UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09645
Columbia Funds Series Trust
(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: March 31
Date of reporting period: March 31, 2020
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
March 31, 2020
March 31, 2020
Columbia Short Term
Bond 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 Federally Insured • No
Financial Institution Guarantee • May Lose Value
Table of Contents
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Columbia Short Term Bond 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 Short Term Bond Fund | Annual
Report 2020
Fund at a Glance
Investment objective
The Fund
seeks current income, consistent with minimal fluctuation of principal.
Portfolio management
Gregory Liechty
Co-Portfolio Manager
Managed Fund since 2010
Ronald Stahl, CFA
Co-Portfolio Manager
Managed Fund since 2006
Returns for Class A shares are shown
with and without the maximum initial sales charge of 1.00%. Returns for Class C shares are shown with and without the 1.00% contingent deferred sales charge for the first year only. The Fund’s other share
classes are not subject to sales charges and have limited eligibility. Please see the Fund’s prospectus for details. Performance for different share classes will vary based on differences in sales charges and
fees associated with each share class. All results shown assume reinvestment of distributions during the period. Returns do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or on the
redemption of Fund shares. Performance results reflect the effect of any fee waivers or reimbursements of Fund expenses by Columbia Management Investment Advisers, LLC and/or any of its affiliates. Absent these fee
waivers or expense reimbursement arrangements, performance results would have been lower.
The performance information shown
represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when redeemed, may be worth more or less than
their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by contacting your financial
intermediary, visiting columbiathreadneedleus.com/investor/ or calling 800.345.6611.
| * | The returns shown for periods prior to the share class inception date (including returns for the Life of the Fund, if shown, which are since Fund inception) include the returns of the Fund’s oldest share class. These returns are adjusted to reflect any higher class-related operating expenses of the newer share classes, as applicable. Please visit columbiathreadneedleus.com/investor/investment-products/mutual-funds/appended-performance for more information. |
The Bloomberg Barclays 1-3 Year
Government/Credit Index consists of Treasury or government agency securities and investment-grade corporate debt securities with maturities of one to three years.
Indices are not available for
investment, are not professionally managed and do not reflect sales charges, fees, brokerage commissions, taxes or other expenses of investing. Securities in the Fund may not match those in an index.
Fund performance may be significantly
negatively impacted by the economic impact of the COVID-19 pandemic. The COVID-19 pandemic has adversely impacted economies and capital markets around the world in ways that will likely continue and may change in
unforeseen ways for an indeterminate period. The COVID-19 pandemic may exacerbate pre-existing political, social and economic risks in certain countries and globally.
|
Columbia Short Term Bond Fund | Annual Report 2020
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3 |
Fund at a Glance (continued)
Performance of a hypothetical $10,000 investment (March 31, 2010 — March 31, 2020)
The chart above shows the change in
value of a hypothetical $10,000 investment in Class A shares of Columbia Short Term Bond Fund during the stated time period, and does not reflect the deduction of taxes that a shareholder may pay on Fund distributions
or on the redemption of Fund shares.
| Portfolio breakdown (%) (at March 31, 2020) | |
| Asset-Backed Securities — Non-Agency | 22.1 |
| Commercial Mortgage-Backed Securities - Non-Agency | 8.8 |
| Corporate Bonds & Notes | 33.5 |
| Foreign Government Obligations | 0.1 |
| Money Market Funds | 4.0 |
| Residential Mortgage-Backed Securities - Agency | 7.5 |
| Residential Mortgage-Backed Securities - Non-Agency | 23.1 |
| U.S. Treasury Obligations | 0.9 |
| Total | 100.0 |
Percentages indicated are based
upon total investments excluding investments in derivatives, if any. The Fund’s portfolio composition is subject to change.
| Quality breakdown (%) (at March 31, 2020) | |
| AAA rating | 14.0 |
| AA rating | 12.7 |
| A rating | 24.9 |
| BBB rating | 24.1 |
| BB rating | 4.1 |
| B rating | 2.1 |
| CCC rating | 0.1 |
| D rating | 0.0(a) |
| Not rated | 18.0 |
| Total | 100.0 |
| (a) | Rounds to zero. |
Percentages indicated are based upon
total fixed income investments.
