redeemed or converted to Class A shares, December 14, 2018 was the last day the Fund paid a distribution and shareholder services fee for Class T
shares.
The amount of distribution and shareholder
services expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $431,000 for Class C shares. This amount is based on the most recent information available as of June 30, 2019, and may be recovered from
future payments under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended July 31, 2019, if any, are listed below:
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
5.75
|
0.50 - 1.00
(a)
|
161,612
|
Class
C
|
—
|
1.00
(b)
|
1,623
|
Class
T
|
2.50
|
—
|
—
|
(a)
|
This
charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months after purchase, as follows: 1.00% if redeemed within 12 months after 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 12 months after purchase, with certain limited exceptions.
|
The Fund’s other share classes are not subject to sales
charges.
Expenses waived/reimbursed by the Investment
Manager and its affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of
Trustees, 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 following annual rate(s) as a
percentage of the class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to
December 1, 2018
|
Class
A
|
1.47%
|
1.47%
|
Advisor
Class
|
1.22
|
1.22
|
Class
C
|
2.22
|
2.22
|
Institutional
Class
|
1.22
|
1.22
|
Institutional
2 Class
|
1.15
|
1.15
|
Institutional
3 Class
|
1.11
|
1.10
|
Class
R
|
1.72
|
1.72
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), 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, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This
Columbia
Global Opportunities Fund | Annual Report 2019
|
45
|
Notes to Financial Statements (continued)
July 31, 2019
agreement may be
modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. Any fees waived and/or expenses reimbursed under the expense reimbursement arrangements described above are not recoverable by the Investment
Manager or its affiliates in future periods.
Note
4. Federal tax information
The timing and
character of income and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for deferral/reversal of wash sale losses, passive foreign investment company (PFIC) holdings, re-characterization of distributions for investments, derivative investments, tax straddles, swap investments, post-October capital
losses, trustees’ deferred compensation, principal and/or interest from fixed income securities, foreign currency transactions, foreign capital gains tax and investments in partnerships. To the extent these differences were permanent,
reclassifications were made among the components of the Fund’s net assets. Temporary differences do not require reclassifications.
The following reclassifications were made:
Undistributed
net
investment
income ($)
|
Accumulated
net realized
(loss) ($)
|
Paid
in
capital ($)
|
(1,243,415)
|
1,230,524
|
12,891
|
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification.
The tax character of distributions paid during the years
indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
1,905,530
|
—
|
1,905,530
|
—
|
—
|
—
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At July 31, 2019, the components of distributable earnings on
a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
appreciation ($)
|
7,999,031
|
—
|
—
|
40,464,498
|
At July 31, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
appreciation ($)
|
519,669,230
|
66,007,566
|
(25,543,068)
|
40,464,498
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
46
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
following capital loss carryforwards, determined at July 31, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss
carryforwards with no expiration are required to be utilized prior to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire
unused. In addition, for the year ended July 31, 2019, capital loss carryforwards utilized and expired unused, if any, were as follows:
No
expiration
short-term ($)
|
No
expiration
long-term ($)
|
Total
($)
|
Utilized
($)
|
Expired
($)
|
—
|
—
|
—
|
21,208,022
|
—
|
Under current tax rules, regulated
investment companies can elect to treat certain late-year ordinary losses incurred and post-October capital losses (capital losses realized after October 31) as arising on the first day of the following taxable year. As of July 31, 2019, the Fund
will elect to treat the following late-year ordinary losses and post-October capital losses as arising on August 1, 2019.
Late
year
ordinary losses ($)
|
Post-October
capital losses ($)
|
—
|
955
|
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and proceeds from
sales of securities, excluding short-term investments and derivatives, if any, aggregated to $478,321,076 and $538,476,863, respectively, for the year ended July 31, 2019, of which $217,605,889 and $210,524,287, respectively, were U.S. government
securities. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the Financial Highlights.
Note 6. Affiliated money market fund
The Fund invests in Columbia Short-Term Cash Fund, an
affiliated money market fund established for the exclusive use by the Fund and other affiliated funds (the Affiliated MMF). The income earned by the Fund from such investments is included as Dividends - affiliated issuers in the Statement of
Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of the Affiliated MMF. The Affiliated MMF prices its shares with a floating net asset value. In addition, the Board of Trustees of the Affiliated MMF
may impose a fee on redemptions (sometimes referred to as a liquidity fee) or temporarily suspend redemptions (sometimes referred to as imposing a redemption gate) in the event its liquidity falls below regulatory limits.
Note 7. Interfund lending
Pursuant to an exemptive order granted by the Securities and
Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds, borrow money
directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend money under the Interfund
Program during the year ended July 31, 2019.
Columbia
Global Opportunities Fund | Annual Report 2019
|
47
|
Notes to Financial Statements (continued)
July 31, 2019
Note 8. Line of credit
The Fund has access to a revolving credit facility with a
syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility, which is
a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion. Interest is charged to each
participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit
facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other
expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
Note 9. Significant risks
Derivatives risk
Losses involving derivative instruments may be substantial,
because a relatively small movement in the underlying reference (which is generally the price, rate or other economic indicator associated with a security(ies), commodity, currency or index or other instrument or asset) may result in a substantial
loss for the Fund. In addition to the potential for increased losses, the use of derivative instruments may lead to increased volatility within the Fund. Derivatives will typically increase the 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, liquidity risk and pricing risk.
Foreign securities and emerging market countries risk
Investing in foreign securities may involve certain risks not
typically associated with investing in U.S. securities, such as increased currency volatility and risks associated with political, regulatory, economic, social, diplomatic and other conditions or events occurring in the country or region, which may
result in significant market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. Investing in emerging markets may increase these risks and expose the Fund to elevated risks associated with increased
inflation, deflation or currency devaluation. To the extent that the Fund concentrates its investment exposure to any one or a few specific countries, the Fund will be particularly susceptible to the risks associated with the conditions, events or
other factors impacting those countries or regions and may, therefore, have a greater risk than that of a fund that is more geographically diversified.
Shareholder concentration risk
At July 31, 2019, affiliated shareholders of record owned
88.5% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced
to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased
operating expenses for non-redeeming Fund shareholders.
Note 10. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 11. Information regarding pending and settled
legal proceedings
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
48
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as
necessary, 8-K filings with the Securities and Exchange Commission (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 Fund. Further, although we believe proceedings are not 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, 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.
Columbia
Global Opportunities Fund | Annual Report 2019
|
49
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Global Opportunities Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Global Opportunities Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of operations
for the year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
50
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Federal Income Tax Information
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended July 31, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
Qualified
dividend
income
|
Dividends
received
deduction
|
99.63%
|
96.20%
|
Qualified dividend income. For
taxable, non-corporate shareholders, the percentage of ordinary income distributed during the fiscal year that represents qualified dividend income subject to reduced tax rates.
Dividends received deduction. The percentage of ordinary
income distributed during the fiscal year that qualifies for the corporate dividends received deduction.
Columbia
Global Opportunities Fund | Annual Report 2019
|
51
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
52
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
Columbia
Global Opportunities Fund | Annual Report 2019
|
53
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
54
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
Columbia
Global Opportunities Fund | Annual Report 2019
|
55
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
56
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Global Opportunities Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management Investment
Distributors, Inc. (collectively, the Funds).
On an
annual basis, the Fund’s Board of Trustees (the Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its
Contracts Committee in November 2018 and January, March, April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive
response to items of information requested by independent legal counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented
at these meetings were first supplied in draft form to designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who
is an Independent Trustee), and the final materials were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets
with portfolio management teams and senior management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the
work, deliberations and conclusions of the various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
Columbia
Global Opportunities Fund | Annual Report 2019
|
57
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group, the product score of the
Fund (taking into account performance relative to peers and benchmarks) and the net assets of the Fund. The Board observed that the Fund’s investment performance met expectations.
Comparative fees, costs of services provided and the profits
realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability.
The Board considered the reports of its independent fee
consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to industry competitors,
the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of the level of fees is to
achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the "pricing philosophy"
currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s total expense ratio
(after considering proposed expense caps/waivers) was below the peer universe’s median expense ratio shown in the reports. Based on its review, the Board concluded that the Fund’s management fee was fair and reasonable in light of the
extent and quality of services that the Fund receives.
The Board also considered the profitability of Columbia
Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the Profitability Report, discussing the
profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was reasonable and that the 2019 information shows
that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle profitability relative to industry competitors was
reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced ability to offer various other financial products to
Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Fund should permit the Investment Manager to offer competitive compensation to its personnel, make necessary
investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
58
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
Columbia
Global Opportunities Fund | Annual Report 2019
|
59
|
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT filings are available on the SEC’s website at
sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
60
|
Columbia Global Opportunities
Fund | Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Global Opportunities Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Annual
Report
July 31, 2019
Columbia Floating Rate Fund
Beginning on January 1, 2021, as permitted by regulations
adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the
reports will be made available on the Fund’s website (columbiathreadneedleus.com/investor/), and each time a report is posted you will be notified by mail and provided with a website address to access the report.
If you have already elected to receive shareholder reports
electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically at any time by contacting your financial intermediary (such
as a broker-dealer or bank) or, for Fund shares held directly with the Fund, by calling 800.345.6611 or by enrolling in “eDelivery” by logging into your account at columbiathreadneedleus.com/investor/.
You may elect to receive all future reports in paper free of
charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue receiving paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.345.6611 to
let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive paper reports will apply to all Columbia Funds held in your account if you invest through a financial intermediary or all Columbia
Funds held with the fund complex if you invest directly with the Fund.
Not FDIC Insured • No bank guarantee • May lose
value
|
3
|
|
5
|
|
7
|
|
8
|
|
30
|
|
32
|
|
33
|
|
36
|
|
40
|
|
51
|
|
52
|
|
53
|
|
58
|
|
61
|
Columbia Floating Rate Fund | Annual Report 2019
Investment objective
Columbia Floating Rate Fund (the
Fund) seeks to provide shareholders with a high level of current income and, as a secondary objective, preservation of capital.
Portfolio
management
Ronald Launsbach,
CFA
Lead
Portfolio Manager
Managed Fund
since 2012
Vesa Tontti
Co-Portfolio
Manager
Managed Fund
since February 2019
Average
annual total returns (%) (for the period ended July 31, 2019)
|
|
|
Inception
|
1
Year
|
5
Years
|
10
Years
|
Class
A
|
Excluding
sales charges
|
02/16/06
|
2.79
|
3.47
|
5.57
|
|
Including
sales charges
|
|
-0.26
|
2.83
|
5.25
|
Advisor
Class*
|
02/28/13
|
3.05
|
3.75
|
5.74
|
Class
C
|
Excluding
sales charges
|
02/16/06
|
2.02
|
2.70
|
4.79
|
|
Including
sales charges
|
|
1.04
|
2.70
|
4.79
|
Institutional
Class*
|
09/27/10
|
3.05
|
3.72
|
5.81
|
Institutional
2 Class
|
08/01/08
|
2.98
|
3.77
|
5.89
|
Institutional
3 Class*
|
06/01/15
|
3.13
|
3.76
|
5.72
|
Class
R*
|
09/27/10
|
2.54
|
3.21
|
5.33
|
Credit
Suisse Leveraged Loan Index
|
|
4.10
|
4.02
|
5.94
|
Returns for Class A shares are shown
with and without the maximum initial sales charge of 3.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share classes are not subject to sales
charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and fees associated with each share class. All results shown assume
reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of Fund shares. Performance results reflect the effect of any fee waivers or
reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown represents past performance and
is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
*
|
The returns shown for periods
prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. Since the Fund launched more than one share class at its
inception, Class A shares were used. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit
columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information.
|
The Credit Suisse Leveraged Loan Index is an unmanaged market
value-weighted index designed to represent the investable universe of the U.S. dollar-denominated leveraged loan market.
Indices are not available for investment, are not
professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
Columbia
Floating Rate Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a
hypothetical $10,000 investment (July 31, 2009 — July 31, 2019)
The chart above shows the
change in value of a hypothetical $10,000 investment in Class A shares of Columbia Floating Rate Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the redemption of
Fund shares.
Portfolio
breakdown (%) (at July 31, 2019)
|
Common
Stocks
|
1.5
|
Corporate
Bonds & Notes
|
2.1
|
Exchange-Traded
Funds
|
0.7
|
Money
Market Funds
|
1.8
|
Senior
Loans
|
93.8
|
Warrants
|
0.1
|
Total
|
100.0
|
Percentages indicated are based
upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
Quality
breakdown (%) (at July 31, 2019)
|
BBB
rating
|
5.7
|
BB
rating
|
34.9
|
B
rating
|
52.0
|
CCC
rating
|
4.9
|
Not
rated
|
2.5
|
Total
|
100.0
|
Percentages indicated are based
upon total fixed income investments.
Bond ratings apply
to the underlying holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the rating assigned by Moody’s, as available. If Moody’s doesn’t rate
a bond, then the S&P rating is used. When a bond is not rated by any rating agency, it is designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject
to change, including daily. The ratings assigned by credit rating agencies are but one of the considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other
issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage (repay) through free cash flow, quality of management, market positioning and access to capital, as well as such security-specific factors as the
terms of the security (e.g., interest rate and time to maturity) and the amount and type of any collateral. Additionally, the Investment Manager considers the interest rate to be paid on the investment, the portfolio’s exposure to a particular
sector, and the relative value of the loan within the sector, among other factors.
4
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Manager Discussion of Fund Performance
For
the 12-month period that ended July 31, 2019, the Fund’s Class A shares gained 2.79% excluding sales charges. The Fund underperformed its benchmark, the Credit Suisse Leveraged Loan Index, which increased 4.10% for the same time period. Credit
selection across a wide variety of industries and cash positioning detracted from the Fund’s relative performance during the period.
Leveraged bank loan market advanced despite higher
volatility and lower demand
As the period began in
August 2018, the capital markets broadly continued the upward ascent begun more than a year earlier. Leveraged loans were no exception. Within the leveraged bank loan market, demand continued to outpace the supply of new loans, as expectations for a
strong U.S. economy and rising U.S. interest rates persisted. However, the technical, or supply/demand, environment began to change in October 2018, and volatility accelerated through the remainder of calendar year 2018 across both the broad capital
markets and the leveraged bank loan market. Such volatility stemmed from increasingly bearish economic growth expectations and a resulting change in expectations about central bank monetary policy. Many believed the U.S. Federal Reserve (the Fed)
would shift from a more aggressive policy to a more accommodative stance.
Due to new anticipation around possible decreases in interest
rates, retail demand for leveraged loans declined and prices fell abruptly during late November and December 2018. Though loan spreads (i.e., the amount investors earn above short-term LIBOR rates) widened as the period progressed by a total of
approximately 10 basis points in the wake of reduced demand and retail fund outflows, the price drop in December significantly offset wider loan spreads. (A basis point is 1/100th of a percentage point. LIBOR stands for Intercontinental Exchange
London Interbank Offered Rate and is the world’s most widely-used benchmark rate that leading banks charge each other for short-term loans.)
Continued tightening of monetary policy by the Fed through
December 2018 led to an increase in the short-term LIBOR Base Rate in the latter months of 2018 and into 2019. During these months, leveraged loan borrowers dramatically shifted their choice of Base Rate, from three-month floating resets to
one-month resets as they sought to take advantage of anticipated lower interest rates some time during the second half of 2019. So, despite expectations for lower interest rates, the one-month LIBOR rate actually increased during the period, which,
combined with slightly higher spreads, led to overall leveraged loan yields pushing slightly higher. These higher yields, coupled with ongoing expectations for a low default environment, provided the backdrop that enabled leveraged loan prices to
largely recover their December 2018 losses and move into positive territory for the annual period as a whole. (On July 31, 2019, the Fed lowered interest rates for the first time since 2008 to help stave off the possibility of an economic
downturn.)
Beginning in late November 2018 and
persisting through the period, the leveraged loan market’s technical imbalance shifted away from the issuer’s favor and toward the investor’s. While the collateralized debt obligations market remained an active buyer of leveraged
loans, retail investors continued to take money out of leveraged loan mutual funds, providing a sense of balance across the market by early 2019. Still, average loan yields did increase modestly courtesy of a combination of a rising shorter term
one-month LIBOR Base Rate and the shift by borrowers into that product, offset by some price depreciation during the period overall.
Credit selection in variety of industries and cash position
dampened Fund performance
During the period, our
credit selection in the utilities, broadcasting segment of media/telecommunications, health care and energy industries detracted most from the Fund’s relative results. These detractors were partially offset by effective credit selection in the
services industry and in the telecommunications and diversified media segments of the media/telecommunications industry, which contributed positively.
The Fund’s relative results were also negatively
affected by its cash position during the period when the benchmark moved higher. The benchmark does not have a cash component, so as the benchmark rises, any cash component of the Fund detracts from relative results. The effect of the Fund’s
cash position was especially pronounced during this period, as retail mutual fund outflows, along with prepayments of existing loans, compelled us to maintain higher cash balances than usual in the Fund. It should be noted, however, that our team
was diligent and effective at deploying the Fund’s cash balances quickly and prudently and also met redemptions quickly, thereby mitigating the drag from cash.
Columbia
Floating Rate Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance (continued)
Shifting market conditions drove Fund portfolio
changes
Given the favorable market for loans through
most of the period, with December 2018 a notable exception, we remained focused on deploying cash from prepayments and Fund inflows as quickly and prudently as possible throughout. We believe our active management of the Fund’s cash position
has contributed positively to the Fund’s performance. Also, we moved to a more pronounced overweight position in utilities relative to the benchmark. Within the utilities industry, we saw what we considered to be larger, more liquid
transactions with well-structured credit agreements and more asset favorable deals launch in the new issue market during the period. These factors, we believe, may provide enhanced downside protection and increased value for the Fund over the long
term. At the same time, we sought to avoid middle-market renewable energy deals, project finance transactions, and deals with power plants in markets we viewed as unattractive, parameters that had been more prevalent in the industry and comprising a
larger portion of the benchmark in years prior, thus driving the Fund’s increased overweight position.
As of July 31, 2019, the Fund had overweight exposures
compared to the benchmark in the utilities, chemicals, broadcasting, manufacturing, gaming/leisure, forest products/containers and information technology industries. The Fund’s biggest underweights relative to the benchmark were in the
services, financials, transportation, cable/wireless video and consumer non-durables industries.
As always, credit selection and industry weightings were of
great importance in our portfolio positioning and strategy.
Market risk may affect a single
issuer, sector of the economy, industry or the market as a whole. Fixed-income securities and loan investments present issuer default risk. A rise in interest rates
may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding debt instruments, lowering
the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities. Non-investment-grade (high-yield or junk) securities or other similarly rated instruments present
greater price volatility and more risk to principal and income than higher rated securities. Prepayment and extension risk exists because the timing of payments on a loan, bond or other investment may
accelerate when interest rates fall or decelerate when interest rates rise which may reduce investment opportunities and potential returns. Investment in loans 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. These transactions involve greater risk (including default and bankruptcy)
than other investments. Floating rate loans typically present greater risk than other fixed-income investments as they are generally subject to legal or contractual resale restrictions, may trade less
frequently and experience value impairments during liquidation. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report reflect the current views of
the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and results may differ significantly from the views expressed.
These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update such views. These views may not be relied on as investment advice and, because investment
decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any particular Columbia fund. References to specific securities should not be construed as a recommendation or
investment advice.
6
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Understanding Your Fund’s Expenses
(Unaudited)
As an investor, you incur two types of costs. There are
shareholder transaction costs, which generally include sales charges on purchases and may include redemption fees. There are also ongoing fund costs, which generally include management fees, distribution and/or service fees, and other fund expenses.
The following information is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to help you compare these costs with the ongoing costs of investing in other mutual funds.
Analyzing your Fund’s expenses
To illustrate these ongoing costs, we have provided examples
and calculated the expenses paid by investors in each share class of the Fund during the period. The actual and hypothetical information in the table is based on an initial investment of $1,000 at the beginning of the period indicated and held for
the entire period. Expense information is calculated two ways and each method provides you with different information. The amount listed in the “Actual” column is calculated using the Fund’s actual operating expenses and total
return for the period. You may use the Actual information, together with the amount invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000
= 8.6), then multiply the results by the expenses paid during the period under the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the
Fund’s actual return) and then applies the Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end
of the period or the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are required to include the same
hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the hypothetical example with the 5% hypothetical examples that
appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are meant to highlight the ongoing costs of investing in a fund only and do not reflect any
transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If
transaction costs were included in these calculations, your costs would be higher.
February
1, 2019 — July 31, 2019
|
|
Account
value at the
beginning of the
period ($)
|
Account
value at the
end of the
period ($)
|
Expenses
paid during
the period ($)
|
Fund’s
annualized
expense ratio (%)
|
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Hypothetical
|
Actual
|
Class
A
|
1,000.00
|
1,000.00
|
1,034.30
|
1,019.74
|
5.14
|
5.11
|
1.02
|
Advisor
Class
|
1,000.00
|
1,000.00
|
1,035.60
|
1,020.98
|
3.89
|
3.86
|
0.77
|
Class
C
|
1,000.00
|
1,000.00
|
1,030.50
|
1,016.02
|
8.91
|
8.85
|
1.77
|
Institutional
Class
|
1,000.00
|
1,000.00
|
1,035.60
|
1,020.98
|
3.89
|
3.86
|
0.77
|
Institutional
2 Class
|
1,000.00
|
1,000.00
|
1,034.60
|
1,021.12
|
3.73
|
3.71
|
0.74
|
Institutional
3 Class
|
1,000.00
|
1,000.00
|
1,036.00
|
1,021.37
|
3.48
|
3.46
|
0.69
|
Class
R
|
1,000.00
|
1,000.00
|
1,033.00
|
1,018.50
|
6.40
|
6.36
|
1.27
|
Expenses paid during the period
are equal to the annualized expense ratio for each class as indicated above, multiplied by the average account value over the period and then multiplied by the number of days in the Fund’s most recent fiscal half year and divided by 365.
Expenses do not include fees and expenses incurred indirectly
by the Fund from its investment in underlying funds, including affiliated and non-affiliated pooled investment vehicles, such as mutual funds and exchange-traded funds.
