UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number811-21852
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)
Registrant's telephone number, including area code: (800) 345-6611
Date of fiscal year end: October 31
Date of reporting period: October 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
October 31, 2019
Columbia Select
Global Equity 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
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Columbia Select Global Equity Fund
(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 (the
Investment Manager)
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 Select Global Equity
Fund | Annual Report 2019
Investment objective
The Fund
seeks to provide shareholders with long-term capital growth.
Portfolio management
Threadneedle International Limited
David Dudding, CFA
Portfolio Manager
Managed Fund since 2015
Alex Lee, CFA
Portfolio Manager
Managed Fund since December 2019
Effective December 2019, Pauline Grange no longer serves as a Portfolio Manager of the Fund.
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 October 31, 2019)
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Inception
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1 Year
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5 Years
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10 Years
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Class A
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Excluding sales charges
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05/29/90
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22.30
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10.38
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10.39
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Including sales charges
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15.23
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9.08
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9.75
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Advisor Class*
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03/01/18
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22.52
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10.47
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10.44
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Class C
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Excluding sales charges
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06/26/00
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21.27
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9.55
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9.55
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Including sales charges
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20.27
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9.55
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9.55
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Institutional Class*
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09/27/10
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22.50
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10.66
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10.64
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Institutional 2 Class
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12/11/06
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22.57
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10.77
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10.83
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Institutional 3 Class*
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03/01/17
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22.68
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10.61
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10.51
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Class R
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12/11/06
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21.95
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10.09
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10.18
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MSCI ACWI (Net)
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12.59
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7.08
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8.81
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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.
*
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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.
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The MSCI ACWI (Net) is a free
float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The index consists of 45 country indices comprising 24 developed and 21
emerging market country indices.
Indices are not available for
investment, are not professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes (except the MSCI ACWI (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 Select Global Equity Fund | Annual Report 2019
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3
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Fund at a Glance (continued)
Performance of a hypothetical $10,000 investment (October 31, 2009 — October 31, 2019)
The chart above shows the change in
value of a hypothetical $10,000 investment in Class A shares of Columbia Select Global Equity 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 October 31, 2019)
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Microsoft Corp. (United States)
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7.1
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MasterCard, Inc., Class A (United States)
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5.6
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Adobe, Inc. (United States)
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5.1
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Alphabet, Inc., Class A (United States)
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5.0
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RELX PLC (United Kingdom)
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4.2
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Thermo Fisher Scientific, Inc. (United States)
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3.4
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S&P Global, Inc. (United States)
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3.3
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Boston Scientific Corp. (United States)
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3.3
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HDFC Bank Ltd. (India)
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2.9
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Pernod Ricard SA (France)
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2.8
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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.
Equity sector breakdown (%) (at October 31, 2019)
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Communication Services
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8.1
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Consumer Discretionary
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7.3
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Consumer Staples
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6.6
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Financials
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14.8
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Health Care
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20.2
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Industrials
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9.6
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Information Technology
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32.6
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Materials
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0.8
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Total
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100.0
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Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
4
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Columbia Select Global Equity Fund | Annual Report 2019
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Fund at a Glance (continued)
Country breakdown (%) (at October 31, 2019)
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Australia
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1.0
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France
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5.0
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Germany
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1.5
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Hong Kong
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1.8
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India
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5.6
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Indonesia
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0.8
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Ireland
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3.9
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Japan
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3.5
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Netherlands
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1.2
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South Korea
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1.0
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Sweden
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0.9
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Country breakdown (%) (at October 31, 2019)
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Taiwan
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1.4
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United Kingdom
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7.4
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United States(a)
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65.0
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Total
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100.0
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(a)
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Includes investments in Money Market Funds.
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Country breakdown is based
primarily on issuer’s place of organization/incorporation. Percentages indicated are based upon total investments excluding 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 October 31, 2019, the Fund invested at least 40% of its net assets
in foreign companies in accordance with its principal investment strategy.
Columbia Select Global Equity Fund | Annual Report 2019
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5
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Manager Discussion of Fund Performance
For the 12-month period that ended
October 31, 2019, the Fund’s Class A shares returned 22.30% excluding sales charges. The Fund outperformed its benchmark, the MSCI ACWI (Net), which returned 12.59% over the same period. The Fund benefited from
security selection at the regional and sector levels, with the strongest contributions coming from the financial, technology and energy sectors.
Global markets overcame periods of
volatility
Global markets rose over the
period despite significant volatility in the closing months of 2018. This volatility was driven by the U.S.-China trade war, uncertainty around Brexit (the U.K.’s exit from the European Union), growing signs of
weakness in the global economy and tightening by the U.S. Federal Reserve (Fed). Having signaled a continued gradual rise in interest rates in 2018, the Fed shifted to a more patient stance in 2019. The Fed delivered
its first interest-rate cut (of three) in July 2019. Against soft economic data, the European Central Bank followed suit in September, cutting the deposit rate to a record low, while also restarting its bond-buying
program. The export-heavy German economy continued to stutter, with heightened fears of a recession following a negative second-quarter GDP report.
Tensions between the U.S. and China
waxed and waned over the period, with talks proving inconclusive. Optimism following the G-20 meeting in June 2019 was abruptly snuffed out in August, when the White House announced further tariff hikes on Chinese
goods, causing a stock-market sell-off. Hopes were subsequently rekindled as the two sides showed some compromise and agreed to resume talks in October. Still, the damage inflicted on the already slowing Chinese
economy was evident, with the manufacturing sector reeling, and fixed-asset investment slowing sharply.
In the U.K., there were many twists
and turns in the Brexit saga, with the economy showing increasing strain and the pound remaining under pressure. In July, Boris Johnson’s appointment as prime minister lifted fears of a no-deal Brexit. A
last-minute deal with the European Union kindled some hopes of a resolution, but Parliamentary opposition to his timetable forced the prime minister to seek a further extension. He subsequently called for a general
election to take place in December 2019. Despite these and other sources of uncertainty, risk appetite was generally strong over the reporting period and this translated into gains for most markets and sectors. All
regions finished the period higher in U.S. dollar terms with the Far East ex-Japan leading the way. In terms of sectors, real estate and utilities led the way against a backdrop of declining bond yields, while
technology outpaced the broader index as strong corporate earnings generally persisted.
Contributors and detractors
The Fund’s top three
contributing sectors on a relative basis were financials, technology and energy. Financials contributed strongly to performance due to security selection as holdings such as AIA Group Ltd. and Kotak Mahindra Bank Ltd.
were notable contributors. Security selection also played a role in technology, as MasterCard, Inc. and Microsoft Corp. led the relative gains. The allocation effect to technology was also positive, due to the
Fund’s overweight, relative to the benchmark, to the sector, which outperformed on strong corporate earnings. Our zero weight to energy was also beneficial as the sector was out of favor over the period, in no
small measure due pressures on oil prices and worries about global demand.
Among individual holdings, global
payment-business MasterCard was the largest contributor to Fund performance, rising on continued solid revenue and earnings growth amid resilient consumer spending. Alongside Visa, MasterCard dominates the digital
payments space and stands to benefit from entrenched structural trends such as the shift from cash to card, and e-commerce growth. Technology giant Microsoft delivered a series of consensus-beating results, with
continued strong growth for its cloud business. News at the end of the reporting period that it had secured a Pentagon contract for cloud-computing services further improved sentiment. Indian bank Kotak Mahindra
performed well, notably after India’s government cut the corporate tax rate. This could see the nation’s lenders raise provisions, strengthen buffers or offer borrowers lower interest rates. We believe
Kotak Mahindra is well-placed to capitalize on the formalization of savings in the region, favorable demographics, and the shift to digital.
The real estate, utility and
communication services sectors were the only sectors to detract from relative returns over the period and did so marginally. The Fund’s underweight to real estate detracted, as the sector posted strong gains on
the back of accommodative policy measures by central banks. Stock selection was mildly negative. The Fund’s zero weight in utilities was also negative, as lower interest rates and continued worries about global
growth boosted the appeal of so-called “bond proxies.” Security selection in communication services marginally underperformed. Gains from Cellnex Telecom were offset by detraction from Activision Blizzard
and Nintendo.
6
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Columbia Select Global Equity Fund | Annual Report 2019
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Manager Discussion of Fund Performance (continued)
Among holdings, multi-line
managed-care enterprise Centene lagged its peers as continued talks of a government-funded health care system by Democratic presidential candidates weighed on the sector. We closed the Fund’s position midway
through the period. British American Tobacco underperformed on fears of a menthol cigarette ban by the U.S. Food and Drug Administration. We also sold this stock, reallocating proceeds towards preferred opportunities.
Health insurer UnitedHealth Group, Inc. was also pressured by growing fears of regulatory changes in the health care system, including the so-called “Medicare for all.” This overshadowed some robust
results, which included a raise and beat in the most recent quarter. While we have reduced the Fund’s exposure to health care stocks, which are sensitive to political rhetoric, we retained conviction in
UnitedHealth based on its scale and diversification.
Portfolio positioning
Country, sector, and stock
allocation are a residual impact of our bottom-up portfolio construction process. Having said that, the Fund ended the period most overweight as compared to the benchmark to the U.S., India and France, while the
largest underweights were to Japan, China and Canada. China and Canada were zero weights. Among holdings, key new positions over the period included Fidelity National Information Services, Inc. (FIS), Estée
Lauder Companies, Inc. and LVMH Moet Hennessy Louis Vuitton SE (LVMH). Payment-services provider FIS’ recent acquisition of Worldpay reflected its strategy of adding fast-growing, international and
merchant-acquiring businesses to the stable core processing division. We believed beauty product manufacturer Estée Lauder could sustain attractive growth, improve its capital returns and selectively utilize its
pristine balance sheet for deal-making and capital expenditure expansion. E-commerce remained an added tailwind, as did favorable demographics, and the emerging middle class in China. Finally, diversified luxury goods
group LVMH has a portfolio of strong brands and was focused on innovation. LVMH embarked on a controlled digital expansion to drive market-share gains and consumer loyalty across its divisions. With a history of
acquisitions, we felt that LVMH was well-placed to make more deals to capitalize on strong areas of growth, such as e-commerce.
Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. International investing involves certain risks and volatility due to potential political, economic or currency instabilities and different financial and accounting standards. Risks are enhanced for
emerging market issuers. 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.
Columbia Select Global Equity Fund | Annual Report 2019
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7
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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 $1,000 = 8.6), then multiply the results by the expenses paid during the period under
the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the Fund’s actual return) and then applies the
Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or
the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are
required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the
hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are
meant to highlight the ongoing costs of investing in a fund only and do not reflect any transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in
comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.
May 1, 2019 — October 31, 2019
|
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Account value at the
beginning of the
period ($)
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Account value at the
end of the
period ($)
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Expenses paid during
the period ($)
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Fund’s annualized
expense ratio (%)
|
|
Actual
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Hypothetical
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Actual
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Hypothetical
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Actual
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Hypothetical
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Actual
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Class A
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1,000.00
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1,000.00
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1,061.40
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1,018.65
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6.75
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6.61
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1.30
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Advisor Class
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1,000.00
|
1,000.00
|
1,062.70
|
1,019.91
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5.46
|
5.35
|
1.05
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Class C
|
1,000.00
|
1,000.00
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1,057.20
|
1,014.87
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10.63
|
10.41
|
2.05
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Institutional Class
|
1,000.00
|
1,000.00
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1,062.90
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1,019.91
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5.46
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5.35
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1.05
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Institutional 2 Class
|
1,000.00
|
1,000.00
|
1,062.50
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1,020.21
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5.15
|
5.04
|
0.99
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Institutional 3 Class
|
1,000.00
|
1,000.00
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1,063.30
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1,020.47
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4.89
|
4.79
|
0.94
|
Class R
|
1,000.00
|
1,000.00
|
1,060.10
|
1,017.39
|
8.05
|
7.88
|
1.55
|
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
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Columbia Select Global Equity Fund | Annual Report 2019
|
Portfolio of Investments
October 31, 2019
(Percentages represent value of
investments compared to net assets)
Investments in securities
Common Stocks 97.8%
|
Issuer
|
Shares
|
Value ($)
|
Australia 1.0%
|
CSL Ltd.
|
28,543
|
5,033,738
|
France 4.9%
|
LVMH Moet Hennessy Louis Vuitton SE
|
24,639
|
10,522,231
|
Pernod Ricard SA
|
71,194
|
13,151,899
|
Total
|
23,674,130
|
Germany 1.5%
|
Adidas AG
|
23,462
|
7,244,379
|
Hong Kong 1.8%
|
AIA Group Ltd.
|
846,000
|
8,424,658
|
India 5.5%
|
HDFC Bank Ltd.
|
785,774
|
13,614,550
|
Kotak Mahindra Bank Ltd.
|
582,556
|
12,920,913
|
Total
|
26,535,463
|
Indonesia 0.8%
|
PT Bank Central Asia Tbk
|
1,655,600
|
3,705,775
|
Ireland 3.9%
|
Ingersoll-Rand PLC
|
75,880
|
9,628,413
|
Medtronic PLC
|
81,430
|
8,867,727
|
Total
|
18,496,140
|
Japan 3.5%
|
Keyence Corp.
|
18,700
|
11,823,943
|
Nintendo Co., Ltd.
|
13,200
|
4,841,595
|
Total
|
16,665,538
|
Netherlands 1.2%
|
Unilever NV(a)
|
98,050
|
5,795,413
|
South Korea 1.0%
|
Samsung Electronics Co., Ltd.
|
109,782
|
4,744,762
|
Sweden 0.9%
|
Atlas Copco AB, Class B
|
146,814
|
4,555,391
|
Taiwan 1.3%
|
Taiwan Semiconductor Manufacturing Co., Ltd.
|
661,000
|
6,477,670
|
United Kingdom 7.4%
|
Aon PLC
|
37,028
|
7,152,329
|
InterContinental Hotels Group PLC
|
73,126
|
4,425,202
|
Common Stocks (continued)
|
Issuer
|
Shares
|
Value ($)
|
Linde PLC
|
19,644
|
3,877,641
|
RELX PLC
|
821,124
|
19,758,682
|
Total
|
35,213,854
|
United States 63.1%
|
Abbott Laboratories
|
119,820
|
10,018,150
|
Activision Blizzard, Inc.
|
90,252
|
5,056,820
|
Adobe, Inc.(a)
|
85,293
|
23,705,484
|
Alphabet, Inc., Class A(a)
|
18,448
|
23,222,342
|
Amazon.com, Inc.(a)
|
6,772
|
12,031,542
|
ANSYS, Inc.(a)
|
20,555
|
4,525,183
|
Automatic Data Processing, Inc.
|
57,454
|
9,320,762
|
Baxter International, Inc.
|
135,542
|
10,396,071
|
Becton Dickinson and Co.
|
45,471
|
11,640,576
|
Boston Scientific Corp.(a)
|
367,998
|
15,345,517
|
CME Group, Inc.
|
37,849
|
7,787,432
|
Electronic Arts, Inc.(a)
|
49,396
|
4,761,774
|
Estee Lauder Companies, Inc. (The), Class A
|
65,293
|
12,162,127
|
Fidelity National Information Services, Inc.
|
95,086
|
12,528,531
|
Lam Research Corp.
|
20,070
|
5,439,773
|
MasterCard, Inc., Class A
|
94,064
|
26,037,856
|
Microsoft Corp.
|
231,621
|
33,207,503
|
S&P Global, Inc.
|
60,459
|
15,597,817
|
Stryker Corp.
|
24,033
|
5,197,617
|
Texas Instruments, Inc.
|
42,603
|
5,026,728
|
Thermo Fisher Scientific, Inc.
|
53,413
|
16,129,658
|
TransUnion
|
130,265
|
10,762,494
|
UnitedHealth Group, Inc.
|
48,078
|
12,149,311
|
Visa, Inc., Class A
|
55,749
|
9,971,266
|
Total
|
302,022,334
|
Total Common Stocks
(Cost $336,642,227)
|
468,589,245
|
|
The accompanying Notes to Financial
Statements are an integral part of this statement.
Columbia Select Global Equity Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
October 31, 2019
Money Market Funds 1.6%
|
|
Shares
|
Value ($)
|
Columbia Short-Term Cash Fund, 1.938%(b),(c)
|
7,518,472
|
7,517,720
|
Total Money Market Funds
(Cost $7,517,720)
|
7,517,720
|
Total Investments in Securities
(Cost $344,159,947)
|
476,106,965
|
Other Assets & Liabilities, Net
|
|
2,789,547
|
Net Assets
|
$478,896,512
|
Notes to Portfolio of
Investments
(a)
|
Non-income producing investment.
|
(b)
|
The rate shown is the seven-day current annualized yield at October 31, 2019.
|
(c)
|
As defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company
which is under common ownership or control with the Fund. Holdings and transactions in these affiliated companies during the year ended October 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized gain
(loss) —
affiliated
issuers ($)
|
Net change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends —
affiliated
issuers ($)
|
Value —
affiliated
issuers
at end of
period ($)
|
Columbia Short-Term Cash Fund, 1.938%
|
|
6,758,722
|
96,501,472
|
(95,741,722)
|
7,518,472
|
25
|
—
|
182,294
|
7,517,720
|
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 accompanying Notes to Financial Statements are
an integral part of this statement.
10
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Portfolio of Investments (continued)
October 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 October 31, 2019:
|
Level 1 ($)
|
Level 2 ($)
|
Level 3 ($)
|
Total ($)
|
Investments in Securities
|
|
|
|
|
Common Stocks
|
|
|
|
|
Australia
|
—
|
5,033,738
|
—
|
5,033,738
|
France
|
—
|
23,674,130
|
—
|
23,674,130
|
Germany
|
—
|
7,244,379
|
—
|
7,244,379
|
Hong Kong
|
—
|
8,424,658
|
—
|
8,424,658
|
India
|
—
|
26,535,463
|
—
|
26,535,463
|
Indonesia
|
—
|
3,705,775
|
—
|
3,705,775
|
Ireland
|
18,496,140
|
—
|
—
|
18,496,140
|
Japan
|
—
|
16,665,538
|
—
|
16,665,538
|
Netherlands
|
—
|
5,795,413
|
—
|
5,795,413
|
South Korea
|
—
|
4,744,762
|
—
|
4,744,762
|
Sweden
|
—
|
4,555,391
|
—
|
4,555,391
|
Taiwan
|
—
|
6,477,670
|
—
|
6,477,670
|
United Kingdom
|
7,152,329
|
28,061,525
|
—
|
35,213,854
|
United States
|
302,022,334
|
—
|
—
|
302,022,334
|
Total Common Stocks
|
327,670,803
|
140,918,442
|
—
|
468,589,245
|
Money Market Funds
|
7,517,720
|
—
|
—
|
7,517,720
|
Total Investments in Securities
|
335,188,523
|
140,918,442
|
—
|
476,106,965
|
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. 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.
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Select Global Equity Fund | Annual Report 2019
|
11
|
Statement of Assets and Liabilities
October 31, 2019
Assets
|
|
Investments in securities, at value
|
|
Unaffiliated issuers (cost $336,642,227)
|
$468,589,245
|
Affiliated issuers (cost $7,517,720)
|
7,517,720
|
Foreign currency (cost $3,293,314)
|
3,296,284
|
Receivable for:
|
|
Capital shares sold
|
499,282
|
Dividends
|
223,657
|
Foreign tax reclaims
|
169,002
|
Prepaid expenses
|
3,402
|
Total assets
|
480,298,592
|
Liabilities
|
|
Payable for:
|
|
Investments purchased
|
269,513
|
Capital shares purchased
|
240,603
|
Foreign capital gains taxes deferred
|
675,803
|
Management services fees
|
11,410
|
Distribution and/or service fees
|
2,758
|
Transfer agent fees
|
35,401
|
Compensation of board members
|
106,813
|
Other expenses
|
59,779
|
Total liabilities
|
1,402,080
|
Net assets applicable to outstanding capital stock
|
$478,896,512
|
Represented by
|
|
Paid in capital
|
333,168,210
|
Total distributable earnings (loss)
|
145,728,302
|
Total - representing net assets applicable to outstanding capital stock
|
$478,896,512
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
12
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Statement of Assets and Liabilities (continued)
October 31, 2019
Class A
|
|
Net assets
|
$359,803,718
|
Shares outstanding
|
25,096,662
|
Net asset value per share
|
$14.34
|
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)
|
$15.21
|
Advisor Class
|
|
Net assets
|
$366,807
|
Shares outstanding
|
24,878
|
Net asset value per share
|
$14.74
|
Class C
|
|
Net assets
|
$9,918,267
|
Shares outstanding
|
788,801
|
Net asset value per share
|
$12.57
|
Institutional Class
|
|
Net assets
|
$52,177,989
|
Shares outstanding
|
3,588,660
|
Net asset value per share
|
$14.54
|
Institutional 2 Class
|
|
Net assets
|
$3,016,945
|
Shares outstanding
|
206,455
|
Net asset value per share
|
$14.61
|
Institutional 3 Class
|
|
Net assets
|
$52,661,749
|
Shares outstanding
|
3,647,033
|
Net asset value per share
|
$14.44
|
Class R
|
|
Net assets
|
$951,037
|
Shares outstanding
|
66,595
|
Net asset value per share
|
$14.28
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Select Global Equity Fund | Annual Report 2019
|
13
|
Statement of Operations
Year Ended October 31, 2019
Net investment income
|
|
Income:
|
|
Dividends — unaffiliated issuers
|
$4,866,577
|
Dividends — affiliated issuers
|
182,294
|
Foreign taxes withheld
|
(171,780)
|
Total income
|
4,877,091
|
Expenses:
|
|
Management services fees
|
3,860,839
|
Distribution and/or service fees
|
|
Class A
|
851,391
|
Class C
|
90,311
|
Class R
|
2,878
|
Class T
|
1
|
Transfer agent fees
|
|
Class A
|
438,590
|
Advisor Class
|
397
|
Class C
|
11,610
|
Institutional Class
|
50,206
|
Institutional 2 Class
|
1,257
|
Institutional 3 Class
|
3,984
|
Class R
|
727
|
Compensation of board members
|
18,013
|
Custodian fees
|
39,338
|
Printing and postage fees
|
48,682
|
Registration fees
|
117,235
|
Audit fees
|
41,361
|
Legal fees
|
11,323
|
Compensation of chief compliance officer
|
88
|
Other
|
21,420
|
Total expenses
|
5,609,651
|
Fees waived by transfer agent
|
|
Institutional 2 Class
|
(85)
|
Institutional 3 Class
|
(1,240)
|
Expense reduction
|
(1,840)
|
Total net expenses
|
5,606,486
|
Net investment loss
|
(729,395)
|
Realized and unrealized gain (loss) — net
|
|
Net realized gain (loss) on:
|
|
Investments — unaffiliated issuers
|
17,440,991
|
Investments — affiliated issuers
|
25
|
Foreign currency translations
|
(51,535)
|
Net realized gain
|
17,389,481
|
Net change in unrealized appreciation (depreciation) on:
|
|
Investments — unaffiliated issuers
|
72,948,241
|
Foreign currency translations
|
15,429
|
Foreign capital gains tax
|
(654,031)
|
Net change in unrealized appreciation (depreciation)
|
72,309,639
|
Net realized and unrealized gain
|
89,699,120
|
Net increase in net assets resulting from operations
|
$88,969,725
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
14
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Statement of Changes in Net Assets
|
Year Ended
October 31, 2019
|
Year Ended
October 31, 2018
|
Operations
|
|
|
Net investment loss
|
$(729,395)
|
$(419,958)
|
Net realized gain
|
17,389,481
|
41,600,323
|
Net change in unrealized appreciation (depreciation)
|
72,309,639
|
(25,656,569)
|
Net increase in net assets resulting from operations
|
88,969,725
|
15,523,796
|
Distributions to shareholders
|
|
|
Net investment income and net realized gains
|
|
|
Class A
|
(30,829,094)
|
(1,376,724)
|
Advisor Class
|
(9,859)
|
—
|
Class C
|
(799,561)
|
(62,342)
|
Institutional Class
|
(3,034,623)
|
(160,482)
|
Institutional 2 Class
|
(93,620)
|
(3,661)
|
Institutional 3 Class
|
(4,990,744)
|
(419,880)
|
Class K
|
—
|
(174)
|
Class R
|
(28,573)
|
(752)
|
Class T
|
—
|
(14)
|
Total distributions to shareholders
|
(39,786,074)
|
(2,024,029)
|
Increase (decrease) in net assets from capital stock activity
|
23,730,577
|
(22,432,766)
|
Total increase (decrease) in net assets
|
72,914,228
|
(8,932,999)
|
Net assets at beginning of year
|
405,982,284
|
414,915,283
|
Net assets at end of year
|
$478,896,512
|
$405,982,284
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
Columbia Select Global Equity Fund | Annual Report 2019
|
15
|
Statement of Changes in Net Assets (continued)
|
Year Ended
|
Year Ended
|
|
October 31, 2019
|
October 31, 2018 (a)
|
|
Shares
|
Dollars ($)
|
Shares
|
Dollars ($)
|
Capital stock activity
|
Class A
|
|
|
|
|
Subscriptions
|
1,338,794
|
17,446,010
|
1,544,218
|
21,046,975
|
Distributions reinvested
|
2,659,009
|
30,339,297
|
105,124
|
1,354,000
|
Redemptions
|
(3,179,513)
|
(41,932,633)
|
(2,867,553)
|
(38,612,580)
|
Net increase (decrease)
|
818,290
|
5,852,674
|
(1,218,211)
|
(16,211,605)
|
Advisor Class
|
|
|
|
|
Subscriptions
|
26,257
|
322,225
|
8,291
|
116,445
|
Distributions reinvested
|
821
|
9,614
|
—
|
—
|
Redemptions
|
(10,389)
|
(137,064)
|
(102)
|
(1,447)
|
Net increase
|
16,689
|
194,775
|
8,189
|
114,998
|
Class C
|
|
|
|
|
Subscriptions
|
263,188
|
2,988,874
|
272,446
|
3,289,165
|
Distributions reinvested
|
77,522
|
780,647
|
5,327
|
61,311
|
Redemptions
|
(240,164)
|
(2,771,898)
|
(710,225)
|
(8,722,212)
|
Net increase (decrease)
|
100,546
|
997,623
|
(432,452)
|
(5,371,736)
|
Institutional Class
|
|
|
|
|
Subscriptions
|
1,899,583
|
25,607,162
|
925,125
|
12,673,905
|
Distributions reinvested
|
261,597
|
3,018,827
|
12,017
|
156,456
|
Redemptions
|
(781,299)
|
(10,425,338)
|
(668,418)
|
(9,056,699)
|
Net increase
|
1,379,881
|
18,200,651
|
268,724
|
3,773,662
|
Institutional 2 Class
|
|
|
|
|
Subscriptions
|
154,438
|
1,944,577
|
55,132
|
745,562
|
Distributions reinvested
|
8,042
|
93,282
|
278
|
3,637
|
Redemptions
|
(38,745)
|
(503,588)
|
(7,819)
|
(105,767)
|
Net increase
|
123,735
|
1,534,271
|
47,591
|
643,432
|
Institutional 3 Class
|
|
|
|
|
Subscriptions
|
128,607
|
1,759,463
|
94,531
|
1,281,341
|
Distributions reinvested
|
435,846
|
4,990,437
|
32,472
|
419,857
|
Redemptions
|
(767,391)
|
(10,334,871)
|
(526,035)
|
(7,175,096)
|
Net decrease
|
(202,938)
|
(3,584,971)
|
(399,032)
|
(5,473,898)
|
Class K
|
|
|
|
|
Distributions reinvested
|
—
|
—
|
12
|
158
|
Redemptions
|
—
|
—
|
(2,552)
|
(35,239)
|
Net decrease
|
—
|
—
|
(2,540)
|
(35,081)
|
Class R
|
|
|
|
|
Subscriptions
|
45,268
|
595,446
|
15,643
|
207,573
|
Distributions reinvested
|
1,969
|
22,428
|
25
|
326
|
Redemptions
|
(5,945)
|
(78,973)
|
(5,986)
|
(80,437)
|
Net increase
|
41,292
|
538,901
|
9,682
|
127,462
|
Class T
|
|
|
|
|
Redemptions
|
(257)
|
(3,347)
|
—
|
—
|
Net decrease
|
(257)
|
(3,347)
|
—
|
—
|
Total net increase (decrease)
|
2,277,238
|
23,730,577
|
(1,718,049)
|
(22,432,766)
|
(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.
16
|
Columbia Select Global Equity Fund | Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT
BLANK]
Columbia Select Global Equity 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 (loss)
|
Total from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class A
|
Year Ended 10/31/2019
|
$13.04
|
(0.03)
|
2.61
|
2.58
|
—
|
(1.28)
|
(1.28)
|
Year Ended 10/31/2018
|
$12.65
|
(0.02)
|
0.46
|
0.44
|
—
|
(0.05)
|
(0.05)
|
Year Ended 10/31/2017
|
$10.12
|
(0.00)(d)
|
2.53
|
2.53
|
—
|
—
|
—
|
Year Ended 10/31/2016
|
$9.97
|
0.00(d)
|
0.15
|
0.15
|
—
|
—
|
—
|
Year Ended 10/31/2015
|
$9.80
|
0.00(d)
|
0.20
|
0.20
|
(0.03)
|
—
|
(0.03)
|
Advisor Class
|
Year Ended 10/31/2019
|
$13.38
|
0.00(d)
|
2.67
|
2.67
|
—
|
(1.31)
|
(1.31)
|
Year Ended 10/31/2018(g)
|
$13.39
|
0.01
|
(0.02)(h)
|
(0.01)
|
—
|
—
|
—
|
Class C
|
Year Ended 10/31/2019
|
$11.58
|
(0.11)
|
2.28
|
2.17
|
—
|
(1.18)
|
(1.18)
|
Year Ended 10/31/2018
|
$11.32
|
(0.10)
|
0.41
|
0.31
|
—
|
(0.05)
|
(0.05)
|
Year Ended 10/31/2017
|
$9.12
|
(0.08)
|
2.28
|
2.20
|
—
|
—
|
—
|
Year Ended 10/31/2016
|
$9.06
|
(0.07)
|
0.13
|
0.06
|
—
|
—
|
—
|
Year Ended 10/31/2015
|
$8.94
|
(0.07)
|
0.19
|
0.12
|
—
|
—
|
—
|
Institutional Class
|
Year Ended 10/31/2019
|
$13.22
|
0.00(d)
|
2.63
|
2.63
|
—
|
(1.31)
|
(1.31)
|
Year Ended 10/31/2018
|
$12.81
|
0.01
|
0.48
|
0.49
|
(0.03)
|
(0.05)
|
(0.08)
|
Year Ended 10/31/2017
|
$10.22
|
0.04
|
2.55
|
2.59
|
—
|
—
|
—
|
Year Ended 10/31/2016
|
$10.05
|
0.02
|
0.15
|
0.17
|
—
|
—
|
—
|
Year Ended 10/31/2015
|
$9.87
|
0.02
|
0.21
|
0.23
|
(0.05)
|
—
|
(0.05)
|
Institutional 2 Class
|
Year Ended 10/31/2019
|
$13.28
|
0.01
|
2.64
|
2.65
|
—
|
(1.32)
|
(1.32)
|
Year Ended 10/31/2018
|
$12.87
|
0.02
|
0.48
|
0.50
|
(0.04)
|
(0.05)
|
(0.09)
|
Year Ended 10/31/2017
|
$10.26
|
0.02
|
2.59
|
2.61
|
—
|
—
|
—
|
Year Ended 10/31/2016
|
$10.07
|
0.04
|
0.15
|
0.19
|
—
|
—
|
—
|
Year Ended 10/31/2015
|
$9.90
|
0.04
|
0.20
|
0.24
|
(0.07)
|
—
|
(0.07)
|
Institutional 3 Class
|
Year Ended 10/31/2019
|
$13.14
|
0.02
|
2.61
|
2.63
|
—
|
(1.33)
|
(1.33)
|
Year Ended 10/31/2018
|
$12.74
|
0.03
|
0.47
|
0.50
|
(0.05)
|
(0.05)
|
(0.10)
|
Year Ended 10/31/2017(j)
|
$10.85
|
0.03
|
1.86
|
1.89
|
—
|
—
|
—
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
18
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Proceeds from
regulatory
settlements
|
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 10/31/2019
|
—
|
$14.34
|
22.30%
|
1.31%
|
1.31%(c)
|
(0.22%)
|
46%
|
$359,804
|
Year Ended 10/31/2018
|
—
|
$13.04
|
3.52%
|
1.34%
|
1.34%(c)
|
(0.15%)
|
74%
|
$316,700
|
Year Ended 10/31/2017
|
—
|
$12.65
|
25.00%
|
1.37%(e)
|
1.37%(c),(e)
|
(0.04%)
|
72%
|
$322,569
|
Year Ended 10/31/2016
|
—
|
$10.12
|
1.50%
|
1.40%
|
1.40%(c)
|
0.01%
|
66%
|
$303,338
|
Year Ended 10/31/2015
|
0.00(d)
|
$9.97
|
2.00%(f)
|
1.42%
|
1.42%(c)
|
(0.03%)
|
132%
|
$328,090
|
Advisor Class
|
Year Ended 10/31/2019
|
—
|
$14.74
|
22.52%
|
1.07%
|
1.07%(c)
|
0.03%
|
46%
|
$367
|
Year Ended 10/31/2018(g)
|
—
|
$13.38
|
(0.07%)
|
1.10%(i)
|
1.10%(c),(i)
|
0.11%(i)
|
74%
|
$110
|
Class C
|
Year Ended 10/31/2019
|
—
|
$12.57
|
21.27%
|
2.06%
|
2.06%(c)
|
(0.97%)
|
46%
|
$9,918
|
Year Ended 10/31/2018
|
—
|
$11.58
|
2.78%
|
2.08%
|
2.08%(c)
|
(0.79%)
|
74%
|
$7,968
|
Year Ended 10/31/2017
|
—
|
$11.32
|
24.12%
|
2.12%(e)
|
2.12%(c),(e)
|
(0.78%)
|
72%
|
$12,686
|
Year Ended 10/31/2016
|
—
|
$9.12
|
0.66%
|
2.15%
|
2.15%(c)
|
(0.75%)
|
66%
|
$13,808
|
Year Ended 10/31/2015
|
0.00(d)
|
$9.06
|
1.34%(f)
|
2.17%
|
2.17%(c)
|
(0.78%)
|
132%
|
$15,511
|
Institutional Class
|
Year Ended 10/31/2019
|
—
|
$14.54
|
22.50%
|
1.06%
|
1.06%(c)
|
0.03%
|
46%
|
$52,178
|
Year Ended 10/31/2018
|
—
|
$13.22
|
3.84%
|
1.09%
|
1.09%(c)
|
0.10%
|
74%
|
$29,191
|
Year Ended 10/31/2017
|
—
|
$12.81
|
25.34%
|
1.13%
|
1.13%(c)
|
0.33%
|
72%
|
$24,854
|
Year Ended 10/31/2016
|
—
|
$10.22
|
1.69%
|
1.15%
|
1.15%(c)
|
0.24%
|
66%
|
$2,945
|
Year Ended 10/31/2015
|
0.00(d)
|
$10.05
|
2.33%(f)
|
1.17%
|
1.17%(c)
|
0.21%
|
132%
|
$2,297
|
Institutional 2 Class
|
Year Ended 10/31/2019
|
—
|
$14.61
|
22.57%
|
1.00%
|
1.00%
|
0.11%
|
46%
|
$3,017
|
Year Ended 10/31/2018
|
—
|
$13.28
|
3.91%
|
1.02%
|
1.01%
|
0.18%
|
74%
|
$1,098
|
Year Ended 10/31/2017
|
—
|
$12.87
|
25.44%
|
1.03%(e)
|
1.03%(e)
|
0.20%
|
72%
|
$452
|
Year Ended 10/31/2016
|
—
|
$10.26
|
1.89%
|
1.00%
|
1.00%
|
0.40%
|
66%
|
$148
|
Year Ended 10/31/2015
|
0.00(d)
|
$10.07
|
2.43%(f)
|
1.01%
|
1.01%
|
0.43%
|
132%
|
$156
|
Institutional 3 Class
|
Year Ended 10/31/2019
|
—
|
$14.44
|
22.68%
|
0.94%
|
0.94%
|
0.16%
|
46%
|
$52,662
|
Year Ended 10/31/2018
|
—
|
$13.14
|
3.93%
|
0.96%
|
0.95%
|
0.24%
|
74%
|
$50,583
|
Year Ended 10/31/2017(j)
|
—
|
$12.74
|
17.42%
|
0.97%(i)
|
0.97%(i)
|
0.43%(i)
|
72%
|
$54,121
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
Columbia Select Global Equity Fund | Annual Report 2019
|
19
|
Financial Highlights (continued)
|
Net asset value,
beginning of
period
|
Net
investment
income
(loss)
|
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 10/31/2019
|
$12.99
|
(0.06)
|
2.60
|
2.54
|
—
|
(1.25)
|
(1.25)
|
Year Ended 10/31/2018
|
$12.63
|
(0.05)
|
0.46
|
0.41
|
—
|
(0.05)
|
(0.05)
|
Year Ended 10/31/2017
|
$10.13
|
(0.04)
|
2.54
|
2.50
|
—
|
—
|
—
|
Year Ended 10/31/2016
|
$10.01
|
(0.02)
|
0.14
|
0.12
|
—
|
—
|
—
|
Year Ended 10/31/2015
|
$9.84
|
(0.03)
|
0.20
|
0.17
|
(0.00)(d)
|
—
|
(0.00)(d)
|
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)
|
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
|
Class C
|
Institutional 2
Class
|
Class R
|
10/31/2017
|
0.02%
|
0.02%
|
0.01%
|
0.02%
|
(f)
|
The Fund received proceeds from regulatory settlements. Had the Fund not received these proceeds, the total return would have been lower by 0.02%.
|
(g)
|
Advisor Class shares commenced operations on March 1, 2018. Per share data and total return reflect activity from that date.
|
(h)
|
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.
|
(i)
|
Annualized.
|
(j)
|
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.
20
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Financial Highlights (continued)
|
Proceeds from
regulatory
settlements
|
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 R
|
Year Ended 10/31/2019
|
—
|
$14.28
|
21.95%
|
1.57%
|
1.57%(c)
|
(0.47%)
|
46%
|
$951
|
Year Ended 10/31/2018
|
—
|
$12.99
|
3.29%
|
1.59%
|
1.59%(c)
|
(0.40%)
|
74%
|
$329
|
Year Ended 10/31/2017
|
—
|
$12.63
|
24.68%
|
1.62%(e)
|
1.62%(c),(e)
|
(0.32%)
|
72%
|
$197
|
Year Ended 10/31/2016
|
—
|
$10.13
|
1.20%
|
1.65%
|
1.65%(c)
|
(0.24%)
|
66%
|
$196
|
Year Ended 10/31/2015
|
0.00(d)
|
$10.01
|
1.74%(f)
|
1.67%
|
1.67%(c)
|
(0.28%)
|
132%
|
$181
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Select Global Equity Fund | Annual Report 2019
|
21
|
Notes to Financial Statements
October 31, 2019
Note 1. Organization
Columbia Select Global Equity
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 investors 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. Under the policy, the Fund may utilize 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 Select Global Equity Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
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, if available.
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.
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 as to 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 Columbia Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise
Financial, Inc. (Ameriprise Financial). The Investment Manager’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 on the payment date, the proceeds are recorded as
realized gains.
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.
Columbia Select Global Equity Fund | Annual Report 2019
|
23
|
Notes to Financial Statements (continued)
October 31, 2019
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
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 the period ended July 31, 2019 and
all subsequent periods. To comply with the ASU, management implemented disclosure changes which include removal of the
24
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
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.
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 Investment Manager is responsible for the ultimate oversight of investments made by the
Fund. The Fund’s subadviser (see Subadvisory agreement below) has the primary responsibility for the day-to-day portfolio management of the Fund. The management services fee is an annual fee that is equal to a
percentage of the Fund’s daily net assets that declines from 0.88% to 0.62% as the Fund’s net assets increase. The effective management services fee rate for the year ended October 31, 2019 was 0.87% of
the Fund’s average daily net assets.
Subadvisory agreement
The Investment Manager has entered
into a Subadvisory Agreement with Threadneedle International Limited (Threadneedle), an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Ameriprise Financial, to serve as the subadviser
to the Fund. The Investment Manager compensates Threadneedle to manage the investment of the Fund’s 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 for 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.
Columbia Select Global Equity Fund | Annual Report 2019
|
25
|
Notes to Financial Statements (continued)
October 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. In addition, effective March 1, 2019 through February 29, 2020, 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 March 1, 2019, 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 October 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
|
0.06
|
Institutional 3 Class
|
0.01
|
Class R
|
0.13
|
Class T
|
0.02(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 October 31, 2019, these minimum account balance fees reduced total expenses
of the Fund by $1,840.
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 $1,327,000 for Class C shares. This amount is based on the most recent information available as
of September 30, 2019, and may be recovered from future payments under the distribution plan or contingent deferred sales charges (CDSCs). To the extent the unreimbursed expense has been fully recovered, the
distribution and/or shareholder services fee is reduced.
26
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
Sales charges (unaudited)
Sales charges, including front-end
charges and CDSCs, received by the Distributor for distributing Fund shares for the year ended October 31, 2019, if any, are listed below:
|
Front End (%)
|
CDSC (%)
|
Amount ($)
|
Class A
|
5.75
|
0.50 - 1.00(a)
|
172,478
|
Class C
|
—
|
1.00(b)
|
1,880
|
(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:
|
March 1, 2019
through
February 29, 2020
|
Prior to
March 1, 2019
|
Class A
|
1.38%
|
1.38%
|
Advisor Class
|
1.13
|
1.13
|
Class C
|
2.13
|
2.13
|
Institutional Class
|
1.13
|
1.13
|
Institutional 2 Class
|
1.05
|
1.03
|
Institutional 3 Class
|
1.00
|
0.98
|
Class R
|
1.63
|
1.63
|
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 March 1, 2019 through February 29, 2020, 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 March 1, 2019, 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 Select Global Equity Fund | Annual Report 2019
|
27
|
Notes to Financial Statements (continued)
October 31, 2019
At October 31, 2019, these
differences were primarily due to differing treatment for deferral/reversal of wash sale losses, trustees’ deferred compensation, foreign capital gains tax, net operating loss reclassification 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
gain ($)
|
Paid in
capital ($)
|
730,080
|
(730,080)
|
—
|
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 October 31, 2019
|
Year Ended October 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total ($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total ($)
|
6,305,508
|
33,480,566
|
39,786,074
|
242,778
|
1,781,251
|
2,024,029
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At October 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 ($)
|
Net unrealized
appreciation ($)
|
67,742
|
14,833,143
|
—
|
131,607,636
|
At October 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) ($)
|
Net unrealized
appreciation ($)
|
344,499,329
|
132,347,558
|
(739,922)
|
131,607,636
|
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 October 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 October 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 ($)
|
—
|
—
|
—
|
1,408,651
|
—
|
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.
28
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 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 $203,234,601 and $224,581,456, respectively, for the year ended October 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 October 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 October 31, 2019.
Note 9. Significant
risks
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
Columbia Select Global Equity Fund | Annual Report 2019
|
29
|
Notes to Financial Statements (continued)
October 31, 2019
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.
Health care sector risk
The Fund may be more susceptible to
the particular risks that may affect companies in the health care sector than if it were invested in a wider variety of companies in unrelated sectors. Companies in the health care sector are subject to certain risks,
including restrictions on government reimbursement for medical expenses, government approval of medical products and services, competitive pricing pressures, and the rising cost of medical products and services
(especially for companies dependent upon a relatively limited number of products or services). Performance of such companies may be affected by factors including, government regulation, obtaining and protecting
patents (or the failure to do so), product liability and other similar litigation as well as product obsolescence.
Shareholder concentration risk
At October 31, 2019, affiliated
shareholders of record owned 78.1% 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. 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
30
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
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 Select Global Equity Fund | Annual Report 2019
|
31
|
Report of Independent Registered Public
Accounting Firm
To the Board of Trustees of Columbia
Funds Series Trust II and Shareholders of Columbia Select Global Equity Fund
Opinion on the Financial
Statements
We have audited the accompanying
statement of assets and liabilities, including the portfolio of investments, of Columbia Select Global Equity Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as
of October 31, 2019, the related statement of operations for the year ended October 31, 2019, the statement of changes in net assets for each of the two years in the period ended October 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 October 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
October 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 October 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
December 20, 2019
We have served as the auditor of
one or more investment companies within the Columbia Funds Complex since 1977.
32
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Federal Income Tax
Information
(Unaudited)
The Fund hereby designates the
following tax attributes for the fiscal year ended October 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
|
74.71%
|
25.79%
|
$15,711,447
|
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.
TRUSTEES AND
OFFICERS
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
|
Columbia Select Global Equity Fund | Annual Report 2019
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33
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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
|
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
|
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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
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Former Trustee, Boston Museum of Science (Chair of Finance Committee) 1985-2013; former Trustee, BofA Funds Series Trust (11 funds), 2005-2011
|
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
|
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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
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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
|
34
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Columbia Select Global Equity 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
|
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
|
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
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Director, NAPE Education Foundation since October 2016
|
Columbia Select Global Equity Fund | Annual Report 2019
|
35
|
TRUSTEES AND OFFICERS (continued)
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.
|
192
|
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.
|
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.
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).
|
36
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Columbia Select Global Equity Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Fund officers (continued)
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
|
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.
|
Approval of Management
and Subadvisory
Agreements
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 Select Global Equity 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). In addition, under a Subadvisory Agreement (the Subadvisory Agreement) between
Columbia Threadneedle and Threadneedle International Limited (the Subadviser), an affiliate of Columbia Threadneedle, the Subadviser has provided portfolio management and related services for the Fund.
Columbia Select Global Equity Fund | Annual Report 2019
|
37
|
Approval of Management and Subadvisory
Agreements (continued)
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 and the Subadvisory Agreement (together, the Advisory Agreements). 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 Advisory Agreements.
The Board, at its June 17-19, 2019
in-person Board meeting (the June Meeting), considered the renewal of each of the Advisory Agreements for additional one-year terms. At the June Meeting, Independent Legal Counsel reviewed with the Independent
Trustees various factors relevant to the Board’s consideration of advisory and subadvisory 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 each of the Advisory Agreements.
Nature, extent and quality of
services provided by Columbia Threadneedle and the Subadviser
The Board analyzed various
reports and presentations it had received detailing the services performed by Columbia Threadneedle and the Subadviser, as well as their history, reputation, expertise, resources and relative capabilities, and the
qualifications of their personnel.
The Board specifically considered
the many developments during recent years concerning the services provided by Columbia Threadneedle, including, in particular, detailed information regarding the process employed for selecting and overseeing
affiliated and unaffiliated Subadvisers. With respect to Columbia Threadneedle, the Board also noted 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 subadvised 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
Advisory Agreements, the Board also took into account the organization and strength of the Fund’s and its service providers’ compliance programs. The Board also 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.
In addition, the Board discussed
the acceptability of the terms of the Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle in addition to monitoring the Subadviser), noting that no
material changes are proposed from the forms of agreements previously approved. The Board also noted the wide array of legal and compliance services provided to the Funds under the Fund Management Agreements. It was
also observed that the services being performed under the Management Agreement were of a reasonably high quality.
38
|
Columbia Select Global Equity Fund | Annual Report 2019
|
Approval of Management and Subadvisory
Agreements (continued)
With respect to the Subadviser, the Board observed
that it had previously approved the Subadviser’s code of ethics and compliance program, that the Chief Compliance Officer of the Fund continues to monitor the code and the program, and that no material concerns
have been reported. The Board also considered the Subadviser’s organizational strength and resources, portfolio management team depth and capabilities and investment process. The Board also considered the
Subadviser’s capability and wherewithal to carry out its responsibilities under the Subadvisory Agreement. In addition, the Board discussed the acceptability of the terms of the Subadvisory Agreement, including
the scope of services required to be performed. The Board noted that the terms of the Subadvisory Agreement are generally consistent with the terms of other subadviser agreements for subadvisers who manage other funds
managed by the Investment Manager. It was observed that no material changes were recommended to the Subadvisory Agreement. The Board took into account Columbia Threadneedle’s representation that the Subadviser
was in a position to provide quality services to the Fund. In this regard, the Board further observed the various services provided by the subadvisory oversight team and their significant resources added in recent
years to help improve performance.
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 the Subadviser is 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 Advisory Agreements, 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): (i) the performance of the Fund, (ii) the performance of a benchmark index, (iii) the
percentage ranking of the Fund among its comparison group, (iv) the product score of the Fund (taking into account performance relative to peers and benchmarks) and (v) the net assets of the Fund. The Board observed
that the Fund’s investment performance met expectations.
Additionally, the Board reviewed
the performance of the Subadviser. The Board considered, in particular, management’s rationale for recommending the continued retention of the Subadviser.
Comparative fees, costs of
services provided and the profits realized by Columbia Threadneedle, its affiliates and the Subadviser from their relationships with the Fund
The Board reviewed comparative
fees and the costs of services provided under each of the Advisory Agreements. 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.
Additionally, the Board reviewed
the level of subadvisory fees paid to the Subadviser, noting that the fees are paid by the Investment Manager and do not impact the fees paid by the Fund. The Board also reviewed the fees charged by the Subadviser to
other mutual funds employing similar investment strategies where the Subadviser serves as investment adviser or subadviser. The Board also reviewed advisory fee rates charged by other comparable mutual funds employing
the
Columbia Select Global Equity Fund | Annual Report 2019
|
39
|
Approval of Management and Subadvisory
Agreements (continued)
Subadviser to provide subadvisory services. Based
on its reviews, including JDL’s conclusions/analyses, the Board concluded that the Fund’s investment management and subadvisory fees were 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.
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 fees payable under each of the Advisory Agreements 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 each of the Advisory Agreements.
40
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Columbia Select Global Equity Fund | Annual Report 2019
|
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Columbia Select Global Equity 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
October 31, 2019
Columbia Contrarian
Europe 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
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3
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6
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8
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9
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12
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Columbia Contrarian Europe Fund
(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 (the
Investment Manager)
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 Contrarian Europe
Fund | Annual Report 2019
Investment objective
The Fund
seeks to provide shareholders with capital appreciation.
Portfolio management
Threadneedle International Limited
Dan Ison
Portfolio Manager
Managed Fund since 2009
Ann Steele
Deputy 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 October 31, 2019)
|
|
|
Inception
|
1 Year
|
5 Years
|
10 Years
|
Class A
|
Excluding sales charges
|
06/26/00
|
10.83
|
2.97
|
6.23
|
|
Including sales charges
|
|
4.39
|
1.76
|
5.60
|
Advisor Class*
|
01/08/14
|
11.04
|
3.22
|
6.38
|
Class C
|
Excluding sales charges
|
06/26/00
|
9.99
|
2.17
|
5.41
|
|
Including sales charges
|
|
8.99
|
2.17
|
5.41
|
Institutional Class*
|
09/27/10
|
11.04
|
3.19
|
6.50
|
Institutional 2 Class*
|
01/08/14
|
11.07
|
3.32
|
6.45
|
Institutional 3 Class*
|
03/01/16
|
11.14
|
3.24
|
6.38
|
MSCI Europe Index (Net)
|
|
10.90
|
3.58
|
5.07
|
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 MSCI Europe Index (Net) is a
free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the developed markets in Europe.
Indices are not available for
investment, are not professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes (except the MSCI Europe 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 Contrarian Europe Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a hypothetical $10,000 investment (October 31, 2009 — October 31, 2019)
The chart above shows the change in
value of a hypothetical $10,000 investment in Class A shares of Columbia Contrarian Europe 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 October 31, 2019)
|
Novo Nordisk A/S, Class B (Denmark)
|
4.8
|
Tesco PLC (United Kingdom)
|
4.3
|
ASML Holding NV (Netherlands)
|
4.0
|
Allianz SE, Registered Shares (Germany)
|
3.6
|
Vodafone Group PLC (United Kingdom)
|
3.3
|
Airbus Group SE (France)
|
3.0
|
Total SA (France)
|
3.0
|
KBC Group NV (Belgium)
|
3.0
|
Unilever PLC (United Kingdom)
|
2.8
|
RELX PLC (United Kingdom)
|
2.8
|
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.