Columbia
Floating Rate Fund | Annual Report 2019
|
7
|
Portfolio of Investments
July 31, 2019
(Percentages represent value of investments compared to net
assets)
Investments in securities
Common
Stocks 1.5%
|
Issuer
|
Shares
|
Value
($)
|
Communication
Services 0.6%
|
Diversified
Telecommunication Services 0.0%
|
Cincinnati
Bell, Inc.(a)
|
9,438
|
36,053
|
Entertainment
0.4%
|
MGM
Holdings II, Inc.(a)
|
53,207
|
3,549,333
|
Media
0.2%
|
Clear
Channel Outdoor Holdings, Inc.(a)
|
198,952
|
602,825
|
Cumulus
Media, Inc., Class A(a)
|
28,485
|
430,408
|
Star
Tribune Co. (The)(a),(b),(c),(d)
|
1,098
|
—
|
Tribune
Media Co.
|
29,872
|
1,388,152
|
Tribune
Publishing Co.
|
4,413
|
36,495
|
Total
|
|
2,457,880
|
Total
Communication Services
|
6,043,266
|
Consumer
Discretionary 0.2%
|
Auto
Components 0.1%
|
Aptiv
PLC
|
11,178
|
979,752
|
Dayco/Mark
IV(a),(d)
|
2,545
|
81,440
|
Delphi
Technologies PLC
|
3,726
|
69,825
|
Total
|
|
1,131,017
|
Diversified
Consumer Services 0.0%
|
Houghton
Mifflin Harcourt Co.(a)
|
18,619
|
108,921
|
Specialty
Retail 0.1%
|
David’s
Bridal, Inc.(a)
|
27,409
|
140,471
|
Total
Consumer Discretionary
|
1,380,409
|
Energy
0.2%
|
Energy
Equipment & Services 0.2%
|
Fieldwood
Energy LLC(a)
|
68,952
|
2,146,131
|
Total
Energy
|
2,146,131
|
Financials
—%
|
Capital
Markets —%
|
RCS
Capital Corp., Class B(a),(b),(c),(d)
|
6,880
|
0
|
Total
Financials
|
0
|
Information
Technology 0.1%
|
Software
0.1%
|
Avaya
Holdings Corp.(a)
|
80,614
|
970,593
|
Total
Information Technology
|
970,593
|
Common
Stocks (continued)
|
Issuer
|
Shares
|
Value
($)
|
Materials
0.2%
|
Chemicals
0.2%
|
LyondellBasell
Industries NV, Class A
|
21,977
|
1,839,255
|
Metals
& Mining 0.0%
|
Aleris
International, Inc.(a)
|
16,833
|
374,534
|
Total
Materials
|
2,213,789
|
Utilities
0.2%
|
Independent
Power and Renewable Electricity Producers 0.2%
|
Vistra
Energy Corp
|
105,843
|
2,271,391
|
Vistra
Energy Corp.(a)
|
105,843
|
84,674
|
Total
|
|
2,356,065
|
Total
Utilities
|
2,356,065
|
Total
Common Stocks
(Cost $12,440,750)
|
15,110,253
|
Corporate
Bonds & Notes 2.1%
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Airlines
0.5%
|
American
Airlines Group, Inc.(e)
|
06/01/2022
|
5.000%
|
|
5,000,000
|
5,181,360
|
Building
Materials 0.1%
|
Core
& Main LP(e)
|
08/15/2025
|
6.125%
|
|
1,296,000
|
1,334,880
|
Media
and Entertainment 0.8%
|
Cumulus
Media New Holdings, Inc.(e)
|
07/01/2026
|
6.750%
|
|
916,000
|
934,064
|
Diamond
Sports Group LLC/Finance Co.(e),(f)
|
08/15/2026
|
5.375%
|
|
2,591,000
|
2,635,366
|
iHeartCommunications,
Inc.
|
05/01/2026
|
6.375%
|
|
478,473
|
508,825
|
05/01/2027
|
8.375%
|
|
867,232
|
914,896
|
Univision
Communications, Inc.(e)
|
02/15/2025
|
5.125%
|
|
3,000,000
|
2,929,158
|
Total
|
7,922,309
|
Paper
0.1%
|
Rayonier
AM Products, Inc.(e)
|
06/01/2024
|
5.500%
|
|
1,060,000
|
848,374
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
8
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Corporate
Bonds & Notes (continued)
|
Issuer
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Technology
0.6%
|
CommScope
Finance LLC(e)
|
03/01/2024
|
5.500%
|
|
1,178,000
|
1,198,130
|
Dell
International LLC/EMC Corp.(e)
|
06/15/2023
|
5.450%
|
|
2,325,000
|
2,506,882
|
Dun
& Bradstreet Corp. (The)(e)
|
08/15/2026
|
6.875%
|
|
1,645,000
|
1,755,743
|
Veritas
US, Inc./Bermuda Ltd.(e)
|
02/01/2023
|
7.500%
|
|
1,000,000
|
967,880
|
Total
|
6,428,635
|
Total
Corporate Bonds & Notes
(Cost $21,175,088)
|
21,715,558
|
Exchange-Traded
Funds 0.7%
|
|
Shares
|
Value
($)
|
First
Trust Senior Loan ETF
|
25,000
|
1,184,500
|
Invesco
Senior Loan ETF
|
50,000
|
1,141,000
|
SPDR
Blackstone/GSO Senior Loan ETF
|
100,000
|
4,647,000
|
Total
Exchange-Traded Funds
(Cost $6,932,750)
|
6,972,500
|
Senior
Loans 93.1%
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Aerospace
& Defense 1.0%
|
Doncasters
US Finance LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
04/09/2020
|
5.830%
|
|
2,030,346
|
1,515,146
|
TransDigm,
Inc.(g),(h)
|
Tranche
E Term Loan
|
3-month
USD LIBOR + 2.500%
05/30/2025
|
4.830%
|
|
1,678,565
|
1,663,995
|
Tranche
F Term Loan
|
3-month
USD LIBOR + 2.500%
06/09/2023
|
4.830%
|
|
4,831,607
|
4,803,680
|
Wesco
Aircraft Hardware Corp.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.500%
Floor 0.750%
02/28/2021
|
4.740%
|
|
2,000,000
|
1,978,000
|
Total
|
9,960,821
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Airlines
0.7%
|
American
Airlines, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
10/10/2021
|
4.379%
|
|
1,979,382
|
1,977,739
|
3-month
USD LIBOR + 1.750%
06/27/2025
|
4.061%
|
|
1,747,626
|
1,711,590
|
United
AirLines, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 1.750%
04/01/2024
|
3.984%
|
|
3,391,478
|
3,383,000
|
Total
|
7,072,329
|
Automotive
1.2%
|
Allison
Transmission, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
03/29/2026
|
4.261%
|
|
1,386,402
|
1,393,611
|
Dayco
Products LLC/Mark IV Industries, Inc.(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
05/19/2023
|
6.772%
|
|
3,158,802
|
2,969,274
|
DexKo
Global Inc.(g),(h)
|
Tranche
B 1st Lien Term Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
07/24/2024
|
5.734%
|
|
1,480,279
|
1,471,649
|
Horizon
Global Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 6.000%
Floor 1.000%
06/30/2021
|
8.330%
|
|
1,163,996
|
1,148,725
|
Navistar,
Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.500%
11/06/2024
|
5.830%
|
|
3,730,532
|
3,737,545
|
Panther
BF Aggregator 2 LP(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.500%
04/30/2026
|
5.734%
|
|
1,750,000
|
1,748,915
|
Total
|
12,469,719
|
Brokerage/Asset
Managers/Exchanges 0.7%
|
AlixPartners
LLP(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
04/04/2024
|
4.984%
|
|
2,547,424
|
2,549,691
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Blackstone
CQP Holdco LP(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.500%
09/30/2024
|
5.887%
|
|
500,000
|
501,875
|
Greenhill
& Co., Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
04/12/2024
|
5.575%
|
|
2,000,000
|
1,988,340
|
Victory
Capital Holdings, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
07/01/2026
|
5.569%
|
|
1,981,818
|
1,992,342
|
Total
|
7,032,248
|
Building
Materials 2.8%
|
American
Bath Group LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.250%
Floor 1.000%
09/30/2023
|
6.580%
|
|
2,126,984
|
2,116,413
|
Covia
Holdings Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
06/01/2025
|
6.313%
|
|
2,153,250
|
1,830,263
|
HD
Supply, Inc.(g),(h)
|
Tranche
B5 Term Loan
|
3-month
USD LIBOR + 1.750%
10/17/2023
|
3.984%
|
|
3,833,634
|
3,840,343
|
Ply
Gem Midco, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
04/12/2025
|
6.119%
|
|
4,361,086
|
4,255,679
|
QUIKRETE
Holdings, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 2.750%
11/15/2023
|
4.984%
|
|
4,380,795
|
4,341,236
|
SRS
Distribution, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
05/23/2025
|
5.484%
|
|
3,465,000
|
3,348,923
|
TAMKO
Building Products, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
05/29/2026
|
5.564%
|
|
1,500,000
|
1,503,750
|
US
Silica Co.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
05/01/2025
|
6.250%
|
|
4,433,738
|
4,246,412
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Wilsonart
LLC(g),(h)
|
Tranche
D Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
12/19/2023
|
5.580%
|
|
3,317,770
|
3,252,244
|
Total
|
28,735,263
|
Cable
and Satellite 2.3%
|
Charter
Communications Operating LLC/Safari LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.000%
04/30/2025
|
4.330%
|
|
3,612,469
|
3,617,815
|
Cogeco
Communications (U.S.A.) II LP(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.250%
01/03/2025
|
4.484%
|
|
2,955,000
|
2,946,874
|
CSC
Holdings LLC(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.250%
07/17/2025
|
4.575%
|
|
2,448,870
|
2,439,687
|
3-month
USD LIBOR + 2.250%
01/15/2026
|
4.575%
|
|
1,990,000
|
1,982,538
|
CSC
Holdings LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
04/15/2027
|
5.325%
|
|
997,500
|
1,000,822
|
MCC
Iowa LLC(g),(h)
|
Tranche
M Term Loan
|
3-month
USD LIBOR + 2.000%
01/15/2025
|
4.350%
|
|
3,457,405
|
3,464,596
|
Telesat
Canada(g),(h)
|
Tranche
B4 Term Loan
|
3-month
USD LIBOR + 2.500%
Floor 0.750%
11/17/2023
|
4.830%
|
|
4,677,605
|
4,677,605
|
Virgin
Media Bristol LLC(g),(h)
|
Tranche
K Term Loan
|
3-month
USD LIBOR + 2.500%
01/15/2026
|
4.825%
|
|
4,200,000
|
4,207,896
|
Total
|
24,337,833
|
Chemicals
7.1%
|
Alpha
3 BV/Atotech(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
01/31/2024
|
5.330%
|
|
1,238,996
|
1,209,879
|
Aruba
Investments, Inc./ANGUS Chemical Co.(d),(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
02/02/2022
|
5.580%
|
|
2,430,380
|
2,424,304
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
10
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Ascend
Performance Materials Operations LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 5.250%
Floor 1.000%
08/12/2022
|
7.484%
|
|
1,746,000
|
1,743,818
|
Axalta
Coating Systems Dutch Holding BBV/U.S. Holdings, Inc.(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 1.750%
06/01/2024
|
4.080%
|
|
2,111,705
|
2,098,845
|
Chemours
Co. (The)(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 1.750%
04/03/2025
|
3.990%
|
|
2,884,158
|
2,730,951
|
ColourOz
Investment 1 GmbH(g),(h)
|
Tranche
C 1st Lien Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
09/07/2021
|
5.283%
|
|
581,482
|
498,801
|
ColourOz
Investment 2 LLC(g),(h)
|
Tranche
B2 1st Lien Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
09/07/2021
|
5.283%
|
|
3,517,487
|
3,017,336
|
DuBois
Chemicals, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
03/15/2024
|
5.484%
|
|
1,418,963
|
1,385,262
|
Element
Solutions, Inc./MacDermid, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.250%
01/30/2026
|
4.484%
|
|
2,985,000
|
2,982,522
|
Flint
Group GMBH(g),(h)
|
Tranche
B8 1st Lien Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
09/07/2021
|
5.283%
|
|
806,437
|
691,770
|
Hexion,
Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.500%
07/01/2026
|
5.820%
|
|
850,000
|
847,875
|
HII
Holding Corp./Houghton International(d),(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
12/20/2019
|
5.652%
|
|
1,834,023
|
1,831,731
|
HII
Holding Corp./Houghton International(g),(h)
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 8.500%
Floor 1.250%
12/21/2020
|
9.500%
|
|
2,150,000
|
2,139,250
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Ineos
US Finance LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
04/01/2024
|
4.258%
|
|
3,087,863
|
3,038,550
|
Invictus
U.S. Newco LLC/SK Intermediate II SARL(g),(h)
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 6.750%
03/30/2026
|
9.272%
|
|
1,575,000
|
1,561,219
|
Kraton
Polymers LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
Floor 1.000%
03/08/2025
|
4.734%
|
|
3,902,384
|
3,901,174
|
LTI
Holdings, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.500%
09/06/2025
|
5.734%
|
|
2,084,250
|
1,985,248
|
Messer
Industries LLC(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 2.500%
03/01/2026
|
4.830%
|
|
4,987,500
|
4,962,563
|
Minerals
Technologies, Inc.(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 2.250%
Floor 0.750%
02/14/2024
|
4.535%
|
|
2,440,419
|
2,445,495
|
Momentive
Performance Materials GmbH(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.250%
05/15/2024
|
5.590%
|
|
1,167,000
|
1,160,441
|
OCI
Partners LP(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
03/13/2025
|
6.330%
|
|
3,727,812
|
3,727,813
|
Omnova
Solutions, Inc.(d),(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
08/25/2023
|
5.484%
|
|
1,394,598
|
1,396,341
|
PQ
Corp.(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 2.500%
02/08/2025
|
4.756%
|
|
2,146,521
|
2,143,837
|
Ravago
Holdings America, Inc.(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.750%
07/13/2023
|
4.990%
|
|
1,833,363
|
1,801,279
|
Schenectady
International Group, Inc.(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.750%
10/15/2025
|
7.063%
|
|
3,283,500
|
3,213,726
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
11
|
Portfolio of Investments
(continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Solenis
Holdings LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.250%
06/26/2025
|
6.772%
|
|
3,524,288
|
3,457,820
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 8.500%
06/26/2026
|
11.022%
|
|
1,000,000
|
984,060
|
Starfruit
Finco BV/US Holdco LLC/AzkoNobel(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
10/01/2025
|
5.610%
|
|
3,990,000
|
3,916,863
|
Trinseo
Materials Operating SCA(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
09/06/2024
|
4.234%
|
|
1,925,598
|
1,905,379
|
Tronox
Finance LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.000%
09/23/2024
|
5.272%
|
|
2,236,110
|
2,218,288
|
Univar
U.S.A., Inc.(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 2.250%
07/01/2024
|
4.484%
|
|
3,371,507
|
3,374,306
|
Vantage
Specialty Chemicals, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
10/28/2024
|
5.862%
|
|
992,443
|
973,418
|
Vantage
Specialty Chemicals, Inc.(d),(g),(h)
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 8.250%
Floor 1.000%
10/27/2025
|
10.580%
|
|
2,400,000
|
2,280,000
|
Total
|
74,050,164
|
Construction
Machinery 1.6%
|
Altra
Industrial Motion Corp.(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
10/01/2025
|
4.234%
|
|
3,055,970
|
3,044,510
|
Columbus
McKinnon Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
Floor 1.000%
01/31/2024
|
4.830%
|
|
2,363,188
|
2,372,050
|
Douglas
Dynamics LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
12/31/2021
|
5.240%
|
|
1,152,629
|
1,151,914
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
DXP
Enterprises, Inc.(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.750%
Floor 1.000%
08/29/2023
|
6.984%
|
|
2,972,062
|
2,990,638
|
North
American Lifting Holdings, Inc./TNT Crane & Rigging, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.500%
Floor 1.000%
11/27/2020
|
6.830%
|
|
2,351,490
|
2,188,061
|
United
Rentals, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 1.750%
10/31/2025
|
3.984%
|
|
2,481,250
|
2,481,870
|
Vertiv
Group Corp.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
11/30/2023
|
6.330%
|
|
2,512,931
|
2,390,426
|
Total
|
16,619,469
|
Consumer
Cyclical Services 3.9%
|
Allied
Universal Holdco LLC(g),(h),(i),(j)
|
Delayed
Draw Term Loan
|
3-month
USD LIBOR + 4.250%
07/10/2026
|
|
|
186,937
|
187,238
|
Allied
Universal Holdco LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
07/10/2026
|
6.507%
|
|
1,888,063
|
1,891,103
|
Cast
& Crew Payroll LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.000%
02/09/2026
|
6.240%
|
|
1,995,000
|
2,004,476
|
Creative
Artists Agency LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
02/15/2024
|
5.234%
|
|
3,512,342
|
3,517,610
|
DTZ
U.S. Borrower LLC/Cushman & Wakefield(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
08/21/2025
|
5.484%
|
|
3,424,125
|
3,434,842
|
GoDaddy
Operating Co., LLC/Finance Co., Inc.(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 2.000%
02/15/2024
|
4.234%
|
|
2,936,900
|
2,945,153
|
ServiceMaster
Co., LLC (The)(g),(h)
|
Tranche
C Term Loan
|
3-month
USD LIBOR + 2.500%
11/08/2023
|
4.734%
|
|
1,181,147
|
1,179,423
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
12
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Staples,
Inc.(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 5.000%
04/16/2026
|
7.332%
|
|
2,250,000
|
2,192,355
|
Trans
Union LLC(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 2.000%
04/10/2023
|
4.234%
|
|
3,071,399
|
3,077,634
|
Uber
Technologies, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.500%
07/13/2023
|
5.769%
|
|
5,623,500
|
5,632,553
|
USS
Ultimate Holdings, Inc./United Site Services, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.750%
Floor 1.000%
08/25/2024
|
5.950%
|
|
2,957,424
|
2,950,031
|
Waterbridge
Operating LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 5.750%
Floor 1.000%
06/22/2026
|
8.136%
|
|
3,600,000
|
3,514,500
|
Web.com
Group, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.750%
10/10/2025
|
6.075%
|
|
2,000,000
|
1,988,380
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 7.750%
10/09/2026
|
10.075%
|
|
2,927,237
|
2,876,011
|
West
Corp.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
10/10/2024
|
6.522%
|
|
2,942,532
|
2,743,911
|
Total
|
40,135,220
|
Consumer
Products 0.6%
|
Serta
Simmons Bedding LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
11/08/2023
|
5.865%
|
|
3,378,326
|
2,302,093
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 8.000%
Floor 1.000%
11/08/2024
|
10.314%
|
|
1,898,666
|
852,824
|
SIWF
Holdings, Inc.(d),(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.250%
06/15/2025
|
6.520%
|
|
2,029,500
|
2,024,426
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Weight
Watchers International, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.750%
Floor 0.750%
11/29/2024
|
7.045%
|
|
1,338,799
|
1,326,254
|
Total
|
6,505,597
|
Diversified
Manufacturing 2.9%
|
Allnex
& Cy SCA(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 0.750%
09/13/2023
|
5.771%
|
|
2,377,491
|
2,313,608
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 0.750%
09/13/2023
|
5.771%
|
|
1,791,255
|
1,743,124
|
Apex
Tool Group LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
Floor 1.250%
02/01/2022
|
5.984%
|
|
2,390,466
|
2,287,676
|
Bright
Bidco BV/Lumileds LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
06/30/2024
|
5.799%
|
|
3,562,147
|
2,374,385
|
Brookfield
WEC Holdings, Inc./Westinghouse Electric Co., LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.500%
Floor 0.750%
08/01/2025
|
5.734%
|
|
3,830,750
|
3,840,327
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 6.750%
Floor 0.750%
08/01/2025
|
9.083%
|
|
1,000,000
|
1,010,500
|
EWT
Holdings III Corp.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
12/20/2024
|
5.234%
|
|
2,654,310
|
2,647,674
|
Forterra
Finance LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
10/25/2023
|
5.234%
|
|
2,511,152
|
2,331,604
|
Gardner
Denver, Inc.(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 2.750%
07/30/2024
|
4.984%
|
|
2,027,919
|
2,031,691
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
13
|
Portfolio of Investments
(continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Gates
Global LLC(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
04/01/2024
|
4.984%
|
|
2,559,440
|
2,547,104
|
Generac
Power Systems, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 1.750%
Floor 0.750%
05/31/2023
|
3.980%
|
|
1,702,305
|
1,702,305
|
Hyster-Yale
Group, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
05/30/2023
|
5.484%
|
|
1,395,000
|
1,379,306
|
Welbilt,
Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.500%
10/23/2025
|
4.734%
|
|
1,800,376
|
1,780,122
|
Zekelman
Industries, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.250%
Floor 1.000%
06/14/2021
|
4.484%
|
|
1,955,036
|
1,954,625
|
Total
|
29,944,051
|
Electric
5.0%
|
AES
Corp. (The)(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 1.750%
05/31/2022
|
4.272%
|
|
1,764,372
|
1,762,908
|
Astoria
Energy LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
12/24/2021
|
6.240%
|
|
4,066,964
|
4,064,930
|
Calpine
Construction Finance Co., LP(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.500%
01/15/2025
|
4.734%
|
|
2,544,426
|
2,538,065
|
Calpine
Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
05/31/2023
|
4.830%
|
|
2,813,000
|
2,813,394
|
3-month
USD LIBOR + 2.500%
Floor 0.750%
01/15/2024
|
4.830%
|
|
1,192,523
|
1,192,690
|
Carroll
County Energy LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.500%
02/16/2026
|
5.830%
|
|
1,501,144
|
1,501,144
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
CPV
Shore Holdings LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.750%
12/29/2025
|
5.990%
|
|
1,055,961
|
1,049,805
|
Eastern
Power LLC/Covert Midco LLC/TPF II LC LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
Floor 1.000%
10/02/2023
|
5.984%
|
|
5,307,942
|
5,319,566
|
Edgewater
Generation LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
12/13/2025
|
5.984%
|
|
2,985,000
|
2,968,224
|
EFS
Cogen Holdings I LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
06/28/2023
|
5.555%
|
|
2,065,375
|
2,061,327
|
Exgen
Renewables IV LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
11/28/2024
|
5.530%
|
|
1,891,738
|
1,823,957
|
Frontera
Generation Holdings LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
Floor 1.000%
05/02/2025
|
6.629%
|
|
3,682,130
|
3,583,191
|
Helix
Gen Funding LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
Floor 1.000%
06/03/2024
|
5.984%
|
|
3,407,328
|
3,256,827
|
LMBE-MC
Holdco II LLC(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
12/03/2025
|
6.330%
|
|
2,832,204
|
2,828,664
|
MRP
Generation Holdings LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 7.000%
Floor 1.000%
10/18/2022
|
9.330%
|
|
3,037,816
|
2,999,843
|
Nautilus
Power LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
Floor 1.000%
05/16/2024
|
6.484%
|
|
4,709,131
|
4,690,624
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
14
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Oregon
Clean Energy LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.750%
Floor 1.000%
03/01/2026
|
5.984%
|
|
1,097,250
|
1,097,711
|
Southeast
PowerGen LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
12/02/2021
|
5.740%
|
|
721,038
|
688,591
|
Vistra
Operations Co. LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
08/04/2023
|
4.234%
|
|
1,273,448
|
1,274,683
|
West
Deptford Energy LLC(g),(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
08/26/2026
|
6.072%
|
|
1,600,000
|
1,596,000
|
WG
Partners Acquisition LLC(d),(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.500%
11/15/2023
|
5.830%
|
|
2,863,759
|
2,845,860
|
Total
|
51,958,004
|
Environmental
1.5%
|
Advanced
Disposal Services, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.250%
Floor 0.750%
11/10/2023
|
4.599%
|
|
3,929,644
|
3,936,049
|
EnergySolutions
LLC/Envirocare of Utah LLC(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
Floor 1.000%
05/09/2025
|
6.080%
|
|
4,702,500
|
4,514,400
|
GFL
Environmental, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
05/30/2025
|
5.234%
|
|
2,093,985
|
2,076,040
|
NRC
US Holding Co., LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 5.250%
Floor 1.000%
06/11/2024
|
7.580%
|
|
3,203,357
|
3,183,336
|
WCA
Waste Systems, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
Floor 1.000%
08/11/2023
|
4.734%
|
|
2,309,663
|
2,286,566
|
Total
|
15,996,391
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Finance
Companies 1.2%
|
Avolon
Borrower 1 LLC(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 1.750%
Floor 0.750%
01/15/2025
|
4.022%
|
|
4,604,290
|
4,613,636
|
Ellie
Mae, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.000%
04/17/2026
|
6.525%
|
|
3,000,000
|
3,000,000
|
FinCo
I LLC/Fortress Investment Group(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
12/27/2022
|
4.234%
|
|
4,703,646
|
4,718,933
|
Total
|
12,332,569
|
Food
and Beverage 2.1%
|
Aramark
Intermediate HoldCo Corp.(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 1.750%
03/28/2024
|
4.080%
|
|
1,808,476
|
1,808,476
|
Del
Monte Foods, Inc.(g),(h)