Equity sector breakdown (%) (at October 31, 2019)
|
Communication Services
|
7.5
|
Consumer Discretionary
|
12.8
|
Consumer Staples
|
10.8
|
Energy
|
4.3
|
Financials
|
19.2
|
Health Care
|
10.6
|
Industrials
|
19.7
|
Information Technology
|
9.9
|
Materials
|
5.2
|
Total
|
100.0
|
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
4
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Fund at a Glance (continued)
Country breakdown (%) (at October 31, 2019)
|
Belgium
|
3.0
|
Denmark
|
4.8
|
Finland
|
2.4
|
France
|
17.2
|
Germany
|
10.0
|
Ireland
|
1.1
|
Italy
|
4.3
|
Netherlands
|
5.6
|
Norway
|
4.5
|
Portugal
|
1.3
|
Spain
|
4.1
|
Sweden
|
4.4
|
Switzerland
|
4.4
|
United Kingdom
|
32.9
|
United States(a)
|
0.0(b)
|
Total
|
100.0
|
(a)
|
Includes investments in Money Market Funds.
|
(b)
|
Rounds to zero.
|
Country breakdown is based
primarily on issuer’s place of organization/incorporation. Percentages indicated are based upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject
to change.
Columbia Contrarian Europe Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance
At October 31, 2019, approximately
68.9% 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
October 31, 2019, the Fund’s Class A shares returned 10.83% excluding sales charges. The Fund slightly underperformed its benchmark, the MSCI Europe Index (Net), which returned 10.90% over the same time period.
While the Fund benefited from a relative underweighting in energy and an overweighting in industrials, its underweighting in health care and consumer staples detracted from performance.
European markets advanced despite
volatility
European equity markets advanced
during the review period, although they ended 2018 on a weak note as economic indicators softened in China; European data showed continuing growth, but at a slower pace. The European Central Bank confirmed that it
would end its bond-buying stimulus plan by the end of 2018. In the U.S., a series of interest-rate hikes had raised concerns that the economy would cool sharply, although tax cuts remained a strong stimulus for
activity. Brexit (the U.K.’s exit from the European Union) negotiations descended into further disarray and the trade war between the U.S. and China also dented confidence. A more upbeat note marked the
beginning of 2019. European and U.S. markets rose, buoyed by encouraging economic data and corporate results. GDP growth for the first quarter of 2019 was higher than expected in the U.S. and the eurozone. But later
in the year, signs of a global economic slowdown multiplied. In the U.S., second-quarter GDP data showed that a fall in business investment was steeper than prior estimates. U.K. statistics indicated that the economy
was faltering amid Brexit-related uncertainty; GDP dipped by 0.2% in the second quarter. The German economy also shrank, and business confidence slumped.
In September, the European Central
Bank announced stimulus measures to spur growth. These included lowering interest rates further into negative territory, restarting its bond-purchase program, and outlining more-generous terms for long-term cheap
financing for banks. In the U.S., the Federal Reserve cut interest rates three times over the review period. The U.K. had to contend with political uncertainty. Prime Minister Theresa May resigned and was replaced by
Boris Johnson; he called a general election for December 2019. The deadline for Brexit was postponed twice as Parliament failed to ratify draft agreements reached with the European Union, and another extension was
subsequently agreed until January 2020. In Italy, the Democratic Party and the Five Star Movement agreed to form a new coalition government, avoiding a snap election.
Contributors and detractors
The strongest-contributing
sectors to Fund performance on a relative basis were financials, industrials and technology. The Fund was initially underweight in financials, but later moved to an overweight. Subdued economic growth is likely to
mean that interest-rate increases in the eurozone will be deferred, although optimism regarding growth prospects improved as the U.S., China and Europe introduced economic stimulus measures. Sector allocation
contributed to performance, but favorable stock selection was the main driver. Outperformance in industrials was driven by optimism regarding global economic growth prospects. The Fund was overweight in the sector,
and relative outperformance was driven both by allocation and stock selection. Outperformance in technology was driven by technological advances within the sector and by optimism regarding global economic growth
prospects. The fund was overweight in the sector, and relative outperformance was driven by allocation and stock selection.
Among Fund holdings, Cellnex
Telecom, ASML, and 3i Group were the top relative contributors to Fund performance; all three stocks delivered positive absolute returns in U.S. dollar terms, and outperformed the benchmark. Cellnex Telecom released
solid results; the telecom-mast company continued to expand organically and through acquisitions. Management noted a promising pipeline of opportunities in Europe and reaffirmed financial targets for 2019. We sold the
stock as we felt its valuation looked stretched. Semiconductor equipment supplier ASML published robust quarterly results, demonstrating strong revenue growth and healthy gross margins. Its strength in extreme
ultraviolet light (EUV) lithography, field upgrade sales and the logic market more than offset softer demand for memory products. We retained the stock. Private equity group 3i delivered encouraging quarterly results,
despite market turbulence and Brexit uncertainties, and issued confident financial guidance. We retained the stock.
6
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Manager Discussion of Fund Performance (continued)
The Fund’s positioning in
health care, consumer staples and utilities detracted from relative performance. Health care stocks found favor during periods of market turbulence and were also boosted by drug developments and merger and acquisition
activity. We increased the Fund’s exposure to the sector during the review period, but were still underweight relative to the benchmark, while stock selection detracted. The consumer staples sector’s
relatively defensive stocks found favor during periods of market turbulence, while stock-specific factors also boosted returns, such as Nestlé’s new management and potential for improved capital allocation.
Although the Fund increased its exposure to the sector during the period, it remained underweight relative to the benchmark, and stock selection was unfavorable. The utilities sector outperformed the benchmark index
as investors rotated into relatively defensive stocks, and sought higher yields. The Fund’s zero exposure to the sector during the period detracted from performance.
John Wood Group, Ubisoft
Entertainment and Umicore were the main detractors from relative performance. John Wood Group underperformed amid weakness in the energy sector; the firm noted that volatility in commodity prices may affect confidence
and future contract awards. We sold the stock; in the current environment, the major oil companies were focusing on low and disciplined capital expenditure, which could impact oil-service firms. Ubisoft Entertainment
was impacted by disappointing reviews of the recently released Ghost Recon Breakpoint video game, which led to reduced earnings guidance. The company deferred the release of three other video games. We retained the
stock, which was bought during the review period. Umicore warned that demand for cathode materials used in electric vehicles had weakened, while a weak cobalt price had led to intensified competitive pressures. We
sold the stock.
Portfolio positioning
We increased the Fund’s
exposure to France and Denmark during the period, while decreasing its weightings in Germany and Spain. By the end of the period, the Fund was relatively overweight in Belgium, Denmark, Finland, Norway, Portugal and
the U.K. while being underweight in Germany and Switzerland. We were neutrally weighted in Austria, France, Ireland, Italy, the Netherlands, Spain and Sweden. Among sectors, we reduced the Fund’s weightings in
consumer discretionary and technology, while increasing weightings in communications services and health care. The Fund ended the period overweight in communication services, consumer discretionary, financials,
industrials and technology, while being underweight in consumer staples, energy, health care, materials, real estate and utilities.
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. International investing involves certain risks and volatility due to potential political, economic or currency instabilities and different financial and accounting standards. Risks are enhanced for
emerging market issuers. 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. Investments in a limited number of companies subject the Fund to greater risk of loss. Investments in small- and mid-cap companies involve risks and volatility greater than investments in larger, more established companies. 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 Contrarian Europe 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 $1,000 = 8.6), then multiply the results by the expenses paid during the period under
the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the Fund’s actual return) and then applies the
Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or
the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are
required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the
hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are
meant to highlight the ongoing costs of investing in a fund only and do not reflect any transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in
comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.
May 1, 2019 — October 31, 2019
|
|
Account value at the
beginning of the
period ($)
|
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
|
1,004.30
|
1,018.45
|
6.77
|
6.82
|
1.34
|
Advisor Class
|
1,000.00
|
1,000.00
|
1,004.30
|
1,019.76
|
5.46
|
5.50
|
1.08
|
Class C
|
1,000.00
|
1,000.00
|
998.50
|
1,014.67
|
10.53
|
10.61
|
2.09
|
Institutional Class
|
1,000.00
|
1,000.00
|
1,004.30
|
1,019.71
|
5.51
|
5.55
|
1.09
|
Institutional 2 Class
|
1,000.00
|
1,000.00
|
1,004.30
|
1,020.11
|
5.10
|
5.14
|
1.01
|
Institutional 3 Class
|
1,000.00
|
1,000.00
|
1,004.40
|
1,020.42
|
4.80
|
4.84
|
0.95
|
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 Contrarian Europe Fund | Annual Report 2019
|
Portfolio of Investments
October 31, 2019
(Percentages represent value of
investments compared to net assets)
Investments in securities
Common Stocks 99.3%
|
Issuer
|
Shares
|
Value ($)
|
Belgium 2.9%
|
KBC Group NV
|
116,537
|
8,194,218
|
Denmark 4.7%
|
Novo Nordisk A/S, Class B
|
240,840
|
13,243,481
|
Finland 2.4%
|
Sampo OYJ, Class A
|
165,964
|
6,801,178
|
France 17.1%
|
Airbus Group SE
|
58,599
|
8,406,517
|
Dassault Systemes
|
19,625
|
2,980,581
|
Kering SA
|
6,139
|
3,493,069
|
LVMH Moet Hennessy Louis Vuitton SE
|
17,364
|
7,415,399
|
Sanofi
|
73,330
|
6,760,082
|
Total SA
|
158,039
|
8,355,242
|
Ubisoft Entertainment SA(a)
|
91,661
|
5,417,099
|
VINCI SA
|
44,560
|
4,999,468
|
Total
|
47,827,457
|
Germany 9.9%
|
Adidas AG
|
18,034
|
5,568,371
|
Allianz SE, Registered Shares
|
41,039
|
10,022,653
|
Knorr-Bremse AG
|
50,359
|
5,082,405
|
SAP SE
|
52,652
|
6,976,466
|
Total
|
27,649,895
|
Ireland 1.2%
|
Smurfit Kappa Group PLC
|
95,286
|
3,182,316
|
Italy 4.3%
|
Ferrari NV
|
16,744
|
2,681,670
|
Fiat Chrysler Automobiles NV
|
203,070
|
3,151,397
|
Moncler SpA
|
72,435
|
2,795,176
|
Pirelli & C. SpA(b)
|
590,777
|
3,415,216
|
Total
|
12,043,459
|
Netherlands 5.6%
|
ASML Holding NV
|
42,367
|
11,105,006
|
Koninklijke Philips NV
|
104,058
|
4,565,452
|
Total
|
15,670,458
|
Common Stocks (continued)
|
Issuer
|
Shares
|
Value ($)
|
Norway 4.4%
|
DNB ASA
|
382,318
|
6,960,977
|
SalMar ASA
|
116,419
|
5,433,009
|
Total
|
12,393,986
|
Portugal 1.3%
|
Galp Energia SGPS SA
|
228,531
|
3,655,304
|
Spain 4.1%
|
Amadeus IT Group SA, Class A
|
87,343
|
6,461,483
|
Grifols SA
|
152,411
|
4,916,866
|
Total
|
11,378,349
|
Sweden 4.3%
|
Atlas Copco AB, Class A
|
175,267
|
6,186,317
|
Sandvik AB
|
334,189
|
5,904,227
|
Total
|
12,090,544
|
Switzerland 4.4%
|
SGS SA, Registered Shares
|
2,554
|
6,661,101
|
Sika AG
|
32,732
|
5,626,843
|
Total
|
12,287,944
|
United Kingdom 32.7%
|
3i Group PLC
|
491,727
|
7,185,549
|
Ashtead Group PLC
|
137,050
|
4,172,599
|
Associated British Foods PLC
|
171,228
|
4,942,461
|
BT Group PLC
|
2,403,507
|
6,378,566
|
Galiform PLC
|
730,482
|
5,467,135
|
M&G PLC(a)
|
350,261
|
970,034
|
Persimmon PLC
|
238,348
|
7,030,383
|
Prudential PLC
|
350,261
|
6,117,953
|
RELX PLC
|
322,903
|
7,770,005
|
Rio Tinto PLC
|
105,085
|
5,470,917
|
St. James’s Place PLC
|
528,608
|
7,129,899
|
Tesco PLC
|
3,893,332
|
11,884,610
|
Unilever PLC
|
129,989
|
7,783,610
|
Vodafone Group PLC
|
4,461,574
|
9,104,832
|
Total
|
91,408,553
|
Total Common Stocks
(Cost $250,981,709)
|
277,827,142
|
|
The accompanying Notes to Financial
Statements are an integral part of this statement.
Columbia Contrarian Europe Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
October 31, 2019
Money Market Funds 0.0%
|
|
Shares
|
Value ($)
|
Columbia Short-Term Cash Fund, 1.938%(c),(d)
|
18,179
|
18,178
|
Total Money Market Funds
(Cost $18,178)
|
18,178
|
Total Investments in Securities
(Cost $250,999,887)
|
277,845,320
|
Other Assets & Liabilities, Net
|
|
1,864,875
|
Net Assets
|
$279,710,195
|
Notes to Portfolio of
Investments
(a)
|
Non-income producing investment.
|
(b)
|
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 October 31, 2019, the total value of these securities amounted to $3,415,216, which represents
1.22% of total net assets.
|
(c)
|
The rate shown is the seven-day current annualized yield at October 31, 2019.
|
(d)
|
As defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company
which is under common ownership or control with the Fund. Holdings and transactions in these affiliated companies during the year ended October 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized gain
(loss) —
affiliated
issuers ($)
|
Net change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends —
affiliated
issuers ($)
|
Value —
affiliated
issuers
at end of
period ($)
|
Columbia Short-Term Cash Fund, 1.938%
|
|
1,851,523
|
71,997,238
|
(73,830,582)
|
18,179
|
(687)
|
—
|
62,322
|
18,178
|
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.
The accompanying Notes to Financial Statements are
an integral part of this statement.
10
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Portfolio of Investments (continued)
October 31, 2019
Fair value measurements (continued)
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 October 31, 2019:
|
Level 1 ($)
|
Level 2 ($)
|
Level 3 ($)
|
Total ($)
|
Investments in Securities
|
|
|
|
|
Common Stocks
|
|
|
|
|
Belgium
|
—
|
8,194,218
|
—
|
8,194,218
|
Denmark
|
—
|
13,243,481
|
—
|
13,243,481
|
Finland
|
—
|
6,801,178
|
—
|
6,801,178
|
France
|
—
|
47,827,457
|
—
|
47,827,457
|
Germany
|
—
|
27,649,895
|
—
|
27,649,895
|
Ireland
|
—
|
3,182,316
|
—
|
3,182,316
|
Italy
|
—
|
12,043,459
|
—
|
12,043,459
|
Netherlands
|
—
|
15,670,458
|
—
|
15,670,458
|
Norway
|
—
|
12,393,986
|
—
|
12,393,986
|
Portugal
|
—
|
3,655,304
|
—
|
3,655,304
|
Spain
|
—
|
11,378,349
|
—
|
11,378,349
|
Sweden
|
—
|
12,090,544
|
—
|
12,090,544
|
Switzerland
|
—
|
12,287,944
|
—
|
12,287,944
|
United Kingdom
|
—
|
91,408,553
|
—
|
91,408,553
|
Total Common Stocks
|
—
|
277,827,142
|
—
|
277,827,142
|
Money Market Funds
|
18,178
|
—
|
—
|
18,178
|
Total Investments in Securities
|
18,178
|
277,827,142
|
—
|
277,845,320
|
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.
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Contrarian Europe Fund | Annual Report 2019
|
11
|
Statement of Assets and Liabilities
October 31, 2019
Assets
|
|
Investments in securities, at value
|
|
Unaffiliated issuers (cost $250,981,709)
|
$277,827,142
|
Affiliated issuers (cost $18,178)
|
18,178
|
Foreign currency (cost $39,626)
|
39,613
|
Receivable for:
|
|
Investments sold
|
3,605
|
Capital shares sold
|
11,714,999
|
Dividends
|
253,475
|
Foreign tax reclaims
|
1,155,081
|
Expense reimbursement due from Investment Manager
|
186
|
Prepaid expenses
|
2,897
|
Total assets
|
291,015,176
|
Liabilities
|
|
Payable for:
|
|
Investments purchased
|
10,025,937
|
Capital shares purchased
|
164,983
|
Management services fees
|
6,488
|
Distribution and/or service fees
|
566
|
Transfer agent fees
|
12,045
|
Compensation of board members
|
43,523
|
Interfund lending
|
1,000,000
|
Other expenses
|
51,439
|
Total liabilities
|
11,304,981
|
Net assets applicable to outstanding capital stock
|
$279,710,195
|
Represented by
|
|
Paid in capital
|
256,322,427
|
Total distributable earnings (loss)
|
23,387,768
|
Total - representing net assets applicable to outstanding capital stock
|
$279,710,195
|
Class A
|
|
Net assets
|
$57,165,316
|
Shares outstanding
|
8,171,175
|
Net asset value per share
|
$7.00
|
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)
|
$7.43
|
Advisor Class
|
|
Net assets
|
$6,787,990
|
Shares outstanding
|
974,029
|
Net asset value per share
|
$6.97
|
Class C
|
|
Net assets
|
$6,330,535
|
Shares outstanding
|
931,750
|
Net asset value per share
|
$6.79
|
Institutional Class
|
|
Net assets
|
$30,653,255
|
Shares outstanding
|
4,397,620
|
Net asset value per share
|
$6.97
|
Institutional 2 Class
|
|
Net assets
|
$509,250
|
Shares outstanding
|
72,518
|
Net asset value per share
|
$7.02
|
Institutional 3 Class
|
|
Net assets
|
$178,263,849
|
Shares outstanding
|
26,082,483
|
Net asset value per share
|
$6.83
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
12
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Statement of Operations
Year Ended October 31, 2019
Net investment income
|
|
Income:
|
|
Dividends — unaffiliated issuers
|
$8,582,766
|
Dividends — affiliated issuers
|
62,322
|
Foreign taxes withheld
|
(746,695)
|
Total income
|
7,898,393
|
Expenses:
|
|
Management services fees
|
2,395,454
|
Distribution and/or service fees
|
|
Class A
|
152,486
|
Class C
|
75,479
|
Transfer agent fees
|
|
Class A
|
94,079
|
Advisor Class
|
5,027
|
Class C
|
11,707
|
Institutional Class
|
35,190
|
Institutional 2 Class
|
263
|
Institutional 3 Class
|
13,551
|
Class T
|
1
|
Compensation of board members
|
14,840
|
Custodian fees
|
38,638
|
Printing and postage fees
|
22,621
|
Registration fees
|
91,483
|
Audit fees
|
50,830
|
Legal fees
|
9,632
|
Interest on interfund lending
|
1,006
|
Compensation of chief compliance officer
|
77
|
Other
|
13,805
|
Total expenses
|
3,026,169
|
Fees waived or expenses reimbursed by Investment Manager and its affiliates
|
(72,495)
|
Expense reduction
|
(40)
|
Total net expenses
|
2,953,634
|
Net investment income
|
4,944,759
|
Realized and unrealized gain (loss) — net
|
|
Net realized gain (loss) on:
|
|
Investments — unaffiliated issuers
|
(6,417,772)
|
Investments — affiliated issuers
|
(687)
|
Foreign currency translations
|
(106,957)
|
Net realized loss
|
(6,525,416)
|
Net change in unrealized appreciation (depreciation) on:
|
|
Investments — unaffiliated issuers
|
29,207,289
|
Foreign currency translations
|
54,431
|
Net change in unrealized appreciation (depreciation)
|
29,261,720
|
Net realized and unrealized gain
|
22,736,304
|
Net increase in net assets resulting from operations
|
$27,681,063
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
Columbia Contrarian Europe Fund | Annual Report 2019
|
13
|
Statement of Changes in Net Assets
|
Year Ended
October 31, 2019
|
Year Ended
October 31, 2018
|
Operations
|
|
|
Net investment income
|
$4,944,759
|
$4,355,328
|
Net realized gain (loss)
|
(6,525,416)
|
30,517,843
|
Net change in unrealized appreciation (depreciation)
|
29,261,720
|
(75,958,207)
|
Net increase (decrease) in net assets resulting from operations
|
27,681,063
|
(41,085,036)
|
Distributions to shareholders
|
|
|
Net investment income and net realized gains
|
|
|
Class A
|
(1,534,072)
|
(1,381,286)
|
Advisor Class
|
(54,719)
|
(20,195)
|
Class C
|
(136,379)
|
(147,186)
|
Institutional Class
|
(562,702)
|
(1,528,986)
|
Institutional 2 Class
|
(9,962)
|
(7,549)
|
Institutional 3 Class
|
(5,137,462)
|
(4,031,132)
|
Class K
|
—
|
(64)
|
Class T
|
—
|
(38)
|
Total distributions to shareholders
|
(7,435,296)
|
(7,116,436)
|
Decrease in net assets from capital stock activity
|
(62,595,428)
|
(30,476,350)
|
Total decrease in net assets
|
(42,349,661)
|
(78,677,822)
|
Net assets at beginning of year
|
322,059,856
|
400,737,678
|
Net assets at end of year
|
$279,710,195
|
$322,059,856
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
14
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Statement of Changes in Net Assets (continued)
|
Year Ended
|
Year Ended
|
|
October 31, 2019
|
October 31, 2018
|
|
Shares
|
Dollars ($)
|
Shares
|
Dollars ($)
|
Capital stock activity
|
Class A
|
|
|
|
|
Subscriptions
|
262,139
|
1,733,883
|
1,106,037
|
8,156,130
|
Distributions reinvested
|
261,762
|
1,523,456
|
187,962
|
1,368,366
|
Redemptions
|
(2,890,675)
|
(18,728,789)
|
(2,710,806)
|
(19,728,649)
|
Net decrease
|
(2,366,774)
|
(15,471,450)
|
(1,416,807)
|
(10,204,153)
|
Advisor Class
|
|
|
|
|
Subscriptions
|
766,822
|
5,087,074
|
362,808
|
2,673,997
|
Distributions reinvested
|
9,441
|
54,664
|
2,780
|
20,152
|
Redemptions
|
(122,256)
|
(799,588)
|
(108,165)
|
(777,288)
|
Net increase
|
654,007
|
4,342,150
|
257,423
|
1,916,861
|
Class C
|
|
|
|
|
Subscriptions
|
18,841
|
119,814
|
129,605
|
944,350
|
Distributions reinvested
|
22,450
|
127,738
|
19,502
|
138,659
|
Redemptions
|
(583,100)
|
(3,700,074)
|
(700,976)
|
(4,969,624)
|
Net decrease
|
(541,809)
|
(3,452,522)
|
(551,869)
|
(3,886,615)
|
Institutional Class
|
|
|
|
|
Subscriptions
|
2,942,263
|
20,268,100
|
2,474,694
|
17,998,131
|
Distributions reinvested
|
96,153
|
556,726
|
208,875
|
1,514,344
|
Redemptions
|
(8,106,168)
|
(52,130,270)
|
(4,516,680)
|
(32,662,216)
|
Net decrease
|
(5,067,752)
|
(31,305,444)
|
(1,833,111)
|
(13,149,741)
|
Institutional 2 Class
|
|
|
|
|
Subscriptions
|
23,151
|
157,220
|
5,361
|
39,531
|
Distributions reinvested
|
1,699
|
9,905
|
1,028
|
7,505
|
Redemptions
|
(11,069)
|
(72,077)
|
(3,623)
|
(26,394)
|
Net increase
|
13,781
|
95,048
|
2,766
|
20,642
|
Institutional 3 Class
|
|
|
|
|
Subscriptions
|
216,263
|
1,338,416
|
431,774
|
3,073,908
|
Distributions reinvested
|
906,064
|
5,137,384
|
567,757
|
4,031,073
|
Redemptions
|
(3,593,753)
|
(23,277,051)
|
(1,692,846)
|
(12,274,354)
|
Net decrease
|
(2,471,426)
|
(16,801,251)
|
(693,315)
|
(5,169,373)
|
Class K
|
|
|
|
|
Distributions reinvested
|
—
|
—
|
3
|
24
|
Redemptions
|
—
|
—
|
(538)
|
(3,995)
|
Net decrease
|
—
|
—
|
(535)
|
(3,971)
|
Class T
|
|
|
|
|
Redemptions
|
(326)
|
(1,959)
|
—
|
—
|
Net decrease
|
(326)
|
(1,959)
|
—
|
—
|
Total net decrease
|
(9,780,299)
|
(62,595,428)
|
(4,235,448)
|
(30,476,350)
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Contrarian Europe Fund | Annual Report 2019
|
15
|
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 10/31/2019
|
$6.48
|
0.10
|
0.57
|
0.67
|
(0.06)
|
(0.09)
|
(0.15)
|
Year Ended 10/31/2018
|
$7.43
|
0.06
|
(0.89)
|
(0.83)
|
(0.12)
|
—
|
(0.12)
|
Year Ended 10/31/2017
|
$5.92
|
0.07
|
1.57
|
1.64
|
(0.13)
|
—
|
(0.13)
|
Year Ended 10/31/2016
|
$6.96
|
0.10
|
(0.86)
|
(0.76)
|
(0.08)
|
(0.20)
|
(0.28)
|
Year Ended 10/31/2015
|
$7.05
|
0.08
|
0.16
|
0.24
|
(0.12)
|
(0.21)
|
(0.33)
|
Advisor Class
|
Year Ended 10/31/2019
|
$6.46
|
0.09
|
0.59
|
0.68
|
(0.08)
|
(0.09)
|
(0.17)
|
Year Ended 10/31/2018
|
$7.41
|
0.10
|
(0.92)
|
(0.82)
|
(0.13)
|
—
|
(0.13)
|
Year Ended 10/31/2017
|
$5.90
|
0.06
|
1.59
|
1.65
|
(0.14)
|
—
|
(0.14)
|
Year Ended 10/31/2016
|
$6.94
|
0.12
|
(0.87)
|
(0.75)
|
(0.09)
|
(0.20)
|
(0.29)
|
Year Ended 10/31/2015
|
$7.03
|
0.11
|
0.15
|
0.26
|
(0.14)
|
(0.21)
|
(0.35)
|
Class C
|
Year Ended 10/31/2019
|
$6.28
|
0.05
|
0.56
|
0.61
|
(0.01)
|
(0.09)
|
(0.10)
|
Year Ended 10/31/2018
|
$7.23
|
0.01
|
(0.89)
|
(0.88)
|
(0.07)
|
—
|
(0.07)
|
Year Ended 10/31/2017
|
$5.75
|
0.02
|
1.54
|
1.56
|
(0.08)
|
—
|
(0.08)
|
Year Ended 10/31/2016
|
$6.77
|
0.06
|
(0.86)
|
(0.80)
|
(0.02)
|
(0.20)
|
(0.22)
|
Year Ended 10/31/2015
|
$6.86
|
0.02
|
0.17
|
0.19
|
(0.07)
|
(0.21)
|
(0.28)
|
Institutional Class
|
Year Ended 10/31/2019
|
$6.46
|
0.11
|
0.57
|
0.68
|
(0.08)
|
(0.09)
|
(0.17)
|
Year Ended 10/31/2018
|
$7.41
|
0.08
|
(0.90)
|
(0.82)
|
(0.13)
|
—
|
(0.13)
|
Year Ended 10/31/2017
|
$5.90
|
0.10
|
1.55
|
1.65
|
(0.14)
|
—
|
(0.14)
|
Year Ended 10/31/2016
|
$6.94
|
0.11
|
(0.86)
|
(0.75)
|
(0.09)
|
(0.20)
|
(0.29)
|
Year Ended 10/31/2015
|
$7.04
|
0.08
|
0.17
|
0.25
|
(0.14)
|
(0.21)
|
(0.35)
|
Institutional 2 Class
|
Year Ended 10/31/2019
|
$6.51
|
0.12
|
0.57
|
0.69
|
(0.09)
|
(0.09)
|
(0.18)
|
Year Ended 10/31/2018
|
$7.46
|
0.09
|
(0.90)
|
(0.81)
|
(0.14)
|
—
|
(0.14)
|
Year Ended 10/31/2017
|
$5.94
|
0.10
|
1.57
|
1.67
|
(0.15)
|
—
|
(0.15)
|
Year Ended 10/31/2016
|
$6.99
|
0.13
|
(0.88)
|
(0.75)
|
(0.10)
|
(0.20)
|
(0.30)
|
Year Ended 10/31/2015
|
$7.08
|
0.12
|
0.15
|
0.27
|
(0.15)
|
(0.21)
|
(0.36)
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
16
|
Columbia Contrarian Europe 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 10/31/2019
|
$7.00
|
10.83%
|
1.37%(c)
|
1.34%(c),(d)
|
1.56%
|
62%
|
$57,165
|
Year Ended 10/31/2018
|
$6.48
|
(11.40%)
|
1.35%(c),(e)
|
1.35%(c),(d),(e)
|
0.86%
|
63%
|
$68,249
|
Year Ended 10/31/2017
|
$7.43
|
28.21%
|
1.39%
|
1.38%(d)
|
1.01%
|
55%
|
$88,861
|
Year Ended 10/31/2016
|
$5.92
|
(11.25%)
|
1.36%
|
1.36%(d)
|
1.68%
|
55%
|
$114,672
|
Year Ended 10/31/2015
|
$6.96
|
3.61%
|
1.35%(e)
|
1.35%(d),(e)
|
1.14%
|
63%
|
$189,670
|
Advisor Class
|
Year Ended 10/31/2019
|
$6.97
|
11.04%
|
1.12%(c)
|
1.09%(c),(d)
|
1.38%
|
62%
|
$6,788
|
Year Ended 10/31/2018
|
$6.46
|
(11.26%)
|
1.11%(c),(e)
|
1.10%(c),(d),(e)
|
1.37%
|
63%
|
$2,066
|
Year Ended 10/31/2017
|
$7.41
|
28.67%
|
1.14%
|
1.13%(d)
|
1.00%
|
55%
|
$464
|
Year Ended 10/31/2016
|
$5.90
|
(11.05%)
|
1.09%
|
1.09%(d)
|
1.87%
|
55%
|
$248
|
Year Ended 10/31/2015
|
$6.94
|
3.90%
|
1.10%(e)
|
1.10%(d),(e)
|
1.51%
|
63%
|
$6,800
|
Class C
|
Year Ended 10/31/2019
|
$6.79
|
9.99%
|
2.12%(c)
|
2.10%(c),(d)
|
0.80%
|
62%
|
$6,331
|
Year Ended 10/31/2018
|
$6.28
|
(12.23%)
|
2.10%(c),(e)
|
2.10%(c),(d),(e)
|
0.19%
|
63%
|
$9,259
|
Year Ended 10/31/2017
|
$7.23
|
27.47%
|
2.14%
|
2.13%(d)
|
0.36%
|
55%
|
$14,637
|
Year Ended 10/31/2016
|
$5.75
|
(12.02%)
|
2.11%
|
2.11%(d)
|
0.92%
|
55%
|
$16,919
|
Year Ended 10/31/2015
|
$6.77
|
2.84%
|
2.10%(e)
|
2.10%(d),(e)
|
0.36%
|
63%
|
$29,009
|
Institutional Class
|
Year Ended 10/31/2019
|
$6.97
|
11.04%
|
1.11%(c)
|
1.09%(c),(d)
|
1.69%
|
62%
|
$30,653
|
Year Ended 10/31/2018
|
$6.46
|
(11.26%)
|
1.10%(c),(e)
|
1.10%(c),(d),(e)
|
1.16%
|
63%
|
$61,160
|
Year Ended 10/31/2017
|
$7.41
|
28.65%
|
1.14%
|
1.13%(d)
|
1.52%
|
55%
|
$83,748
|
Year Ended 10/31/2016
|
$5.90
|
(11.06%)
|
1.11%
|
1.11%(d)
|
1.85%
|
55%
|
$54,741
|
Year Ended 10/31/2015
|
$6.94
|
3.75%
|
1.11%(e)
|
1.11%(d),(e)
|
1.18%
|
63%
|
$57,916
|
Institutional 2 Class
|
Year Ended 10/31/2019
|
$7.02
|
11.07%
|
1.04%(c)
|
1.01%(c)
|
1.85%
|
62%
|
$509
|
Year Ended 10/31/2018
|
$6.51
|
(11.12%)
|
1.02%(c),(e)
|
1.01%(c),(e)
|
1.19%
|
63%
|
$382
|
Year Ended 10/31/2017
|
$7.46
|
28.78%
|
1.03%
|
1.03%
|
1.49%
|
55%
|
$418
|
Year Ended 10/31/2016
|
$5.94
|
(10.99%)
|
0.99%
|
0.99%
|
2.13%
|
55%
|
$253
|
Year Ended 10/31/2015
|
$6.99
|
4.03%
|
0.98%(e)
|
0.98%(e)
|
1.68%
|
63%
|
$184
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
Columbia Contrarian Europe Fund | Annual Report 2019
|
17
|
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 10/31/2019
|
$6.34
|
0.13
|
0.54
|
0.67
|
(0.09)
|
(0.09)
|
(0.18)
|
Year Ended 10/31/2018
|
$7.27
|
0.09
|
(0.88)
|
(0.79)
|
(0.14)
|
—
|
(0.14)
|
Year Ended 10/31/2017
|
$5.79
|
0.13
|
1.50
|
1.63
|
(0.15)
|
—
|
(0.15)
|
Year Ended 10/31/2016(f)
|
$5.87
|
0.12
|
(0.20)
|
(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)
|
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)
|
Ratios include line of credit interest expense which is less than 0.01%.