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 7.250%
Floor 1.000%
08/18/2021
|
9.467%
|
|
2,000,000
|
1,380,000
|
Dole
Food Co., Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
04/06/2024
|
5.005%
|
|
2,683,750
|
2,656,912
|
H-Food
Holdings LLC/Hearthside Food Solutions LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.688%
05/23/2025
|
5.922%
|
|
2,697,750
|
2,643,795
|
Hostess
Brands LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.250%
Floor 0.750%
08/03/2022
|
4.508%
|
|
2,134,617
|
2,130,177
|
JBS
U.S.A. Lux SA(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
05/01/2026
|
4.734%
|
|
2,917,687
|
2,922,968
|
Post
Holdings, Inc.(g),(h)
|
Tranche
A Term Loan
|
3-month
USD LIBOR + 2.000%
05/24/2024
|
4.270%
|
|
2,000,000
|
1,999,440
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
15
|
Portfolio of Investments (continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
United
Natural Foods, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
10/22/2025
|
6.484%
|
|
4,577,000
|
3,853,285
|
US
Foods, Inc./US Foodservice, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
Floor 0.750%
06/27/2023
|
4.234%
|
|
2,970,185
|
2,964,868
|
Total
|
22,359,921
|
Foreign
Agencies 0.2%
|
Oxea
Holding Vier GmbH(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 3.500%
10/14/2024
|
5.938%
|
|
2,281,250
|
2,279,106
|
Gaming
4.5%
|
Affinity
Gaming(g),(h)
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 8.250%
Floor 1.000%
01/31/2025
|
0.000%
|
|
1,350,000
|
1,287,563
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
07/01/2023
|
5.484%
|
|
1,451,206
|
1,405,856
|
Aristocrat
Leisure Ltd.(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 1.750%
10/19/2024
|
4.028%
|
|
3,077,917
|
3,076,194
|
Boyd
Gaming Corp.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.250%
09/15/2023
|
4.446%
|
|
2,098,022
|
2,096,449
|
Caesars
Resort Collection LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.750%
12/23/2024
|
4.984%
|
|
3,940,000
|
3,906,155
|
CBAC
Borrower LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 4.000%
07/08/2024
|
6.234%
|
|
1,947,962
|
1,940,657
|
CCM
Merger, Inc./MotorCity Casino Hotel(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.250%
Floor 0.750%
08/06/2021
|
4.484%
|
|
2,649,592
|
2,649,592
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
CityCenter
Holdings LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.250%
Floor 0.750%
04/18/2024
|
4.484%
|
|
3,351,315
|
3,355,505
|
Eldorado
Resorts, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.250%
04/17/2024
|
4.577%
|
|
2,468,116
|
2,463,501
|
Gateway
Casinos & Entertainment Ltd.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
12/01/2023
|
5.330%
|
|
1,920,538
|
1,900,142
|
Golden
Nugget, Inc./Landry’s, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 0.750%
10/04/2023
|
5.020%
|
|
3,212,778
|
3,216,215
|
Mohegan
Tribal Gaming Authority(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
10/13/2023
|
6.234%
|
|
4,160,058
|
3,858,454
|
PCI
Gaming Authority(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.000%
05/29/2026
|
5.234%
|
|
1,900,000
|
1,912,559
|
Scientific
Games International, Inc.(d),(g),(h),(i),(j)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
10/18/2020
|
0.500%
|
|
1,900,000
|
1,786,000
|
Scientific
Games International, Inc.(g),(h)
|
Tranche
B5 Term Loan
|
3-month
USD LIBOR + 2.750%
08/14/2024
|
4.984%
|
|
3,677,535
|
3,655,138
|
Seminole
Tribe of Florida(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 1.750%
07/08/2024
|
3.984%
|
|
2,235,188
|
2,239,568
|
Stars
Group Holdings BV(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.500%
07/10/2025
|
5.830%
|
|
5,105,025
|
5,120,340
|
Wynn
Resorts Ltd.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.250%
10/30/2024
|
4.480%
|
|
1,492,500
|
1,493,619
|
Total
|
47,363,507
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
16
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Health
Care 6.2%
|
Acadia
Healthcare Co., Inc.(g),(h)
|
Tranche
B4 Term Loan
|
3-month
USD LIBOR + 2.500%
02/16/2023
|
4.734%
|
|
1,483,776
|
1,483,509
|
Air
Methods Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
04/22/2024
|
5.830%
|
|
2,768,500
|
2,325,540
|
athenahealth,
Inc.(g),(h)
|
Tranche
B 1st Lien Term Loan
|
3-month
USD LIBOR + 4.500%
02/11/2026
|
7.045%
|
|
2,493,750
|
2,499,211
|
Avantor
Funding, Inc.(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
11/21/2024
|
5.234%
|
|
905,561
|
913,104
|
Carestream
Health, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 5.750%
Floor 1.000%
02/28/2021
|
7.984%
|
|
1,541,605
|
1,478,013
|
Change
Healthcare Holdings, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
Floor 1.000%
03/01/2024
|
4.734%
|
|
3,691,987
|
3,682,166
|
DaVita,
Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 0.750%
06/24/2021
|
5.130%
|
|
1,370,614
|
1,369,147
|
Diplomat
Pharmacy, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 4.500%
Floor 1.000%
12/20/2024
|
6.740%
|
|
1,600,000
|
1,489,328
|
Envision
Healthcare Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
10/10/2025
|
5.984%
|
|
5,920,250
|
5,075,371
|
Gentiva
Health Services(g),(h),(i)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.750%
07/02/2025
|
6.000%
|
|
3,731,391
|
3,750,048
|
HC
Group Holdings III, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.750%
04/07/2022
|
5.984%
|
|
1,949,367
|
1,942,057
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
HCA,
Inc.(g),(h)
|
Tranche
B10 Term Loan
|
3-month
USD LIBOR + 2.000%
03/13/2025
|
4.330%
|
|
1,629,375
|
1,632,992
|
IQVIA,
Inc./Quintiles IMS(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 1.750%
06/11/2025
|
4.008%
|
|
3,960,000
|
3,956,476
|
National
Mentor Holdings, Inc./Civitas Solutions, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.250%
03/09/2026
|
6.490%
|
|
1,878,333
|
1,887,725
|
Tranche
C 1st Lien Term Loan
|
3-month
USD LIBOR + 4.250%
03/09/2026
|
6.490%
|
|
116,959
|
117,544
|
Ortho-Clinical
Diagnostics, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
06/30/2025
|
5.563%
|
|
4,075,653
|
3,955,952
|
Owens
& Minor, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 4.500%
04/30/2025
|
6.730%
|
|
3,712,500
|
2,984,590
|
PAREXEL
International Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.750%
09/27/2024
|
4.984%
|
|
2,850,688
|
2,749,147
|
Phoenix
Guarantor, Inc./BrightSpring(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.500%
03/05/2026
|
6.880%
|
|
2,300,000
|
2,309,775
|
Pluto
Acquisition I, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 5.000%
06/22/2026
|
7.278%
|
|
2,500,000
|
2,462,500
|
RegionalCare
Hospital Partners Holdings, Inc.(g),(h)
|
Tranche
B 1st Lien Term Loan
|
3-month
USD LIBOR + 4.500%
11/16/2025
|
6.769%
|
|
3,980,000
|
4,001,890
|
Select
Medical Corp.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.500%
03/06/2025
|
4.850%
|
|
3,576,464
|
3,565,305
|
Sterigenics-Nordion
Holdings LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
05/15/2022
|
5.234%
|
|
3,286,231
|
3,249,261
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
17
|
Portfolio of Investments (continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Surgery
Center Holdings, Inc.(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
09/02/2024
|
5.490%
|
|
1,984,848
|
1,915,379
|
Team
Health Holdings, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
02/06/2024
|
4.984%
|
|
3,921,754
|
3,424,985
|
Total
|
64,221,015
|
Independent
Energy 0.0%
|
Ascent
Resources – Marcellus LLC(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 6.500%
Floor 1.000%
03/30/2023
|
8.825%
|
|
62,500
|
60,625
|
Leisure
2.6%
|
24
Hour Fitness Worldwide, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.500%
05/30/2025
|
5.734%
|
|
1,549,288
|
1,549,288
|
AMC
Entertainment Holdings, Inc.(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 3.000%
04/22/2026
|
5.230%
|
|
3,125,168
|
3,127,387
|
Crown
Finance US, Inc./Cineworld Group PLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.250%
02/28/2025
|
4.484%
|
|
3,691,127
|
3,675,624
|
Formula
One Management Ltd.(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 2.500%
Floor 1.000%
02/01/2024
|
4.734%
|
|
3,258,105
|
3,214,479
|
Life
Time Fitness, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
06/10/2022
|
5.272%
|
|
3,089,783
|
3,086,353
|
Metro-Goldwyn-Mayer,
Inc.(d),(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 2.500%
07/03/2025
|
4.740%
|
|
2,828,625
|
2,814,482
|
Metro-Goldwyn-Mayer,
Inc.(g),(h)
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 4.500%
Floor 1.000%
07/03/2026
|
6.740%
|
|
2,225,000
|
2,158,250
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
NAI
Entertainment Holdings LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.500%
Floor 1.000%
05/08/2025
|
4.740%
|
|
2,257,937
|
2,255,115
|
Six
Flags Theme Parks, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.000%
04/17/2026
|
4.240%
|
|
1,650,000
|
1,655,676
|
William
Morris Endeavor Entertainment LLC/IMG Worldwide Holdings LLC(g),(h)
|
Tranche
B1 1st Lien Term Loan
|
3-month
USD LIBOR + 2.750%
05/18/2025
|
4.990%
|
|
4,118,413
|
4,002,068
|
Total
|
27,538,722
|
Lodging
0.5%
|
Hilton
Worldwide Finance LLC(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 1.750%
06/22/2026
|
4.016%
|
|
3,542,478
|
3,551,724
|
RHP
Hotel Properties LP(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.000%
05/11/2024
|
4.330%
|
|
1,470,738
|
1,470,738
|
Total
|
5,022,462
|
Media
and Entertainment 5.4%
|
Cengage
Learning, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
Floor 1.000%
06/07/2023
|
6.484%
|
|
1,872,363
|
1,801,850
|
Cumulus
Media New Holdings, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.500%
Floor 2.000%
05/13/2022
|
6.740%
|
|
1,003,001
|
1,009,270
|
Emerald
Expositions Holding, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.750%
05/22/2024
|
4.984%
|
|
2,857,420
|
2,796,700
|
Entravision
Communications Corp.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.750%
11/29/2024
|
5.080%
|
|
1,223,750
|
1,196,216
|
Gray
Television, Inc.(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 2.250%
Floor 1.000%
02/07/2024
|
4.582%
|
|
735,642
|
735,759
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
18
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Tranche
C Term Loan
|
3-month
USD LIBOR + 2.500%
01/02/2026
|
4.832%
|
|
1,990,000
|
1,993,900
|
Hubbard
Radio LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
03/28/2025
|
5.740%
|
|
3,058,036
|
3,047,853
|
iHeartCommunications,
Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
05/01/2026
|
6.230%
|
|
2,093,319
|
2,107,386
|
ION
Media Networks, Inc.(g),(h),(i)
|
Tranche
B4 Term Loan
|
3-month
USD LIBOR + 3.000%
12/18/2024
|
5.313%
|
|
3,229,834
|
3,224,796
|
Learfield
Communications LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
12/01/2023
|
5.490%
|
|
3,248,782
|
3,254,890
|
Lions
Gate Capital Holdings LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.250%
03/24/2025
|
4.484%
|
|
2,716,763
|
2,709,971
|
Mcgraw-Hill
Global Education Holdings LLC(g),(h)
|
Tranche
B 1st Lien Term Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
05/04/2022
|
6.234%
|
|
1,370,584
|
1,309,771
|
Meredith
Corp.(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 2.750%
01/31/2025
|
4.984%
|
|
1,938,772
|
1,943,871
|
Mission
Broadcasting, Inc.(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 2.250%
01/17/2024
|
4.480%
|
|
510,386
|
507,834
|
Nascar
Holdings, Inc.(g),(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 2.750%
07/27/2026
|
|
|
2,250,000
|
2,259,855
|
NEP
Group, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.250%
10/20/2025
|
5.484%
|
|
995,000
|
994,174
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 7.000%
10/19/2026
|
9.234%
|
|
1,000,000
|
992,500
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Nexstar
Broadcasting, Inc.(g),(h),(i)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.750%
06/19/2026
|
|
|
2,000,000
|
1,999,580
|
Nexstar
Broadcasting, Inc.(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 2.250%
01/17/2024
|
4.491%
|
|
2,562,086
|
2,549,275
|
Nielsen
Finance LLC/VNU, Inc.(g),(h)
|
Tranche
B4 Term Loan
|
3-month
USD LIBOR + 2.000%
10/04/2023
|
4.367%
|
|
3,866,135
|
3,857,861
|
R.R.
Donnelley & Sons Co.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 5.000%
01/15/2024
|
7.262%
|
|
2,985,000
|
2,960,135
|
Radio
One, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
04/18/2023
|
6.240%
|
|
4,527,304
|
4,337,746
|
Sinclair
Television Group, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.250%
01/03/2024
|
4.490%
|
|
3,787,385
|
3,778,863
|
Tribune
Media Co.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 0.750%
12/27/2020
|
5.234%
|
|
166,798
|
166,590
|
Tranche
C Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 0.750%
01/26/2024
|
5.234%
|
|
3,450,269
|
3,443,817
|
Univision
Communications, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
03/15/2024
|
4.984%
|
|
1,185,340
|
1,159,227
|
Total
|
56,139,690
|
Metals
and Mining 0.3%
|
Foresight
Energy LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 5.750%
Floor 1.000%
03/28/2022
|
8.272%
|
|
2,426,757
|
1,771,532
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
19
|
Portfolio of Investments
(continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Harsco
Corp.(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 2.250%
Floor 1.000%
12/06/2024
|
4.500%
|
|
941,680
|
942,839
|
Total
|
2,714,371
|
Midstream
1.3%
|
Equitrans
Midstream Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.500%
01/31/2024
|
6.734%
|
|
1,194,000
|
1,201,713
|
GIP
III Stetson I/II LP(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
07/18/2025
|
6.550%
|
|
3,078,724
|
3,088,976
|
Lower
Cadence Holdings LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
05/22/2026
|
6.269%
|
|
2,350,000
|
2,343,138
|
Prairie
ECI Acquiror LP(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.750%
03/11/2026
|
7.080%
|
|
1,496,250
|
1,499,617
|
Southcross
Energy Partners LP(g),(h),(k)
|
Debtor
in Possession Letter of Credit Term Loan
|
3-month
USD LIBOR + 10.000%
10/01/2019
|
0.000%
|
|
1,022,065
|
1,032,285
|
Debtor
in Possession Term Loan
|
3-month
USD LIBOR + 10.000%
Floor 1.000%
10/01/2019
|
12.390%
|
|
557,490
|
563,065
|
Delayed
Draw Debtor in Possession Term Loan
|
3-month
USD LIBOR + 10.000%
10/01/2019
|
12.380%
|
|
552,817
|
558,345
|
Southcross
Energy Partners LP(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 5.250%
10/01/2019
|
10.500%
|
|
1,486,297
|
1,404,551
|
3-month
USD LIBOR + 5.250%
Floor 1.000%
10/01/2019
|
10.500%
|
|
534,934
|
505,512
|
3-month
USD LIBOR + 6.250%
10/01/2019
|
|
|
1,776,916
|
1,332,687
|
Total
|
13,529,889
|
Oil
Field Services 1.2%
|
Apergy
Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
05/09/2025
|
4.750%
|
|
1,462,825
|
1,468,311
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Fieldwood
Energy LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 5.250%
Floor 1.000%
04/11/2022
|
7.506%
|
|
135,937
|
124,680
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 7.250%
Floor 1.000%
04/11/2023
|
9.506%
|
|
2,183,515
|
1,788,932
|
MRC
Global, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
09/20/2024
|
5.234%
|
|
5,725,157
|
5,735,920
|
Traverse
Midstream Partners LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
09/27/2024
|
6.260%
|
|
3,044,456
|
2,974,434
|
Total
|
12,092,277
|
Other
Financial Institutions 1.2%
|
IRI
Holdings, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.500%
12/01/2025
|
7.022%
|
|
3,231,256
|
3,122,201
|
Lifescan
Global Corp.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 6.000%
10/01/2024
|
8.660%
|
|
4,897,375
|
4,662,693
|
Lifescan
Global Corp.(d),(g),(h)
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 9.500%
10/01/2025
|
12.160%
|
|
1,000,000
|
905,000
|
UFC
Holdings LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
04/29/2026
|
5.490%
|
|
3,845,627
|
3,851,626
|
Total
|
12,541,520
|
Other
Industry 2.8%
|
Filtration
Group Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
03/29/2025
|
5.234%
|
|
3,349,799
|
3,352,780
|
Hamilton
Holdco LLC/Reece International Pty Ltd.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
07/02/2025
|
4.330%
|
|
3,960,000
|
3,955,050
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
20
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Harland
Clarke Holdings Corp.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.750%
Floor 1.000%
11/03/2023
|
7.080%
|
|
4,795,769
|
3,668,763
|
Hillman
Group, Inc. (The)(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
05/30/2025
|
6.234%
|
|
4,205,006
|
4,091,135
|
II-VI,
Inc.(g),(h),(i)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.500%
05/08/2026
|
|
|
3,425,000
|
3,414,314
|
Interior
Logic Group Holdings IV LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
05/30/2025
|
6.330%
|
|
3,176,000
|
3,136,300
|
Lightstone
Holdco LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.750%
Floor 1.000%
01/30/2024
|
5.984%
|
|
2,814,072
|
2,769,526
|
Tranche
C Term Loan
|
3-month
USD LIBOR + 3.750%
Floor 1.000%
01/30/2024
|
5.984%
|
|
158,718
|
156,206
|
RBS
Global, Inc./Rexnord LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
08/21/2024
|
4.234%
|
|
2,037,492
|
2,044,561
|
Titan
Acquisition Ltd./Husky IMS International Ltd.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
03/28/2025
|
5.234%
|
|
2,187,263
|
2,075,166
|
Total
|
28,663,801
|
Other
REIT 0.2%
|
ESH
Hospitality, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
08/30/2023
|
4.234%
|
|
1,022,168
|
1,022,801
|
VICI
Properties 1 LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.000%
12/20/2024
|
4.272%
|
|
1,197,727
|
1,194,541
|
Total
|
2,217,342
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Other
Utility 0.2%
|
Sandy
Creek Energy Associates LP(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
11/09/2020
|
6.330%
|
|
2,779,149
|
2,501,734
|
Packaging
3.8%
|
Anchor
Glass Container Corp.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
12/07/2023
|
5.103%
|
|
1,608,915
|
1,437,968
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 7.750%
Floor 1.000%
12/07/2024
|
10.110%
|
|
1,000,000
|
711,250
|
Berry
Global, Inc.(g),(h)
|
Tranche
T Term Loan
|
3-month
USD LIBOR + 2.000%
01/06/2021
|
4.379%
|
|
1,849,175
|
1,847,251
|
BWAY
Holding Co.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
04/03/2024
|
5.590%
|
|
3,566,589
|
3,506,421
|
Consolidated
Container Co., LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
05/22/2024
|
4.984%
|
|
1,861,796
|
1,843,178
|
Flex
Acquisition Co., Inc./Novolex(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
12/29/2023
|
5.319%
|
|
1,111,906
|
1,061,692
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.250%
06/29/2025
|
5.569%
|
|
3,082,333
|
2,948,436
|
Multi-Color
Corp.(g),(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 4.500%
06/30/2026
|
7.025%
|
|
1,550,000
|
1,550,775
|
Packaging
Coordinators Midco, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.000%
06/30/2023
|
6.330%
|
|
2,969,027
|
2,959,140
|
Plastipak
Holdings, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.500%
10/14/2024
|
4.740%
|
|
2,652,750
|
2,645,455
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
21
|
Portfolio of Investments
(continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Pregis
Holding I Corp.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
05/20/2021
|
5.831%
|
|
3,878,078
|
3,870,826
|
Printpack
Holdings, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
07/26/2023
|
5.250%
|
|
887,244
|
879,481
|
ProAmpac
PG Borrower LLC(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
11/20/2023
|
5.897%
|
|
3,022,720
|
2,953,439
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 8.500%
Floor 1.000%
11/18/2024
|
11.020%
|
|
1,300,000
|
1,232,829
|
Reynolds
Group Holdings, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
02/05/2023
|
4.984%
|
|
3,603,027
|
3,600,577
|
Spectrum
Holdings III Corp.(d),(g),(h)
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 7.000%
Floor 1.000%
01/31/2026
|
9.234%
|
|
1,575,000
|
1,441,125
|
Tricorbraun
Holdings, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.750%
Floor 1.000%
11/30/2023
|
6.018%
|
|
1,165,858
|
1,143,707
|
Trident
TPI Holdings, Inc.(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
10/17/2024
|
5.484%
|
|
1,561,000
|
1,508,972
|
Twist
Beauty International Holdings S.A.(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
04/22/2024
|
5.524%
|
|
1,962,500
|
1,918,344
|
Total
|
39,060,866
|
Pharmaceuticals
2.7%
|
Akorn,
Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 7.000%
Floor 1.000%
04/16/2021
|
9.250%
|
|
1,454,480
|
1,334,485
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Bausch
Health Companies, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
06/02/2025
|
5.379%
|
|
3,007,125
|
3,016,899
|
3-month
USD LIBOR + 2.750%
11/27/2025
|
5.129%
|
|
1,171,875
|
1,171,148
|
Catalent
Pharma Solutions, Inc.(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 2.250%
05/18/2026
|
4.484%
|
|
997,500
|
1,001,869
|
Endo
Finance Co. I SARL(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
Floor 0.750%
04/29/2024
|
6.500%
|
|
4,936,741
|
4,495,545
|
Grifols
Worldwide Operations Ltd.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.250%
01/31/2025
|
4.599%
|
|
2,731,666
|
2,737,484
|
Jaguar
Holding Co. I LLC/Pharmaceutical Product Development LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
Floor 1.000%
08/18/2022
|
4.734%
|
|
3,819,757
|
3,811,583
|
Mallinckrodt
International Finance SA(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
Floor 0.750%
02/24/2025
|
5.528%
|
|
1,837,606
|
1,559,669
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 0.750%
09/24/2024
|
5.080%
|
|
1,626,680
|
1,380,872
|
Nestlé
Skin Health(g),(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
Floor 1.000%
08/01/2026
|
6.593%
|
|
2,400,000
|
2,407,800
|
RPI
Finance Trust(g),(h)
|
Tranche
B6 Term Loan
|
3-month
USD LIBOR + 2.000%
03/27/2023
|
4.234%
|
|
4,804,881
|
4,828,905
|
Total
|
27,746,259
|
Property
& Casualty 1.7%
|
Alliant
Holdings Intermediate LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
05/09/2025
|
5.269%
|
|
2,857,329
|
2,815,726
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
22
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Asurion
LLC(g),(h)
|
Tranche
B2 2nd Lien Term Loan
|
3-month
USD LIBOR + 6.500%
08/04/2025
|
8.734%
|
|
2,025,000
|
2,059,587
|
Tranche
B4 Term Loan
|
3-month
USD LIBOR + 3.000%
08/04/2022
|
5.234%
|
|
1,421,583
|
1,423,872
|
Tranche
B6 Term Loan
|
3-month
USD LIBOR + 3.000%
11/03/2023
|
5.234%
|
|
1,544,739
|
1,547,643
|
Tranche
B7 Term Loan
|
3-month
USD LIBOR + 3.000%
11/03/2024
|
5.234%
|
|
1,356,288
|
1,358,715
|
HUB
International Ltd.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
04/25/2025
|
5.267%
|
|
2,163,038
|
2,139,136
|
Sedgwick
Claims Management Services, Inc./Lightning Cayman Merger Sub, Ltd.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
12/31/2025
|
5.484%
|
|
3,478,759
|
3,421,604
|
USI,
Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
05/16/2024
|
5.330%
|
|
3,119,437
|
3,073,301
|
Total
|
17,839,584
|
Restaurants
1.1%
|
Carrols
Restaurant Group, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
04/30/2026
|
5.500%
|
|
1,175,000
|
1,177,937
|
IRB
Holding Corp./Arby’s/Buffalo Wild Wings(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
02/05/2025
|
5.550%
|
|
2,790,010
|
2,777,064
|
KFC
Holding Co./Yum! Brands(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 1.750%
04/03/2025
|
4.050%
|
|
2,350,050
|
2,347,113
|
New
Red Finance, Inc./Burger King/Tim Hortons(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 2.250%
Floor 1.000%
02/16/2024
|
4.484%
|
|
5,559,007
|
5,557,617
|
Total
|
11,859,731
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Retailers
3.4%
|
Academy
Ltd.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
07/01/2022
|
6.284%
|
|
2,356,568
|
1,642,080
|
AI
Aqua Merger Sub, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
12/13/2023
|
5.484%
|
|
1,105,313
|
1,056,955
|
Tranche
B1 1st Lien Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
12/13/2023
|
5.484%
|
|
3,691,961
|
3,539,668
|
ASP
Unifrax Holdings, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.750%
12/12/2025
|
6.080%
|
|
997,494
|
961,335
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 8.500%
12/14/2026
|
10.928%
|
|
1,000,000
|
951,250
|
Bass
Pro Group LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 5.000%
Floor 0.750%
09/25/2024
|
7.234%
|
|
3,930,000
|
3,712,435
|
Belk,
Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.750%
Floor 1.000%
12/12/2022
|
7.285%
|
|
2,468,788
|
1,996,188
|
BJ’s
Wholesale Club, Inc.(g),(h)
|
Tranche
B 1st Lien Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
02/03/2024
|
5.075%
|
|
3,079,954
|
3,084,112
|
Burlington
Coat Factory Warehouse Corp.(g),(h)
|
Tranche
B5 Term Loan
|
3-month
USD LIBOR + 2.000%
Floor 0.750%
11/17/2024
|
4.320%
|
|
1,718,380
|
1,721,611
|
Harbor
Freight Tools U.S.A., Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
Floor 0.750%
08/18/2023
|
4.734%
|
|
3,757,377
|
3,687,978
|
J.Crew
Group, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.220%
Floor 1.000%
03/05/2021
|
5.480%
|
|
3,373,084
|
3,061,074
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
23
|
Portfolio of Investments
(continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
JC
Penney Corp., Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
Floor 1.000%
06/23/2023
|
6.771%
|
|
1,898,333
|
1,641,413
|
Men’s
Wearhouse, Inc. (The)(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
04/09/2025
|
5.480%
|
|
810,017
|
707,412
|
Michaels
Stores, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.500%
Floor 1.000%
01/30/2023
|
4.745%
|
|
4,494,315
|
4,344,879
|
Party
City Holdings, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
Floor 0.750%
08/19/2022
|
4.740%
|
|
2,129,474
|
2,123,383
|
PetSmart,
Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
03/11/2022
|
6.380%
|
|
896,475
|
879,568
|
Total
|
35,111,341
|
Supermarkets
0.6%
|
Albertsons
LLC(g),(h)
|
Tranche
B5 Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 0.750%
12/21/2022
|
5.311%
|
|
940,508
|
942,107
|
Tranche
B6 Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 0.750%
06/22/2023
|
5.234%
|
|
2,114,381
|
2,117,235
|
Tranche
B7 Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 0.750%
11/17/2025
|
5.234%
|
|
3,295,466
|
3,298,399
|
Total
|
6,357,741
|
Technology
14.1%
|
Applied
Systems, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
09/19/2024
|
5.330%
|
|
3,576,201
|
3,563,040
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 7.000%
Floor 1.000%
09/19/2025
|
9.330%
|
|
1,500,000
|
1,511,880
|
Avaya,
Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 4.250%
12/15/2024
|
6.575%
|
|
3,929,950
|
3,776,446
|
Boxer
Parent Co., Inc./BMC Software, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
10/02/2025
|
6.580%
|
|
3,980,000
|
3,825,297
|
CDS
US Intermediate Holdings, Inc.(g),(h)
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 8.250%
Floor 1.000%
07/10/2023
|
10.580%
|
|
3,000,000
|
2,715,000
|
CDW
LLC/AP Exhaust Acquisition(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 1.750%
Floor 0.750%
08/17/2023
|
3.990%
|
|
2,363,043
|
2,370,794
|
Celestica,
Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.125%
06/27/2025
|
4.366%
|
|
2,970,000
|
2,873,475
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 2.500%
06/27/2025
|
4.741%
|
|
746,250
|
731,325
|
CommScope,
Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
04/06/2026
|
5.484%
|
|
3,100,000
|
3,100,775
|
Dawn
Acquisition LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
12/31/2025
|
6.080%
|
|
2,353,125
|
2,311,945
|
Dell
International LLC/EMC Corp.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.000%
Floor 0.750%
09/07/2023
|
4.240%
|
|
4,376,153
|
4,386,437
|
DigiCert,
Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
10/31/2024
|
6.234%
|
|
2,450,296
|
2,451,228
|
2nd
Lien Term Loan
|
3-month
USD LIBOR + 8.000%
Floor 1.000%
10/31/2025
|
10.234%
|
|
1,580,000
|
1,576,050
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
24
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Dun
& Bradstreet Corp. (The)(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 5.000%
02/06/2026
|
7.241%
|
|
3,000,000
|
3,017,820
|
Evertec
Group LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.500%
11/27/2024
|
5.734%
|
|
2,487,500
|
2,495,286
|
Hyland
Software, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.250%
Floor 0.750%
07/01/2024
|
5.484%
|
|
1,954,975
|
1,955,796
|
Infor
US, Inc.(g),(h)
|
Tranche
B6 Term Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
02/01/2022
|
5.080%
|
|
1,881,536
|
1,881,197
|
Informatica
LLC(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 3.250%
08/05/2022
|
5.484%
|
|
2,469,904
|
2,479,783
|
ION
Trading Technologies SARL(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.000%
Floor 1.000%
11/21/2024
|
6.651%
|
|
2,606,039
|
2,516,131
|
IPC
Corp.(g),(h)
|
Tranche
B1 1st Lien Term Loan
|
3-month
USD LIBOR + 4.500%
Floor 1.000%
08/06/2021
|
0.000%
|
|
1,033,438
|
881,864
|
Leidos,
Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 1.750%
08/22/2025
|
4.000%
|
|
3,875,445
|
3,885,948
|
MA
FinanceCo LLC/Micro Focus International PLC(d),(g),(h)
|
Tranche
B2 Term Loan
|
3-month
USD LIBOR + 2.250%
11/19/2021
|
4.484%
|
|
2,706,047
|
2,699,282
|
MA
FinanceCo LLC/Micro Focus International PLC(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 2.500%
06/21/2024
|
4.734%
|
|
841,599
|
834,588
|
Maxar
Technologies Ltd.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.750%
10/04/2024
|
4.990%
|
|
5,082,699
|
4,591,355
|
McAfee
LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 3.750%
09/30/2024
|
5.991%
|
|
4,788,221
|
4,785,539
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
McDermott
International, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 5.000%
Floor 1.000%
05/12/2025
|
7.234%
|
|
2,567,500
|
2,448,111
|
Microchip
Technology, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
05/29/2025
|
4.240%
|
|
3,197,776
|
3,193,779
|
Misys
Ltd./Almonde/Tahoe/Finastra USA(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.500%
Floor 1.000%
06/13/2024
|
5.734%
|
|
3,723,791
|
3,650,731
|
MYOB
Group(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.000%
05/06/2026
|
6.234%
|
|
1,650,000
|
1,656,187
|
Natel
Engineering Co., Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 5.000%
Floor 1.000%
04/30/2026
|
7.241%
|
|
2,275,000
|
2,277,844
|
Neustar,
Inc.(g),(h)
|
Tranche
B4 1st Lien Term Loan
|
3-month
USD LIBOR + 3.500%
08/08/2024
|
5.734%
|
|
3,053,174
|
2,963,503
|
Tranche
B5 1st Lien Term Loan
|
3-month
USD LIBOR + 4.500%
08/08/2024
|
6.734%
|
|
997,500
|
982,538
|
Oberthur
Technologies Holding SAS(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 3.750%
01/10/2024
|
6.080%
|
|
2,409,761
|
2,311,876
|
ON
Semiconductor Corp.(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 1.750%
03/31/2023
|
3.984%
|
|
2,461,227
|
2,455,074
|
Perspecta,
Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.250%
05/30/2025
|
4.484%
|
|
2,994,750
|
2,994,750
|
Plantronics,
Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.500%
07/02/2025
|
4.734%
|
|
3,031,901
|
3,031,143
|
Rackspace
Hosting, Inc.(g),(h)
|
Tranche
B 1st Lien Term Loan
|
3-month
USD LIBOR + 3.000%
Floor 1.000%
11/03/2023
|
5.576%
|
|
2,492,752
|
2,308,289
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
25
|
Portfolio of Investments (continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Refinitiv
US Holdings, Inc.(e),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.750%
10/01/2025
|
5.984%
|
|
2,972,506
|
2,969,326
|
Riverbed
Technology, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.250%
Floor 1.000%
04/24/2022
|
5.490%
|
|
2,921,468
|
2,463,411
|
Rovi
Solutions Corp./Guides, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.500%
Floor 0.750%
07/02/2021
|
4.740%
|
|
3,249,732
|
3,200,174
|
RP
Crown Parent LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.750%
Floor 1.000%
10/12/2023
|
4.984%
|
|
1,096,875
|
1,093,584
|
Sabre
GLBL, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.000%
02/22/2024
|
4.234%
|
|
3,295,675
|
3,302,991
|
Science
Applications International Corp.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 1.750%
10/31/2025
|
3.984%
|
|
3,970,000
|
3,955,112
|
SCS
Holdings I, Inc./Sirius Computer Solutions, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 4.250%
07/01/2026
|
6.569%
|
|
1,775,000
|
1,783,183
|
Seattle
SpinCo, Inc./Micro Focus International PLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
06/21/2024
|
4.734%
|
|
3,516,698
|
3,487,404
|
Shutterfly,
Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
08/17/2024
|
4.740%
|
|
1,347,883
|
1,347,667
|
SS&C
Technologies Holdings, Inc.(g),(h)
|
Tranche
B3 Term Loan
|
3-month
USD LIBOR + 2.250%
04/16/2025
|
4.484%
|
|
1,811,279
|
1,810,156
|
Tranche
B4 Term Loan
|
3-month
USD LIBOR + 2.250%
04/16/2025
|
4.484%
|
|
1,233,186
|
1,232,421
|
Tempo
Acquisition LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 3.000%
05/01/2024
|
5.234%
|
|
3,830,977
|
3,835,766
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
TIBCO
Software, Inc.(g),(h),(i)
|
Term
Loan
|
3-month
USD LIBOR + 4.000%
06/12/2026
|
|
|
1,756,977
|
1,758,628
|
TTM
Technologies, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.500%
09/28/2024
|
4.730%
|
|
3,026,210
|
3,012,350
|
Ultimate
Software Group, Inc. (The)(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 3.750%
05/04/2026
|
6.080%
|
|
1,250,000
|
1,259,175
|
VeriFone
Systems, Inc.(g),(h)
|
1st
Lien Term Loan
|
3-month
USD LIBOR + 4.000%
08/20/2025
|
6.520%
|
|
1,235,637
|
1,201,274
|
Verint
Systems, Inc.(d),(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
06/28/2024
|
4.230%
|
|
3,332,000
|
3,348,660
|
Veritas
US, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 4.500%
Floor 1.000%
01/27/2023
|
6.750%
|
|
1,939,368
|
1,818,564
|
Verscend
Holding Corp.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 4.500%
08/27/2025
|
6.734%
|
|
1,786,500
|
1,793,753
|
Western
Digital Corp.(g),(h)
|
Tranche
B4 Term Loan
|
3-month
USD LIBOR + 1.750%
04/29/2023
|
4.012%
|
|
1,792,611
|
1,776,926
|
Xperi
Corp.(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 2.500%
Floor 0.750%
12/01/2023
|
4.734%
|
|
2,432,259
|
2,400,348
|
Total
|
146,342,979
|
Transportation
Services 0.3%
|
HFOTCO
LLC(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.750%
06/26/2025
|
4.990%
|
|
2,945,250
|
2,934,205
|
Wireless
1.8%
|
Cellular
South, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.250%
05/17/2024
|
4.508%
|
|
2,940,000
|
2,916,127
|
The accompanying Notes to Financial Statements are an integral part
of this statement.
26
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments
(continued)
July 31, 2019
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Numericable
US LLC(g),(h)
|
Tranche
B11 Term Loan
|
3-month
USD LIBOR + 2.750%
07/31/2025
|
4.984%
|
|
3,470,125
|
3,339,995
|
SBA
Senior Finance II LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
04/11/2025
|
4.240%
|
|
3,386,227
|
3,375,425
|
Sprint
Communications, Inc.(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.500%
Floor 0.750%
02/02/2024
|
4.750%
|
|
6,082,660
|
6,065,933
|
3-month
USD LIBOR + 3.000%
Floor 0.750%
02/02/2024
|
5.250%
|
|
671,625
|
670,994
|
Switch
Ltd.(g),(h)
|
Tranche
B1 Term Loan
|
3-month
USD LIBOR + 2.250%
06/27/2024
|
4.484%
|
|
2,229,500
|
2,222,990
|
Total
|
18,591,464
|
Wirelines
2.4%
|
CenturyLink,
Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.750%
01/31/2025
|
4.984%
|
|
7,288,962
|
7,239,325
|
Level
3 Financing, Inc.(g),(h)
|
Tranche
B Term Loan
|
3-month
USD LIBOR + 2.250%
02/22/2024
|
4.484%
|
|
5,050,000
|
5,052,121
|
Southwire
Co., LLC(g),(h)
|
Term
Loan
|
3-month
USD LIBOR + 2.000%
05/19/2025
|
4.234%
|
|
4,276,788
|
4,262,546
|
Windstream
Services LLC(g),(h),(k)
|
Debtor
in Possession Term Loan
|
3-month
USD LIBOR + 2.500%
02/26/2021
|
4.740%
|
|
3,000,000
|
3,015,000
|
Senior
Loans (continued)
|
Borrower
|
Coupon
Rate
|
|
Principal
Amount ($)
|
Value
($)
|
Windstream
Services LLC(g),(h)
|
Tranche
B6 Term Loan
|
3-month
USD LIBOR + 6.000%
Floor 0.750%
03/29/2021
|
10.250%
|
|
3,859,761
|
3,952,318
|
Tranche
B7 Term Loan
|
3-month
USD LIBOR + 5.250%
Floor 0.750%
02/17/2024
|
9.500%
|
|
1,501,883
|
1,514,393
|
Total
|
25,035,703
|
Total
Senior Loans
(Cost $988,107,016)
|
967,275,533
|
Warrants
0.1%
|
Issuer
|
Shares
|
Value
($)
|
Communication
Services 0.1%
|
Media
0.1%
|
iHeartCommunications,
Inc.(a)
|
84,607
|
1,232,132
|
Total
Communication Services
|
1,232,132
|
Total
Warrants
(Cost $1,438,319)
|
1,232,132
|
|
Money
Market Funds 1.8%
|
|
Shares
|
Value
($)
|
Columbia
Short-Term Cash Fund, 2.361%(l),(m)
|
19,105,805
|
19,103,895
|
Total
Money Market Funds
(Cost $19,103,895)
|
19,103,895
|
Total
Investments in Securities
(Cost: $1,049,197,818)
|
1,031,409,871
|
Other
Assets & Liabilities, Net
|
|
7,773,808
|
Net
Assets
|
1,039,183,679
|
Notes to Portfolio of Investments
(a)
|
Non-income
producing investment.
|
(b)
|
Represents fair
value as determined in good faith under procedures approved by the Board of Trustees. At July 31, 2019, the total value of these securities amounted to $0, which represents less than 0.01% of total net assets.
|
(c)
|
Negligible market
value.
|
(d)
|
Valuation
based on significant unobservable inputs.
|
(e)
|
Represents privately
placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified
institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees.
At July 31, 2019, the total value of these securities amounted to $23,261,163, which represents 2.24% of total net assets.
|
(f)
|
Represents a
security purchased on a when-issued basis.
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
27
|
Portfolio of Investments (continued)
July 31, 2019
Notes to Portfolio of
Investments (continued)
(g)
|
The stated
interest rate represents the weighted average interest rate at July 31, 2019 of contracts within the senior loan facility. Interest rates on contracts are primarily determined either weekly, monthly or quarterly by reference to the indicated base
lending rate and spread and the reset period. These base lending rates are primarily the London Interbank Offered Rate (“LIBOR”) and other short-term rates. Base lending rates may be subject to a floor or minimum rate. The interest rate
for senior loans purchased on a when-issued or delayed delivery basis will be determined upon settlement, therefore no interest rate is disclosed. Senior loans often require prepayments from excess cash flows or permit the borrowers to repay at
their election. The degree to which borrowers repay, cannot be predicted with accuracy. As a result, remaining maturities of senior loans may be less than the stated maturities.
|
(h)
|
Variable
rate security. The interest rate shown was the current rate as of July 31, 2019.
|
(i)
|
Represents
a security purchased on a forward commitment basis.
|
(j)
|
At July 31,
2019, the Fund had unfunded senior loan commitments pursuant to the terms of the loan agreement. The Fund receives a stated coupon rate until the borrower draws on the loan commitment, at which time the rate will become the stated rate in the loan
agreement.
|
Borrower
|
Unfunded
Commitment ($)
|
Allied
Universal Holdco LLC
Delayed Draw Term Loan
07/10/2026
|
187,238
|
Scientific
Games International, Inc.
Term Loan
10/18/2020 0.500%
|
1,786,000
|
(k)
|
The
borrower filed for protection under Chapter 11 of the U.S. Federal Bankruptcy Code.
|
(l)
|
The rate
shown is the seven-day current annualized yield at July 31, 2019.
|
(m)
|
As
defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common ownership or control with the Fund. Holdings and
transactions in these affiliated companies during the year ended July 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized
gain
(loss) —
affiliated
issuers ($)
|
Net
change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends
—
affiliated
issuers ($)
|
Value
—
affiliated
issuers
at end of
period ($)
|
Columbia
Short-Term Cash Fund, 2.361%
|
|
77,675,322
|
377,620,882
|
(436,190,399)
|
19,105,805
|
(6,149)
|
5,759
|
1,487,865
|
19,103,895
|
Fair value measurements
The Fund categorizes its fair value measurements according to
a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the Fund’s assumptions about the information market participants would use in pricing an
investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level. For example, certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair
value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels
listed below:
■
|
Level 1 — Valuations
based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments.
|
■
|
Level 2 — Valuations
based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.).
|
■
|
Level 3 — Valuations
based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments).
|
Inputs that are used in determining fair value of an investment
may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary between investments, and is affected by various factors such
as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered by the Investment Manager, along with any other relevant factors in the calculation of an
investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many
investments. This condition could cause an investment to be reclassified between the various levels within the hierarchy.
Investments falling into the Level 3 category are primarily
supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency and corroboration to support these quoted prices.
Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant unobservable inputs and/or significant assumptions by the Investment Manager.
Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.
Under the direction of the Fund’s Board of Trustees (the
Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of voting and non-voting members from various groups within the
Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The accompanying Notes to Financial Statements are an integral part of this
statement.
28
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Portfolio of Investments (continued)
July 31, 2019
Fair value
measurements (continued)
The Committee meets at least monthly to review and approve valuation matters, which may include a description of specific valuation determinations, data regarding
pricing information received from approved pricing vendors and brokers and the results of Board-approved valuation control policies and procedures (the Policies). The Policies address, among other things, instances when market quotations are or are
not readily available, including recommendations of third party pricing vendors and a determination of appropriate pricing methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with
a potential for stale pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to discuss
additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or approve related valuation actions. The Committee reports to the Board, with members of the Committee meeting with the Board
at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those described earlier.
The following table is a summary of the inputs used to value the
Fund’s investments at July 31, 2019:
|
Level
1 ($)
|
Level
2 ($)
|
Level
3 ($)
|
Total
($)
|
Investments
in Securities
|
|
|
|
|
Common
Stocks
|
|
|
|
|
Communication
Services
|
2,493,933
|
3,549,333
|
0*
|
6,043,266
|
Consumer
Discretionary
|
1,158,498
|
140,471
|
81,440
|
1,380,409
|
Energy
|
—
|
2,146,131
|
—
|
2,146,131
|
Financials
|
—
|
—
|
0*
|
0*
|
Information
Technology
|
970,593
|
—
|
—
|
970,593
|
Materials
|
1,839,255
|
374,534
|
—
|
2,213,789
|
Utilities
|
2,271,391
|
84,674
|
—
|
2,356,065
|
Total
Common Stocks
|
8,733,670
|
6,295,143
|
81,440
|
15,110,253
|
Corporate
Bonds & Notes
|
—
|
21,715,558
|
—
|
21,715,558
|
Exchange-Traded
Funds
|
6,972,500
|
—
|
—
|
6,972,500
|
Senior
Loans
|
—
|
909,989,789
|
57,285,744
|
967,275,533
|
Warrants
|
|
|
|
|
Communication
Services
|
—
|
1,232,132
|
—
|
1,232,132
|
Total
Warrants
|
—
|
1,232,132
|
—
|
1,232,132
|
Money
Market Funds
|
19,103,895
|
—
|
—
|
19,103,895
|
Total
Investments in Securities
|
34,810,065
|
939,232,622
|
57,367,184
|
1,031,409,871
|
See the Portfolio of
Investments for all investment classifications not indicated in the table.
The Fund’s assets assigned to the Level 2 input category
are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical assets.
The following table is a reconciliation of Level 3 assets for
which significant observable and unobservable inputs were used to determine fair value:
|
Balance
as of
07/31/2018
($)
|
Increase
(decrease)
in accrued
discounts/
premiums
($)
|
Realized
gain (loss)
($)
|
Change
in unrealized
appreciation
(depreciation)(a)
($)
|
Purchases
($)
|
Sales
($)
|
Transfers
into
Level 3
($)
|
Transfers
out of
Level 3
($)
|
Balance
as of
07/31/2019
($)
|
Common
Stocks
|
5,162,198
|
—
|
4,360,101
|
(4,711,271)
|
—
|
(4,815,482)
|
85,894
|
—
|
81,440
|
Senior
Loans
|
47,041,592
|
23,856
|
19,730
|
(170,312)
|
15,402,375
|
(20,420,022)
|
32,914,827
|
(17,526,302)
|
57,285,744
|
Total
|
52,203,790
|
23,856
|
4,379,831
|
(4,881,583)
|
15,402,375
|
(25,235,504)
|
33,000,721
|
(17,526,302)
|
57,367,184
|
(a) Change in unrealized
appreciation (depreciation) relating to securities held at July 31, 2019 was $(747,490), which is comprised of Common Stocks of $(4,454) and Senior Loans of $(743,036).
The Fund’s assets assigned to the Level 3 category are
valued utilizing the valuation technique deemed the most appropriate in the circumstances. Certain common stocks and senior loans classified as Level 3 securities are valued using the market approach and utilize single market quotations from broker
dealers which may have included, but were not limited to, observable transactions for identical or similar assets in the market and the distressed nature of the security. The appropriateness of fair values for these securities is monitored on an
ongoing basis which may include results of back testing, manual price reviews and other control procedures. Significant increases (decreases) to any of these inputs would have resulted in a significantly higher (lower) fair value measurement.
Financial assets were transferred from Level 2 to Level 3 due
to utilizing a single market quotation from a broker dealer. As a result, management concluded that the market input(s) were generally unobservable.
Financial assets were transferred from Level 3 to Level 2 as
observable market inputs were utilized and management determined that there was sufficient, reliable and observable market data to value these assets as of period end.