|
(f)
|
Institutional 3 Class shares commenced operations on March 1, 2016. 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.
18
|
Columbia Contrarian Europe 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 10/31/2019
|
$6.83
|
11.14%
|
0.98%(c)
|
0.95%(c)
|
1.96%
|
62%
|
$178,264
|
Year Ended 10/31/2018
|
$6.34
|
(11.10%)
|
0.96%(c),(e)
|
0.95%(c),(e)
|
1.25%
|
63%
|
$180,942
|
Year Ended 10/31/2017
|
$7.27
|
28.94%
|
0.98%
|
0.98%
|
2.02%
|
55%
|
$212,604
|
Year Ended 10/31/2016(f)
|
$5.79
|
(1.36%)
|
0.92%(g)
|
0.92%(g)
|
2.91%(g)
|
55%
|
$2
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Contrarian Europe Fund | Annual Report 2019
|
19
|
Notes to Financial Statements
October 31, 2019
Note 1. Organization
Columbia Contrarian Europe 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 investors 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
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. Under the policy, the Fund may utilize 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, if available.
20
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 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.
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.
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.
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 on the payment date, the proceeds are recorded as
realized gains.
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 Contrarian Europe Fund | Annual Report 2019
|
21
|
Notes to Financial Statements (continued)
October 31, 2019
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
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 the period ended July 31, 2019 and
all subsequent periods. To comply with the ASU, 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.
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 Investment Manager is responsible for the ultimate oversight of investments made by the
Fund. The Fund’s subadviser (see Subadvisory agreement below) has the primary responsibility for the day-to-day portfolio management of the
22
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
Fund. The management services fee is an annual fee
that is equal to a percentage of the Fund’s daily net assets that declines from 0.88% to 0.62% as the Fund’s net assets increase. The effective management services fee rate for the year ended October 31,
2019 was 0.88% of the Fund’s average daily net assets.
Subadvisory agreement
The Investment Manager has entered
into a Subadvisory Agreement with Threadneedle International Limited (Threadneedle), an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Ameriprise Financial, to serve as the subadviser
to the Fund. The Investment Manager compensates Threadneedle to manage the investment of the Fund’s 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 for 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 Contrarian Europe Fund | Annual Report 2019
|
23
|
Notes to Financial Statements (continued)
October 31, 2019
For the year ended October 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
|
0.15
|
Advisor Class
|
0.15
|
Class C
|
0.16
|
Institutional Class
|
0.15
|
Institutional 2 Class
|
0.07
|
Institutional 3 Class
|
0.01
|
Class T
|
0.02(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 October 31, 2019, these minimum account balance fees reduced total expenses
of the Fund by $40.
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 $153,000 for Class C shares. This amount is based on the most recent information available as
of September 30, 2019, and may be recovered from future payments under the distribution plan or contingent deferred sales charges (CDSCs). To the extent the unreimbursed expense has been fully recovered, the
distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
Sales charges, including front-end
charges and CDSCs, received by the Distributor for distributing Fund shares for the year ended October 31, 2019, if any, are listed below:
|
Front End (%)
|
CDSC (%)
|
Amount ($)
|
Class A
|
5.75
|
0.50 - 1.00(a)
|
25,663
|
Class C
|
—
|
1.00(b)
|
423
|
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.
24
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 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:
|
Fee rate(s) contractual
through
February 29, 2020
|
Class A
|
1.35%
|
Advisor Class
|
1.10
|
Class C
|
2.10
|
Institutional Class
|
1.10
|
Institutional 2 Class
|
1.01
|
Institutional 3 Class
|
0.95
|
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 October 31, 2019, these
differences were primarily due to differing treatment for deferral/reversal of wash sale losses, trustees’ deferred compensation, capital loss carryforward, distribution reclassifications, foreign currency
transactions, and passive foreign investment company (PFIC) holdings. 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) ($)
|
Paid in
capital ($)
|
1,221,828
|
(1,221,828)
|
—
|
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 Contrarian Europe Fund | Annual Report 2019
|
25
|
Notes to Financial Statements (continued)
October 31, 2019
The tax character of distributions
paid during the years indicated was as follows:
Year Ended October 31, 2019
|
Year Ended October 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total ($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total ($)
|
3,766,493
|
3,668,803
|
7,435,296
|
7,116,436
|
—
|
7,116,436
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At October 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 ($)
|
Net unrealized
appreciation ($)
|
6,336,374
|
—
|
(7,900,093)
|
25,005,281
|
At October 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) ($)
|
Net unrealized
appreciation ($)
|
252,840,039
|
31,969,306
|
(6,964,025)
|
25,005,281
|
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 October 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 October 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 ($)
|
(7,900,093)
|
—
|
(7,900,093)
|
—
|
—
|
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 $168,258,764 and $232,509,425, respectively, for the year ended October 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.
26
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 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 October 31, 2019 was as follows:
Borrower or lender
|
Average loan
balance ($)
|
Weighted average
interest rate (%)
|
Number of days
with outstanding loans
|
Borrower
|
500,000
|
2.80
|
28
|
Interest expense incurred by the
Fund is recorded as Interfund lending in the Statement of Operations. The Fund had an outstanding interfund loan balance at October 31, 2019 as shown on the Statement of Assets and Liabilities. The loans are
unsecured.
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 October 31, 2019.
Note 9. Significant
risks
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.
Geographic concentration risk
The Fund may be particularly
susceptible to economic, political, regulatory or other events or conditions affecting issuers and countries in Europe. Currency devaluations could occur in countries that have not yet experienced currency devaluation
to date, or could continue to occur in countries that have already experienced such devaluations. In addition, the private and
Columbia Contrarian Europe Fund | Annual Report 2019
|
27
|
Notes to Financial Statements (continued)
October 31, 2019
public sectors’ debt problems of a single
European Union (EU) country can pose significant economic risks to the EU as a whole. As a result, the Fund’s NAV may be more volatile than the NAV of a more geographically diversified fund. If securities of
issuers in Europe fall out of favor, it may cause the Fund to underperform other funds that do not concentrate in this region of the world.
Shareholder concentration risk
At October 31, 2019, affiliated
shareholders of record owned 90.3% 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.
28
|
Columbia Contrarian Europe 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 Contrarian Europe Fund
Opinion on the Financial
Statements
We have audited the accompanying
statement of assets and liabilities, including the portfolio of investments, of Columbia Contrarian Europe Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund") as of
October 31, 2019, the related statement of operations for the year ended October 31, 2019, the statement of changes in net assets for each of the two years in the period ended October 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 October 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 October
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 October 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
December 20, 2019
We have served as the auditor of
one or more investment companies within the Columbia Funds Complex since 1977.
Columbia Contrarian Europe Fund | Annual Report 2019
|
29
|
Federal Income Tax
Information
(Unaudited)
The Fund hereby designates the
following tax attributes for the fiscal year ended October 31, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
Qualified
dividend
income
|
Foreign
taxes paid
to foreign
countries
|
Foreign
taxes paid
per share
to foreign
countries
|
Foreign
source
income
|
Foreign
source
income per
share
|
100.00%
|
$746,695
|
$0.02
|
$8,582,765
|
$0.21
|
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.
Foreign taxes. The Fund makes the
election to pass through to shareholders the foreign taxes paid. Eligible shareholders may claim a foreign tax credit. These taxes, and the corresponding foreign source income, are provided.
TRUSTEES AND
OFFICERS
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
|
30
|
Columbia Contrarian Europe 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
|
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
|
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
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
31
|
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
|
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
|
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
|
32
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
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.
|
192
|
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.
|
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.
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).
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
33
|
TRUSTEES AND OFFICERS (continued)
Fund officers (continued)
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
|
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.
|
Approval of Management
and Subadvisory
Agreements
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 Contrarian Europe 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). In addition, under a Subadvisory Agreement (the Subadvisory Agreement) between
Columbia Threadneedle and Threadneedle International Limited (the Subadviser), an affiliate of Columbia Threadneedle, the Subadviser has provided portfolio management and related services for the Fund.
34
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Approval of Management and Subadvisory
Agreements (continued)
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 and the Subadvisory Agreement (together, the Advisory Agreements). 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 Advisory Agreements.
The Board, at its June 17-19, 2019
in-person Board meeting (the June Meeting), considered the renewal of each of the Advisory Agreements for additional one-year terms. At the June Meeting, Independent Legal Counsel reviewed with the Independent
Trustees various factors relevant to the Board’s consideration of advisory and subadvisory 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 each of the Advisory Agreements.
Nature, extent and quality of
services provided by Columbia Threadneedle and the Subadviser
The Board analyzed various
reports and presentations it had received detailing the services performed by Columbia Threadneedle and the Subadviser, as well as their history, reputation, expertise, resources and relative capabilities, and the
qualifications of their personnel.
The Board specifically considered
the many developments during recent years concerning the services provided by Columbia Threadneedle, including, in particular, detailed information regarding the process employed for selecting and overseeing
affiliated and unaffiliated Subadvisers. With respect to Columbia Threadneedle, the Board also noted 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 subadvised 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
Advisory Agreements, the Board also took into account the organization and strength of the Fund’s and its service providers’ compliance programs. The Board also 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.
In addition, the Board discussed
the acceptability of the terms of the Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle in addition to monitoring the Subadviser), noting that no
material changes are proposed from the forms of agreements previously approved. The Board also noted the wide array of legal and compliance services provided to the Funds under the Fund Management Agreements. It was
also observed that the services being performed under the Management Agreement were of a reasonably high quality.
Columbia Contrarian Europe Fund | Annual Report 2019
|
35
|
Approval of Management and Subadvisory
Agreements (continued)
With respect to the Subadviser, the Board observed
that it had previously approved the Subadviser’s code of ethics and compliance program, that the Chief Compliance Officer of the Fund continues to monitor the code and the program, and that no material concerns
have been reported. The Board also considered the Subadviser’s organizational strength and resources, portfolio management team depth and capabilities and investment process. The Board also considered the
Subadviser’s capability and wherewithal to carry out its responsibilities under the Subadvisory Agreement. In addition, the Board discussed the acceptability of the terms of the Subadvisory Agreement, including
the scope of services required to be performed. The Board noted that the terms of the Subadvisory Agreement are generally consistent with the terms of other subadviser agreements for subadvisers who manage other funds
managed by the Investment Manager. It was observed that no material changes were recommended to the Subadvisory Agreement. The Board took into account Columbia Threadneedle’s representation that the Subadviser
was in a position to provide quality services to the Fund. In this regard, the Board further observed the various services provided by the subadvisory oversight team and their significant resources added in recent
years to help improve performance.
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 the Subadviser is 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 Advisory Agreements, 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): (i) the performance of the Fund, (ii) the performance of a benchmark index, (iii) the
percentage ranking of the Fund among its comparison group, (iv) the product score of the Fund (taking into account performance relative to peers and benchmarks) and (v) 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.
Additionally, the Board reviewed
the performance of the Subadviser. The Board considered, in particular, management’s rationale for recommending the continued retention of the Subadviser.
Comparative fees, costs of
services provided and the profits realized by Columbia Threadneedle, its affiliates and the Subadviser from their relationships with the Fund
The Board reviewed comparative
fees and the costs of services provided under each of the Advisory Agreements. 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 slightly below the
peer universe’s median expense ratio shown in the reports.
Additionally, the Board reviewed
the level of subadvisory fees paid to the Subadviser, noting that the fees are paid by the Investment Manager and do not impact the fees paid by the Fund. The Board also reviewed the fees charged by the Subadviser to
other mutual funds employing similar investment strategies where the Subadviser serves as investment
36
|
Columbia Contrarian Europe Fund | Annual Report 2019
|
Approval of Management and Subadvisory
Agreements (continued)
adviser or subadviser. Based on its reviews,
including JDL’s conclusions/analyses, the Board concluded that the Fund’s investment management and subadvisory fees were 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.
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 fees payable under each of the Advisory Agreements 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 each of the Advisory Agreements.
Columbia Contrarian Europe Fund | Annual Report 2019
|
37
|
[THIS PAGE INTENTIONALLY LEFT
BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Contrarian Europe 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
October 31, 2019
Columbia Seligman
Global Technology 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
|
|
13
|
|
15
|
|
16
|
|
18
|
|
22
|
|
34
|
|
35
|
|
35
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|
39
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Columbia Seligman Global Technology
Fund (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 (the
Investment Manager)
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 Seligman Global Technology
Fund | Annual Report 2019
Investment objective
The Fund
seeks to provide shareholders with long-term capital appreciation.
Portfolio management
Paul Wick
Lead Portfolio Manager
Managed Fund since 1994
Shekhar Pramanick
Portfolio Manager
Managed Fund since 2014
Sanjay Devgan
Technology Team Member
Managed Fund since 2014
Jeetil Patel
Technology Team Member
Managed Fund since 2015
Christopher Boova
Technology Team Member
Managed Fund since 2016
Vimal Patel
Technology Team Member
Managed Fund since 2018
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 October 31, 2019)
|
|
|
Inception
|
1 Year
|
5 Years
|
10 Years
|
Class A
|
Excluding sales charges
|
05/23/94
|
30.23
|
18.56
|
16.00
|
|
Including sales charges
|
|
22.74
|
17.16
|
15.31
|
Advisor Class*
|
11/08/12
|
30.52
|
18.85
|
16.20
|
Class C
|
Excluding sales charges
|
05/27/99
|
29.21
|
17.66
|
15.13
|
|
Including sales charges
|
|
28.21
|
17.66
|
15.13
|
Institutional Class*
|
09/27/10
|
30.53
|
18.86
|
16.27
|
Institutional 2 Class
|
08/03/09
|
30.63
|
18.96
|
16.43
|
Institutional 3 Class*
|
03/01/17
|
30.69
|
18.79
|
16.11
|
Class R
|
04/30/03
|
29.89
|
18.26
|
15.70
|
MSCI World Information Technology Index (Net)
|
|
21.21
|
16.90
|
15.50
|
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 MSCI World Information
Technology Index (Net) is a free float-adjusted market capitalization index designed to measure information technology stock performance in the global developed equity market.
Indices are not available for
investment, are not professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes (except the MSCI World Information Technology 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 Seligman Global Technology Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a hypothetical $10,000 investment (October 31, 2009 — October 31, 2019)
The chart above shows the change in
value of a hypothetical $10,000 investment in Class A shares of Columbia Seligman Global Technology 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 October 31, 2019)
|
Lam Research Corp. (United States)
|
8.2
|
Broadcom, Inc. (United States)
|
5.3
|
Apple, Inc. (United States)
|
5.2
|
Synopsys, Inc. (United States)
|
4.2
|
Alphabet, Inc., Class A (United States)
|
4.1
|
Micron Technology, Inc. (United States)
|
3.7
|
Visa, Inc., Class A (United States)
|
3.6
|
Teradyne, Inc. (United States)
|
3.5
|
Marvell Technology Group Ltd. (United States)
|
3.3
|
Applied Materials, Inc. (United States)
|
3.2
|
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.
Equity sector breakdown (%) (at October 31, 2019)
|
Communication Services
|
9.1
|
Consumer Discretionary
|
1.4
|
Industrials
|
0.1
|
Information Technology
|
89.4
|
Total
|
100.0
|
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
Equity sub-industry breakdown (%) (at October 31, 2019)
|
Information Technology
|
|
Application Software
|
11.0
|
Communications Equipment
|
2.5
|
Data Processing & Outsourced Services
|
10.3
|
Internet Services & Infrastructure
|
1.5
|
Semiconductor Equipment
|
16.4
|
Semiconductors
|
26.3
|
Systems Software
|
10.9
|
Technology Hardware, Storage & Peripherals
|
10.5
|
Total
|
89.4
|
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
4
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Fund at a Glance (continued)
Country breakdown (%) (at October 31, 2019)
|
Brazil
|
2.3
|
China
|
0.3
|
Germany
|
2.6
|
Israel
|
1.5
|
Netherlands
|
2.0
|
Sweden
|
0.3
|
United Kingdom
|
0.8
|
United States(a)
|
90.2
|
Total
|
100.0
|
(a)
|
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 excluding 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 October 31, 2019, the Fund invested at least 40% of its net assets
in foreign companies in accordance with its principal investment strategy.
Summary of investments in securities by industry (%)
(at October 31, 2019)
|
Communications Equipment
|
2.4
|
Diversified Consumer Services
|
1.0
|
Electrical Equipment
|
0.1
|
Entertainment
|
1.8
|
Interactive Media & Services
|
6.9
|
Internet & Direct Marketing Retail
|
0.4
|
IT Services
|
11.4
|
Semiconductors & Semiconductor Equipment
|
40.7
|
Software
|
21.0
|
Technology Hardware, Storage & Peripherals
|
9.9
|
Money Market Funds
|
2.6
|
Total
|
98.1
|
Percentages indicated are based
upon net assets. The Fund’s portfolio composition is subject to change.
Columbia Seligman Global Technology Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance
For the 12-month period that ended
October 31, 2019, the Fund’s Class A shares returned 30.23% excluding sales charges. The Fund’s benchmark, the MSCI World Information Technology Index (Net), returned 21.21%. Stock selection coupled with a
significant overweight in the semiconductor industry were the primary contributors to the Fund’s substantial performance advantage over the benchmark. An underweight in hardware and stock selection in the
entertainment industry within the communication services sector also aided relative returns. Stock selection in the software and IT service industries detracted from relative results.
A mixed backdrop for global equity
markets
Global growth decelerated across
developed economies, as the impact of key supports faded, geopolitical risks increased and uncertainty around the U.K.’s exit from the European Union continued to cloud the global economic outlook and weigh on
capital spending. China’s economy slowed, reflecting an ongoing battle over trade with the United States. Japan’s economy is treading water. Eurozone countries registered mixed results, with annualized
growth generally tracking between one and two percent, leaving the United States as the only major economy on relatively solid ground. However, a rollout of state- level taxes on e-commerce transactions in many of the
most populous states could prove to be a hurdle for many internet retailers.
The U.S. Federal Reserve lowered
short-term borrowing rates in July and again in September. In its September meeting, the European Central Bank enacted broad monetary stimulus measures, while both the Bank of Japan and the People’s Bank of
China appear poised to take steps if momentum continues to weaken in their respective economies.
Most stock markets around the
developed world rose over the 12-month period ended October 31, 2019. The S&P 500 Index gained 14.33%. The MSCI ACWI ex USA Index (Net), a broad measure of stock market performance outside the United States,
returned 11.27% while the MSCI EAFE Index (Net), which tracks equity returns in developed countries in Europe, Australasia and the Far East, returned 11.04%.