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
29
|
Statement of Assets and Liabilities
July 31, 2019
Assets
|
|
Investments
in securities, at value
|
|
Unaffiliated
issuers (cost $1,030,093,923)
|
$1,012,305,976
|
Affiliated
issuers (cost $19,103,895)
|
19,103,895
|
Cash
|
8,138,368
|
Receivable
for:
|
|
Investments
sold
|
19,193,572
|
Investments
sold on a delayed delivery basis
|
9,964,020
|
Capital
shares sold
|
4,673,732
|
Dividends
|
58,510
|
Interest
|
3,072,278
|
Prepaid
expenses
|
7,222
|
Total
assets
|
1,076,517,573
|
Liabilities
|
|
Payable
for:
|
|
Investments
purchased
|
1,990,000
|
Investments
purchased on a delayed delivery basis
|
21,261,759
|
Capital
shares purchased
|
9,270,776
|
Distributions
to shareholders
|
4,426,328
|
Management
services fees
|
18,318
|
Distribution
and/or service fees
|
4,318
|
Transfer
agent fees
|
93,065
|
Compensation
of board members
|
67,474
|
Other
expenses
|
201,856
|
Total
liabilities
|
37,333,894
|
Net
assets applicable to outstanding capital stock
|
$1,039,183,679
|
Represented
by
|
|
Paid
in capital
|
1,077,388,253
|
Total
distributable earnings (loss) (Note 2)
|
(38,204,574)
|
Total
- representing net assets applicable to outstanding capital stock
|
$1,039,183,679
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
30
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Statement of Assets and Liabilities (continued)
July 31, 2019
Class
A
|
|
Net
assets
|
$323,190,899
|
Shares
outstanding
|
36,029,809
|
Net
asset value per share
|
$8.97
|
Maximum
sales charge
|
3.00%
|
Maximum
offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares)
|
$9.25
|
Advisor
Class
|
|
Net
assets
|
$29,254,696
|
Shares
outstanding
|
3,266,591
|
Net
asset value per share
|
$8.96
|
Class
C
|
|
Net
assets
|
$75,405,913
|
Shares
outstanding
|
8,404,983
|
Net
asset value per share
|
$8.97
|
Institutional
Class
|
|
Net
assets
|
$446,512,083
|
Shares
outstanding
|
49,846,334
|
Net
asset value per share
|
$8.96
|
Institutional
2 Class
|
|
Net
assets
|
$56,375,572
|
Shares
outstanding
|
6,261,948
|
Net
asset value per share
|
$9.00
|
Institutional
3 Class
|
|
Net
assets
|
$106,005,101
|
Shares
outstanding
|
11,820,970
|
Net
asset value per share
|
$8.97
|
Class
R
|
|
Net
assets
|
$2,439,415
|
Shares
outstanding
|
271,716
|
Net
asset value per share
|
$8.98
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
31
|
Statement of Operations
Year Ended July 31, 2019
Net
investment income
|
|
Income:
|
|
Dividends
— unaffiliated issuers
|
$240,672
|
Dividends
— affiliated issuers
|
1,487,865
|
Interest
|
68,302,141
|
Interfund
lending
|
810
|
Foreign
taxes withheld
|
(29)
|
Total
income
|
70,031,459
|
Expenses:
|
|
Management
services fees
|
7,806,070
|
Distribution
and/or service fees
|
|
Class
A
|
926,200
|
Class
C
|
864,170
|
Class
R
|
12,928
|
Class
T
|
3
|
Transfer
agent fees
|
|
Class
A
|
330,659
|
Advisor
Class
|
33,650
|
Class
C
|
77,137
|
Institutional
Class
|
493,896
|
Institutional
2 Class
|
44,978
|
Institutional
3 Class
|
7,876
|
Class
R
|
2,307
|
Class
T
|
1
|
Compensation
of board members
|
29,270
|
Custodian
fees
|
218,646
|
Printing
and postage fees
|
100,087
|
Registration
fees
|
133,965
|
Audit
fees
|
39,750
|
Legal
fees
|
18,255
|
Compensation
of chief compliance officer
|
254
|
Other
|
27,752
|
Total
expenses
|
11,167,854
|
Fees
waived or expenses reimbursed by Investment Manager and its affiliates
|
(129)
|
Total
net expenses
|
11,167,725
|
Net
investment income
|
58,863,734
|
Realized
and unrealized gain (loss) — net
|
|
Net
realized gain (loss) on:
|
|
Investments
— unaffiliated issuers
|
(6,441,173)
|
Investments
— affiliated issuers
|
(6,149)
|
Net
realized loss
|
(6,447,322)
|
Net
change in unrealized appreciation (depreciation) on:
|
|
Investments
— unaffiliated issuers
|
(20,957,534)
|
Investments
— affiliated issuers
|
5,759
|
Net
change in unrealized appreciation (depreciation)
|
(20,951,775)
|
Net
realized and unrealized loss
|
(27,399,097)
|
Net
increase in net assets resulting from operations
|
$31,464,637
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
32
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Statement of Changes in Net Assets
|
Year
Ended
July 31, 2019
|
Year
Ended
July 31, 2018
|
Operations
|
|
|
Net
investment income
|
$58,863,734
|
$45,818,918
|
Net
realized gain (loss)
|
(6,447,322)
|
3,838,593
|
Net
change in unrealized appreciation (depreciation)
|
(20,951,775)
|
5,114,626
|
Net
increase in net assets resulting from operations
|
31,464,637
|
54,772,137
|
Distributions
to shareholders
|
|
|
Net
investment income and net realized gains
|
|
|
Class
A
|
(17,551,226)
|
|
Advisor
Class
|
(1,883,271)
|
|
Class
C
|
(3,444,498)
|
|
Institutional
Class
|
(27,638,795)
|
|
Institutional
2 Class
|
(3,783,811)
|
|
Institutional
3 Class
|
(5,132,499)
|
|
Class
R
|
(115,361)
|
|
Class
T
|
(41)
|
|
Net
investment income
|
|
|
Class
A
|
|
(13,063,260)
|
Advisor
Class
|
|
(1,002,170)
|
Class
B
|
|
(3)
|
Class
C
|
|
(2,677,712)
|
Institutional
Class
|
|
(19,864,649)
|
Institutional
2 Class
|
|
(1,942,167)
|
Institutional
3 Class
|
|
(4,991,374)
|
Class
K
|
|
(372)
|
Class
R
|
|
(138,101)
|
Class
T
|
|
(89)
|
Total
distributions to shareholders (Note 2)
|
(59,549,502)
|
(43,679,897)
|
Increase
(decrease) in net assets from capital stock activity
|
(191,794,351)
|
108,184,111
|
Total
increase (decrease) in net assets
|
(219,879,216)
|
119,276,351
|
Net
assets at beginning of year
|
1,259,062,895
|
1,139,786,544
|
Net
assets at end of year
|
$1,039,183,679
|
$1,259,062,895
|
Undistributed
net investment income
|
$554,290
|
$1,097,711
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
33
|
Statement of Changes in Net Assets (continued)
|
Year
Ended
|
Year
Ended
|
|
July
31, 2019
|
July
31, 2018
|
|
Shares
|
Dollars
($)
|
Shares
|
Dollars
($)
|
Capital
stock activity
|
Class
A
|
|
|
|
|
Subscriptions
|
10,299,734
|
93,161,761
|
12,641,804
|
115,458,766
|
Distributions
reinvested
|
1,922,001
|
17,237,645
|
1,403,227
|
12,786,191
|
Redemptions
|
(18,372,165)
|
(164,950,901)
|
(12,280,798)
|
(111,871,783)
|
Net
increase (decrease)
|
(6,150,430)
|
(54,551,495)
|
1,764,233
|
16,373,174
|
Advisor
Class
|
|
|
|
|
Subscriptions
|
2,927,951
|
26,395,652
|
3,009,623
|
27,435,621
|
Distributions
reinvested
|
209,990
|
1,880,050
|
110,077
|
1,002,023
|
Redemptions
|
(3,706,867)
|
(33,212,519)
|
(1,259,609)
|
(11,466,711)
|
Net
increase (decrease)
|
(568,926)
|
(4,936,817)
|
1,860,091
|
16,970,933
|
Class
B
|
|
|
|
|
Redemptions
|
—
|
—
|
(1,103)
|
(9,347)
|
Net
decrease
|
—
|
—
|
(1,103)
|
(9,347)
|
Class
C
|
|
|
|
|
Subscriptions
|
2,105,660
|
19,054,852
|
2,389,024
|
21,809,582
|
Distributions
reinvested
|
353,436
|
3,169,094
|
269,197
|
2,453,263
|
Redemptions
|
(3,806,770)
|
(34,143,387)
|
(3,855,866)
|
(35,119,178)
|
Net
decrease
|
(1,347,674)
|
(11,919,441)
|
(1,197,645)
|
(10,856,333)
|
Institutional
Class
|
|
|
|
|
Subscriptions
|
35,261,796
|
317,230,155
|
37,836,960
|
344,841,828
|
Distributions
reinvested
|
2,771,465
|
24,819,973
|
1,574,276
|
14,327,562
|
Redemptions
|
(46,694,041)
|
(417,450,148)
|
(36,810,149)
|
(335,344,509)
|
Net
increase (decrease)
|
(8,660,780)
|
(75,400,020)
|
2,601,087
|
23,824,881
|
Institutional
2 Class
|
|
|
|
|
Subscriptions
|
5,347,105
|
48,738,693
|
10,434,962
|
95,751,899
|
Distributions
reinvested
|
419,368
|
3,780,971
|
211,902
|
1,941,325
|
Redemptions
|
(10,760,407)
|
(97,901,366)
|
(1,643,437)
|
(15,044,791)
|
Net
increase (decrease)
|
(4,993,934)
|
(45,381,702)
|
9,003,427
|
82,648,433
|
Institutional
3 Class
|
|
|
|
|
Subscriptions
|
3,719,493
|
33,464,411
|
1,341,487
|
12,212,884
|
Distributions
reinvested
|
571,523
|
5,129,106
|
547,878
|
4,990,764
|
Redemptions
|
(4,239,495)
|
(37,848,582)
|
(3,758,835)
|
(34,234,410)
|
Net
increase (decrease)
|
51,521
|
744,935
|
(1,869,470)
|
(17,030,762)
|
Class
K
|
|
|
|
|
Distributions
reinvested
|
—
|
—
|
33
|
307
|
Redemptions
|
—
|
—
|
(1,916)
|
(17,591)
|
Net
decrease
|
—
|
—
|
(1,883)
|
(17,284)
|
Class
R
|
|
|
|
|
Subscriptions
|
109,170
|
978,997
|
146,639
|
1,337,861
|
Distributions
reinvested
|
7,543
|
67,757
|
6,015
|
54,853
|
Redemptions
|
(155,529)
|
(1,394,161)
|
(561,817)
|
(5,112,298)
|
Net
decrease
|
(38,816)
|
(347,407)
|
(409,163)
|
(3,719,584)
|
Class
T
|
|
|
|
|
Redemptions
|
(271)
|
(2,404)
|
—
|
—
|
Net
decrease
|
(271)
|
(2,404)
|
—
|
—
|
Total
net increase (decrease)
|
(21,709,310)
|
(191,794,351)
|
11,749,574
|
108,184,111
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
34
|
Columbia Floating Rate Fund
| Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia
Floating Rate Fund | Annual Report 2019
|
35
|
The
following table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single share of a class held for the periods shown. Per share net investment income (loss) amounts are
calculated based on average shares outstanding during the period. Total return assumes reinvestment of all dividends and distributions, if any. Total return does not reflect payment of sales charges, if any. Total return and portfolio turnover are
not annualized for periods of less than one year. The portfolio turnover rate is calculated without regard to purchase and sales transactions of short-term instruments and certain derivatives, if any. If such transactions were included, the
Fund’s portfolio turnover rate may be higher.
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Total
distributions to
shareholders
|
Class
A
|
Year
Ended 7/31/2019
|
$9.15
|
0.42
|
(0.17)
|
0.25
|
(0.43)
|
(0.43)
|
Year
Ended 7/31/2018
|
$9.06
|
0.35
|
0.07
|
0.42
|
(0.33)
|
(0.33)
|
Year
Ended 7/31/2017
|
$8.89
|
0.33
|
0.17
|
0.50
|
(0.33)
|
(0.33)
|
Year
Ended 7/31/2016
|
$9.03
|
0.35
|
(0.14)
|
0.21
|
(0.35)
|
(0.35)
|
Year
Ended 7/31/2015
|
$9.24
|
0.35
|
(0.21)
|
0.14
|
(0.35)
|
(0.35)
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$9.14
|
0.44
|
(0.17)
|
0.27
|
(0.45)
|
(0.45)
|
Year
Ended 7/31/2018
|
$9.05
|
0.38
|
0.07
|
0.45
|
(0.36)
|
(0.36)
|
Year
Ended 7/31/2017
|
$8.87
|
0.35
|
0.19
|
0.54
|
(0.36)
|
(0.36)
|
Year
Ended 7/31/2016
|
$9.02
|
0.37
|
(0.14)
|
0.23
|
(0.38)
|
(0.38)
|
Year
Ended 7/31/2015
|
$9.22
|
0.37
|
(0.20)
|
0.17
|
(0.37)
|
(0.37)
|
Class
C
|
Year
Ended 7/31/2019
|
$9.15
|
0.35
|
(0.17)
|
0.18
|
(0.36)
|
(0.36)
|
Year
Ended 7/31/2018
|
$9.06
|
0.28
|
0.07
|
0.35
|
(0.26)
|
(0.26)
|
Year
Ended 7/31/2017
|
$8.89
|
0.26
|
0.18
|
0.44
|
(0.27)
|
(0.27)
|
Year
Ended 7/31/2016
|
$9.03
|
0.29
|
(0.14)
|
0.15
|
(0.29)
|
(0.29)
|
Year
Ended 7/31/2015
|
$9.24
|
0.28
|
(0.21)
|
0.07
|
(0.28)
|
(0.28)
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$9.14
|
0.44
|
(0.17)
|
0.27
|
(0.45)
|
(0.45)
|
Year
Ended 7/31/2018
|
$9.05
|
0.37
|
0.08
|
0.45
|
(0.36)
|
(0.36)
|
Year
Ended 7/31/2017
|
$8.88
|
0.34
|
0.19
|
0.53
|
(0.36)
|
(0.36)
|
Year
Ended 7/31/2016
|
$9.02
|
0.37
|
(0.13)
|
0.24
|
(0.38)
|
(0.38)
|
Year
Ended 7/31/2015
|
$9.23
|
0.37
|
(0.21)
|
0.16
|
(0.37)
|
(0.37)
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$9.19
|
0.44
|
(0.18)
|
0.26
|
(0.45)
|
(0.45)
|
Year
Ended 7/31/2018
|
$9.09
|
0.39
|
0.07
|
0.46
|
(0.36)
|
(0.36)
|
Year
Ended 7/31/2017
|
$8.92
|
0.35
|
0.18
|
0.53
|
(0.36)
|
(0.36)
|
Year
Ended 7/31/2016
|
$9.06
|
0.38
|
(0.14)
|
0.24
|
(0.38)
|
(0.38)
|
Year
Ended 7/31/2015
|
$9.27
|
0.38
|
(0.21)
|
0.17
|
(0.38)
|
(0.38)
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
36
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Class
A
|
Year
Ended 7/31/2019
|
$8.97
|
2.79%
|
1.02%
|
1.02%
|
4.68%
|
32%
|
$323,191
|
Year
Ended 7/31/2018
|
$9.15
|
4.75%
|
1.04%
|
1.03%
(c)
|
3.85%
|
67%
|
$386,052
|
Year
Ended 7/31/2017
|
$9.06
|
5.74%
|
1.05%
|
1.03%
|
3.58%
|
76%
|
$366,211
|
Year
Ended 7/31/2016
|
$8.89
|
2.53%
|
1.08%
|
1.04%
(c)
|
4.03%
|
25%
|
$454,902
|
Year
Ended 7/31/2015
|
$9.03
|
1.58%
|
1.07%
|
1.05%
(c)
|
3.87%
|
36%
|
$556,853
|
Advisor
Class
|
Year
Ended 7/31/2019
|
$8.96
|
3.05%
|
0.77%
|
0.77%
|
4.95%
|
32%
|
$29,255
|
Year
Ended 7/31/2018
|
$9.14
|
5.01%
|
0.80%
|
0.78%
(c)
|
4.14%
|
67%
|
$35,048
|
Year
Ended 7/31/2017
|
$9.05
|
6.13%
|
0.80%
|
0.78%
|
3.84%
|
76%
|
$17,868
|
Year
Ended 7/31/2016
|
$8.87
|
2.66%
|
0.84%
|
0.79%
(c)
|
4.30%
|
25%
|
$18,675
|
Year
Ended 7/31/2015
|
$9.02
|
1.94%
|
0.82%
|
0.80%
(c)
|
4.12%
|
36%
|
$11,219
|
Class
C
|
Year
Ended 7/31/2019
|
$8.97
|
2.02%
|
1.77%
|
1.77%
|
3.93%
|
32%
|
$75,406
|
Year
Ended 7/31/2018
|
$9.15
|
3.96%
|
1.79%
|
1.78%
(c)
|
3.09%
|
67%
|
$89,274
|
Year
Ended 7/31/2017
|
$9.06
|
4.96%
|
1.80%
|
1.78%
|
2.83%
|
76%
|
$99,233
|
Year
Ended 7/31/2016
|
$8.89
|
1.76%
|
1.84%
|
1.79%
(c)
|
3.28%
|
25%
|
$91,734
|
Year
Ended 7/31/2015
|
$9.03
|
0.83%
|
1.82%
|
1.80%
(c)
|
3.12%
|
36%
|
$100,881
|
Institutional
Class
|
Year
Ended 7/31/2019
|
$8.96
|
3.05%
|
0.77%
|
0.77%
|
4.93%
|
32%
|
$446,512
|
Year
Ended 7/31/2018
|
$9.14
|
5.01%
|
0.79%
|
0.78%
(c)
|
4.09%
|
67%
|
$534,756
|
Year
Ended 7/31/2017
|
$9.05
|
6.01%
|
0.80%
|
0.78%
|
3.82%
|
76%
|
$505,884
|
Year
Ended 7/31/2016
|
$8.88
|
2.78%
|
0.84%
|
0.79%
(c)
|
4.28%
|
25%
|
$122,746
|
Year
Ended 7/31/2015
|
$9.02
|
1.83%
|
0.82%
|
0.80%
(c)
|
4.12%
|
36%
|
$105,935
|
Institutional
2 Class
|
Year
Ended 7/31/2019
|
$9.00
|
2.98%
|
0.74%
|
0.74%
|
4.91%
|
32%
|
$56,376
|
Year
Ended 7/31/2018
|
$9.19
|
5.16%
|
0.76%
|
0.74%
|
4.23%
|
67%
|
$103,392
|
Year
Ended 7/31/2017
|
$9.09
|
6.04%
|
0.75%
|
0.74%
|
3.86%
|
76%
|
$20,485
|
Year
Ended 7/31/2016
|
$8.92
|
2.84%
|
0.75%
|
0.74%
|
4.27%
|
25%
|
$14,702
|
Year
Ended 7/31/2015
|
$9.06
|
1.91%
|
0.74%
|
0.74%
|
4.19%
|
36%
|
$46,248
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
37
|
Financial Highlights (continued)
|
Net
asset value,
beginning of
period
|
Net
investment
income
|
Net
realized
and
unrealized
gain (loss)
|
Total
from
investment
operations
|
Distributions
from net
investment
income
|
Total
distributions to
shareholders
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$9.15
|
0.45
|
(0.17)
|
0.28
|
(0.46)
|
(0.46)
|
Year
Ended 7/31/2018
|
$9.06
|
0.38
|
0.07
|
0.45
|
(0.36)
|
(0.36)
|
Year
Ended 7/31/2017
|
$8.89
|
0.35
|
0.18
|
0.53
|
(0.36)
|
(0.36)
|
Year
Ended 7/31/2016
|
$9.03
|
0.38
|
(0.13)
|
0.25
|
(0.39)
|
(0.39)
|
Year
Ended 7/31/2015(d)
|
$9.12
|
0.06
|
(0.09)
|
(0.03)
|
(0.06)
|
(0.06)
|
Class
R
|
Year
Ended 7/31/2019
|
$9.16
|
0.40
|
(0.18)
|
0.22
|
(0.40)
|
(0.40)
|
Year
Ended 7/31/2018
|
$9.07
|
0.32
|
0.08
|
0.40
|
(0.31)
|
(0.31)
|
Year
Ended 7/31/2017
|
$8.90
|
0.30
|
0.18
|
0.48
|
(0.31)
|
(0.31)
|
Year
Ended 7/31/2016
|
$9.04
|
0.33
|
(0.14)
|
0.19
|
(0.33)
|
(0.33)
|
Year
Ended 7/31/2015
|
$9.25
|
0.33
|
(0.21)
|
0.12
|
(0.33)
|
(0.33)
|
Notes
to Financial Highlights
|
(a)
|
In
addition to the fees and expenses that the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of any other funds in which it invests. Such indirect expenses are not included in the Fund’s reported expense
ratios.
|
(b)
|
Total net
expenses include the impact of certain fee waivers/expense reimbursements made by the Investment Manager and certain of its affiliates, if applicable.
|
(c)
|
The
benefits derived from expense reductions had an impact of less than 0.01%.
|
(d)
|
Institutional
3 Class shares commenced operations on June 1, 2015. Per share data and total return reflect activity from that date.
|
(e)
|
Annualized.
|
The accompanying Notes to Financial Statements are an
integral part of this statement.
38
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Financial Highlights (continued)
|
Net
asset
value,
end of
period
|
Total
return
|
Total
gross
expense
ratio to
average
net assets(a)
|
Total
net
expense
ratio to
average
net assets(a),(b)
|
Net
investment
income
ratio to
average
net assets
|
Portfolio
turnover
|
Net
assets,
end of
period
(000’s)
|
Institutional
3 Class
|
Year
Ended 7/31/2019
|
$8.97
|
3.13%
|
0.69%
|
0.69%
|
5.02%
|
32%
|
$106,005
|
Year
Ended 7/31/2018
|
$9.15
|
5.10%
|
0.70%
|
0.69%
|
4.18%
|
67%
|
$107,695
|
Year
Ended 7/31/2017
|
$9.06
|
6.11%
|
0.70%
|
0.70%
|
3.82%
|
76%
|
$123,550
|
Year
Ended 7/31/2016
|
$8.89
|
2.88%
|
0.70%
|
0.68%
|
4.39%
|
25%
|
$10
|
Year
Ended 7/31/2015(d)
|
$9.03
|
(0.28%)
|
0.70%
(e)
|
0.70%
(e)
|
4.13%
(e)
|
36%
|
$10
|
Class
R
|
Year
Ended 7/31/2019
|
$8.98
|
2.54%
|
1.27%
|
1.27%
|
4.42%
|
32%
|
$2,439
|
Year
Ended 7/31/2018
|
$9.16
|
4.48%
|
1.29%
|
1.28%
(c)
|
3.53%
|
67%
|
$2,844
|
Year
Ended 7/31/2017
|
$9.07
|
5.48%
|
1.30%
|
1.28%
|
3.33%
|
76%
|
$6,526
|
Year
Ended 7/31/2016
|
$8.90
|
2.27%
|
1.34%
|
1.29%
(c)
|
3.80%
|
25%
|
$6,725
|
Year
Ended 7/31/2015
|
$9.04
|
1.33%
|
1.33%
|
1.30%
(c)
|
3.64%
|
36%
|
$4,030
|
The accompanying Notes to Financial Statements are an integral part of this
statement.
Columbia
Floating Rate Fund | Annual Report 2019
|
39
|
Notes to Financial Statements
July 31, 2019
Note 1. Organization
Columbia Floating Rate Fund (the Fund), a series of Columbia
Funds Series Trust II (the Trust), is a diversified fund. The Trust is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company organized as a Massachusetts business trust.
Fund shares
The Trust may issue an unlimited number of shares (without par
value). The Fund offers each of the share classes listed in the Statement of Assets and Liabilities. Although all share classes generally have identical voting, dividend and liquidation rights, each share class votes separately when required by the
Trust’s organizational documents or by law. Each share class has its own expense and sales charge structure. Different share classes may have different minimum initial investment amounts and pay different distribution amounts to the extent the
expenses of distributing such share classes vary. Distributions to shareholders in a liquidation will be proportional to the net asset value of each share class.
As described in the Fund’s prospectus, Class A and Class
C shares are offered to the general public for investment. Advisor Class, Institutional Class, Institutional 2 Class, Institutional 3 Class and Class R shares are available for purchase through authorized investment professionals to omnibus
retirement plans or to institutional and to certain other investors as also described in the Fund’s prospectus. Class C shares automatically convert to Class A shares after 10 years. Effective December 14, 2018, Class T shares merged, in a
tax-free transaction, into Class A shares of the Fund and are no longer offered for sale.
Note 2. Summary of significant accounting
policies
Basis of preparation
The Fund is an investment company that applies the accounting
and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared
in accordance with U.S. generally accepted accounting principles (GAAP), which requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies
followed by the Fund in the preparation of its financial statements.
Security valuation
All equity securities are valued at the close of business of
the New York Stock Exchange. Equity securities are valued at the official closing price on the principal exchange or market on which they trade. Unlisted securities or listed securities for which there were no sales during the day are valued at the
mean of the latest quoted bid and ask prices on such exchanges or markets.
Debt securities generally are valued by pricing services
approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take into account, as applicable, factors such as yield,
quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for which quotations are not readily available or not believed to be reflective of market
value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or less are valued primarily at amortized cost value, unless this method results in a valuation that management believes
does not approximate market value.
Senior loan
securities for which reliable market quotations are readily available are generally valued by pricing services at the average of the bids received.
Foreign equity securities are valued based on the closing
price on the foreign exchange in which such securities are primarily traded. If any foreign equity security closing prices are not readily available, the securities are valued at the mean of the latest quoted bid and ask prices on such exchanges or
markets. Foreign currency exchange rates are determined at the scheduled
40
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
closing time of the
New York Stock Exchange. Many securities markets and exchanges outside the U.S. close prior to the close of the New York Stock Exchange; therefore, the closing prices for securities in such markets or on such exchanges may not fully reflect events
that occur after such close but before the close of the New York Stock Exchange. In those situations, foreign securities will be fair valued pursuant to a policy adopted by the Board of Trustees, including, if available, utilizing a third party
pricing service to determine these fair values. The third-party pricing service takes into account multiple factors, including, but not limited to, movements in the U.S. securities markets, certain depositary receipts, futures contracts and foreign
exchange rates that have occurred subsequent to the close of the foreign exchange or market, to determine a good faith estimate that reasonably reflects the current market conditions as of the close of the New York Stock Exchange. The fair value of
a security is likely to be different from the quoted or published price, if available.
Investments in open-end investment companies, including money
market funds, are valued at their latest net asset value.
Investments for which market quotations are not readily
available, or that have quotations which management believes are not reflective of market value or reliable, are valued at fair value as determined in good faith under procedures approved by and under the general supervision of the Board of
Trustees. If a security or class of securities (such as foreign securities) is valued at fair value, such value is likely to be different from the quoted or published price for the security.
The determination of fair value often requires significant
judgment. To determine fair value, management may use assumptions including but not limited to future cash flows and estimated risk premiums. Multiple inputs from various sources may be used to determine fair value.
GAAP requires disclosure regarding the inputs and valuation
techniques used to measure fair value and any changes in valuation inputs or techniques. In addition, investments shall be disclosed by major category. This information is disclosed following the Fund’s Portfolio of Investments.
Investments in senior loans
The Fund may invest in senior loan participations and
assignments of all or a portion of a loan. When the Fund purchases a senior loan participation, the Fund typically enters into a contractual relationship with the lender or third party selling such participations (Selling Participant), but not the
borrower, and assumes the credit risk of the borrower, Selling Participant and any other parties positioned between the Fund and the borrower. In addition, the Fund may not directly benefit from the collateral supporting the senior loan that it has
purchased from the Selling Participant. In contrast, when the Fund purchases an assignment of a senior loan, the Fund typically has direct rights against the borrower; provided, however, that the Fund’s rights may be more limited than the
lender from which it acquired the assignment and the Fund may be able to enforce its rights only through an administrative agent. Although certain senior loan participations or assignments are secured by collateral, the Fund could experience delays
or limitations in realizing such collateral or have its interest subordinated to other indebtedness of the obligor. In the event that the administrator or collateral agent of a loan becomes insolvent or enters into receivership or bankruptcy, the
Fund may incur costs and delays in realizing payment or may suffer a loss of principal and/or interest. The risk of loss is greater for unsecured or subordinated loans. In addition, senior loan participations and assignments are vulnerable to
market, economic or other conditions or events that may reduce the demand for loan participations and assignments and certain loan participations and assignments which were liquid when purchased, may become illiquid.
The Fund may enter into senior loan participations and
assignments where all or a portion of the loan may be unfunded. The Fund is obligated to fund these commitments at the borrower’s discretion. These commitments, if any, are generally traded and priced in the same manner as other senior loan
securities and are disclosed as unfunded senior loan commitments in the Fund’s Portfolio of Investments with a corresponding payable for investments purchased. The Fund designates cash or liquid securities to cover these commitments.
Delayed delivery securities
The Fund may trade securities on other than normal settlement
terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may fail to deliver, which could cause the Fund to subsequently
invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
Columbia
Floating Rate Fund | Annual Report 2019
|
41
|
Notes to Financial Statements (continued)
July 31, 2019
Security transactions
Security transactions are accounted for on the trade date.
Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
The trade date for senior loans purchased in the primary
market is the date on which the loan is allocated. The trade date for senior loans purchased in the secondary market is the date on which the transaction is entered into.
Income recognition
Interest income is recorded on an accrual basis. Market
premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted.
The Fund may place a debt security on non-accrual status and
reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security is removed from non-accrual status when the issuer
resumes interest payments or when collectibility of interest is reasonably assured.
Corporate actions and dividend income are generally recorded
net of any non-reclaimable tax withholdings, on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities.
The Fund may receive distributions from holdings in equity
securities, business development companies (BDCs), exchange-traded funds (ETFs), limited partnerships (LPs), other regulated investment companies (RICs), and real estate investment trusts (REITs), which report information on the tax character of
their distributions annually. These distributions are allocated to dividend income, capital gain and return of capital based on actual information reported. Return of capital is recorded as a reduction of the cost basis of securities held. If the
Fund no longer owns the applicable securities, return of capital is recorded as a realized gain. With respect to REITs, to the extent actual information has not yet been reported, estimates for return of capital are made by the Fund’s
management. Management’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs, which could result in a proportionate change in return of capital to shareholders.
Awards from class action litigation are recorded as a
reduction of cost basis if the Fund still owns the applicable securities on the payment date. If the Fund no longer owns the applicable securities, the proceeds are recorded as realized gains.
The value of additional securities received as an income
payment through a payment in kind, if any, is recorded as interest income and increases the cost basis of such securities.
The Fund may receive other income from senior loans, including
amendment fees, consent fees and commitment fees. These fees are recorded as income when received by the Fund. These amounts are included in Interest Income in the Statement of Operations.
Expenses
General expenses of the Trust are allocated to the Fund and
other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are charged to the Fund. Expenses directly attributable to a
specific class of shares are charged to that share class.
Determination of class net asset value
All income, expenses (other than class-specific expenses,
which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on the relative net assets of each class, for purposes of
determining the net asset value of each class.
42
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
Federal income tax status
The Fund intends to qualify each year as a regulated
investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its tax year, and as such will not be subject to federal
income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other amounts, if any, such that the Fund should not be subject to federal excise tax.
Therefore, no federal income or excise tax provision is recorded.
Distributions to shareholders
Distributions from net investment income, if any, are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s organizational documents and, in some
cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition, certain of the Fund’s contracts with its service providers contain
general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting
the likelihood of any such claims.
Recent accounting
pronouncements
Accounting Standards Update 2017-08
Premium Amortization on Purchased Callable Debt Securities
In March 2017, the Financial Accounting Standards Board issued
Accounting Standards Update (ASU) No. 2017-08 Premium Amortization on Purchased Callable Debt Securities. ASU No. 2017-08 updates the accounting standards to shorten the amortization period for certain purchased callable debt securities, held at a
premium, to be amortized to the earliest call date. The update applies to securities with explicit, noncontingent call features that are callable at fixed prices and on preset dates. The standard is effective for annual periods beginning after
December 15, 2018 and interim periods within those fiscal years. Management does not expect the implementation of this guidance to have a material impact on the financial statement amounts and footnote disclosures.
Accounting Standards Update 2018-13 Disclosure Framework -
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the Financial Accounting Standards Board
issued Accounting Standards Update (ASU) No. 2018-13 Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The standard is effective for annual periods beginning after December 15, 2019 and interim periods within
those fiscal years, with early adoption permitted. After evaluation, Management determined to adopt the ASU effective for periods ending July 31, 2019 and all subsequent periods. As a result of the amendments, management implemented disclosure
changes which include removal of the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, removal of the policy for the timing of transfers between levels, removal of the description of the level 3 valuation
processes, as well as modifications to the measurement uncertainty disclosure.
Disclosure Update and Simplification
In September 2018, the Securities and Exchange Commission
(SEC) released Final Rule 33-10532, Disclosure Update and Simplification, which amends certain financial statement disclosure requirements that the SEC determined to be redundant, outdated, or superseded in light of other SEC disclosure
requirements, GAAP, or changes in the information environment. As a result of the amendments, management implemented disclosure changes which included removing the components of distributable earnings presented on the Statement of Assets and
Liabilities and combining income and gain distributions paid to shareholders as presented on the Statement of Changes in Net Assets. Any values presented to meet prior year requirements were left unchanged. The amendments had no effect on the
Fund’s net assets or results of operation.
Columbia
Floating Rate Fund | Annual Report 2019
|
43
|
Notes to Financial Statements (continued)
July 31, 2019
Note 3. Fees and other transactions with
affiliates
Management services fees
The Fund has entered into a Management Agreement with Columbia
Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the Investment Manager provides the Fund with investment research and
advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the Fund’s daily net assets that declines from 0.66% to 0.40% as the Fund’s net assets increase. The
effective management services fee rate for the year ended July 31, 2019 was 0.64% of the Fund’s average daily net assets.
Compensation of board members
Members of the Board of Trustees who are not officers or
employees of the Investment Manager or Ameriprise Financial are compensated for their services to the Fund as disclosed in the Statement of Operations. Under a Deferred Compensation Plan (the Deferred Plan), these members of the Board of Trustees
may elect to defer payment of up to 100% of their compensation. Deferred amounts are treated as though equivalent dollar amounts had been invested in shares of certain funds managed by the Investment Manager. The Fund’s liability for these
amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Deferred Plan. All amounts payable under the Deferred Plan constitute a general unsecured obligation of the Fund.
Compensation of Chief Compliance Officer
The Board of Trustees has appointed a Chief Compliance Officer
to the Fund in accordance with federal securities regulations. As disclosed in the Statement of Operations, a portion of the Chief Compliance Officer’s total compensation is allocated to the Fund, along with other allocations to affiliated
registered investment companies managed by the Investment Manager and its affiliates, based on relative net assets.
Transfer agency fees
Under a Transfer and Dividend Disbursing Agent Agreement,
Columbia Management Investment Services Corp. (the Transfer Agent), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, is responsible for providing transfer agency services to the Fund. The Transfer Agent
has contracted with DST Asset Manager Solutions, Inc. (DST) to serve as sub-transfer agent. The Transfer Agent pays the fees of DST for services as sub-transfer agent and DST is not entitled to reimbursement for such fees from the Fund (with the
exception of out-of-pocket fees).
The Fund pays the
Transfer Agent a monthly transfer agency fee based on the number or the average value of accounts, depending on the type of account. In addition, the Fund pays the Transfer Agent a fee for shareholder services based on the number of accounts or on a
percentage of the average aggregate value of the Fund’s shares maintained in omnibus accounts up to the lesser of the amount charged by the financial intermediary or a cap established by the Board of Trustees from time to time.
The Transfer Agent also receives compensation from the Fund
for various shareholder services and reimbursements for certain out-of-pocket fees. Total transfer agency fees for Institutional 2 Class and Institutional 3 Class shares are subject to an annual limitation of not more than 0.07% and 0.02%,
respectively, of the average daily net assets attributable to each share class.
44
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
For
the year ended July 31, 2019, the Fund’s effective transfer agency fee rates as a percentage of average daily net assets of each class were as follows:
|
Effective
rate (%)
|
Class
A
|
0.09
|
Advisor
Class
|
0.09
|
Class
C
|
0.09
|
Institutional
Class
|
0.09
|
Institutional
2 Class
|
0.06
|
Institutional
3 Class
|
0.01
|
Class
R
|
0.09
|
Class
T
|
0.06
(a)
|
An annual minimum account balance
fee of $20 may apply to certain accounts with a value below the applicable share class’s initial minimum investment requirements to reduce the impact of small accounts on transfer agency fees. These minimum account balance fees are remitted to
the Fund and recorded as part of expense reductions in the Statement of Operations. For the year ended July 31, 2019, no minimum account balance fees were charged by the Fund.
Distribution and service fees
The Fund has entered into an agreement with Columbia
Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder services. Under a Plan and Agreement of Distribution, the Fund
pays a fee at the maximum annual rates of up to 0.25%, 1.00%, 0.50% and 0.25% of the Fund’s average daily net assets attributable to Class A, Class C, Class R and Class T shares, respectively. For Class C shares, of the 1.00% fee, up to 0.75%
can be reimbursed for distribution expenses and up to an additional 0.25% can be reimbursed for shareholder servicing expenses. For Class R shares, of the 0.50% fee, up to 0.25% can be reimbursed for shareholder servicing expenses. For Class T
shares, of the 0.25% fee, up to 0.25% can be reimbursed for distribution and/or shareholder servicing expenses. As a result of all Class T shares of the Fund being redeemed or converted to Class A shares, December 14, 2018 was the last day the Fund
paid a distribution and shareholder services fee for Class T shares.
The amount of distribution and shareholder services expenses
incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $866,000 for Class C shares. This amount is based on the most recent information available as of June 30, 2019, and may be recovered from future payments
under the distribution plan or CDSCs. To the extent the unreimbursed expense has been fully recovered, the distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
Sales charges, including front-end charges and CDSCs, received
by the Distributor for distributing Fund shares for the year ended July 31, 2019, if any, are listed below:
|
Front
End (%)
|
CDSC
(%)
|
Amount
($)
|
Class
A
|
3.00
|
0.50 - 1.00
(a)
|
355,979
|
Class
C
|
—
|
1.00
(b)
|
27,495
|
Class
T
|
2.50
|
—
|
—
|
(a)
|
This
charge is imposed on certain investments of between $1 million and $50 million redeemed within 18 months after purchase, as follows: 1.00% if redeemed within 12 months after 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 12 months after purchase, with certain limited exceptions.
|
The Fund’s other share classes are not subject to sales
charges.
Columbia
Floating Rate Fund | Annual Report 2019
|
45
|
Notes to Financial Statements (continued)
July 31, 2019
Expenses waived/reimbursed by the Investment Manager and its
affiliates
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) for the period(s) disclosed below, unless sooner terminated at the sole discretion of the Board of Trustees, 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 following annual rate(s) as a percentage of the
class’ average daily net assets:
|
December
1, 2018
through
November 30, 2019
|
Prior
to
December 1, 2018
|
Class
A
|
1.03%
|
1.03%
|
Advisor
Class
|
0.78
|
0.78
|
Class
C
|
1.78
|
1.78
|
Institutional
Class
|
0.78
|
0.78
|
Institutional
2 Class
|
0.75
|
0.74
|
Institutional
3 Class
|
0.70
|
0.69
|
Class
R
|
1.28
|
1.28
|
Under the agreement governing
these fee waivers and/or expense reimbursement arrangements, the following fees and expenses are excluded from the waiver/reimbursement commitment, and therefore will be paid by the Fund, if applicable: taxes (including foreign transaction taxes),
expenses associated with investments in affiliated and non-affiliated pooled investment vehicles (including mutual funds and exchange-traded funds), 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, infrequent and/or unusual expenses and any other expenses the exclusion of which is
specifically approved by the Board of Trustees. This agreement may be modified or amended only with approval from the Investment Manager, certain of its affiliates and the Fund. In addition to the contractual agreement, the Investment Manager and
certain of its affiliates have voluntarily agreed to waive fees and/or reimburse Fund expenses (excluding certain fees and expenses described above) so that Fund level expenses (expenses directly attributable to the Fund and not to a specific share
class) are waived proportionately across all share classes, but the Fund’s net operating expenses shall not exceed the contractual annual rates listed in the table above. This arrangement may be revised or discontinued at any time. Any fees
waived and/or expenses reimbursed under the expense reimbursement arrangements described above are not recoverable by the Investment Manager or its affiliates in future periods.
Note 4. Federal tax information
The timing and character of income and capital gain
distributions are determined in accordance with income tax regulations, which may differ from GAAP because of temporary or permanent book to tax differences.
At July 31, 2019, these differences were primarily due to
differing treatment for deferral/reversal of wash sale losses, capital loss carryforwards, trustees’ deferred compensation, distributions, principal and/or interest from fixed income securities and investments in partnerships. To the extent
these differences were permanent, reclassifications were made among the components of the Fund’s net assets. Temporary differences do not require reclassifications.
The following reclassifications were made:
Undistributed
net
investment
income ($)
|
Accumulated
net realized
(loss) ($)
|
Paid
in
capital ($)
|
142,347
|
(142,347)
|
—
|
Net investment income (loss) and
net realized gains (losses), as disclosed in the Statement of Operations, and net assets were not affected by this reclassification.
46
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
The
tax character of distributions paid during the years indicated was as follows:
Year
Ended July 31, 2019
|
Year
Ended July 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total
($)
|
59,549,502
|
—
|
59,549,502
|
43,679,897
|
—
|
43,679,897
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At July 31, 2019, the components of distributable earnings on
a tax basis were as follows:
Undistributed
ordinary income ($)
|
Undistributed
long-term
capital gains ($)
|
Capital
loss
carryforwards ($)
|
Net
unrealized
(depreciation) ($)
|
5,094,870
|
—
|
(20,953,120)
|
(17,853,387)
|
At July 31, 2019, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
Federal
tax cost ($)
|
Gross
unrealized
appreciation ($)
|
Gross
unrealized
(depreciation) ($)
|
Net
unrealized
(depreciation) ($)
|
1,049,263,258
|
9,237,900
|
(27,091,287)
|
(17,853,387)
|
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
The following capital loss carryforwards, determined at July
31, 2019, may be available to reduce taxable income arising from future net realized gains on investments, if any, to the extent permitted by the Internal Revenue Code. Capital loss carryforwards with no expiration are required to be utilized prior
to any capital losses which carry an expiration date. As a result of this ordering rule, capital loss carryforwards which carry an expiration date may be more likely to expire unused. In addition, for the year ended July 31, 2019, capital loss
carryforwards utilized and expired unused, if any, were as follows:
No
expiration
short-term ($)
|
No
expiration
long-term ($)
|
Total
($)
|
Utilized
($)
|
Expired
($)
|
1,262,368
|
19,690,752
|
20,953,120
|
—
|
—
|
Management of the Fund has
concluded that there are no significant uncertain tax positions in the Fund that would require recognition in the financial statements. However, management’s conclusion may be subject to review and adjustment at a later date based on factors
including, but not limited to, new tax laws, regulations, and administrative interpretations (including relevant court decisions). Generally, the Fund’s federal tax returns for the prior three fiscal years remain subject to examination by the
Internal Revenue Service.
Note 5. Portfolio
information
The cost of purchases and proceeds from
sales of securities, excluding short-term investments and derivatives, if any, aggregated to $383,038,642 and $547,258,078, respectively, for the year ended July 31, 2019. The amount of purchase and sale activity impacts the portfolio turnover rate
reported in the Financial Highlights.
Note
6. Affiliated money market fund
The Fund invests
in Columbia Short-Term Cash Fund, an affiliated money market fund established for the exclusive use by the Fund and other affiliated funds (the Affiliated MMF). The income earned by the Fund from such investments is included as Dividends -
affiliated issuers in the Statement of Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of the Affiliated MMF. The Affiliated MMF prices its shares with a floating net asset value. In addition, the
Board of Trustees of the Affiliated MMF may impose a fee on redemptions (sometimes referred to as a liquidity fee) or temporarily suspend redemptions (sometimes referred to as imposing a redemption gate) in the event its liquidity falls below
regulatory limits.
Columbia
Floating Rate Fund | Annual Report 2019
|
47
|
Notes to Financial Statements (continued)
July 31, 2019
Note 7. Interfund lending
Pursuant to an exemptive order granted by the Securities and
Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and, except for closed-end funds and money market funds, borrow money
directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject to certain restrictions.
Interfund loans are subject to the risk that the borrowing
fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject to conditions intended to mitigate conflicts of interest
arising from the Investment Manager’s relationship with each Participating Fund.
The Fund’s activity in the Interfund Program during the
year ended July 31, 2019 was as follows:
Borrower
or lender
|
Average
loan
balance ($)
|
Weighted
average
interest rate (%)
|
Days
outstanding
|
Lender
|
800,000
|
2.82
|
13
|
Interest income earned by the Fund
is recorded as Interfund lending in the Statement of Operations. The Fund had no outstanding interfund loans at July 31, 2019.
Note 8. Line of credit
The Fund has access to a revolving credit facility with a
syndicate of banks led by Citibank, N.A., HSBC Bank USA, N.A. and JPMorgan Chase Bank, N.A. whereby the Fund may borrow for the temporary funding of shareholder redemptions or for other temporary or emergency purposes. The credit facility, which is
a collective agreement between the Fund and certain other funds managed by the Investment Manager or an affiliated investment manager, severally and not jointly, permits collective borrowings up to $1 billion. Interest is charged to each
participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit
facility matures no later than 60 days after the date of borrowing. The Fund also pays a commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other
expenses in the Statement of Operations. This agreement expires annually in December unless extended or renewed.
The Fund had no borrowings during the year ended July 31,
2019.
Note 9. Significant risks
Credit risk
Credit risk is the risk that the value of debt securities in
the Fund’s portfolio may decline because the issuer 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 debt instruments to indicate their credit risk. Lower rated or unrated debt instruments held by the Fund may present increased credit risk as compared to higher-rated debt instruments.
Floating rate loan risk
Floating rate loans are generally subject to legal or
contractual restrictions on resale, may trade infrequently on the secondary market, may trade only in the over-the-counter market and are typically subject to extended settlement periods. Each of these factors may result in increased liquidity risk
and impaired value when the Fund needs to liquidate such loans. Additionally, 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. Certain floating rate and other loans
may not be fully collateralized and may decline in value. Because rates on certain floating rate loans reset only periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can cause fluctuations in the
Fund’s NAV.
48
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Notes to Financial Statements (continued)
July 31, 2019
High-yield investments risk
Securities and other debt instruments held by the Fund that
are rated below investment grade (commonly called "high-yield" or "junk" bonds) and unrated debt instruments 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 debt instruments. In addition, these investments have greater price fluctuations, are less liquid and are more likely to experience a default than higher-rated debt instruments. High-yield debt instruments 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 interest rates may also affect the liquidity of
the Fund’s investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, 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. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative impact on the Fund’s performance and net asset value per share. In general, the longer the maturity or duration of a
debt security, the greater its sensitivity to changes in interest rates.