Contributors
In the semiconductor industry,
positions in semiconductor equipment companies Lam Research and Teradyne helped performance, as both stocks rose sharply during the period. Lam, a major player in “etch fabrication” and
“deposition” equipment that creates chips, continued to benefit from the rise in demand for labor-intensive chips of all kinds. Given this increased complexity of chips, Teradyne, a supplier of automated
testing equipment, has benefited from the increased demand for semiconductor testing. Teradyne delivered solid earnings on the back of high margins and strong demand. Like many other companies in the industry, both
Lam and Teradyne availed themselves of improved access to offshore cash and bought back shares over the past year. The Fund had no exposure to chip company Nvidia, which aided relative returns as the company missed
earnings on excess inventory related to its gaming business and exposure to cryptocurrency mining. A relative underweight in Apple also aided relative returns. Apple underperformed the benchmark return on concerns
about slowing growth, even though those fears seemed to disappear after the company’s September 2019 product launch. In the entertainment industry, the Fund’s lack of exposure to Nintendo and Electronic
Arts boosted relative returns as these and other video gaming names took a substantial hit on concerns that competition from Battle Royale-type games, such as Fortnite, have the potential to shorten game life-cycles
and hurt earnings. We took advantage of the sell-off and established a position in Activision, which further aided results as the company’s recent launch of a mobile version of Call of Duty outperformed expected
demand.
Detractors
Within software, an underweight
in Microsoft detracted from relative results as the company’s cloud platform and strategy continued to benefit from the secular corporate shift to the cloud. Strength within Microsoft’s Server, Office and
Windows divisions also attracted investors. Positions in digital recording company TiVo and remote access solution provider LogMeIn also were industry detractors. The overhang of ongoing patent infringement litigation
continued to weigh on TiVo shares. LogMeIn reported better-than-expected earnings. However, investors exited the stocks after the company announced a three-year investment strategy designed to reaccelerate long term
growth that would reduce margins and cash flow for the next two years. In IT services, competition among money transfer and payment services companies remained fierce. A lack of exposure to some of the top performing
names, including MasterCard, detracted from returns. Memory suppliers, Micron and Western Digital, underperformed the broader semiconductor index in May as the market believed memory would be broadly
6
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Manager Discussion of Fund Performance (continued)
hurt by announced trade tariffs and the Huawei
ban. However, both companies have recently rebounded, as the inventory overhang that resulted from almost a year of continued reductions in capital spending by NAND suppliers has been worked down and NAND Flash
pricing has stabilized. DRAM bit consumption also accelerated as Cloud Data Center demand improved.
At period’s end
Late in the period, we observed a
significant rotation out of extreme valuation “momentum” stocks, particularly in the internet, software and medical device industries, and into more reasonably valued stocks, many of which are represented
in the Fund’s portfolio. As a result, we are optimistic regarding the current environment, even though we remain concerned about the potential impact of continued trade and tariff brinksmanship; and we remain
committed to finding attractively valued companies with what we believe to be underappreciated growth characteristics.
Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The products of technology companies may be subject to severe competition and rapid obsolescence, and their stocks may be subject to greater price fluctuations. Investments in small- and mid-cap companies involve risks and volatility greater than investments in larger, more established companies. 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. As a non-diversified fund, fewer investments could have a greater effect on performance. 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 Seligman Global Technology 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 $1,000 = 8.6), then multiply the results by the expenses paid during the period under
the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the Fund’s actual return) and then applies the
Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or
the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are
required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the
hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are
meant to highlight the ongoing costs of investing in a fund only and do not reflect any transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in
comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.
May 1, 2019 — October 31, 2019
|
|
Account value at the
beginning of the
period ($)
|
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
|
1,053.10
|
1,018.60
|
6.78
|
6.67
|
1.31
|
Advisor Class
|
1,000.00
|
1,000.00
|
1,054.30
|
1,019.86
|
5.49
|
5.40
|
1.06
|
Class C
|
1,000.00
|
1,000.00
|
1,048.90
|
1,014.82
|
10.64
|
10.46
|
2.06
|
Institutional Class
|
1,000.00
|
1,000.00
|
1,054.30
|
1,019.86
|
5.49
|
5.40
|
1.06
|
Institutional 2 Class
|
1,000.00
|
1,000.00
|
1,054.40
|
1,020.16
|
5.18
|
5.09
|
1.00
|
Institutional 3 Class
|
1,000.00
|
1,000.00
|
1,054.80
|
1,020.42
|
4.92
|
4.84
|
0.95
|
Class R
|
1,000.00
|
1,000.00
|
1,051.60
|
1,017.34
|
8.07
|
7.93
|
1.56
|
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 Seligman Global Technology Fund | Annual Report 2019
|
Portfolio of Investments
October 31, 2019
(Percentages represent value of
investments compared to net assets)
Investments in securities
Common Stocks 95.6%
|
Issuer
|
Shares
|
Value ($)
|
Brazil 2.3%
|
Afya Ltd., Class A(a)
|
272,378
|
7,354,206
|
Arco Platform Ltd., Class A(a)
|
113,285
|
4,701,328
|
Linx SA, ADR(a)
|
601,933
|
5,176,624
|
Pagseguro Digital Ltd., Class A(a)
|
284,254
|
10,540,138
|
Total
|
27,772,296
|
China 0.3%
|
Tencent Holdings Ltd., ADR
|
77,000
|
3,118,500
|
Germany 2.5%
|
Infineon Technologies AG
|
1,327,000
|
25,702,357
|
TeamViewer AG(a)
|
180,575
|
4,765,011
|
Total
|
30,467,368
|
Israel 1.4%
|
Mellanox Technologies Ltd.(a)
|
154,800
|
17,445,960
|
Netherlands 2.0%
|
NXP Semiconductors NV
|
209,500
|
23,815,960
|
Sweden 0.3%
|
Telefonaktiebolaget LM Ericsson, ADR
|
393,500
|
3,431,320
|
United Kingdom 0.8%
|
Finablr PLC(a)
|
4,500,534
|
9,164,395
|
United States 86.0%
|
Activision Blizzard, Inc.
|
347,644
|
19,478,493
|
Advanced Energy Industries, Inc.(a)
|
203,700
|
12,038,670
|
Alphabet, Inc., Class A(a)
|
37,625
|
47,362,350
|
Alphabet, Inc., Class C(a)
|
25,318
|
31,903,465
|
Apple, Inc.
|
239,385
|
59,549,413
|
Applied Materials, Inc.
|
682,400
|
37,027,024
|
Arista Networks, Inc.(a)
|
38,685
|
9,461,190
|
Bloom Energy Corp., Class A(a)
|
380,900
|
1,165,554
|
Booking Holdings, Inc.(a)
|
2,265
|
4,640,464
|
Broadcom, Inc.
|
207,196
|
60,677,349
|
Cambium Networks Corp.(a)
|
386,500
|
3,385,740
|
Cerence, Inc.(a)
|
467,292
|
7,243,026
|
CommScope Holding Co., Inc.(a)
|
209,500
|
2,346,400
|
Cornerstone OnDemand, Inc.(a)
|
113,076
|
6,622,861
|
Cypress Semiconductor Corp.
|
286,998
|
6,678,443
|
Common Stocks (continued)
|
Issuer
|
Shares
|
Value ($)
|
Dell Technologies, Inc.(a)
|
170,300
|
9,007,167
|
Euronet Worldwide, Inc.(a)
|
32,216
|
4,512,495
|
F5 Networks, Inc.(a)
|
49,800
|
7,175,184
|
Fidelity National Information Services, Inc.
|
147,000
|
19,368,720
|
Fiserv, Inc.(a)
|
140,700
|
14,933,898
|
ForeScout Technologies, Inc.(a)
|
157,871
|
4,856,112
|
Fortinet, Inc.(a)
|
315,836
|
25,759,584
|
Genpact Ltd.
|
179,600
|
7,034,932
|
Global Payments, Inc.
|
70,731
|
11,966,271
|
GoDaddy, Inc., Class A(a)
|
91,549
|
5,953,431
|
Inphi Corp.(a)
|
192,385
|
13,828,634
|
Intel Corp.
|
44,700
|
2,526,891
|
Lam Research Corp.
|
346,852
|
94,010,766
|
Marvell Technology Group Ltd.(b)
|
1,572,232
|
38,346,739
|
Micron Technology, Inc.(a)
|
887,673
|
42,208,851
|
Microsoft Corp.
|
258,200
|
37,018,134
|
NetApp, Inc.
|
484,700
|
27,085,036
|
Nuance Communications, Inc.(a)
|
1,452,615
|
23,706,677
|
ON Semiconductor Corp.(a)
|
1,479,830
|
30,188,532
|
Oracle Corp.
|
373,400
|
20,346,566
|
Palo Alto Networks, Inc.(a)
|
98,200
|
22,329,698
|
Ping Identity Holding Corp.(a)
|
110,269
|
1,842,595
|
Plantronics, Inc.
|
70,800
|
2,790,936
|
Qorvo, Inc.(a)
|
179,701
|
14,530,623
|
Rambus, Inc.(a)
|
44,400
|
614,718
|
SailPoint Technologies Holding, Inc.(a)
|
228,851
|
4,430,555
|
Salesforce.com, Inc.(a)
|
118,533
|
18,549,229
|
Sciplay Corp., Class A(a)
|
256,085
|
2,476,342
|
SMART Global Holdings, Inc.(a)
|
139,132
|
4,132,220
|
Splunk, Inc.(a)
|
45,861
|
5,501,486
|
Symantec Corp.
|
503,600
|
11,522,368
|
Synaptics, Inc.(a)
|
516,523
|
21,750,784
|
Synopsys, Inc.(a)
|
354,711
|
48,152,018
|
Teradyne, Inc.
|
656,986
|
40,220,683
|
TiVo Corp.
|
1,045,800
|
8,512,812
|
Verint Systems, Inc.(a)
|
143,700
|
6,522,543
|
Visa, Inc., Class A
|
231,100
|
41,334,546
|
The accompanying Notes to Financial
Statements are an integral part of this statement.
Columbia Seligman Global Technology Fund | Annual Report 2019
|
9
|
Portfolio of Investments (continued)
October 31, 2019
Common Stocks (continued)
|
Issuer
|
Shares
|
Value ($)
|
Western Digital Corp.(b)
|
492,800
|
25,453,120
|
Xperi Corp.
|
285,900
|
5,805,200
|
Total
|
1,035,887,538
|
Total Common Stocks
(Cost $727,564,204)
|
1,151,103,337
|
|
Money Market Funds 2.6%
|
|
Shares
|
Value ($)
|
Columbia Short-Term Cash Fund, 1.938%(c),(d)
|
30,983,871
|
30,980,772
|
Total Money Market Funds
(Cost $30,980,772)
|
30,980,772
|
Total Investments in Securities
(Cost $758,544,976)
|
1,182,084,109
|
Other Assets & Liabilities, Net
|
|
21,762,126
|
Net Assets
|
$1,203,846,235
|
At October 31, 2019, securities
and/or cash totaling $21,275,205 were pledged as collateral.
Investments in derivatives
Call option contracts written
|
Description
|
Counterparty
|
Trading
currency
|
Notional
amount
|
Number of
contracts
|
Exercise
price/Rate
|
Expiration
date
|
Premium
received ($)
|
Value ($)
|
Marvell Technology Group Ltd.
|
Deutsche Bank
|
USD
|
(414,630)
|
(170)
|
32.00
|
1/17/2020
|
(13,556)
|
(340)
|
Marvell Technology Group Ltd.
|
Deutsche Bank
|
USD
|
(517,068)
|
(212)
|
31.00
|
1/17/2020
|
(20,506)
|
(1,272)
|
Marvell Technology Group Ltd.
|
Deutsche Bank
|
USD
|
(3,921,912)
|
(1,608)
|
35.00
|
1/15/2021
|
(163,950)
|
(151,956)
|
Western Digital Corp.
|
Deutsche Bank
|
USD
|
(4,250,795)
|
(823)
|
90.00
|
1/15/2021
|
(305,627)
|
(93,822)
|
Total
|
|
|
|
|
|
|
(503,639)
|
(247,390)
|
Put option contracts written
|
Description
|
Counterparty
|
Trading
currency
|
Notional
amount
|
Number of
contracts
|
Exercise
price/Rate
|
Expiration
date
|
Premium
received ($)
|
Value ($)
|
Marvell Technology Group Ltd.
|
Deutsche Bank
|
USD
|
(4,334,103)
|
(1,777)
|
15.00
|
01/17/2020
|
(190,356)
|
(4,443)
|
Marvell Technology Group Ltd.
|
Deutsche Bank
|
USD
|
(8,073,090)
|
(3,310)
|
17.00
|
01/15/2021
|
(453,332)
|
(329,345)
|
Western Digital Corp.
|
Deutsche Bank
|
USD
|
(4,255,960)
|
(824)
|
40.00
|
01/15/2021
|
(261,135)
|
(379,040)
|
Total
|
|
|
|
|
|
|
(904,823)
|
(712,828)
|
Notes to Portfolio of
Investments
(a)
|
Non-income producing investment.
|
(b)
|
This security or a portion of this security has been pledged as collateral in connection with derivative contracts.
|
(c)
|
The rate shown is the seven-day current annualized yield at October 31, 2019.
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
10
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Portfolio of Investments (continued)
October 31, 2019
Notes to Portfolio of Investments (continued)
(d)
|
As defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company which is under common
ownership or control with the Fund. Holdings and transactions in these affiliated companies during the year ended October 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized gain
(loss) —
affiliated
issuers ($)
|
Net change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends —
affiliated
issuers ($)
|
Value —
affiliated
issuers
at end of
period ($)
|
Columbia Short-Term Cash Fund, 1.938%
|
|
3,144
|
292,705,310
|
(261,724,583)
|
30,983,871
|
(463)
|
—
|
215,022
|
30,980,772
|
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 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 accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Seligman Global Technology Fund | Annual Report 2019
|
11
|
Portfolio of Investments (continued)
October 31, 2019
Fair value measurements (continued)
The following table is a summary of the inputs used to value the Fund’s investments at October 31, 2019:
|
Level 1 ($)
|
Level 2 ($)
|
Level 3 ($)
|
Total ($)
|
Investments in Securities
|
|
|
|
|
Common Stocks
|
|
|
|
|
Brazil
|
27,772,296
|
—
|
—
|
27,772,296
|
China
|
—
|
3,118,500
|
—
|
3,118,500
|
Germany
|
—
|
30,467,368
|
—
|
30,467,368
|
Israel
|
17,445,960
|
—
|
—
|
17,445,960
|
Netherlands
|
23,815,960
|
—
|
—
|
23,815,960
|
Sweden
|
3,431,320
|
—
|
—
|
3,431,320
|
United Kingdom
|
—
|
9,164,395
|
—
|
9,164,395
|
United States
|
1,035,887,538
|
—
|
—
|
1,035,887,538
|
Total Common Stocks
|
1,108,353,074
|
42,750,263
|
—
|
1,151,103,337
|
Money Market Funds
|
30,980,772
|
—
|
—
|
30,980,772
|
Total Investments in Securities
|
1,139,333,846
|
42,750,263
|
—
|
1,182,084,109
|
Investments in Derivatives
|
|
|
|
|
Liability
|
|
|
|
|
Options Contracts Written
|
(960,218)
|
—
|
—
|
(960,218)
|
Total
|
1,138,373,628
|
42,750,263
|
—
|
1,181,123,891
|
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.
The accompanying Notes to Financial Statements are
an integral part of this statement.
12
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Statement of Assets and Liabilities
October 31, 2019
Assets
|
|
Investments in securities, at value
|
|
Unaffiliated issuers (cost $727,564,204)
|
$1,151,103,337
|
Affiliated issuers (cost $30,980,772)
|
30,980,772
|
Cash collateral held at broker for:
|
|
Options contracts written
|
12,170,801
|
Receivable for:
|
|
Investments sold
|
793,623
|
Capital shares sold
|
14,983,643
|
Dividends
|
20,551
|
Foreign tax reclaims
|
6,209
|
Prepaid expenses
|
5,054
|
Total assets
|
1,210,063,990
|
Liabilities
|
|
Option contracts written, at value (premiums received $1,408,462)
|
960,218
|
Payable for:
|
|
Investments purchased
|
3,485,152
|
Capital shares purchased
|
1,463,104
|
Management services fees
|
30,001
|
Distribution and/or service fees
|
8,340
|
Transfer agent fees
|
157,983
|
Compensation of board members
|
54,666
|
Other expenses
|
58,291
|
Total liabilities
|
6,217,755
|
Net assets applicable to outstanding capital stock
|
$1,203,846,235
|
Represented by
|
|
Paid in capital
|
658,619,511
|
Total distributable earnings (loss)
|
545,226,724
|
Total - representing net assets applicable to outstanding capital stock
|
$1,203,846,235
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Seligman Global Technology Fund | Annual Report 2019
|
13
|
Statement of Assets and Liabilities (continued)
October 31, 2019
Class A
|
|
Net assets
|
$801,352,148
|
Shares outstanding
|
17,939,793
|
Net asset value per share
|
$44.67
|
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)
|
$47.40
|
Advisor Class
|
|
Net assets
|
$27,388,567
|
Shares outstanding
|
589,979
|
Net asset value per share
|
$46.42
|
Class C
|
|
Net assets
|
$70,776,867
|
Shares outstanding
|
2,126,512
|
Net asset value per share
|
$33.28
|
Institutional Class
|
|
Net assets
|
$204,305,057
|
Shares outstanding
|
4,476,562
|
Net asset value per share
|
$45.64
|
Institutional 2 Class
|
|
Net assets
|
$31,006,168
|
Shares outstanding
|
675,298
|
Net asset value per share
|
$45.91
|
Institutional 3 Class
|
|
Net assets
|
$3,159,707
|
Shares outstanding
|
69,249
|
Net asset value per share
|
$45.63
|
Class R
|
|
Net assets
|
$65,857,721
|
Shares outstanding
|
1,538,475
|
Net asset value per share
|
$42.81
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
14
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Statement of Operations
Year Ended October 31, 2019
Net investment income
|
|
Income:
|
|
Dividends — unaffiliated issuers
|
$12,369,701
|
Dividends — affiliated issuers
|
215,022
|
Foreign taxes withheld
|
(47,718)
|
Total income
|
12,537,005
|
Expenses:
|
|
Management services fees
|
9,935,853
|
Distribution and/or service fees
|
|
Class A
|
1,828,415
|
Class C
|
690,556
|
Class R
|
264,480
|
Transfer agent fees
|
|
Class A
|
929,110
|
Advisor Class
|
28,276
|
Class C
|
87,833
|
Institutional Class
|
239,671
|
Institutional 2 Class
|
13,566
|
Institutional 3 Class
|
289
|
Class R
|
66,954
|
Compensation of board members
|
25,876
|
Custodian fees
|
26,059
|
Printing and postage fees
|
71,278
|
Registration fees
|
121,138
|
Audit fees
|
34,106
|
Legal fees
|
17,218
|
Line of credit interest
|
17
|
Interest on interfund lending
|
12,379
|
Compensation of chief compliance officer
|
246
|
Other
|
29,242
|
Total expenses
|
14,422,562
|
Expense reduction
|
(1,767)
|
Total net expenses
|
14,420,795
|
Net investment loss
|
(1,883,790)
|
Realized and unrealized gain (loss) — net
|
|
Net realized gain (loss) on:
|
|
Investments — unaffiliated issuers
|
124,527,418
|
Investments — affiliated issuers
|
(463)
|
Foreign currency translations
|
(43,780)
|
Options purchased
|
(230,031)
|
Options contracts written
|
409,389
|
Net realized gain
|
124,662,533
|
Net change in unrealized appreciation (depreciation) on:
|
|
Investments — unaffiliated issuers
|
160,660,551
|
Foreign currency translations
|
(470)
|
Options contracts written
|
515,659
|
Net change in unrealized appreciation (depreciation)
|
161,175,740
|
Net realized and unrealized gain
|
285,838,273
|
Net increase in net assets resulting from operations
|
$283,954,483
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
Columbia Seligman Global Technology Fund | Annual Report 2019
|
15
|
Statement of Changes in Net Assets
|
Year Ended
October 31, 2019
|
Year Ended
October 31, 2018
|
Operations
|
|
|
Net investment loss
|
$(1,883,790)
|
$(4,450,673)
|
Net realized gain
|
124,662,533
|
115,331,135
|
Net change in unrealized appreciation (depreciation)
|
161,175,740
|
(153,989,376)
|
Net increase (decrease) in net assets resulting from operations
|
283,954,483
|
(43,108,914)
|
Distributions to shareholders
|
|
|
Net investment income and net realized gains
|
|
|
Class A
|
(72,889,935)
|
(50,464,788)
|
Advisor Class
|
(2,082,330)
|
(1,358,785)
|
Class C
|
(8,584,086)
|
(10,821,922)
|
Institutional Class
|
(20,328,208)
|
(16,124,785)
|
Institutional 2 Class
|
(2,274,625)
|
(1,216,596)
|
Institutional 3 Class
|
(209,449)
|
(9,899)
|
Class K
|
—
|
(12,163)
|
Class R
|
(4,602,603)
|
(1,870,130)
|
Total distributions to shareholders
|
(110,971,236)
|
(81,879,068)
|
Decrease in net assets from capital stock activity
|
(38,337,509)
|
(3,955,520)
|
Total increase (decrease) in net assets
|
134,645,738
|
(128,943,502)
|
Net assets at beginning of year
|
1,069,200,497
|
1,198,143,999
|
Net assets at end of year
|
$1,203,846,235
|
$1,069,200,497
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
16
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Statement of Changes in Net Assets (continued)
|
Year Ended
|
Year Ended
|
|
October 31, 2019
|
October 31, 2018
|
|
Shares
|
Dollars ($)
|
Shares
|
Dollars ($)
|
Capital stock activity
|
Class A
|
|
|
|
|
Subscriptions
|
1,474,540
|
58,504,140
|
3,685,753
|
155,504,584
|
Distributions reinvested
|
2,045,019
|
67,608,340
|
1,167,408
|
46,259,825
|
Redemptions
|
(3,820,374)
|
(146,879,611)
|
(4,294,005)
|
(179,359,837)
|
Net increase (decrease)
|
(300,815)
|
(20,767,131)
|
559,156
|
22,404,572
|
Advisor Class
|
|
|
|
|
Subscriptions
|
214,290
|
8,758,069
|
287,392
|
12,474,458
|
Distributions reinvested
|
46,392
|
1,590,331
|
24,392
|
998,545
|
Redemptions
|
(220,427)
|
(8,723,496)
|
(215,207)
|
(9,298,370)
|
Net increase
|
40,255
|
1,624,904
|
96,577
|
4,174,633
|
Class C
|
|
|
|
|
Subscriptions
|
294,132
|
8,035,959
|
456,239
|
14,775,576
|
Distributions reinvested
|
318,364
|
7,895,423
|
331,999
|
10,196,535
|
Redemptions
|
(807,380)
|
(22,783,929)
|
(2,660,128)
|
(87,015,719)
|
Net decrease
|
(194,884)
|
(6,852,547)
|
(1,871,890)
|
(62,043,608)
|
Institutional Class
|
|
|
|
|
Subscriptions
|
902,894
|
36,130,166
|
1,787,202
|
76,508,570
|
Distributions reinvested
|
591,260
|
19,925,462
|
382,046
|
15,406,442
|
Redemptions
|
(2,334,198)
|
(88,074,299)
|
(2,195,471)
|
(93,135,056)
|
Net decrease
|
(840,044)
|
(32,018,671)
|
(26,223)
|
(1,220,044)
|
Institutional 2 Class
|
|
|
|
|
Subscriptions
|
319,320
|
13,386,557
|
322,536
|
13,879,374
|
Distributions reinvested
|
63,058
|
2,136,404
|
27,703
|
1,122,448
|
Redemptions
|
(277,562)
|
(10,746,677)
|
(150,128)
|
(6,390,187)
|
Net increase
|
104,816
|
4,776,284
|
200,111
|
8,611,635
|
Institutional 3 Class
|
|
|
|
|
Subscriptions
|
41,742
|
1,698,140
|
45,550
|
1,945,224
|
Distributions reinvested
|
6,214
|
209,156
|
241
|
9,691
|
Redemptions
|
(19,304)
|
(776,845)
|
(8,157)
|
(344,419)
|
Net increase
|
28,652
|
1,130,451
|
37,634
|
1,610,496
|
Class K
|
|
|
|
|
Distributions reinvested
|
—
|
—
|
296
|
11,875
|
Redemptions
|
—
|
—
|
(4,530)
|
(205,661)
|
Net decrease
|
—
|
—
|
(4,234)
|
(193,786)
|
Class R
|
|
|
|
|
Subscriptions
|
450,861
|
17,118,794
|
732,032
|
29,696,391
|
Distributions reinvested
|
141,018
|
4,477,318
|
45,913
|
1,754,725
|
Redemptions
|
(207,443)
|
(7,826,911)
|
(219,349)
|
(8,750,534)
|
Net increase
|
384,436
|
13,769,201
|
558,596
|
22,700,582
|
Total net decrease
|
(777,584)
|
(38,337,509)
|
(450,273)
|
(3,955,520)
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Seligman Global Technology 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 (loss)
|
Total from
investment
operations
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class A
|
Year Ended 10/31/2019
|
$38.52
|
(0.07)
|
10.28
|
10.21
|
(4.06)
|
(4.06)
|
Year Ended 10/31/2018
|
$43.04
|
(0.14)
|
(1.53)
|
(1.67)
|
(2.85)
|
(2.85)
|
Year Ended 10/31/2017
|
$32.85
|
(0.17)
|
12.91
|
12.74
|
(2.55)
|
(2.55)
|
Year Ended 10/31/2016
|
$30.77
|
(0.15)
|
4.58
|
4.43
|
(2.35)
|
(2.35)
|
Year Ended 10/31/2015
|
$30.15
|
(0.21)
|
4.36
|
4.15
|
(3.53)
|
(3.53)
|
Advisor Class
|
Year Ended 10/31/2019
|
$39.89
|
0.03
|
10.67
|
10.70
|
(4.17)
|
(4.17)
|
Year Ended 10/31/2018
|
$44.45
|
(0.04)
|
(1.58)
|
(1.62)
|
(2.94)
|
(2.94)
|
Year Ended 10/31/2017
|
$33.84
|
(0.09)
|
13.32
|
13.23
|
(2.62)
|
(2.62)
|
Year Ended 10/31/2016
|
$31.63
|
(0.15)
|
4.78
|
4.63
|
(2.42)
|
(2.42)
|
Year Ended 10/31/2015
|
$30.89
|
(0.13)
|
4.47
|
4.34
|
(3.60)
|
(3.60)
|
Class C
|
Year Ended 10/31/2019
|
$29.66
|
(0.27)
|
7.65
|
7.38
|
(3.76)
|
(3.76)
|
Year Ended 10/31/2018
|
$33.77
|
(0.35)
|
(1.17)
|
(1.52)
|
(2.59)
|
(2.59)
|
Year Ended 10/31/2017
|
$26.27
|
(0.35)
|
10.18
|
9.83
|
(2.33)
|
(2.33)
|
Year Ended 10/31/2016
|
$25.04
|
(0.30)
|
3.66
|
3.36
|
(2.13)
|
(2.13)
|
Year Ended 10/31/2015
|
$25.13
|
(0.35)
|
3.59
|
3.24
|
(3.33)
|
(3.33)
|
Institutional Class
|
Year Ended 10/31/2019
|
$39.29
|
0.04
|
10.48
|
10.52
|
(4.17)
|
(4.17)
|
Year Ended 10/31/2018
|
$43.82
|
(0.04)
|
(1.55)
|
(1.59)
|
(2.94)
|
(2.94)
|
Year Ended 10/31/2017
|
$33.40
|
(0.10)
|
13.14
|
13.04
|
(2.62)
|
(2.62)
|
Year Ended 10/31/2016
|
$31.24
|
(0.08)
|
4.66
|
4.58
|
(2.42)
|
(2.42)
|
Year Ended 10/31/2015
|
$30.55
|
(0.13)
|
4.41
|
4.28
|
(3.59)
|
(3.59)
|
Institutional 2 Class
|
Year Ended 10/31/2019
|
$39.49
|
0.06
|
10.55
|
10.61
|
(4.19)
|
(4.19)
|
Year Ended 10/31/2018
|
$44.04
|
(0.02)
|
(1.57)
|
(1.59)
|
(2.96)
|
(2.96)
|
Year Ended 10/31/2017
|
$33.57
|
(0.08)
|
13.21
|
13.13
|
(2.66)
|
(2.66)
|
Year Ended 10/31/2016
|
$31.40
|
(0.07)
|
4.71
|
4.64
|
(2.47)
|
(2.47)
|
Year Ended 10/31/2015
|
$30.69
|
(0.13)
|
4.48
|
4.35
|
(3.64)
|
(3.64)
|
Institutional 3 Class
|
Year Ended 10/31/2019
|
$39.28
|
0.07
|
10.49
|
10.56
|
(4.21)
|
(4.21)
|
Year Ended 10/31/2018
|
$43.81
|
0.01
|
(1.56)
|
(1.55)
|
(2.98)
|
(2.98)
|
Year Ended 10/31/2017(f)
|
$35.81
|
(0.06)
|
8.06
|
8.00
|
—
|
—
|
The accompanying Notes to Financial
Statements are an integral part of this statement.
18
|
Columbia Seligman Global Technology 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 10/31/2019
|
$44.67
|
30.23%
|
1.32%(c),(d)
|
1.32%(c),(d),(e)
|
(0.17%)
|
43%
|
$801,352
|
Year Ended 10/31/2018
|
$38.52
|
(4.06%)
|
1.32%(c)
|
1.32%(c),(e)
|
(0.34%)
|
42%
|
$702,652
|
Year Ended 10/31/2017
|
$43.04
|
41.53%
|
1.33%
|
1.33%(e)
|
(0.47%)
|
53%
|
$760,937
|
Year Ended 10/31/2016
|
$32.85
|
15.54%
|
1.40%
|
1.40%(e)
|
(0.51%)
|
55%
|
$525,860
|
Year Ended 10/31/2015
|
$30.77
|
14.65%
|
1.42%
|
1.42%(e)
|
(0.68%)
|
64%
|
$454,512
|
Advisor Class
|
Year Ended 10/31/2019
|
$46.42
|
30.52%
|
1.07%(c),(d)
|
1.07%(c),(d),(e)
|
0.07%
|
43%
|
$27,389
|
Year Ended 10/31/2018
|
$39.89
|
(3.81%)
|
1.07%(c)
|
1.07%(c),(e)
|
(0.09%)
|
42%
|
$21,927
|
Year Ended 10/31/2017
|
$44.45
|
41.87%
|
1.08%
|
1.08%(e)
|
(0.24%)
|
53%
|
$20,140
|
Year Ended 10/31/2016
|
$33.84
|
15.81%
|
1.15%
|
1.15%(e)
|
(0.47%)
|
55%
|
$4,915
|
Year Ended 10/31/2015
|
$31.63
|
14.95%
|
1.17%
|
1.17%(e)
|
(0.42%)
|
64%
|
$384
|
Class C
|
Year Ended 10/31/2019
|
$33.28
|
29.21%
|
2.07%(c),(d)
|
2.07%(c),(d),(e)
|
(0.91%)
|
43%
|
$70,777
|
Year Ended 10/31/2018
|
$29.66
|
(4.78%)
|
2.06%(c)
|
2.06%(c),(e)
|
(1.09%)
|
42%
|
$68,853
|
Year Ended 10/31/2017
|
$33.77
|
40.49%
|
2.08%
|
2.08%(e)
|
(1.22%)
|
53%
|
$141,591
|
Year Ended 10/31/2016
|
$26.27
|
14.63%
|
2.15%
|
2.15%(e)
|
(1.26%)
|
55%
|
$101,739
|
Year Ended 10/31/2015
|
$25.04
|
13.81%
|
2.17%
|
2.17%(e)
|
(1.43%)
|
64%
|
$90,044
|
Institutional Class
|
Year Ended 10/31/2019
|
$45.64
|
30.53%
|
1.07%(c),(d)
|
1.07%(c),(d),(e)
|
0.09%
|
43%
|
$204,305
|
Year Ended 10/31/2018
|
$39.29
|
(3.79%)
|
1.07%(c)
|
1.07%(c),(e)
|
(0.09%)
|
42%
|
$208,865
|
Year Ended 10/31/2017
|
$43.82
|
41.85%
|
1.08%
|
1.08%(e)
|
(0.26%)
|
53%
|
$234,123
|
Year Ended 10/31/2016
|
$33.40
|
15.85%
|
1.15%
|
1.15%(e)
|
(0.25%)
|
55%
|
$47,809
|
Year Ended 10/31/2015
|
$31.24
|
14.94%
|
1.17%
|
1.17%(e)
|
(0.42%)
|
64%
|
$40,763
|
Institutional 2 Class
|
Year Ended 10/31/2019
|
$45.91
|
30.63%
|
1.00%(c),(d)
|
1.00%(c),(d)
|
0.14%
|
43%
|
$31,006
|
Year Ended 10/31/2018
|
$39.49
|
(3.77%)
|
1.02%(c)
|
1.02%(c)
|
(0.04%)
|
42%
|
$22,531
|
Year Ended 10/31/2017
|
$44.04
|
41.95%
|
1.02%
|
1.02%
|
(0.20%)
|
53%
|
$16,310
|
Year Ended 10/31/2016
|
$33.57
|
15.97%
|
1.02%
|
1.02%
|
(0.23%)
|
55%
|
$2,735
|
Year Ended 10/31/2015
|
$31.40
|
15.12%
|
1.02%
|
1.02%
|
(0.41%)
|
64%
|
$972
|
Institutional 3 Class
|
Year Ended 10/31/2019
|
$45.63
|
30.69%
|
0.96%(c),(d)
|
0.96%(c),(d)
|
0.17%
|
43%
|
$3,160
|
Year Ended 10/31/2018
|
$39.28
|
(3.71%)
|
0.97%(c)
|
0.97%(c)
|
0.03%
|
42%
|
$1,595
|
Year Ended 10/31/2017(f)
|
$43.81
|
22.34%
|
0.98%(g)
|
0.98%(g)
|
(0.38%)(g)
|
53%
|
$130
|
The accompanying Notes to Financial
Statements are an integral part of this statement.
Columbia Seligman Global Technology Fund | Annual Report 2019
|
19
|
Financial Highlights (continued)
|
Net asset value,
beginning of
period
|
Net
investment
income
(loss)
|
Net
realized
and
unrealized
gain (loss)
|
Total from
investment
operations
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class R
|
Year Ended 10/31/2019
|
$37.07
|
(0.16)
|
9.86
|
9.70
|
(3.96)
|
(3.96)
|
Year Ended 10/31/2018
|
$41.53
|
(0.23)
|
(1.47)
|
(1.70)
|
(2.76)
|
(2.76)
|
Year Ended 10/31/2017
|
$31.79
|
(0.26)
|
12.48
|
12.22
|
(2.48)
|
(2.48)
|
Year Ended 10/31/2016
|
$29.85
|
(0.22)
|
4.44
|
4.22
|
(2.28)
|
(2.28)
|
Year Ended 10/31/2015
|
$29.35
|
(0.27)
|
4.23
|
3.96
|
(3.46)
|
(3.46)
|
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)
|
Ratios include line of credit interest expense which is less than 0.01%.
|
(e)
|
The benefits derived from expense reductions had an impact of less than 0.01%.
|
(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.
20
|
Columbia Seligman Global Technology 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 R
|
Year Ended 10/31/2019
|
$42.81
|
29.89%
|
1.57%(c),(d)
|
1.57%(c),(d),(e)
|
(0.43%)
|
43%
|
$65,858
|
Year Ended 10/31/2018
|
$37.07
|
(4.29%)
|
1.57%(c)
|
1.57%(c),(e)
|
(0.58%)
|
42%
|
$42,778
|
Year Ended 10/31/2017
|
$41.53
|
41.16%
|
1.58%
|
1.58%(e)
|
(0.74%)
|
53%
|
$24,728
|
Year Ended 10/31/2016
|
$31.79
|
15.25%
|
1.65%
|
1.65%(e)
|
(0.75%)
|
55%
|
$9,878
|
Year Ended 10/31/2015
|
$29.85
|
14.37%
|
1.67%
|
1.67%(e)
|
(0.93%)
|
64%
|
$9,414
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Seligman Global Technology Fund | Annual Report 2019
|
21
|
Notes to Financial Statements
October 31, 2019
Note 1. Organization
Columbia Seligman Global
Technology 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, Institutional 3 Class and Class R shares are available for purchase
through authorized investment professionals to omnibus retirement plans or to institutional investors 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
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. Under the policy, the Fund may utilize 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 Seligman Global Technology Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
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.
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, if available.
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 Seligman Global Technology Fund | Annual Report 2019
|
23
|
Notes to Financial Statements (continued)
October 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 are contract specific for over-the-counter derivatives. 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.
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 decrease the Fund’s exposure to equity market risk and to increase
return on investments and to protect gains. 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
24
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
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.
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 October 31, 2019:
|
Liability derivatives
|
|
Risk exposure
category
|
Statement
of assets and liabilities
location
|
Fair value ($)
|
Equity risk
|
Options contracts written, at value
|
960,218
|
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 October 31, 2019:
Amount of realized gain (loss) on derivatives recognized in income
|
Risk exposure category
|
Options
contracts
written
($)
|
Options
contracts
purchased
($)
|
Total
($)
|
Equity risk
|
409,389
|
(230,031)
|
179,358
|
Change in unrealized appreciation (depreciation) on derivatives recognized in income
|
Risk exposure category
|
Options
contracts
written
($)
|
Equity risk
|
515,659
|
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended October 31, 2019:
Derivative instrument
|
Average
value ($)
|
Options contracts — purchased
|
10,482**
|
Options contracts — written
|
(590,068)*
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
25
|
Notes to Financial Statements (continued)
October 31, 2019
**
|
Based on the ending daily outstanding amounts for the year ended October 31, 2019.
|
*
|
Based on the ending quarterly outstanding amounts for the year ended October 31, 2019.
|
Offsetting of assets and
liabilities
The following table presents the
Fund’s gross and net amount of assets and liabilities available for offset under netting arrangements as well as any related collateral received or pledged by the Fund as of October 31, 2019:
|
Deutsche
Bank ($)
|
Liabilities
|
|
Options contracts written
|
960,218
|
Total financial and derivative net assets
|
(960,218)
|
Total collateral received (pledged) (a)
|
(960,218)
|
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
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 as to 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 Columbia Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise
Financial, Inc. (Ameriprise Financial). The Investment Manager’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 on the payment date, the proceeds are recorded as
realized gains.
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.
26
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 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.
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
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 the period ended July 31, 2019 and
all subsequent periods. To comply with the ASU, 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.
Columbia Seligman Global Technology Fund | Annual Report 2019
|
27
|
Notes to Financial Statements (continued)
October 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 0.915% to 0.755% as the Fund’s net assets increase. The effective management services fee rate for the year ended October 31, 2019 was 0.912% 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 for 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. In addition, effective March 1, 2019 through February 29, 2020, 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.
28
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
For the year ended October 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
|
0.06
|
Institutional 3 Class
|
0.01
|
Class R
|
0.13
|
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 October 31, 2019, these minimum account balance fees reduced total expenses
of the Fund by $1,767.
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 0.50% of the Fund’s average daily net assets attributable to Class A, Class C and
Class R 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.
The amount of distribution and
shareholder services expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $3,983,000 for Class C shares. This amount is based on the most recent information available as
of September 30, 2019, and may be recovered from future payments under the distribution plan or contingent deferred sales charges (CDSCs). To the extent the unreimbursed expense has been fully recovered, the
distribution and/or shareholder services fee is reduced.
Sales charges (unaudited)
Sales charges, including front-end
charges and CDSCs, received by the Distributor for distributing Fund shares for the year ended October 31, 2019, if any, are listed below:
|
Front End (%)
|
CDSC (%)
|
Amount ($)
|
Class A
|
5.75
|
0.50 - 1.00(a)
|
326,948
|
Class C
|
—
|
1.00(b)
|
4,450
|
(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 Seligman Global Technology Fund | Annual Report 2019
|
29
|
Notes to Financial Statements (continued)
October 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:
|
March 1, 2019
through
February 29, 2020
|
Prior to
March 1, 2019
|
Class A
|
1.37%
|
1.42%
|
Advisor Class
|
1.12
|
1.17
|
Class C
|
2.12
|
2.17
|
Institutional Class
|
1.12
|
1.17
|
Institutional 2 Class
|
1.05
|
1.11
|
Institutional 3 Class
|
1.00
|
1.07
|
Class R
|
1.62
|
1.67
|
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 March 1, 2019 through February 29, 2020, 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. 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 October 31, 2019, these
differences were primarily due to differing treatment for deferral/reversal of wash sale losses, trustees’ deferred compensation, net operating loss reclassification, 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
gain ($)
|
Paid in
capital ($)
|
1,878,413
|
(1,878,413)
|
—
|
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.
30
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
The tax character of distributions
paid during the years indicated was as follows:
Year Ended October 31, 2019
|
Year Ended October 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total ($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total ($)
|
13,898,150
|
97,073,086
|
110,971,236
|
19,495,398
|
62,383,670
|
81,879,068
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At October 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 ($)
|
Net unrealized
appreciation ($)
|
7,780,365
|
116,624,963
|
—
|
420,875,643
|
At October 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) ($)
|
Net unrealized
appreciation ($)
|
760,248,248
|
448,623,663
|
(27,748,020)
|
420,875,643
|
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 $465,634,268 and $667,201,348, respectively, for the year ended October 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.
Columbia Seligman Global Technology Fund | Annual Report 2019
|
31
|
Notes to Financial Statements (continued)
October 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’s activity in the
Interfund Program during the year ended October 31, 2019 was as follows:
Borrower or lender
|
Average loan
balance ($)
|
Weighted average
interest rate (%)
|
Number of days
with outstanding loans
|
Borrower
|
3,533,327
|
2.85
|
41
|
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 $1 billion. Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the
one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other expenses in the Statement of Operations. This agreement
expires annually in December unless extended or renewed.
For the year ended October 31,
2019, the Fund’s borrowing activity was as follows:
Average loan
balance ($)
|
Weighted average
interest rate (%)
|
Days
outstanding
|
200,000
|
3.04
|
1
|
Interest expense incurred by the
Fund is recorded as a line of credit interest expense in the Statement of Operations. The Fund had no outstanding borrowings at October 31, 2019.
Note 9. Significant
risks
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.
Non-diversification risk
A non-diversified fund is permitted
to invest a greater percentage of its total assets in 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.
32
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
Shareholder concentration risk
At October 31, 2019, affiliated
shareholders of record owned 30.1% 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. 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.
Columbia Seligman Global Technology Fund | Annual Report 2019
|
33
|
Report of Independent Registered Public
Accounting Firm
To the Board of Trustees of Columbia
Funds Series Trust II and Shareholders of Columbia Seligman Global Technology Fund
Opinion on the Financial
Statements
We have audited the accompanying
statement of assets and liabilities, including the portfolio of investments, of Columbia Seligman Global Technology Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the
"Fund") as of October 31, 2019, the related statement of operations for the year ended October 31, 2019, the statement of changes in net assets for each of the two years in the period ended October 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 October 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
October 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 October 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
December 20, 2019
We have served as the auditor of
one or more investment companies within the Columbia Funds Complex since 1977.
34
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Federal Income Tax
Information
(Unaudited)
The Fund hereby designates the
following tax attributes for the fiscal year ended October 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
|
74.44%
|
72.46%
|
$122,561,116
|
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.
TRUSTEES AND
OFFICERS
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
|
Columbia Seligman Global Technology 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
|
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
|
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
|
36
|
Columbia Seligman Global Technology 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
|
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
|
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
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
37
|
TRUSTEES AND OFFICERS (continued)
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.
|
192
|
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.
|
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.
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).
|
38
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Fund officers (continued)
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
|
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.
|
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 Seligman Global Technology 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
Columbia Seligman Global Technology Fund | Annual Report 2019
|
39
|
Approval of Management Agreement (continued)
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.
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
40
|
Columbia Seligman Global Technology Fund | Annual Report 2019
|
Approval of Management Agreement (continued)
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 slightly 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.
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 Seligman Global Technology Fund | Annual Report 2019
|
41
|
[THIS PAGE INTENTIONALLY LEFT
BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Seligman Global Technology 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
October 31, 2019
Columbia Contrarian
Asia Pacific 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
|
|
9
|
|
10
|
|
13
|
|
14
|
|
15
|
|
18
|
|
22
|
|
32
|
|
33
|
|
33
|
|
37
|
Columbia Contrarian Asia Pacific
Fund (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 (the
Investment Manager)
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 Contrarian Asia Pacific
Fund | Annual Report 2019
Investment objective
The Fund
seeks to provide shareholders with long-term growth of capital.
Portfolio management
Soo Nam Ng, CFA
Co-Lead Portfolio Manager
Managed Fund since 2018
Christine Seng, CFA
Co-Lead Portfolio Manager
Managed Fund since 2018
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 October 31, 2019)
|
|
|
Inception
|
1 Year
|
5 Years
|
10 Years
|
Class A*
|
Excluding sales charges
|
09/27/10
|
14.41
|
3.67
|
5.34
|
|
Including sales charges
|
|
7.86
|
2.45
|
4.71
|
Class C*
|
Excluding sales charges
|
09/27/10
|
13.59
|
2.87
|
4.52
|
|
Including sales charges
|
|
12.59
|
2.87
|
4.52
|
Institutional Class*
|
09/27/10
|
14.73
|
3.92
|
5.57
|
Institutional 2 Class
|
07/15/09
|
14.82
|
4.04
|
5.71
|
Institutional 3 Class*
|
03/01/17
|
14.87
|
4.09
|
5.74
|
Class R*
|
09/27/10
|
14.11
|
3.39
|
5.03
|
MSCI AC Asia Pacific ex Japan Index (Net)
|
|
13.89
|
4.33
|
5.85
|
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 MSCI AC Asia Pacific ex Japan
Index (Net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of Asia, excluding Japan.
Indices are not available for
investment, are not professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes (except the MSCI AC Asia Pacific ex Japan 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 Contrarian Asia Pacific Fund | Annual Report 2019
|
3
|
Fund at a Glance (continued)
Performance of a hypothetical $10,000 investment (October 31, 2009 — October 31, 2019)
The chart above shows the change in
value of a hypothetical $10,000 investment in Class A shares of Columbia Contrarian Asia Pacific 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 October 31, 2019)
|
Tencent Holdings Ltd. (China)
|
7.5
|
Alibaba Group Holding Ltd., ADR (China)
|
6.8
|
Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan)
|
5.1
|
Samsung Electronics Co., Ltd. (South Korea)
|
5.1
|
BHP Group Ltd. (Australia)
|
4.0
|
Samsung Electro-Mechanics Co., Ltd. (South Korea)
|
3.8
|
Ping An Insurance Group Co. of China Ltd., Class H (China)
|
3.6
|
MediaTek, Inc. (Taiwan)
|
3.5
|
China Construction Bank Corp., Class H (China)
|
2.9
|
AIA Group Ltd. (Hong Kong)
|
2.8
|
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.
Equity sector breakdown (%) (at October 31, 2019)
|
Communication Services
|
11.2
|
Consumer Discretionary
|
14.4
|
Consumer Staples
|
6.0
|
Energy
|
5.7
|
Financials
|
20.1
|
Health Care
|
2.4
|
Industrials
|
3.4
|
Information Technology
|
21.5
|
Materials
|
8.2
|
Real Estate
|
5.0
|
Utilities
|
2.1
|
Total
|
100.0
|
Percentages indicated are based
upon total equity investments. The Fund’s portfolio composition is subject to change.
4
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Fund at a Glance (continued)
Country breakdown (%) (at October 31, 2019)
|
Australia
|
14.4
|
China
|
35.8
|
Hong Kong
|
7.9
|
India
|
7.7
|
Indonesia
|
1.0
|
Jersey
|
1.2
|
Macau
|
1.3
|
Philippines
|
1.3
|
Singapore
|
1.5
|
South Korea
|
11.8
|
Taiwan
|
9.6
|
Thailand
|
3.6
|
United States(a)
|
2.9
|
Total
|
100.0
|
(a)
|
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 excluding investments in derivatives, if any. The Fund’s portfolio composition is subject
to change.
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
5
|
Manager Discussion of Fund Performance
At October 31, 2019, approximately
76.5% 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
October 31, 2019, the Fund’s Class A shares returned 14.41% excluding sales charges. During the same period, the Fund outperformed its benchmark, the MSCI AC Asia Pacific ex Japan Index (Net), which returned
13.89%. The outperformance of the Fund relative to benchmark was largely due to an overweight to the technology sector.
Shifting trade outlook drove market
direction
The 12 months ended October 31,
2019 can best be characterized as a year of two distinct halves. The period opened with optimism that a U.S.-China trade deal could be reached following the November 2018 U.S. mid-term elections. This fueled a strong
stock market recovery, led by a rebound in China.
However, trade talks broke down in
May, and President Trump followed up with tariff threats and sanctions, including a ban on certain component supplies to smartphone manufacturer Huawei. This led to a sharp correction in most markets in the Asia
Pacific region. The trade conflict weighed on economic momentum in the region and globally, with economic data showing more visible signs of slowing as the period progressed.
Interest rate cuts by the U.S.
Federal Reserve at the end of July and mid-September provided support to the equity markets, and allowed Asian countries to ease monetary policies as well. October saw China and the U.S. reach a temporary truce on
trade and pledge to re-start bilateral negotiations.
In Hong Kong, street protests
beginning in June against a proposed extradition bill led to violence, disrupted business operations and turned tourists away, leading that market lower with the property sector most negatively impacted. Elsewhere,
elections resulted in incumbents remaining in power in Thailand, Indonesia and India. This supported sentiment in those markets on the outlook for continuity of economic agendas and stable environments for policy
execution, especially important for India which is facing an economic slowdown.
The strength of the technology
sector as the period progressed was a major surprise after initial concerns that the macroeconomic slowdown would weigh on technology product purchases. Despite the obstacles presented to Huawei by the U.S. sanctions,
China pushed ahead with an accelerated implementation of a 5G telecommunications network. This spurred expectations for a stronger technology cycle going into 2020, premised on smartphone replacement and building out
of network infrastructure.
Contributors and detractors
The Fund’s performance
early in the period benefited from its overweight in China, but these gains were surrendered following the failure of U.S.-China trade talks in May. Performance in the second half of the period was supported by an
overweight to the technology sector. Individual security selection was critical in a market environment where top down dynamics were heavily influenced by trade tensions.
In Australia, stock selection was
strong with positive contributions led by exposure to multinational mining, metals and petroleum company BHP, which benefited from strengthening iron ore prices. A position in Aristocrat Leisure was also a strong
contributor. The company manufactures and sells gaming machines, systems and software in Australia and internationally. Aristocrat is successfully transitioning from land-based slot games to a more digitally driven
strategy, buoyed by an attractive portfolio of new game launches. The company generates strong free cash flow from recurring revenue streams and has been gaining share in the key U.S. market.
6
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Manager Discussion of Fund Performance (continued)
Within the technology sector, the
Fund’s overweight in Taiwan Semiconductor Manufacturing (TSMC) was a leading positive contributor. TSMC extended its lead in the semiconductor space, especially with respect to chips for 5G equipment and
smartphones. Shares of MediaTek, a Taiwanese semiconductor design company which outsources fabrication, also enjoyed a strong rally following the success of the company’s new 5G smartphone chips. We believe
MediaTek is well-positioned to win market share from U.S. competitors.
Performance also benefited from a
sizeable position in benchmark heavyweight Samsung Electronics, South Korea’s largest listed company. Apart from being a beneficiary of a new technology upcycle led by 5G telecommunications, Samsung is also
positioned to gain from U.S. restrictions on the sale of components and software to Chinese telecommunications giant Huawei. As a result of these restrictions, future Huawei phones will not provide access to
Google’s PlayStore and critical applications such as Gmail, Maps and Chrome.
Among China stocks, overweight
positions in Ping An Insurance and e-commerce giant Alibaba were strong contributors. Both companies maintained a steady pace of business execution and delivered on market expectations despite the backdrop of slowing
economic growth. Ping An Insurance’s focus on high margin products and steady expansion of its sales force led to improved confidence in its ability to create new business value. Alibaba continues to execute
well on broadening its revenue sources, leveraging its technology edge and size advantage.
On the downside, exposure to United
Tractors in Indonesia hurt performance as a result of falling coal prices and lackluster sale of construction equipment such as excavators. We believe the stock has been oversold, especially given the value of its
gold mining business. In Korea, discount retailer E-Mart was a drag on performance, as the stock continued to slide alongside intense competition from Coupang, an online retailer with backing from Japanese
conglomerate and investment firm Softbank. We believe that Coupang’s cash-intensive strategy is not sustainable given huge losses at Softbank from other investments, and that E-Mart should be able to weave its
online and offline presence into a business strategy that can stand up to the competitive challenge.