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. Changing regulatory, market or other conditions or environments (for example, the interest rate or credit environments) may 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. 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. A less liquid market can lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share,
including, for example, if the Fund is forced to sell securities in a down market.
Shareholder concentration risk
At July 31, 2019, affiliated shareholders of record owned
51.2% of the outstanding shares of the Fund in one or more accounts. Subscription and redemption activity by concentrated accounts may have a significant effect on the operations of the Fund. In the case of a large redemption, the Fund may be forced
to sell investments at inopportune times, including its liquid positions, which may result in Fund losses and the Fund holding a higher percentage of less liquid positions. Large redemptions could result in decreased economies of scale and increased
operating expenses for non-redeeming Fund shareholders.
Note 10. Subsequent events
Management has evaluated the events and transactions that
have occurred through the date the financial statements were issued and noted no items requiring adjustment of the financial statements or additional disclosure.
Note 11. Information regarding pending and settled
legal proceedings
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. Ameriprise Financial is required to make quarterly (10-Q), annual (10-K) and, as necessary,
8-K filings with the Securities and Exchange Commission (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.
Columbia
Floating Rate Fund | Annual Report 2019
|
49
|
Notes to Financial Statements (continued)
July 31, 2019
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 Fund. Further, although we believe proceedings are not 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, 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.
50
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Report of Independent Registered Public Accounting Firm
To the
Board of Trustees of Columbia Funds Series Trust II and Shareholders of Columbia Floating Rate Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of Columbia Floating Rate Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of July 31, 2019, the related statement of operations for the
year ended July 31, 2019, the statement of changes in net assets for each of the two years in the period ended July 31, 2019, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred
to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of July 31, 2019, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period ended July 31, 2019 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of
America.
Basis for Opinion
These financial statements are the responsibility of the
Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in
accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks
of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2019 by correspondence with the custodian, transfer agent, agent banks and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Minneapolis, Minnesota
September 20, 2019
We have served as the auditor of one or more investment
companies within the Columbia Funds Complex since 1977.
Columbia
Floating Rate Fund | Annual Report 2019
|
51
|
Federal Income Tax Information
(Unaudited)
The Fund hereby designates the following tax attributes for
the fiscal year ended July 31, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
Qualified
dividend
income
|
Dividends
received
deduction
|
0.49%
|
0.29%
|
Qualified dividend income. For
taxable, non-corporate shareholders, the percentage of ordinary income distributed during the fiscal year that represents qualified dividend income subject to reduced tax rates.
Dividends received deduction. The percentage of ordinary
income distributed during the fiscal year that qualifies for the corporate dividends received deduction.
52
|
Columbia Floating Rate Fund
| Annual Report 2019
|
The
Board oversees the Fund’s operations and 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 Fund’s Trustees as
of the printing of this report, including their principal occupations during the past five years, although specific titles for individuals may have varied over the period. Under current Board policy, Trustees not affiliated with the Investment
Manager generally may serve through the end of the calendar year in which they reach the mandatory retirement age established by the Board.
Independent trustees
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
George
S. Batejan
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1953
|
Trustee
since 1/17
|
Executive
Vice President, Global Head of Technology and Operations, Janus Capital Group, Inc., 2010-2016
|
121
|
Former
Chairman of the Board, NICSA (National Investment Company Services Association) (Executive Committee, Nominating Committee and Governance Committee), 2014-2016; former Director, Intech Investment Management, 2011-2016; former Board Member, Metro
Denver Chamber of Commerce, 2015-2016; former Advisory Board Member, University of Colorado Business School, 2015-2018
|
Kathleen
Blatz
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 1/06 for RiverSource Funds and since 6/11 for Nations Funds
|
Attorney;
specializing in arbitration and mediation; Chief Justice, Minnesota Supreme Court, 1998-2006; Associate Justice, Minnesota Supreme Court, 1996-1998; Fourth Judicial District Court Judge, Hennepin County, 1994-1996; Attorney in private practice and
public service, 1984-1993; State Representative, Minnesota House of Representatives, 1979-1993, which included service on the Tax and Financial Institutions and Insurance Committees; Member and Interim Chair, Minnesota Sports Facilities Authority,
January 2017-July 2017; Interim President and Chief Executive Officer, Blue Cross and Blue Shield of Minnesota (health care insurance), February-July 2018
|
121
|
Trustee,
BlueCross BlueShield of Minnesota since 2009 (Chair of the Business Development Committee, 2014-2017; Chair of the Governance Committee since 2017); Chair of the Robina Foundation since August 2013; former Member and Chair of the Board, Minnesota
Sports Facilities Authority, January 2017-July 2017
|
Edward
J. Boudreau, Jr.
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1944
|
Chair
of the Board since 1/18; Trustee since 6/11 for RiverSource Funds and since 1/05 for Nations Funds
|
Managing
Director, E.J. Boudreau & Associates (consulting) since 2000; FINRA Industry Arbitrator, 2002-present; Chairman and Chief Executive Officer, John Hancock Investments (asset management), Chairman and Interested Trustee for open-end and
closed-end funds offered by John Hancock, 1989-2000; John Hancock Mutual Life Insurance Company, including Senior Vice President and Treasurer and Senior Vice President Information Technology, 1968-1988
|
121
|
Former
Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
Columbia
Floating Rate Fund | Annual Report 2019
|
53
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Pamela
G. Carlton
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 7/07 for RiverSource Funds and since 6/11 for Nations Funds
|
President,
Springboard — Partners in Cross Cultural Leadership (consulting company) since 2003; Managing Director of US Equity Research, JP Morgan Chase, 1999-2003; Director of US Equity Research, Chase Asset Management, 1996-1999; Co-Director Latin
America Research, 1993-1996, COO Global Research, 1992-1996, Co-Director of US Research, 1991-1992, Investment Banker, Morgan Stanley, 1982-1991
|
121
|
Trustee,
New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, Laurel Road Bank (Audit Committee) since 2017
|
Patricia
M. Flynn
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1950
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Trustee
Professor of Economics and Management, Bentley University since 1976 (also teaches and conducts research on corporate governance); Dean, McCallum Graduate School of Business, Bentley University, 1992-2002
|
121
|
Trustee,
MA Taxpayers Foundation since 1997; Board of Directors, The MA Business Roundtable since 2003; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010
|
Brian
J. Gallagher
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1954
|
Trustee
since 12/17
|
Retired;
Partner with Deloitte & Touche LLP and its predecessors, 1977-2016
|
119
|
Trustee,
Catholic Schools Foundation since 2004
|
Catherine
James Paglia
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1952
|
Trustee
since 11/04 for RiverSource Funds and since 6/11 for Nations Funds
|
Director,
Enterprise Asset Management, Inc. (private real estate and asset management company) since September 1998; Managing Director and Partner, Interlaken Capital, Inc., 1989-1997; Managing Director, Morgan Stanley, 1982-1989; Vice President, Investment
Banking, 1980-1982, Associate, Investment Banking, 1976-1980, Dean Witter Reynolds, Inc.
|
121
|
Director,
Valmont Industries, Inc. (irrigation systems manufacturer) since 2012; Trustee, Carleton College (on the Investment Committee); Trustee, Carnegie Endowment for International Peace (on the Investment Committee)
|
Anthony
M. Santomero
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1946
|
Trustee
since 6/11 for RiverSource Funds and since 1/08 for Nations Funds
|
Richard
K. Mellon Professor Emeritus of Finance, The Wharton School, University of Pennsylvania, since 2002; Senior Advisor, McKinsey & Company (consulting), 2006-2008; President, Federal Reserve Bank of Philadelphia, 2000- 2006; Professor of Finance,
The Wharton School, University of Pennsylvania, 1972-2002
|
121
|
Trustee,
Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019
|
54
|
Columbia Floating Rate Fund
| Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Independent trustees (continued)
Name,
address,
year of birth
|
Position
held
with the Trust and
length of service
|
Principal
occupation(s)
during past five years
and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex
overseen
|
Other
directorships
held by Trustee
during the past
five years
|
Minor
M. Shaw
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1947
|
Trustee
since 6/11 for RiverSource Funds and since 2003 for Nations Funds
|
President,
Micco LLC (private investments) since 2011; President, Micco Corp. (family investment business), 1998-2011
|
121
|
Director,
BlueCross BlueShield of South Carolina since April 2008; Board Chair, Hollingsworth Funds since 2016; Advisory Board member, Duke Energy Corp. since October 2016; Chair of the Duke Endowment; Chair of Greenville – Spartanburg Airport
Commission; former Trustee, BofA Funds Series Trust (11 funds), 2003-2011; former Director, Piedmont Natural Gas, 2004-2016; former Director, National Association of Corporate Directors, Carolinas Chapter, 2013-2018
|
Sandra
Yeager
c/o Columbia Management
Investment Advisers, LLC
225 Franklin Street
Mail Drop BX32 05228
Boston, MA 02110
1964
|
Trustee
since 12/17
|
Retired;
President and founder, Hanoverian Capital, LLC (SEC registered investment advisor firm), 2008-2016; Managing Director, DuPont Capital, 2006-2008; Managing Director, Morgan Stanley Investment Management, 2004-2006; Senior Vice President, Alliance
Bernstein, 1990-2004
|
119
|
Director,
NAPE Education Foundation since October 2016
|
Interested trustee affiliated with Investment
Manager*
Name,
address,
year of birth
|
Position
held with the Trust and length of service
|
Principal
occupation(s) during the
past five years and other relevant
professional experience
|
Number
of
Funds in the
Columbia Funds
complex overseen
|
Other
directorships
held by Trustee
during the past
five years
|
William
F. Truscott
c/o Columbia Management
Investment Advisers, LLC
225 Franklin St.
Boston, MA 02110
1960
|
Trustee
since 11/01 for RiverSource Funds and since 6/11 for Nations Funds; Senior Vice President since 2002 for RiverSource Funds and since 5/10 for Nations Funds
|
Chairman
of the Board and President, Columbia Management Investment Advisers, LLC since May 2010 and February 2012, respectively; 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); Director and Chief Executive Officer, Columbia Management Investment Distributors, Inc. since May 2010 and February 2012, respectively; 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.
|
190
|
Chairman
of the Board, Columbia Management Investment Advisers, LLC since May 2010; Director, Columbia Management Investment Distributors, Inc. since May 2010; former Director, Ameriprise Certificate Company, August 2006-January 2013
|
*
|
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.
|
Columbia
Floating Rate Fund | Annual Report 2019
|
55
|
TRUSTEES AND OFFICERS (continued)
Nations Funds refer to the Funds within the Columbia Funds
Complex that historically bore the Nations brand and includes series of Columbia Funds Series Trust. RiverSource Funds refer to the Funds within the Columbia Funds Complex that historically bore the RiverSource brand and includes series of Columbia
Funds Series Trust II.
The Statement of Additional
Information has additional information about the Fund’s Board members and is available, without charge, upon request by calling 800.345.6611, visiting columbiathreadneedleus.com/investor/ or contacting your financial intermediary.
56
|
Columbia Floating Rate Fund
| Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
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 of the Fund as of the printing of this report, 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 Fund’s other officers are:
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; officer of Columbia Funds and affiliated funds since 2007.
|
Michael
G. Clarke
225 Franklin Street
Boston, MA 02110
Born 1969
|
Chief
Financial Officer (Principal Financial Officer) (2009) and Senior Vice President (2019)
|
Vice
President, Head of North American Operations, and Co-Head of Global Operations, Columbia Management Investment Advisers, LLC, since June 2019 (previously Vice President – Accounting and Tax, May 2010 - May 2019); senior officer of Columbia
Funds and affiliated funds since 2002 (previously Treasurer and Chief Accounting Officer, January 2009 - January 2019 and December 2015 - January 2019, respectively).
|
Joseph
Beranek
5890 Ameriprise
Financial Center
Minneapolis, MN 55474
Born 1965
|
Treasurer
and Chief Accounting Officer (Principal Accounting Officer) (2019)
|
Vice
President — Mutual Fund Accounting and Financial Reporting, Columbia Management Investment Advisers, LLC, since December 2018 and March 2017, respectively (previously Vice President — Pricing and Corporate Actions, May 2010 - March
2017).
|
Paul
B. Goucher
485 Lexington Avenue
New York, NY 10017
Born 1968
|
Senior
Vice President (2011) and Assistant Secretary (2008)
|
Senior
Vice President and Assistant General Counsel, Ameriprise Financial, Inc. since January 2017 (previously Vice President and Lead Chief Counsel, November 2008 - January 2017 and January 2013 - January 2017, respectively); Vice President, Chief Legal
Officer and Assistant Secretary, Columbia Management Investment Advisers, LLC since March 2015 (previously Vice President and Assistant Secretary, May 2010 – March 2015).
|
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.
|
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; Executive Vice President and Global Chief Investment Officer, Columbia Management Investment Advisers, LLC since July 2013.
|
Ryan
C. Larrenaga
225 Franklin Street
Boston, MA 02110
Born 1970
|
Senior
Vice President (2017), Chief Legal Officer (2017), and Secretary (2015)
|
Vice
President and Chief Counsel, Ameriprise Financial, Inc. since August 2018 (previously Vice President and Group Counsel, August 2011 - August 2018); officer of Columbia Funds and affiliated funds since 2005.
|
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.
|
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.
|
Columbia
Floating Rate Fund | Annual Report 2019
|
57
|
Approval of Management Agreement
Columbia Management Investment Advisers, LLC (Columbia
Threadneedle or the Investment Manager, and together with its domestic and global affiliates, Columbia Threadneedle Investments), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial), serves as the investment manager to
Columbia Floating Rate Fund (the Fund). Under a management agreement (the Management Agreement), Columbia Threadneedle provides investment advice and other services to the Fund and other funds distributed by Columbia Management Investment
Distributors, Inc. (collectively, the Funds).
On an
annual basis, the Fund’s Board of Trustees (the Board), including the independent Board members (the Independent Trustees), considers renewal of the Management Agreement. Columbia Threadneedle prepared detailed reports for the Board and its
Contracts Committee in November 2018 and January, March, April and June 2019, including reports providing the results of analyses performed by an independent organization, Broadridge Financial Solutions, Inc. (Broadridge), and a comprehensive
response to items of information requested by independent legal counsel to the Independent Trustees (Independent Legal Counsel) in a letter to the Investment Manager, to assist the Board in making this determination. Many of the materials presented
at these meetings were first supplied in draft form to designated independent Board representatives, i.e., Independent Legal Counsel, Fund Counsel, the Chair of the Board (who is an Independent Trustee) and the Chair of the Contracts Committee (who
is an Independent Trustee), and the final materials were revised to include information reflective of discussion and subsequent requests made by the Contracts Committee. In addition, throughout the year, the Board (or its committees) regularly meets
with portfolio management teams and senior management personnel and reviews information prepared by Columbia Threadneedle addressing the services Columbia Threadneedle provides and Fund performance. The Board also accords appropriate weight to the
work, deliberations and conclusions of the various committees, such as the Contracts Committee, the Investment Review Committee, the Audit Committee and the Compliance Committee in determining whether to continue the Management Agreement.
The Board, at its June 17-19, 2019 in-person Board meeting
(the June Meeting), considered the renewal of the Management Agreement for an additional one-year term. At the June Meeting, Independent Legal Counsel reviewed with the Independent Trustees various factors relevant to the Board’s consideration
of management agreements and the Board’s legal responsibilities related to such consideration. Following an analysis and discussion of the factors identified below, the Board, including all of the Independent Trustees, approved the renewal of
the Management Agreement.
Nature, extent and quality
of services provided by Columbia Threadneedle
The
Board analyzed various reports and presentations it had received detailing the services performed by Columbia Threadneedle, as well as its history, reputation, expertise, resources and capabilities, and the qualifications of its personnel.
The Board specifically considered the many developments during
recent years concerning the services provided by Columbia Threadneedle, including, in particular, the organization and depth of the equity and credit research departments. The Board further observed the enhancements to the investment risk management
department’s processes, systems and oversight, over the past several years, as well as planned 2019 initiatives. The Board also took into account the broad scope of services provided by Columbia Threadneedle to each Fund, including, among
other services, investment, risk and compliance oversight. The Board also took into account the information it received concerning Columbia Threadneedle’s ability to attract and retain key portfolio management personnel and that it has
sufficient resources to provide competitive and adequate compensation to investment personnel.
In connection with the Board’s evaluation of the overall
package of services provided by Columbia Threadneedle, the Board also considered the nature, quality and range of administrative services provided to the Fund by Columbia Threadneedle, as well as the achievements in 2018 in the performance of
administrative services, and noted the various enhancements anticipated for 2019. In evaluating the quality of services provided under the Management Agreement, the Board also took into account the organization and strength of the Fund’s and
its service providers’ compliance programs. In addition, the Board reviewed the financial condition of Columbia Threadneedle and its affiliates and each entity’s ability to carry out its responsibilities under the Management Agreement
and the Fund’s other service agreements with affiliates of Ameriprise Financial, observing the financial strength of Ameriprise Financial, with its relatively strong cash position and solid balance sheet.
58
|
Columbia Floating Rate Fund
| Annual Report 2019
|
Approval of Management Agreement (continued)
The Board also discussed the acceptability of the terms of the
Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle), noting that no material changes are proposed from the form of agreement previously approved. They also noted the wide array of
legal and compliance services provided to the Funds under the Management Agreement. It was also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Based on the foregoing, and based on other information
received (both oral and written, including the information on investment performance referenced below) and other considerations, the Board concluded that Columbia Threadneedle and its affiliates are in a position to continue to provide a high
quality and level of services to the Fund.
Investment
performance
For purposes of evaluating the nature,
extent and quality of services provided under the Management Agreement, the Board carefully reviewed the investment performance of the Fund. In this regard, the Board considered detailed reports providing the results of analyses performed by an
independent organization showing, for various periods (including since manager inception): the performance of the Fund, the performance of a benchmark index, the percentage ranking of the Fund among its comparison group, the product score of the
Fund (taking into account performance relative to peers and benchmarks) and the net assets of the Fund. The Board observed that the Fund’s investment performance met expectations.
Comparative fees, costs of services provided and the profits
realized by Columbia Threadneedle and its affiliates from their relationships with the Fund
The Board reviewed comparative fees and the costs of
services provided under the Management Agreement. The Board members considered detailed comparative information set forth in an annual report on fees and expenses, including, among other things, data (based on analyses conducted by an independent
organization) showing a comparison of the Fund’s expenses with median expenses paid by funds in its comparative peer universe, as well as data showing the Fund’s contribution to Columbia Threadneedle’s profitability.
The Board considered the reports of its independent fee
consultant, JDL Consultants, LLC (JDL), which assisted in the Board’s analysis of the Funds’ performance and expenses, the reasonableness of Columbia Threadneedle’s profitability, particularly in comparison to industry competitors,
the reasonableness of the Funds’ fee rates, and JDL’s conclusion that the management fees being charged to the Fund are reasonable. The Board accorded particular weight to the notion that the primary objective of the level of fees is to
achieve a rational pricing model applied consistently across the various product lines in the Fund family, while assuring that the overall fees for each Fund (with certain defined exceptions) are generally in line with the "pricing philosophy"
currently in effect (i.e., that Fund total expense ratios, in general, approximate or are lower than the median expense ratios of funds in the same Lipper comparison universe). The Board took into account that the Fund’s total expense ratio
(after considering proposed expense caps/waivers) approximated the peer universe’s median expense ratio. Based on its review, the Board concluded that the Fund’s management fee was fair and reasonable in light of the extent and quality
of services that the Fund receives.
The Board also
considered the profitability of Columbia Threadneedle and its affiliates in connection with Columbia Threadneedle providing management services to the Fund. In this regard, the Independent Trustees referred to their detailed analysis of the
Profitability Report, discussing the profitability to Columbia Threadneedle and Ameriprise Financial from managing, operating and distributing the Funds. The Board considered that in 2018 the Board had concluded that 2017 profitability was
reasonable and that the 2019 information shows that the profitability generated by Columbia Threadneedle in 2018 only slightly increased from 2017 levels. The Board also noted JDL’s report and its conclusion that 2018 Columbia Threadneedle
profitability relative to industry competitors was reasonable. It also took into account the indirect economic benefits flowing to Columbia Threadneedle or its affiliates in connection with managing or distributing the Funds, such as the enhanced
ability to offer various other financial products to Ameriprise Financial customers, soft dollar benefits and overall reputational advantages. The Board noted that the fees paid by the Fund should permit the Investment Manager to offer competitive
compensation to its personnel, make necessary investments in its business and earn an appropriate profit. The Board concluded that profitability levels were reasonable.
Columbia
Floating Rate Fund | Annual Report 2019
|
59
|
Approval of Management Agreement (continued)
Economies of scale to be realized
The Board also considered the economies of scale that might
be realized by the Fund as its net asset level grows and took note of the extent to which Fund shareholders might also benefit from such growth. In this regard, the Board took into account that management fees decline as Fund assets exceed various
breakpoints, all of which have not been surpassed. The Board concluded that the breakpoints in the management fee rate schedule satisfactorily provides for the sharing of economies of scale, as they allow for adequate opportunity for shareholders to
realize benefits (fee breaks) as Fund assets grow.
Based
on the foregoing, the Board, including all of the Independent Trustees, concluded that the management fees were fair and reasonable in light of the extent and quality of services provided. In reaching this conclusion, no single factor was
determinative. On June 19, 2019, the Board, including all of the Independent Trustees, approved the renewal of the Management Agreement.
60
|
Columbia Floating Rate Fund
| Annual Report 2019
|
The
Fund mails one shareholder report to each shareholder address, unless such shareholder elected to receive shareholder reports from the Fund electronically. If you would like more than one report, please call shareholder services at 800.345.6611 and
additional reports will be sent to you.
Proxy voting
policies and procedures
The policy of the Board of
Trustees is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures as stated in the Statement of Additional Information (SAI). You may obtain a copy of the SAI without charge by calling 800.345.6611;
contacting your financial intermediary; visiting columbiathreadneedleus.com/investor/; or searching the website of the Securities and Exchange Commission (SEC) at sec.gov. Information regarding how the Fund voted proxies relating to portfolio
securities is filed with the SEC by August 31st for the most recent 12-month period ending June 30th of that year, and is available without charge by visiting columbiathreadneedleus.com/investor/, or searching the website of the SEC at
sec.gov.
Quarterly schedule of investments
The Fund files a complete schedule of portfolio holdings
with the SEC for the first and third quarters of each fiscal year on Form N-PORT, and for reporting periods ended prior to March 31, 2019, on Form N-Q. The Fund’s Form N-Q and Form N-PORT filings are available on the SEC’s website at
sec.gov. The Fund’s complete schedule of portfolio holdings, as filed on Form N-Q or Form N-PORT, can also be obtained without charge, upon request, by calling 800.345.6611.
Additional Fund information
For more information about the Fund, please visit
columbiathreadneedleus.com/investor/ or call 800.345.6611. Customer Service Representatives are available to answer your questions Monday through Friday from 8 a.m. to 7 p.m. Eastern time.
Fund investment manager
Columbia Management Investment Advisers, LLC
225 Franklin Street
Boston, MA 02110
Fund distributor
Columbia Management Investment Distributors, Inc.
225 Franklin Street
Boston, MA 02110
Fund transfer agent
Columbia Management Investment Services Corp.
P.O. Box 219104
Kansas City, MO 64121-9104
Columbia
Floating Rate Fund | Annual Report 2019
|
61
|
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Floating Rate Fund
P.O. Box 219104
Kansas City, MO 64121-9104
Please read and consider the investment objectives, risks,
charges and expenses for any fund carefully before investing. For a prospectus and summary prospectus, which contains this and other important information about the Fund, go to
columbiathreadneedleus.com/investor/. The Fund is distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Threadneedle Investments (Columbia Threadneedle) is
the global brand name of the Columbia and Threadneedle group of companies. All rights reserved.