Among positions in China stocks
listed in Hong Kong, “old economy” companies such as BBMG and Sinopec Kantons underperformed as investors shifted into A shares traded on mainland exchanges as a result of their increased weighting in
widely deployed benchmark indices. BBMG is the leading cement manufacturer in North East China and is benefiting from stabilized competition and growth in the northeast coastal Hubei-Beijing-Tianjin region. Sinopec
Kantons operates gas pipelines, oil jetties, storage terminals and liquid natural gas tankers. We believe the company’s business fundamentals remain promising despite the stock currently being out of favor.
Fund positioning
On the positive side,
policymakers appeared more worried about the potential economic fallout from trade tensions than they did a year ago. The negative development is that geopolitical undertones have intensified, as “national
security” concerns around the rise of China are being fervently expressed on a bipartisan basis. The erosion of trust between the U.S. and China may take years to repair. Nonetheless, at the close of the
reporting period, we expected the Chinese economy to remain on course for steady, sustainable growth. As a result, we remained overweighted in China, especially in large-cap names such as Tencent, Ping An Insurance
and Alibaba.
Hong Kong appeared headed into a
recession in the wake of recent protests. We believed Korea and Taiwan would continue to benefit from the technology sector recovery cycle as 5G implementation goes into full swing in 2020. We anticipated that 5G
equipment, including handsets and network equipment, would require more high end components, further boosting the sector’s rebound. The Fund’s exposure in both Korea and Taiwan was concentrated in the
technology sector, with a focus on large-cap names such as TSMC, Samsung Electronics and Mediatek, along with select component makers.
Barring shocks from outside the
region, it was our view that sentiment with respect to Australia and Southeast Asia would be supported by political stability that allowed for robust economic policy execution. We had a neutral view on those markets
and were focused primarily on stock specific exposures within each.
Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. Concentration in the Asia Pacific region, where issuers tend to be less developed than U.S. issuers, presents increased risk of loss than a fund that does not concentrate its investments. International investing involves certain risks and volatility due to potential political, economic or currency instabilities and different financial and accounting standards. Risks are
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
7
|
Manager Discussion of Fund Performance (continued)
enhanced for emerging market issuers. 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. Investing in derivatives is a specialized activity that involves special risks, which may result in significant losses. Investments in a limited number of companies subject the Fund to greater risk of loss. 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.
8
|
Columbia Contrarian Asia Pacific 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 $1,000 = 8.6), then multiply the results by the expenses paid during the period under
the “Actual” column. The amount listed in the “Hypothetical” column assumes a 5% annual rate of return before expenses (which is not the Fund’s actual return) and then applies the
Fund’s actual expense ratio for the period to the hypothetical return. You should not use the hypothetical account values and expenses to estimate either your actual account balance at the end of the period or
the expenses you paid during the period. See “Compare with other funds” below for details on how to use the hypothetical data.
Compare with other funds
Since all mutual funds are
required to include the same hypothetical calculations about expenses in shareholder reports, you can use this information to compare the ongoing cost of investing in the Fund with other funds. To do so, compare the
hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. As you compare hypothetical examples of other funds, it is important to note that hypothetical examples are
meant to highlight the ongoing costs of investing in a fund only and do not reflect any transaction costs, such as sales charges, or redemption or exchange fees. Therefore, the hypothetical calculations are useful in
comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If transaction costs were included in these calculations, your costs would be higher.
May 1, 2019 — October 31, 2019
|
|
Account value at the
beginning of the
period ($)
|
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
|
958.70
|
1,017.39
|
7.65
|
7.88
|
1.55
|
Class C
|
1,000.00
|
1,000.00
|
955.00
|
1,013.61
|
11.33
|
11.67
|
2.30
|
Institutional Class
|
1,000.00
|
1,000.00
|
959.50
|
1,018.65
|
6.42
|
6.61
|
1.30
|
Institutional 2 Class
|
1,000.00
|
1,000.00
|
960.40
|
1,019.36
|
5.73
|
5.90
|
1.16
|
Institutional 3 Class
|
1,000.00
|
1,000.00
|
960.00
|
1,019.61
|
5.48
|
5.65
|
1.11
|
Class R
|
1,000.00
|
1,000.00
|
956.80
|
1,016.13
|
8.88
|
9.15
|
1.80
|
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 Contrarian Asia Pacific Fund | Annual Report 2019
|
9
|
Portfolio of Investments
October 31, 2019
(Percentages represent value of
investments compared to net assets)
Investments in securities
Common Stocks 97.3%
|
Issuer
|
Shares
|
Value ($)
|
Australia 14.4%
|
Ansell Ltd.
|
10,265
|
195,207
|
Aristocrat Leisure Ltd.
|
16,253
|
354,397
|
BHP Group Ltd.
|
27,595
|
676,421
|
LendLease Group
|
12,681
|
163,911
|
Macquarie Group Ltd.
|
2,992
|
276,274
|
NEXTDC Ltd.(a)
|
33,325
|
147,272
|
Oil Search Ltd.
|
41,486
|
204,746
|
Pilbara Minerals Ltd.(a)
|
586,811
|
131,068
|
Treasury Wine Estates Ltd.
|
27,855
|
337,690
|
Total
|
2,486,986
|
China 35.9%
|
58.Com, Inc., ADR(a)
|
2,666
|
140,791
|
Alibaba Group Holding Ltd., ADR(a)
|
6,444
|
1,138,461
|
Baoshan Iron & Steel Co., Ltd.
|
167,000
|
137,532
|
Baozun, Inc., ADR(a)
|
3,840
|
167,117
|
BBMG Corp., Class H
|
789,000
|
225,806
|
BeiGene Ltd.(a)
|
19,600
|
208,236
|
Beijing Enterprises Water Group Ltd.(a)
|
696,000
|
362,775
|
China Construction Bank Corp., Class H
|
598,380
|
479,464
|
China Mobile Ltd.
|
45,500
|
369,765
|
China Overseas Land & Investment Ltd.
|
68,000
|
214,574
|
NetEase, Inc., ADR
|
378
|
108,055
|
Ping An Insurance Group Co. of China Ltd., Class H
|
53,000
|
611,715
|
Sinopec Kantons Holdings Ltd.
|
774,000
|
315,532
|
Tencent Holdings Ltd.
|
31,000
|
1,257,450
|
Times China Holdings Ltd.
|
258,000
|
460,439
|
Total
|
6,197,712
|
Hong Kong 7.9%
|
AIA Group Ltd.
|
47,600
|
474,011
|
Galaxy Entertainment Group Ltd.
|
35,000
|
240,997
|
Hong Kong Exchanges and Clearing Ltd.
|
11,060
|
344,564
|
Hua Hong Semiconductor Ltd.(b)
|
149,000
|
299,617
|
Total
|
1,359,189
|
Common Stocks (continued)
|
Issuer
|
Shares
|
Value ($)
|
India 7.8%
|
Adani Ports & Special Economic Zone Ltd.
|
34,999
|
195,029
|
Godrej Consumer Products Ltd.
|
19,906
|
207,794
|
Larsen & Toubro Ltd.
|
18,507
|
383,984
|
Mahindra & Mahindra Ltd.
|
35,161
|
300,293
|
Reliance Industries Ltd.
|
12,226
|
251,994
|
Total
|
1,339,094
|
Indonesia 1.0%
|
PT United Tractors Tbk
|
116,300
|
179,513
|
Jersey 1.2%
|
Amcor PLC
|
21,863
|
209,347
|
Macau 1.3%
|
Wynn Macau Ltd.
|
100,000
|
217,008
|
Philippines 1.3%
|
Metropolitan Bank & Trust Co.
|
164,709
|
219,262
|
Singapore 1.5%
|
DBS Group Holdings Ltd.
|
14,032
|
267,462
|
South Korea 11.8%
|
E-MART, Inc., Class L
|
2,521
|
241,143
|
Hana Financial Group, Inc.
|
10,502
|
304,060
|
Samsung Electro-Mechanics Co., Ltd.
|
6,656
|
644,397
|
Samsung Electronics Co., Ltd.
|
19,783
|
855,018
|
Total
|
2,044,618
|
Taiwan 9.6%
|
MediaTek, Inc.
|
44,000
|
587,614
|
Taiwan Semiconductor Manufacturing Co., Ltd.
|
88,000
|
862,383
|
Yageo Corp.
|
21,000
|
215,489
|
Total
|
1,665,486
|
Thailand 3.6%
|
Bangkok Bank PCL, Foreign Registered Shares
|
50,800
|
293,554
|
Kasikornbank PCL, Foreign Registered Shares
|
23,400
|
107,936
|
Thai Beverage PCL
|
323,200
|
216,993
|
Total
|
618,483
|
Total Common Stocks
(Cost $15,179,816)
|
16,804,160
|
|
The accompanying Notes to Financial
Statements are an integral part of this statement.
10
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Portfolio of Investments (continued)
October 31, 2019
Money Market Funds 3.0%
|
|
Shares
|
Value ($)
|
Columbia Short-Term Cash Fund, 1.938%(c),(d)
|
506,807
|
506,757
|
Total Money Market Funds
(Cost $506,757)
|
506,757
|
Total Investments in Securities
(Cost $15,686,573)
|
17,310,917
|
Other Assets & Liabilities, Net
|
|
(44,599)
|
Net Assets
|
$17,266,318
|
Notes to Portfolio of
Investments
(a)
|
Non-income producing investment.
|
(b)
|
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 October 31, 2019, the total value of these securities amounted to $299,617, which represents
1.74% of total net assets.
|
(c)
|
The rate shown is the seven-day current annualized yield at October 31, 2019.
|
(d)
|
As defined in the Investment Company Act of 1940, an affiliated company is one in which the Fund owns 5% or more of the company’s outstanding voting securities, or a company
which is under common ownership or control with the Fund. Holdings and transactions in these affiliated companies during the year ended October 31, 2019 are as follows:
|
Issuer
|
Beginning
shares
|
Shares
purchased
|
Shares
sold
|
Ending
shares
|
Realized gain
(loss) —
affiliated
issuers ($)
|
Net change in
unrealized
appreciation
(depreciation) —
affiliated
issuers ($)
|
Dividends —
affiliated
issuers ($)
|
Value —
affiliated
issuers
at end of
period ($)
|
Columbia Short-Term Cash Fund, 1.938%
|
|
1,168,279
|
9,104,557
|
(9,766,029)
|
506,807
|
—
|
—
|
13,665
|
506,757
|
Abbreviation Legend
ADR
|
American Depositary Receipt
|
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.
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
11
|
Portfolio of Investments (continued)
October 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 October 31, 2019:
|
Level 1 ($)
|
Level 2 ($)
|
Level 3 ($)
|
Total ($)
|
Investments in Securities
|
|
|
|
|
Common Stocks
|
|
|
|
|
Australia
|
—
|
2,486,986
|
—
|
2,486,986
|
China
|
1,554,424
|
4,643,288
|
—
|
6,197,712
|
Hong Kong
|
—
|
1,359,189
|
—
|
1,359,189
|
India
|
—
|
1,339,094
|
—
|
1,339,094
|
Indonesia
|
—
|
179,513
|
—
|
179,513
|
Jersey
|
—
|
209,347
|
—
|
209,347
|
Macau
|
—
|
217,008
|
—
|
217,008
|
Philippines
|
—
|
219,262
|
—
|
219,262
|
Singapore
|
—
|
267,462
|
—
|
267,462
|
South Korea
|
—
|
2,044,618
|
—
|
2,044,618
|
Taiwan
|
—
|
1,665,486
|
—
|
1,665,486
|
Thailand
|
—
|
618,483
|
—
|
618,483
|
Total Common Stocks
|
1,554,424
|
15,249,736
|
—
|
16,804,160
|
Money Market Funds
|
506,757
|
—
|
—
|
506,757
|
Total Investments in Securities
|
2,061,181
|
15,249,736
|
—
|
17,310,917
|
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.
The accompanying Notes to Financial Statements are
an integral part of this statement.
12
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Statement of Assets and Liabilities
October 31, 2019
Assets
|
|
Investments in securities, at value
|
|
Unaffiliated issuers (cost $15,179,816)
|
$16,804,160
|
Affiliated issuers (cost $506,757)
|
506,757
|
Receivable for:
|
|
Investments sold
|
212,538
|
Capital shares sold
|
2
|
Dividends
|
4,989
|
Foreign tax reclaims
|
299
|
Expense reimbursement due from Investment Manager
|
521
|
Prepaid expenses
|
2,187
|
Total assets
|
17,531,453
|
Liabilities
|
|
Payable for:
|
|
Investments purchased
|
178,497
|
Capital shares purchased
|
3,651
|
Foreign capital gains taxes deferred
|
8,356
|
Management services fees
|
417
|
Distribution and/or service fees
|
17
|
Transfer agent fees
|
552
|
Compensation of board members
|
42,751
|
Custodian fees
|
17,240
|
Other expenses
|
13,654
|
Total liabilities
|
265,135
|
Net assets applicable to outstanding capital stock
|
$17,266,318
|
Represented by
|
|
Paid in capital
|
99,667,803
|
Total distributable earnings (loss)
|
(82,401,485)
|
Total - representing net assets applicable to outstanding capital stock
|
$17,266,318
|
Class A
|
|
Net assets
|
$769,939
|
Shares outstanding
|
62,556
|
Net asset value per share
|
$12.31
|
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)
|
$13.06
|
Class C
|
|
Net assets
|
$255,690
|
Shares outstanding
|
21,118
|
Net asset value per share
|
$12.11
|
Institutional Class
|
|
Net assets
|
$312,828
|
Shares outstanding
|
25,379
|
Net asset value per share
|
$12.33
|
Institutional 2 Class
|
|
Net assets
|
$2,300,305
|
Shares outstanding
|
185,817
|
Net asset value per share
|
$12.38
|
Institutional 3 Class
|
|
Net assets
|
$13,297,962
|
Shares outstanding
|
1,086,320
|
Net asset value per share
|
$12.24
|
Class R
|
|
Net assets
|
$329,594
|
Shares outstanding
|
27,059
|
Net asset value per share
|
$12.18
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
13
|
Statement of Operations
Year Ended October 31, 2019
Net investment income
|
|
Income:
|
|
Dividends — unaffiliated issuers
|
$539,228
|
Dividends — affiliated issuers
|
13,665
|
Foreign taxes withheld
|
(41,375)
|
Total income
|
511,518
|
Expenses:
|
|
Management services fees
|
153,013
|
Distribution and/or service fees
|
|
Class A
|
1,888
|
Class C
|
2,519
|
Class R
|
1,596
|
Transfer agent fees
|
|
Class A
|
1,541
|
Class C
|
513
|
Institutional Class
|
673
|
Institutional 2 Class
|
1,645
|
Institutional 3 Class
|
1,026
|
Class R
|
650
|
Compensation of board members
|
11,193
|
Custodian fees
|
17,983
|
Printing and postage fees
|
11,982
|
Registration fees
|
88,441
|
Audit fees
|
49,966
|
Legal fees
|
7,303
|
Line of credit interest
|
230
|
Compensation of chief compliance officer
|
6
|
Other
|
9,815
|
Total expenses
|
361,983
|
Fees waived or expenses reimbursed by Investment Manager and its affiliates
|
(155,187)
|
Total net expenses
|
206,796
|
Net investment income
|
304,722
|
Realized and unrealized gain (loss) — net
|
|
Net realized gain (loss) on:
|
|
Investments — unaffiliated issuers
|
(799,222)
|
Foreign currency translations
|
(9,601)
|
Net realized loss
|
(808,823)
|
Net change in unrealized appreciation (depreciation) on:
|
|
Investments — unaffiliated issuers
|
2,856,085
|
Foreign currency translations
|
2
|
Foreign capital gains tax
|
(6,554)
|
Net change in unrealized appreciation (depreciation)
|
2,849,533
|
Net realized and unrealized gain
|
2,040,710
|
Net increase in net assets resulting from operations
|
$2,345,432
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
14
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Statement of Changes in Net Assets
|
Year Ended
October 31, 2019
|
Year Ended
October 31, 2018
|
Operations
|
|
|
Net investment income
|
$304,722
|
$285,994
|
Net realized gain (loss)
|
(808,823)
|
8,560,761
|
Net change in unrealized appreciation (depreciation)
|
2,849,533
|
(12,050,043)
|
Net increase (decrease) in net assets resulting from operations
|
2,345,432
|
(3,203,288)
|
Distributions to shareholders
|
|
|
Net investment income and net realized gains
|
|
|
Class A
|
(37,057)
|
(12,876)
|
Class C
|
(11,068)
|
(1,205)
|
Institutional Class
|
(17,231)
|
(2,825)
|
Institutional 2 Class
|
(151,975)
|
(196,901)
|
Institutional 3 Class
|
(704,733)
|
(228,050)
|
Class R
|
(14,808)
|
(2,553)
|
Total distributions to shareholders
|
(936,872)
|
(444,410)
|
Decrease in net assets from capital stock activity
|
(1,981,872)
|
(8,878,186)
|
Total decrease in net assets
|
(573,312)
|
(12,525,884)
|
Net assets at beginning of year
|
17,839,630
|
30,365,514
|
Net assets at end of year
|
$17,266,318
|
$17,839,630
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
15
|
Statement of Changes in Net Assets (continued)
|
Year Ended
|
Year Ended
|
|
October 31, 2019
|
October 31, 2018
|
|
Shares
|
Dollars ($)
|
Shares
|
Dollars ($)
|
Capital stock activity
|
Class A
|
|
|
|
|
Subscriptions
|
11,931
|
149,396
|
66,514
|
968,111
|
Distributions reinvested
|
3,435
|
36,996
|
925
|
12,864
|
Redemptions
|
(10,924)
|
(138,120)
|
(101,274)
|
(1,440,875)
|
Net increase (decrease)
|
4,442
|
48,272
|
(33,835)
|
(459,900)
|
Class C
|
|
|
|
|
Subscriptions
|
127
|
1,496
|
5,252
|
76,139
|
Distributions reinvested
|
1,037
|
11,068
|
87
|
1,205
|
Redemptions
|
(3,975)
|
(44,814)
|
(19,436)
|
(262,462)
|
Net decrease
|
(2,811)
|
(32,250)
|
(14,097)
|
(185,118)
|
Institutional Class
|
|
|
|
|
Subscriptions
|
756
|
8,984
|
14,526
|
215,558
|
Distributions reinvested
|
1,589
|
17,110
|
201
|
2,796
|
Redemptions
|
(3,686)
|
(43,066)
|
(3,092)
|
(41,276)
|
Net increase (decrease)
|
(1,341)
|
(16,972)
|
11,635
|
177,078
|
Institutional 2 Class
|
|
|
|
|
Subscriptions
|
3,288
|
36,981
|
695,207
|
10,097,046
|
Distributions reinvested
|
12,965
|
140,026
|
13,565
|
189,093
|
Redemptions
|
(66,476)
|
(772,278)
|
(1,133,733)
|
(16,396,842)
|
Net decrease
|
(50,223)
|
(595,271)
|
(424,961)
|
(6,110,703)
|
Institutional 3 Class
|
|
|
|
|
Subscriptions
|
9,353
|
102,997
|
431,587
|
6,270,934
|
Distributions reinvested
|
65,972
|
704,578
|
13,026
|
179,624
|
Redemptions
|
(192,071)
|
(2,210,495)
|
(628,856)
|
(8,707,096)
|
Net decrease
|
(116,746)
|
(1,402,920)
|
(184,243)
|
(2,256,538)
|
Class R
|
|
|
|
|
Subscriptions
|
2,402
|
28,011
|
7,529
|
96,052
|
Distributions reinvested
|
1,375
|
14,700
|
184
|
2,536
|
Redemptions
|
(2,116)
|
(25,442)
|
(10,597)
|
(141,593)
|
Net increase (decrease)
|
1,661
|
17,269
|
(2,884)
|
(43,005)
|
Total net decrease
|
(165,018)
|
(1,981,872)
|
(648,385)
|
(8,878,186)
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
16
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
[THIS PAGE INTENTIONALLY LEFT
BLANK]
Columbia Contrarian Asia Pacific 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 (loss)
|
Total from
investment
operations
|
Distributions
from net
investment
income
|
Distributions
from net
realized
gains
|
Total
distributions to
shareholders
|
Class A
|
Year Ended 10/31/2019
|
$11.37
|
0.17
|
1.38
|
1.55
|
(0.23)
|
(0.38)
|
(0.61)
|
Year Ended 10/31/2018
|
$13.69
|
0.08
|
(2.28)
|
(2.20)
|
(0.12)
|
—
|
(0.12)
|
Year Ended 10/31/2017
|
$10.58
|
0.08
|
3.13
|
3.21
|
(0.10)
|
—
|
(0.10)
|
Year Ended 10/31/2016
|
$12.91
|
0.09
|
0.45
|
0.54
|
(2.87)
|
—
|
(2.87)
|
Year Ended 10/31/2015
|
$14.58
|
0.14
|
(1.67)
|
(1.53)
|
(0.14)
|
—
|
(0.14)
|
Class C
|
Year Ended 10/31/2019
|
$11.17
|
0.07
|
1.38
|
1.45
|
(0.13)
|
(0.38)
|
(0.51)
|
Year Ended 10/31/2018
|
$13.47
|
0.00(f)
|
(2.27)
|
(2.27)
|
(0.03)
|
—
|
(0.03)
|
Year Ended 10/31/2017
|
$10.41
|
(0.01)
|
3.09
|
3.08
|
(0.02)
|
—
|
(0.02)
|
Year Ended 10/31/2016
|
$12.73
|
0.04
|
0.41
|
0.45
|
(2.77)
|
—
|
(2.77)
|
Year Ended 10/31/2015
|
$14.37
|
0.02
|
(1.63)
|
(1.61)
|
(0.03)
|
—
|
(0.03)
|
Institutional Class
|
Year Ended 10/31/2019
|
$11.39
|
0.20
|
1.38
|
1.58
|
(0.26)
|
(0.38)
|
(0.64)
|
Year Ended 10/31/2018
|
$13.72
|
0.17
|
(2.35)
|
(2.18)
|
(0.15)
|
—
|
(0.15)
|
Year Ended 10/31/2017
|
$10.61
|
0.12
|
3.11
|
3.23
|
(0.12)
|
—
|
(0.12)
|
Year Ended 10/31/2016
|
$12.95
|
0.12
|
0.45
|
0.57
|
(2.91)
|
—
|
(2.91)
|
Year Ended 10/31/2015
|
$14.62
|
0.21
|
(1.71)
|
(1.50)
|
(0.17)
|
—
|
(0.17)
|
Institutional 2 Class
|
Year Ended 10/31/2019
|
$11.44
|
0.21
|
1.39
|
1.60
|
(0.28)
|
(0.38)
|
(0.66)
|
Year Ended 10/31/2018
|
$13.77
|
0.06
|
(2.23)
|
(2.17)
|
(0.16)
|
—
|
(0.16)
|
Year Ended 10/31/2017
|
$10.65
|
0.12
|
3.13
|
3.25
|
(0.13)
|
—
|
(0.13)
|
Year Ended 10/31/2016
|
$12.99
|
0.13
|
0.45
|
0.58
|
(2.92)
|
—
|
(2.92)
|
Year Ended 10/31/2015
|
$14.66
|
0.26
|
(1.74)
|
(1.48)
|
(0.19)
|
—
|
(0.19)
|
Institutional 3 Class
|
Year Ended 10/31/2019
|
$11.32
|
0.21
|
1.38
|
1.59
|
(0.29)
|
(0.38)
|
(0.67)
|
Year Ended 10/31/2018
|
$13.63
|
0.16
|
(2.30)
|
(2.14)
|
(0.17)
|
—
|
(0.17)
|
Year Ended 10/31/2017(g)
|
$10.82
|
0.11
|
2.70
|
2.81
|
—
|
—
|
—
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
18
|
Columbia Contrarian Asia Pacific 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 10/31/2019
|
$12.31
|
14.41%
|
2.48%(c)
|
1.56%(c)
|
1.41%
|
83%
|
$770
|
Year Ended 10/31/2018
|
$11.37
|
(16.22%)
|
2.06%(c),(d)
|
1.60%(c),(d),(e)
|
0.59%
|
150%
|
$661
|
Year Ended 10/31/2017
|
$13.69
|
30.66%
|
2.16%
|
1.56%(e)
|
0.69%
|
37%
|
$1,259
|
Year Ended 10/31/2016
|
$10.58
|
6.91%
|
1.84%(c)
|
1.51%(c),(e)
|
0.90%
|
20%
|
$713
|
Year Ended 10/31/2015
|
$12.91
|
(10.58%)
|
1.38%(c)
|
1.29%(c)
|
1.13%
|
86%
|
$869
|
Class C
|
Year Ended 10/31/2019
|
$12.11
|
13.59%
|
3.22%(c)
|
2.31%(c)
|
0.63%
|
83%
|
$256
|
Year Ended 10/31/2018
|
$11.17
|
(16.90%)
|
2.85%(c),(d)
|
2.35%(c),(d),(e)
|
0.01%
|
150%
|
$267
|
Year Ended 10/31/2017
|
$13.47
|
29.70%
|
2.90%
|
2.31%(e)
|
(0.09%)
|
37%
|
$512
|
Year Ended 10/31/2016
|
$10.41
|
6.01%
|
2.59%(c)
|
2.25%(c),(e)
|
0.38%
|
20%
|
$394
|
Year Ended 10/31/2015
|
$12.73
|
(11.23%)
|
2.13%(c)
|
2.03%(c)
|
0.31%
|
86%
|
$316
|
Institutional Class
|
Year Ended 10/31/2019
|
$12.33
|
14.73%
|
2.22%(c)
|
1.31%(c)
|
1.69%
|
83%
|
$313
|
Year Ended 10/31/2018
|
$11.39
|
(16.07%)
|
1.82%(c),(d)
|
1.35%(c),(d),(e)
|
1.28%
|
150%
|
$304
|
Year Ended 10/31/2017
|
$13.72
|
30.90%
|
1.90%
|
1.31%(e)
|
1.01%
|
37%
|
$207
|
Year Ended 10/31/2016
|
$10.61
|
7.21%
|
1.57%(c)
|
1.26%(c),(e)
|
1.19%
|
20%
|
$394
|
Year Ended 10/31/2015
|
$12.95
|
(10.34%)
|
1.13%(c)
|
1.01%(c)
|
1.68%
|
86%
|
$725
|
Institutional 2 Class
|
Year Ended 10/31/2019
|
$12.38
|
14.82%
|
2.07%(c)
|
1.19%(c)
|
1.73%
|
83%
|
$2,300
|
Year Ended 10/31/2018
|
$11.44
|
(15.94%)
|
1.69%(c),(d)
|
1.25%(c),(d)
|
0.42%
|
150%
|
$2,700
|
Year Ended 10/31/2017
|
$13.77
|
31.02%
|
1.73%
|
1.21%
|
1.07%
|
37%
|
$9,101
|
Year Ended 10/31/2016
|
$10.65
|
7.30%
|
1.41%(c)
|
1.15%(c)
|
1.24%
|
20%
|
$16,471
|
Year Ended 10/31/2015
|
$12.99
|
(10.17%)
|
0.95%(c)
|
0.94%(c)
|
1.76%
|
86%
|
$59,489
|
Institutional 3 Class
|
Year Ended 10/31/2019
|
$12.24
|
14.87%
|
2.02%(c)
|
1.13%(c)
|
1.81%
|
83%
|
$13,298
|
Year Ended 10/31/2018
|
$11.32
|
(15.93%)
|
1.67%(c),(d)
|
1.19%(c),(d)
|
1.17%
|
150%
|
$13,621
|
Year Ended 10/31/2017(g)
|
$13.63
|
25.97%
|
1.74%(h)
|
1.18%(h)
|
1.30%(h)
|
37%
|
$18,903
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
19
|
Financial Highlights (continued)
|
Net asset value,
beginning of
period
|
Net
investment
income
(loss)
|
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 10/31/2019
|
$11.25
|
0.14
|
1.37
|
1.51
|
(0.20)
|
(0.38)
|
(0.58)
|
Year Ended 10/31/2018
|
$13.56
|
0.08
|
(2.30)
|
(2.22)
|
(0.09)
|
—
|
(0.09)
|
Year Ended 10/31/2017
|
$10.48
|
0.05
|
3.10
|
3.15
|
(0.07)
|
—
|
(0.07)
|
Year Ended 10/31/2016
|
$12.81
|
0.08
|
0.43
|
0.51
|
(2.84)
|
—
|
(2.84)
|
Year Ended 10/31/2015
|
$14.46
|
0.09
|
(1.64)
|
(1.55)
|
(0.10)
|
—
|
(0.10)
|
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 line of credit interest expense. For the periods indicated below, if line of credit interest expense had been excluded, expenses would have been lower by:
|
Class
|
10/31/2019
|
10/31/2018
|
10/31/2017
|
10/31/2016
|
10/31/2015
|
Class A
|
less than .01%
|
0.01%
|
—%
|
less than .01%
|
0.02%
|
Class C
|
less than .01%
|
0.01%
|
—%
|
less than .01%
|
0.02%
|
Institutional Class
|
less than .01%
|
0.02%
|
—%
|
less than .01%
|
0.03%
|
Institutional 2 Class
|
less than .01%
|
0.01%
|
—%
|
less than .01%
|
less than .01%
|
Institutional 3 Class
|
less than .01%
|
0.01%
|
—%
|
—%
|
—%
|
Class R
|
less than .01%
|
0.02%
|
—%
|
less than .01%
|
0.02%
|
(d)
|
Ratios include interfund lending expense which is less than 0.01%.
|
(e)
|
The benefits derived from expense reductions had an impact of less than 0.01%.
|
(f)
|
Rounds to zero.
|
(g)
|
Institutional 3 Class shares commenced operations on March 1, 2017. Per share data and total return reflect activity from that date.
|
(h)
|
Annualized.
|
The accompanying Notes to
Financial Statements are an integral part of this statement.