© 2019 Columbia Management Investment Advisers, LLC.
columbiathreadneedleus.com/investor/
Item 2. Code of Ethics.
|
(a)
|
The registrant has adopted a code of ethics that applies to the registrants principal executive officer,
principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.
|
|
(b)
|
During the period covered by this report, there were not any amendments to a provision of the code of ethics
that applies to the registrants principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the
registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item.
|
|
(c)
|
During the period covered by this report, there were no waivers, including any implicit waivers, from a
provision of the code of ethics to the registrants principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are
employed by the registrant or a third party that relates to one or more of the items set forth in paragraph (b) of this Item.
|
Item 3. Audit Committee Financial Expert.
The
registrants Board of Trustees has determined that Pamela G. Carlton, Anthony M. Santomero, Brian J. Gallagher and Catherine James Paglia, each of whom are members of the registrants Board of Trustees and Audit Committee, each
qualify as an audit committee financial expert. Ms. Carlton, Mr. Santomero, Mr. Gallagher and Ms. Paglia are each independent trustees, as defined in paragraph (a)(2) of this items instructions.
Item 4. Principal Accountant Fees and Services.
Fee
information below is disclosed for the twelve series of the registrant whose reports to stockholders are included in this annual filing.
(a) Audit
Fees. Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended July 31, 2019 and July 31, 2018 are approximately as follows:
|
|
|
|
|
2019
|
|
2018
|
|
$415,000
|
|
$
|
384,300
|
|
Audit Fees include amounts related to the audit of the registrants annual financial statements or services that are
normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
(b) Audit-Related Fees. Aggregate Audit-Related Fees billed to the registrant by the principal accountant
for professional services rendered during the fiscal years ended July 31, 2019 and July 31, 2018 are approximately as follows:
Audit-Related Fees include amounts for assurance and related services by the principal accountant that are reasonably related
to the performance of the audit of the registrants financial statements and are not reported in Audit Fees above.
During the fiscal years ended
July 31, 2019 and July 31, 2018, there were no Audit-Related Fees billed by the registrants principal accountant to the registrants investment adviser (not including any sub-adviser whose
role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for an
engagement that related directly to the operations and financial reporting of the registrant.
(c) Tax Fees. Aggregate Tax Fees billed by the
principal accountant to the registrant for professional services rendered during the fiscal years ended July 31, 2019 and July 31, 2018 are approximately as follows:
|
|
|
|
|
2019
|
|
2018
|
|
$67,747
|
|
$
|
75,400
|
|
Tax Fees include amounts for the review of annual tax returns, the review of required shareholder distribution calculations
and typically include amounts for professional services by the principal accountant for tax compliance, tax advice and tax planning. Fiscal Years 2019 and 2018 also include Tax Fees for foreign tax filings.
During the fiscal years ended July 31, 2019 and July 31, 2018, there were no Tax Fees billed by the registrants principal accountant to the
registrants investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling,
controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant.
(d) All Other Fees. Aggregate All Other Fees billed by the principal accountant to the registrant for professional services rendered during the fiscal
years ended July 31, 2019 and July 31, 2018 are approximately as follows:
All Other Fees include amounts for products and services provided by the principal accountant, other than the
services reported in paragraphs (a) through (c) above.
Aggregate All Other Fees billed by the registrants principal accountant to the
registrants investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) and any entity controlling,
controlled by, or under common control with the adviser that provides ongoing services to the registrant for an engagement that related directly to the operations and financial reporting of the registrant during the fiscal years ended July 31,
2019 and July 31, 2018 are approximately as follows:
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2019
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2018
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$225,000
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$
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225,000
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In fiscal years 2019 and 2018, All Other Fees primarily consists of fees billed for internal control examinations of the
registrants transfer agent and investment adviser.
(e)(1) Audit Committee Pre-Approval Policies and
Procedures
The registrants Audit Committee is required to pre-approve the engagement of the
registrants independent auditors to provide audit and non-audit services to the registrant and non-audit services to its investment adviser (excluding any sub-adviser whose role is primarily portfolio management and is sub-contracted or overseen by another investment adviser (the Adviser) or any entity controlling,
controlled by or under common control with the Adviser that provides ongoing services to the Fund (a Control Affiliate) if the engagement relates directly to the operations and financial reporting of the registrant.
The Audit Committee has adopted a Policy for Engagement of Independent Auditors for Audit and Non-Audit Services (the
Policy). The Policy sets forth the understanding of the Audit Committee regarding the engagement of the registrants independent accountants to provide (i) audit and permissible audit-related, tax and other services to the
registrant (Fund Services); (ii) non-audit services to the registrants Adviser and any Control Affiliates, that relates directly to the operations and financial reporting of a Fund
(Fund-related Adviser Services); and (iii) certain other audit and non-audit services to the registrants Adviser and its Control Affiliates. A service will require specific pre-approval by the Audit Committee if it is to be provided by the Funds independent auditor; provided, however, that pre-approval of
non-audit services to the Fund, the Adviser or Control Affiliates may be waived if certain de minimis requirements set forth in the SECs rules are met.
Under the Policy, the Audit Committee may delegate pre-approval authority to any
pre-designated member or members who are independent board members. The member(s) to whom such authority is delegated must report, for informational purposes only, any
pre-approval decisions to the Audit Committee at its next regular meeting. The Audit Committees responsibilities with respect to the pre-approval of services
performed by the independent auditor may not be delegated to management.
On an annual basis, at a regularly scheduled Audit Committee meeting, the Funds Treasurer or other
Fund officer shall submit to the Audit Committee a schedule of the types of Fund Services and Fund-related Adviser Services that are subject to specific pre-approval. This schedule will provide a description
of each type of service that is subject to specific pre-approval, along with total projected fees for each service. The pre-approval will generally cover a one-year period. The Audit Committee will review and approve the types of services and the projected fees for the next one-year period and may add to, or subtract from, the
list of pre-approved services from time to time, based on subsequent determinations. This specific approval acknowledges that the Audit Committee is in agreement with the specific types of services that the
independent auditor will be permitted to perform and the projected fees for each service.
The Funds Treasurer or other Fund officer shall report to
the Audit Committee at each of its regular meetings regarding all Fund Services or Fund-related Adviser Services provided since the last such report was rendered, including a description of the services, by category, with forecasted fees for the
annual reporting period, proposed changes requiring specific pre-approval and a description of services provided by the independent auditor, by category, with actual fees during the current reporting period.
*****
(e)(2) 100% of the services
performed for items (b) through (d) above during 2019 and 2018 were pre-approved by the registrants Audit Committee.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrants accountant for services rendered to the registrant, and rendered to the registrants investment adviser (not including any
sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant for the fiscal years ended July 31, 2019 and July 31, 2018 are approximately as follows:
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2019
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2018
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$292,700
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$
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300,400
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(h) The registrants Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrants adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not
pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the principal
accountants independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments
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(a)
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The registrants Schedule I Investments in securities of unaffiliated issuers (as set
forth in 17 CFR 210.12-12) is included in Item 1 of this Form N-CSR.
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Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters
to a Vote of Security Holders.
There were no material changes to the procedures by which shareholders may recommend nominees to the registrants
board of directors.
Item 11. Controls and Procedures.
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(a)
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The registrants principal executive officer and principal financial officer, based on their evaluation of
the registrants disclosure controls and procedures as of a date within 90 days of the filing of this report, have concluded that such controls and procedures are adequately designed to ensure that information required to be disclosed by the
registrant in Form N-CSR is accumulated and communicated to the registrants management, including the principal executive officer and principal financial officer, or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure.
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(b)
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There was no change in the registrants internal control over financial reporting that occurred during the
period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
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Item 12. Disclosure of Securities Lending Activities for
Closed-End Management Investment Companies
Not applicable.
Item 13. Exhibits.
(a)(1) Code of ethics required
to be disclosed under Item 2 of Form N-CSR attached hereto as Exhibit 99.CODE ETH.
(a)(2) Certifications pursuant
to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
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(registrant)
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Columbia Funds Series Trust II
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By (Signature and Title)
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/s/ Christopher O. Petersen
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Christopher O. Petersen, President and Principal Executive Officer
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has
been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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By (Signature and Title)
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/s/ Christopher O. Petersen
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Christopher O. Petersen, President and Principal Executive Officer
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By (Signature and Title)
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/s/ Michael G. Clarke
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Michael G. Clarke, Chief
Financial Officer
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Fund Policy: Code of Ethics for Principal Executive / Senior Financial Officers
COLUMBIA FUNDS
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Applicable Regulatory Authority
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Section 406 of the Sarbanes-Oxley Act of 2002;
Item 2 of Form N-CSR
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Related Policies
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Overview and Implementation of Compliance Program Policy
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Requires Annual Board Approval
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No but Covered Officers Must provide annual certification
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Last Reviewed by AMC
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July 2019
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Overview and Statement
Item 2 of Form N-CSR, the form used by registered management investment companies to file certified annual and
semi-annual shareholder reports, requires a registered management investment company to disclose:
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Whether it has adopted a code of ethics that applies to the investment companys principal executive
officer and senior financial officers and, if it has not adopted such a code of ethics, why it has not done so; and
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Any amendments to, or waivers from, the code of ethics relating to such officers.
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The Board of each Fund has adopted the following Code of Ethics for Principle Executive and Senior Financial Officers (the Code), which sets forth
the ethical standards to which the Fund holds its principal executive officer and each of its senior financial officers.
This Code should be read and
interpreted in conjunction with the Overview and Implementation of Compliance Program Policy.
Policy The Board of each Fund
has adopted the Code in order to comply with applicable regulatory requirements as outlined below:
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I.
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Covered Officers/Purpose of the Code
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This Code applies to the Funds Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer or Controller
(the Covered Officers) for the purpose of promoting:
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Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between
personal and professional relationships;
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Full, fair, accurate, timely and understandable disclosure in reports and documents that the Fund files with, or
submits to, the SEC, and in other public communications made by the Fund;
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Compliance with applicable laws and governmental rules and regulations;
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This document is
current as of the last review date but subject to change thereafter. Please consult the online version to verify that this Fund Policy has not been updated or otherwise changed. This Fund Policy is the property of the Funds and must not be provided
to any external party without express prior consent from the Fund CCO.
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Proprietary and Confidential
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Page
1
of 9
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The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the
Code; and
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Accountability for adherence to the Code.
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Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual or
apparent conflicts of interest.
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II.
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Administration of the Code
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The Board has designated an individual to be primarily responsible for the administration of the Code (the Code Officer). In the
absence of the Code Officer, his or her designee shall serve as the Code Officer, but only on a temporary basis.
The Board has designated
a person who meets the definition of a Chief Legal Officer (the CLO) for purposes of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder as the Funds CLO. The CLO of the Fund shall assist the Funds Code
Officer in administration of this Code. The Code Officer, in consultation with the CLO, shall be responsible for applying this Code to specific situations (in consultation with Fund counsel, where appropriate) and has the authority to interpret this
Code in any particular situation.
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III.
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Managing Conflicts of Interest
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A conflict of interest occurs when a Covered Officers personal interest interferes with the interests of, or his or her
service to, the Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his or her family, receives improper personal benefits as a result of the Covered Officers position with the Fund. Certain provisions in
the 1940 Act and the rules and regulations thereunder and the Advisers Act and the rules and regulations thereunder govern certain conflicts of interest that arise out of the relationships between Covered Officers and the Fund. If such conflicts are
addressed in conformity with applicable provisions of the 1940 Act and the Advisers Act, they will be deemed to have been handled ethically. The Funds and its Advisers compliance programs and procedures are designed to prevent, or
identify and correct, violations of those provisions. This Code does not, and is not intended to, repeat or replace those programs and procedures, and conduct that is consistent with such programs and procedures falls outside of the parameters of
this Code.
Although they do not typically present an opportunity for improper personal benefit, conflicts may arise from, or as a result
of, the contractual relationships between the Fund and, as applicable, its Adviser, administrator, principal underwriter, pricing and bookkeeping agent and/or transfer agent (each, a Primary Service Provider) of which the Covered
Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Fund or for a Primary Service Provider, or for both), be involved in
establishing policies and implementing decisions that will have different effects on the Primary
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This document is
current as of the last review date but subject to change thereafter. Please consult the online version to verify that this Fund Policy has not been updated or otherwise changed. This Fund Policy is the property of the Funds and must not be provided
to any external party without express prior consent from the Fund CCO.
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Proprietary and Confidential
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Page 2 of 9
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Service Providers and the Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationships between the Fund and the Primary Service Providers and is
consistent with the performance by the Covered Officers of their duties as officers of the Fund. If such conflicts are addressed in conformity with applicable provisions of the 1940 Act and the Advisers Act, they will be deemed to have been handled
ethically. In addition, it is recognized by the Board of the Fund that the Covered Officers also may be officers or employees of one or more other investment companies or organizations affiliated with the sponsor of the Fund covered by other similar
codes and that the codes of ethics of those other investment companies or organizations will apply to the Covered Officers acting in such capacities for such other investment companies.
This Code covers general conflicts of interest and other issues applicable to the Funds under the Sarbanes-Oxley Act of 2002. The overarching
principle is that the personal interest of a Covered Officer should not be placed improperly before the interests of the Fund. Certain examples of such conflicts of interest follow.
Each Covered Officer must:
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Not use his or her personal influence or personal relationships improperly to influence investment decisions or
financial reporting by the Fund whereby the Covered Officer, or a member of his or her family, would knowingly benefit personally to the detriment of the Fund;
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Not knowingly cause the Fund to take action, or fail to take action, for the individual personal benefit of the
Covered Officer, or a member of his or her family, rather than the benefit of the Fund;
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Not use material non-public knowledge of portfolio transactions made or
contemplated for the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; and
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Report at least annually (or more frequently, as appropriate) known affiliations or other relationships that may
give rise to conflicts of interest with respect to the Fund.
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If a Covered Officer believes that he or she has a
potential conflict of interest that is likely to materially compromise his or her objectivity or his or her ability to perform the duties of his or her role as a Covered Officer, including a potential conflict of interest that arises out of his or
her responsibilities as an officer or employee of one or more Primary Service Providers or other funds, he or she should consult with the Code Officer, the CLO, the Funds outside counsel, or counsel to the Independent Board Members, as
appropriate.
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This document is
current as of the last review date but subject to change thereafter. Please consult the online version to verify that this Fund Policy has not been updated or otherwise changed. This Fund Policy is the property of the Funds and must not be provided
to any external party without express prior consent from the Fund CCO.
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Proprietary and Confidential
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Page 3 of 9
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Examples of potential conflicts of interest that may materially compromise objectivity or ability
to perform the duties of a Covered Officer and which the Covered Officer should consider discussing with the Code Officer or other appropriate person include:
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Service as a director on the board of a public or private company or service as a public official;
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The receipt of a non-de minimus gift when the gift is in relation to
doing business directly or indirectly with the Fund;
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The receipt of entertainment from any company with which the Fund has current or prospective business dealings,
unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety;
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An ownership interest in, or any consulting or employment relationship with, any of the Funds service
providers, other than the Primary Service Providers or any affiliated person thereof; and
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A direct or indirect material financial interest in commissions, transaction charges or spreads paid by the Fund
for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officers employment, such as compensation or equity ownership.
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IV.
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Disclosure and Compliance
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It is the responsibility of each Covered Officer:
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To familiarize himself or herself with the disclosure requirements generally applicable to the Fund, as well as
the business and financial operations of the Fund;
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To not knowingly misrepresent, and to not knowingly cause others to misrepresent, facts about the Fund to others,
whether within or outside the Fund, including to the Funds Board, Legal Counsel, Independent Legal Counsel and auditors, and to governmental regulators and self-regulatory organizations;
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To the extent appropriate within his or her area of responsibility, consult with other officers and employees of
the Fund and the Primary Service Providers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the
Fund; and
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To adhere to and, within his or her area of responsibility, promote compliance with the standards and
restrictions imposed by applicable laws, rules and regulations.
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This document is
current as of the last review date but subject to change thereafter. Please consult the online version to verify that this Fund Policy has not been updated or otherwise changed. This Fund Policy is the property of the Funds and must not be provided
to any external party without express prior consent from the Fund CCO.
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Proprietary and Confidential
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Page 4 of 9
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V.
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Reporting and Accountability by Covered Officers
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Each Covered Officer must:
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Upon adoption of the Code or becoming a Covered Officer, acknowledge in writing to the Funds Board that he
or she has received, read and understands the Code, using the form attached as Appendix A hereto;
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Annually thereafter acknowledge in writing to the Funds Board that he or she has received and read the Code
and believes that he or she has complied with the requirements of the Code, using the form attached as Appendix B hereto;
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Not retaliate against any employee or Covered Officer for reports of potential violations that are made in good
faith; and
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Notify the Code Officer promptly if he or she knows of any violation, or of conduct that reasonably could be
expected to be or result in a violation, of this Code. Failure to do so is a violation of this Code.
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The Fund will
follow the policy set forth below in investigating and enforcing this Code:
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The Code Officer will endeavor to take all appropriate action to investigate any potential violation reported to
him or her;
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If, after such investigation, the Code Officer believes that no violation has occurred, the Code Officer will so
notify the person(s) reporting the potential violation, and no further action is required;
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Any matter that the Code Officer, upon consultation with the CLO, believes is a violation will be reported by the
Code Officer or the CLO to the Funds Audit Committee;
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The Funds Audit Committee will be responsible for granting waivers, as appropriate; and
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This Code and any changes to or waivers of the Code will, to the extent required, be disclosed as provided by SEC
rules.
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This Code shall be the sole code of ethics adopted by the Fund for the purposes of Section 406 of the Sarbanes-Oxley Act of 2002 and the
rules and forms applicable to registered management investment companies thereunder. Insofar as other policies or procedures of the Fund or the Funds Primary Service Providers govern or purport to govern the behavior or activities of the
Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they conflict with the provisions of this Code. The Funds and its Advisers and principal underwriters codes of ethics under Rule 17j-1 under the 1940 Act and the more detailed policies and procedures of the Primary Service Providers as set forth in their respect Compliance Manuals are separate requirements applicable to the Covered Officers
and are not part of this Code.
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This document is
current as of the last review date but subject to change thereafter. Please consult the online version to verify that this Fund Policy has not been updated or otherwise changed. This Fund Policy is the property of the Funds and must not be provided
to any external party without express prior consent from the Fund CCO.
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Proprietary and Confidential
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Page 5 of 9
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VII.
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Disclosure of Amendments to the Code
|
Any amendments will, to the extent required, be disclosed in accordance with law.
All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected
accordingly. Except as otherwise required by law or this Code or upon advice of counsel, such reports and records shall not be disclosed to anyone other than the Funds Board, the Covered Officers, the Code Officer, the CLO, the Funds
Primary Service Providers and their affiliates, and outside audit firms, legal counsel to the Fund and legal counsel to the Independent Board Members.
The Code is intended solely for the internal use by the Fund and does not constitute an admission, by or on behalf of the Fund, as to any fact,
circumstance, or legal conclusion.
Reporting Requirements
Each Covered Officer must annually acknowledge in writing to the Funds Board that he or she has received and read the Code and believes that he or she
has complied with the requirements of the Code, using the form attached as Appendix II hereto.
The Code Officer or CLO shall report to the Funds
Audit Committee any violations of, or material issues arising under, this Code.
If the Audit Committee concurs that a violation has occurred, it will
inform and make a recommendation to the Funds Board, which will consider appropriate action, which may include review of, and appropriate modifications to: Applicable policies and procedures; Notification to the appropriate personnel of the
Funds Primary Service Providers or their boards; A recommendation to censure, suspend or dismiss the Covered Officer; or Referral of the matter to the appropriate authorities for civil action or criminal prosecution.
All material amendments to this Code must be in writing and approved or ratified by the Funds Board, including a majority of the Independent Board
Members.
The Code Officer, in conjunction with the CLO, shall be responsible for administration of this Code and for adopting procedures to ensure
compliance with the requirements set forth herein.
Any issues that arise under this policy should be communicated to an employees immediate
supervisor, and appropriately escalated to AMC. Additionally, AMC will escalate any compliance issues relating to this Code to the Fund CCO and, if warranted, the appropriate Fund Board.
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This document is
current as of the last review date but subject to change thereafter. Please consult the online version to verify that this Fund Policy has not been updated or otherwise changed. This Fund Policy is the property of the Funds and must not be provided
to any external party without express prior consent from the Fund CCO.
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Proprietary and Confidential
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Page 6 of 9
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Monitoring/Oversight/Escalation
The Code Officer shall be responsible for oversight of compliance with this Code by the Covered Officers. AMC and Ameriprise Risk & Control Services
may perform periodic reviews and assessments of various lines of business, including their compliance with this Code.
Recordkeeping
All records must be maintained for at least seven years, the first three in the appropriate Ameriprise Financial, Inc. management office. The following records
will be maintained to evidence compliance with this Code: (1) a copy of the information or materials supplied to the Audit Committee or the Board: (i) that provided the basis for any amendment or waiver to this Code; and (ii) relating
to any violation of the Code and sanctions imposed for such violation, together with a written record of the approval or action taken by the Audit Committee and/or Board; (2) a copy of the policy and any amendments; and (3) a list of
Covered Officers and reporting by Covered Officers.
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This document is
current as of the last review date but subject to change thereafter. Please consult the online version to verify that this Fund Policy has not been updated or otherwise changed. This Fund Policy is the property of the Funds and must not be provided
to any external party without express prior consent from the Fund CCO.
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Proprietary and Confidential
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Page 7 of 9
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Appendix A
INITIAL ACKNOWLEDGEMENT
I acknowledge
that I have received and read a copy of the Code of Ethics for Principal Executive and Senior Financial Officers (the Code) and that I understand it. I further acknowledge that I am responsible for understanding and complying with the
policies set forth in the Code during my tenure as a Covered Officer, as defined in the Code.
I have set forth below (and on attached sheets of paper, if
necessary) all known affiliations or other relationships that may give rise to conflicts of interest for me with respect to the Fund.
I also acknowledge my responsibility to report any known violation of the Code to the Code Officer, the CLO, the Funds
outside counsel, or counsel to the Independent Board Members, all as defined in this Code. I further acknowledge that the policies contained in the Code are not intended to create any contractual rights or obligations, express or implied. I also
understand that, consistent with applicable law, the Fund has the right to amend, interpret, modify or withdraw any of the provisions of the Code at any time in its sole discretion, with or without notice.
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Covered Officer Name and Title:
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(please
print)
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Signature
Date
|
Please return this completed form to the CLO (_______) within one week from the date of your review of these documents.
Thank you!
Appendix B
ANNUAL ACKNOWLEDGEMENT
I acknowledge that
I have received and read a copy of the Code of Ethics for Principal Executive and Senior Financial Officers (the Code) and that I understand it. I further acknowledge that I am responsible for understanding and complying with the
policies set forth in the Code during my tenure as a Covered Officer, as defined in the Code.
I also acknowledge that I believe that I have fully
complied with the terms and provisions of the Code during the period of time since the most recent Initial or Annual Acknowledgement provided by me except as described below.
I have set forth below (and on attached sheets of paper, if necessary) all known affiliations or other relationships that may
give rise to conflicts of interest for me with respect to the Fund.1
I further acknowledge that the policies contained in the Code are not intended to create any contractual rights or
obligations, express or implied. I also understand that, consistent with applicable law, the Fund has the right to amend, interpret, modify or withdraw any of the provisions of the Code at any time in its sole discretion, with or without notice.
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Covered Officer Name and Title:
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(please
print)
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Signature
Date
|
Please return this completed form to the CLO (_______) within one week from the date of your receipt of a request to
complete and return it. Thank you!
1 It is acceptable to refer to affiliations and other relationships previously disclosed in prior Initial or Annual Acknowledgements without setting forth such affiliations and relationships again.