20
|
Columbia Contrarian Asia Pacific 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 R
|
Year Ended 10/31/2019
|
$12.18
|
14.11%
|
2.72%(c)
|
1.81%(c)
|
1.17%
|
83%
|
$330
|
Year Ended 10/31/2018
|
$11.25
|
(16.49%)
|
2.36%(c),(d)
|
1.85%(c),(d),(e)
|
0.60%
|
150%
|
$286
|
Year Ended 10/31/2017
|
$13.56
|
30.34%
|
2.40%
|
1.82%(e)
|
0.47%
|
37%
|
$383
|
Year Ended 10/31/2016
|
$10.48
|
6.61%
|
2.09%(c)
|
1.76%(c),(e)
|
0.77%
|
20%
|
$293
|
Year Ended 10/31/2015
|
$12.81
|
(10.78%)
|
1.63%(c)
|
1.53%(c)
|
0.79%
|
86%
|
$301
|
The accompanying Notes to Financial Statements are
an integral part of this statement.
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
21
|
Notes to Financial Statements
October 31, 2019
Note 1. Organization
Columbia Contrarian Asia Pacific
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 through authorized investment
professionals to omnibus retirement plans or to institutional investors 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
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. Under the policy, the Fund may utilize 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 Contrarian Asia Pacific Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
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, if available.
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.
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.
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 on the payment date, the proceeds are recorded as
realized gains.
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 Contrarian Asia Pacific Fund | Annual Report 2019
|
23
|
Notes to Financial Statements (continued)
October 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.
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
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 the period ended July 31, 2019 and
all subsequent periods. To comply with the ASU, 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.
24
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 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 Investment Manager is responsible for the ultimate oversight of investments made by the
Fund. The Fund’s subadviser (see Subadvisory agreement below) has the primary responsibility for the day-to-day portfolio management of the Fund. The management services fee is an annual fee that is equal to a
percentage of the Fund’s daily net assets that declines from 0.88% to 0.62% as the Fund’s net assets increase. The effective management services fee rate for the year ended October 31, 2019 was 0.88% of
the Fund’s average daily net assets.
Subadvisory agreement
The Fund’s Board of Trustees
has approved a subadvisory agreement between the Investment Manager and Threadneedle International Limited (Threadneedle), an affiliate of the Investment Manager and an indirect wholly-owned subsidiary of Ameriprise
Financial. As of October 31, 2019, Threadneedle is not providing services to the Fund pursuant to the subadvisory agreement.
Participating Affiliates
The Investment Manager and its
investment advisory affiliates (Participating Affiliates) around the world may coordinate in providing services to their clients. From time to time the Investment Manager (or any affiliated investment subadviser to
the Fund, as the case may be) may engage its Participating Affiliates to provide a variety of services such as investment research, investment monitoring, trading and discretionary investment management (including
portfolio management) to certain accounts managed by the Investment Manager, including the Fund. These Participating Affiliates provide services to the Investment Manager (or any affiliated investment subadviser to
the Fund as the case may be) either pursuant to subadvisory agreements, personnel-sharing agreements or similar inter-company arrangements and the Fund pays no additional fees and expenses as a result of any such
arrangements.
These Participating Affiliates,
like the Investment Manager, are direct or indirect subsidiaries of Ameriprise Financial and are registered, as appropriate, with respective regulators in their home jurisdictions and, where required, the Securities
and Exchange Commission and the Commodity Futures Trading Commission in the United States.
Pursuant to some of these
arrangements, certain employees of these Participating Affiliates may serve as "associated persons" of the Investment Manager and, in this capacity, subject to the oversight and supervision of the Investment Manager
and consistent with the investment objectives, policies and limitations set forth in the Fund’s prospectus and Statement of Additional Information (SAI), may provide such services to the Fund on behalf of the
Investment Manager.
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 for 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.
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
25
|
Notes to Financial Statements (continued)
October 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 October 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
|
0.20
|
Institutional Class
|
0.20
|
Institutional 2 Class
|
0.06
|
Institutional 3 Class
|
0.01
|
Class R
|
0.20
|
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 October 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 0.50% of the Fund’s average daily net assets attributable to Class A, Class C and
Class R 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.
The amount of distribution and
shareholder services expenses incurred by the Distributor and not yet reimbursed (unreimbursed expense) was approximately $3,000 for Class C shares. This amount is based on the most recent information available as of
September 30, 2019, and may be recovered from future payments under the distribution plan or contingent deferred sales charges (CDSCs). To the extent the unreimbursed expense has been fully recovered, the distribution
and/or shareholder services fee is reduced.
26
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
Sales charges (unaudited)
Sales charges, including front-end
charges and CDSCs, received by the Distributor for distributing Fund shares for the year ended October 31, 2019, if any, are listed below:
|
Front End (%)
|
CDSC (%)
|
Amount ($)
|
Class A
|
5.75
|
0.50 - 1.00(a)
|
661
|
Class C
|
—
|
1.00(b)
|
—
|
(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:
|
March 1, 2019
through
February 29, 2020
|
Prior to
March 1, 2019
|
Class A
|
1.55%
|
1.59%
|
Class C
|
2.30
|
2.34
|
Institutional Class
|
1.30
|
1.34
|
Institutional 2 Class
|
1.17
|
1.23
|
Institutional 3 Class
|
1.11
|
1.17
|
Class R
|
1.80
|
1.84
|
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 October 31, 2019, these
differences were primarily due to differing treatment for trustees’ deferred compensation, capital loss carryforward, distribution reclassifications, foreign capital gains tax 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.
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
27
|
Notes to Financial Statements (continued)
October 31, 2019
The following reclassifications
were made:
Undistributed net
investment
income ($)
|
Accumulated
net realized
(loss) ($)
|
Paid in
capital ($)
|
33,874
|
(33,874)
|
—
|
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 October 31, 2019
|
Year Ended October 31, 2018
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total ($)
|
Ordinary
income ($)
|
Long-term
capital gains ($)
|
Total ($)
|
403,918
|
532,954
|
936,872
|
444,410
|
—
|
444,410
|
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At October 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 ($)
|
Net unrealized
appreciation ($)
|
305,849
|
—
|
(84,280,971)
|
1,624,344
|
At October 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) ($)
|
Net unrealized
appreciation ($)
|
15,686,573
|
3,177,804
|
(1,553,460)
|
1,624,344
|
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 October 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 October 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 ($)
|
(84,017,384)
|
(263,587)
|
(84,280,971)
|
—
|
—
|
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 $13,865,730 and $16,037,915, respectively, for the year ended October 31, 2019. The amount of purchase and
sale activity impacts the portfolio turnover rate reported in the Financial Highlights.
28
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 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 October 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 $1 billion. Interest is charged to each participating fund based on its borrowings at a rate equal to the higher of (i) the federal funds effective rate, (ii) the
one-month LIBOR rate and (iii) the overnight bank funding rate, plus in each case, 1.00%. Each borrowing under the credit facility matures no later than 60 days after the date of borrowing. The Fund also pays a
commitment fee equal to its pro rata share of the unused amount of the credit facility at a rate of 0.15% per annum. The commitment fee is included in other expenses in the Statement of Operations. This agreement
expires annually in December unless extended or renewed.
For the year ended October 31,
2019, the Fund’s borrowing activity was as follows:
Average loan
balance ($)
|
Weighted average
interest rate (%)
|
Days
outstanding
|
480,000
|
3.45
|
5
|
Interest expense incurred by the
Fund is recorded as a line of credit interest expense in the Statement of Operations. The Fund had no outstanding borrowings at October 31, 2019.
Note 9. Significant
risks
Asia Pacific region risk
Because the Fund concentrates its
investments in the Asia Pacific region, the Fund may be particularly susceptible to economic, political or regulatory events affecting companies and countries within the Asia Pacific region. Many of the countries in
the Asia Pacific region are considered underdeveloped or developing, including from a political economic and/or social perspective, and may have relatively unstable governments and economies based on limited business,
industries and/or natural resources or commodities. Events in any one country within the region may impact other countries in the region or the region as a whole. As a result, events in the region will generally have
a greater effect on the Fund than if the
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
29
|
Notes to Financial Statements (continued)
October 31, 2019
Fund were more geographically diversified. This
could result in increased volatility in the value of the Fund’s investments and losses for the Fund. Also, securities of some companies in the region can be less liquid than U.S. or other foreign securities,
potentially making it difficult for the Fund to sell such securities at a desirable time and price.
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.
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 October 31, 2019, affiliated
shareholders of record owned 77.4% 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.
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.
30
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Notes to Financial Statements (continued)
October 31, 2019
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 Contrarian Asia Pacific Fund | Annual Report 2019
|
31
|
Report of Independent Registered Public
Accounting Firm
To the Board of Trustees of Columbia
Funds Series Trust II and Shareholders of Columbia Contrarian Asia Pacific Fund
Opinion on the Financial
Statements
We have audited the accompanying
statement of assets and liabilities, including the portfolio of investments, of Columbia Contrarian Asia Pacific Fund (one of the funds constituting Columbia Funds Series Trust II, hereafter referred to as the "Fund")
as of October 31, 2019, the related statement of operations for the year ended October 31, 2019, the statement of changes in net assets for each of the two years in the period ended October 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 October 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
October 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 October 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
December 20, 2019
We have served as the auditor of
one or more investment companies within the Columbia Funds Complex since 1977.
32
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Federal Income Tax
Information
(Unaudited)
The Fund hereby designates the
following tax attributes for the fiscal year ended October 31, 2019. Shareholders will be notified in early 2020 of the amounts for use in preparing 2019 income tax returns.
Qualified
dividend
income
|
|
85.76%
|
|
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.
TRUSTEES AND
OFFICERS
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
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
33
|
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
|
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
|
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
|
34
|
Columbia Contrarian Asia Pacific 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.
|
192
|
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 Contrarian Asia Pacific Fund | Annual Report 2019
|
35
|
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.
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.
|
36
|
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
TRUSTEES AND OFFICERS (continued)
Fund officers (continued)
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
|
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.
|
Approval of Management
and Subadvisory
Agreements
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 Contrarian Asia Pacific 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). In addition, under a Subadvisory Agreement (the Subadvisory Agreement) between
Columbia Threadneedle and Threadneedle International Limited (the Subadviser), an affiliate of Columbia Threadneedle, the Subadviser provided portfolio management and related services for the Fund through January 22,
2018. At present, the Subadviser is not providing services to the Fund; however, Columbia Threadneedle has continued to retain Threadneedle International Limited and may in the future reallocate Fund assets to them to
serve the Fund in a subadvisory capacity.
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 and the Subadvisory Agreement (together, the Advisory
Agreements). 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 Advisory Agreements.
The Board, at its June 17-19, 2019
in-person Board meeting (the June Meeting), considered the renewal of each of the Advisory Agreements for additional one-year terms. At the June Meeting, Independent Legal Counsel reviewed with the Independent
Trustees various factors relevant to the Board’s consideration of advisory and subadvisory 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 each of the Advisory Agreements.
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
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37
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Approval of Management and Subadvisory
Agreements (continued)
Nature, extent and quality of services provided by
Columbia Threadneedle and the Subadviser
The Board analyzed various
reports and presentations it had received detailing the services performed by Columbia Threadneedle and the Subadviser, as well as their history, reputation, expertise, resources and relative capabilities, and the
qualifications of their personnel.
The Board specifically considered
the many developments during recent years concerning the services provided by Columbia Threadneedle, including, in particular, detailed information regarding the process employed for selecting and overseeing
affiliated and unaffiliated Subadvisers. With respect to Columbia Threadneedle, the Board also noted 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 subadvised 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
Advisory Agreements, the Board also took into account the organization and strength of the Fund’s and its service providers’ compliance programs. The Board also 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.
In addition, the Board discussed
the acceptability of the terms of the Management Agreement (including the relatively broad scope of services required to be performed by Columbia Threadneedle in addition to monitoring the Subadviser), noting that no
material changes are proposed from the forms of agreements previously approved. The Board also noted the wide array of legal and compliance services provided to the Funds under the Fund Management Agreements. It was
also observed that the services being performed under the Management Agreement were of a reasonably high quality.
With respect to the Subadviser, the
Board observed that it had previously approved the Subadviser’s code of ethics and compliance program, that the Chief Compliance Officer of the Fund continues to monitor the code and the program, and that no
material concerns have been reported. The Board also considered the Subadviser’s organizational strength and resources, portfolio management team depth and capabilities and investment process. The Board also
considered the Subadviser’s capability and wherewithal to carry out its responsibilities under the Subadvisory Agreement. In addition, the Board discussed the acceptability of the terms of the Subadvisory
Agreement, including the scope of services required to be performed. The Board noted that the terms of the Subadvisory Agreement are generally consistent with the terms of other subadviser agreements for subadvisers
who manage other funds managed by the Investment Manager. It was observed that no material changes were recommended to the Subadvisory Agreement. The Board took into account Columbia Threadneedle’s
representation that the Subadviser was in a position to provide quality services to the Fund. In this regard, the Board further observed the various services provided by the subadvisory oversight team and their
significant resources added in recent years to help improve performance.
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 the Subadviser is 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 Advisory Agreements, 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): (i) the performance of the Fund, (ii) the performance of a benchmark index, (iii) the
percentage ranking of the Fund among its comparison group, (iv) the product score of the Fund (taking into account performance relative to peers and
38
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Columbia Contrarian Asia Pacific Fund | Annual Report 2019
|
Approval of Management and Subadvisory
Agreements (continued)
benchmarks) and (v) the net assets of the Fund.
The Board observed the Fund’s underperformance for certain periods, noting that appropriate steps (such as changes to strategy and management team) had recently been taken to help improve the Fund’s
performance.
Additionally, the Board reviewed
the performance of the Subadviser. The Board considered, in particular, management’s rationale for recommending the continued retention of the Subadviser.
Comparative fees, costs of
services provided and the profits realized by Columbia Threadneedle, its affiliates and the Subadviser from their relationships with the Fund
The Board reviewed comparative
fees and the costs of services provided under each of the Advisory Agreements. 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.
Additionally, the Board reviewed
the level of subadvisory fees paid to the Subadviser, noting that the fees are paid by the Investment Manager and do not impact the fees paid by the Fund. The Board also reviewed the fees charged by the Subadviser to
other mutual funds employing similar investment strategies where the Subadviser serves as investment adviser or subadviser. Based on its reviews, including JDL’s conclusions/analyses, the Board concluded that
the Fund’s investment management and subadvisory fees were 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.
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.
Columbia Contrarian Asia Pacific Fund | Annual Report 2019
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39
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Approval of Management and Subadvisory
Agreements (continued)
Based on the foregoing, the Board, including all
of the Independent Trustees, concluded that fees payable under each of the Advisory Agreements 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 each of the Advisory Agreements.
40
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Columbia Contrarian Asia Pacific Fund | Annual Report 2019
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[THIS PAGE INTENTIONALLY LEFT
BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
Columbia Contrarian Asia Pacific 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)
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The registrant has adopted a code of ethics that applies to the registrant’s 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.
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(b)
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During the period covered by this report, there were not any amendments to a provision of the code of ethics that applies to the registrant’s 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.
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(c)
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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 registrant’s 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.
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Item 3. Audit Committee Financial Expert.
The registrant’s Board of Trustees has determined that Brian J. Gallagher, Pamela G. Carlton, Anthony M. Santomero, and Sandra L. Yeager, each of whom are members of the registrant’s Board of Trustees and Audit Committee, each qualify as an audit committee financial expert. Mr. Gallagher, Ms. Carlton, Mr. Santomero, and Ms. Yeager are each independent trustees, as defined in paragraph (a)(2) of this item’s instructions.
Item 4. Principal Accountant Fees and Services.
Fee information below is disclosed for the four series of the registrant whose reports to stockholders are included in this annual filing. One series liquidated in 2018 and the fees incurred by this series through its liquidation date are included in the response to this Item. One series liquidated in 2019 and the fees incurred by this series through its liquidation date are included in the response to this Item.
(a) Audit Fees. Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended October 31, 2019 and October 31, 2018 are approximately as follows:
|
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2019
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2018
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$116,000
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$171,800
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Audit Fees include amounts related to the audit of the registrant’s 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 October 31, 2019 and October 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 registrant’s financial statements and are not reported in Audit Fees above.
During the fiscal years ended October 31, 2019 and October 31, 2018, there were no Audit-Related Fees billed by the registrant’s principal accountant to the registrant’s 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 October 31, 2019 and October 31, 2018 are approximately as follows:
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2019
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2018
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$45,700
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$40,200
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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 include Tax Fees for foreign tax filings. Fiscal year 2019 also includes Tax Fees for agreed-upon procedures related to a fund liquidation and a final tax return.
During the fiscal years ended October 31, 2019 and October 31, 2018, there were no Tax Fees billed by the registrant’s principal accountant to the registrant’s 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 October 31, 2019 and October 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 registrant’s principal accountant to the registrant’s 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 October 31, 2019 and October 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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$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 registrant’s transfer agent and investment adviser.
(e)(1) Audit Committee Pre-Approval Policies and Procedures
The registrant’s Audit Committee is required to pre-approve the engagement of the registrant’s 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 registrant’s 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 registrant’s 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 registrant’s Adviser and its Control Affiliates. A service will require specific pre-approval by the Audit Committee if it is to be provided by the Fund’s 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 SEC’s 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 Committee's responsibilities with respect to the pre-approval of services performed by the independent auditor may not be delegated to management.
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On an annual basis, at a regularly scheduled Audit Committee meeting, the Fund’s 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.
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The Fund’s 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 registrant’s Audit Committee.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s 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 October 31, 2019 and October 31, 2018 are approximately as follows:
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2019
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2018
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$270,700
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$265,200
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(h) The registrant’s Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant’s 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 accountant’s independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Investments
(a)
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The registrant’s “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 registrant's board of directors.
Item 11. Controls and Procedures.
(c)
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The registrant’s principal executive officer and principal financial officer, based on their evaluation of the registrant’s 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 registrant’s 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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(d)
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There was no change in the registrant's 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 registrant's 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.
(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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Date
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December 20, 2019
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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.
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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Date
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December 20, 2019
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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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Date
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December 20, 2019
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Fund Policy: Code of Ethics for Principal Executive / Senior Financial Officers
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COLUMBIA FUNDS
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Applicable Regulatory Authority
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Section 406 of the Sarbanes-Oxley Act of 2002;
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Item 2 of Form N-CSR
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Related Policies
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Overview and Implementation of Compliance Program
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Policy
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Requires Annual Board Approval
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No but Covered Officers Must provide annual
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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:
•Whether it has adopted a code of ethics that applies to the investment company's 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
•Any amendments to, or waivers from, the code of ethics relating to such officers.
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:
I.Covered Officers/Purpose of the Code
This Code applies to the Fund's Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer or Controller (the "Covered Officers") for the purpose of promoting:
•Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
•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;
•Compliance with applicable laws and governmental rules and regulations;
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.
Proprietary and Confidential
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Page 1 of 9
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Fund Policy: Code of Ethics for Principal Executive / Senior Financial Officers
•The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and
•Accountability for adherence to the Code.
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.
II.Administration of the Code
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 Fund's CLO. The CLO of the Fund shall assist the Fund's 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.
III.Managing Conflicts of Interest
A "conflict of interest" occurs when a Covered Officer's 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 Officer's 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 Fund's and its Adviser's 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
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.
Proprietary and Confidential
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Fund Policy: Code of Ethics for Principal Executive / Senior Financial Officers
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:
•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;
•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;
•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
•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.
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 Fund's outside counsel, or counsel to the Independent Board Members, as appropriate.
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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Fund Policy: Code of Ethics for Principal Executive / Senior Financial Officers
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:
•Service as a director on the board of a public or private company or service as a public official;
•The receipt of a non-de minimus gift when the gift is in relation to doing business directly or indirectly with the Fund;
•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;
•An ownership interest in, or any consulting or employment relationship with, any of the Fund's service providers, other than the Primary Service Providers or any affiliated person thereof; and
•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 Officer's employment, such as compensation or equity ownership.
IV. Disclosure and Compliance
It is the responsibility of each Covered Officer:
•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;
•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 Fund's Board, Legal Counsel, Independent Legal Counsel and auditors, and to governmental regulators and self-regulatory organizations;
•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
•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.
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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Fund Policy: Code of Ethics for Principal Executive / Senior Financial Officers
V.Reporting and Accountability by Covered Officers Each Covered Officer must:
•Upon adoption of the Code or becoming a Covered Officer, acknowledge in writing to the Fund's Board that he or she has received, read and understands the Code, using the form attached as Appendix A hereto;
•Annually thereafter acknowledge in writing to the Fund's 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;
•Not retaliate against any employee or Covered Officer for reports of potential violations that are made in good faith; and
•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.
The Fund will follow the policy set forth below in investigating and enforcing this Code:
•The Code Officer will endeavor to take all appropriate action to investigate any potential violation reported to him or her;
•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;
•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 Fund's Audit
Committee;
•The Fund's Audit Committee will be responsible for granting waivers, as appropriate; and
•This Code and any changes to or waivers of the Code will, to the extent required, be disclosed as provided by SEC rules.
VI. Other Policies
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 Fund's 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 Fund's and its Adviser's and principal underwriter's codes of ethics under Rule 17j-1 under the 1940 Act and the more detailed policies and procedures of the
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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Fund Policy: Code of Ethics for Principal Executive / Senior Financial Officers
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.
VII. Disclosure of Amendments to the Code
Any amendments will, to the extent required, be disclosed in accordance with law.
VIII. Confidentiality
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 Fund's Board, the Covered Officers, the Code Officer, the CLO, the Fund's Primary Service Providers and their affiliates, and outside audit firms, legal counsel to the Fund and legal counsel to the Independent Board Members.
IX. Internal Use
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 Fund's 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 Fund's 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 Fund's 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 Fund's 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 Fund's 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 employee's 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.
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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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.
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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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 Fund's 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.
Covered Officer Name and Title: ________________________________________________
(please print)
______________________________________________________________________________
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.
Covered Officer Name and Title: ________________________________________________
(please print)
______________________________________________________________________________
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!
1It 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.
I, Christopher O. Petersen, certify that:
1.I have reviewed this report on Form N-CSR of Columbia Funds Series Trust II;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d)disclosed in this report any change in the registrant's 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 registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 20, 2019
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/s/ Christopher O. Petersen
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Christopher O. Petersen, President and Principal
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Executive Officer
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I, Michael G. Clarke, certify that:
1.I have reviewed this report on Form N-CSR of Columbia Funds Series Trust II;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and
(d)disclosed in this report any change in the registrant's 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 registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 20, 2019
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/s/ Michael G. Clarke
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Michael G. Clarke, Chief Financial Officer
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