Bond ratings apply to the underlying
holdings of the Fund and not the Fund itself and are divided into categories ranging from highest to lowest credit quality, determined by using the middle rating of Moody’s, S&P and Fitch, after dropping the
highest and lowest available ratings. When ratings are available from only two rating agencies, the lower rating is used. When a rating is available from only one rating agency, that rating is used. When a bond is not
rated by any rating agency, it is designated as “Not rated.” Credit quality ratings assigned by a rating agency are subjective opinions, not statements of fact, and are subject to change, including daily.
The ratings assigned by credit rating agencies are but one of the considerations that the Investment Manager and/or Fund’s subadviser incorporates into its credit analysis process, along with such other
issuer-specific factors as cash flows, capital structure and leverage ratios, ability to de-leverage (repay) through free cash flow, quality of management, market positioning and access to capital, as well as such
security-specific factors as the terms of the security (e.g., interest rate and time to maturity) and the amount and type of any collateral.
| 4 | Columbia Short Term Bond Fund | Annual Report 2020 |
Manager Discussion of Fund Performance
At March 31, 2020, approximately
30.58% 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
March 31, 2020, the Fund’s Class A shares returned -2.94% excluding sales charges, underperforming its benchmark, the Bloomberg Barclays 1-3 Year Government/Credit Index, which returned 4.53%. Exposure to
sectors that trade on their spread to same-duration U.S. Treasuries detracted from performance, as all major spread sectors underperformed similar duration U.S. Treasuries for the year. The Fund’s longer
duration relative to the benchmark during the period aided results. (Duration is a measure of interest rate sensitivity.)
COVID-19 pandemic weighed on
global economies, financial markets
Optimism prevailed early in 2019,
buoyed by solid U.S. economic growth and a recovery from meaningful stock market losses in 2018. Strong job gains drove the unemployment rate down to 3.5%, annually, and consumer spending and export trade supported
growth. However, the pace of growth stalled as COVID-19 spread from China and South Korea through Europe, the United States and most parts of the world. With much of the world’s population on lockdown, the
decline in business activity and surge in layoffs pushed the global economy toward recession.
Central banks have responded
aggressively to global recession fears, cutting interest rates and restarting quantitative easing and other measures to provide liquidity to financial markets. In the United States, the Federal Reserve (Fed) reduced
its benchmark overnight lending rate essentially to zero, resurrected financial crisis-era lending facilities and launched an asset-purchase program covering Treasuries, mortgage-backed securities, municipal bonds and
corporate issues. On the fiscal side, in late March 2020, the U.S. government passed a $2.2 trillion stimulus package to help diminish the impact of lost paychecks and declining business activity, with the possibility
of more in the months to come. U.S. Treasury yields finished the reporting period near all-time lows, with the 2-year Treasury declining to 0.25% and the 5-year Treasury declining to 0.38%.
Against this backdrop, the S&P
500 Index returned -6.98% for the 12-month period, giving up substantial gains during the last five weeks. The Bloomberg Barclays U.S. Aggregate Bond Index gained 8.93%, as the yield on the 10-year U.S. Treasury fell
to 0.64%. (Bond yields and prices move in opposite directions.)
Contributors and detractors
The Fund benefited from slightly
longer duration relative to the benchmark during the reporting period, as interest rates fell during the first quarter of 2020. Agency conventional 15-year mortgage-backed securities also provided the Fund with
positive results relative to the benchmark.
However, these positive factors
were not enough to offset the impact of a retreat from most non-Treasury segments of the fixed-income markets as fears over a global recession mounted. The outlook for negative economic growth drove a sharp sell-off
in short investment-grade corporate debt beginning in late February 2020, before news of the Fed’s plan to include corporates in its asset-purchase program led the category to regain some lost ground. All major
subsectors with the corporate market underperformed relative to similar duration Treasuries. Within the corporate market, the Fund’s exposure to the energy and finance sectors detracted from results as they were
the worst performers in the corporate market. With respect to credit quality, BBB underperformed A and AA credit during the reporting period and the Fund was overweight BBB rated securities. A small allocation to
high-yield corporate notes also weighed on Fund returns. As risk sentiment plummeted, the high-yield sector was hurt by falling oil prices and poor liquidity.
Broad-based market volatility also
weighed on securitized assets, which included mortgage-backed securities (MBS), asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS). Non-agency collateralized mortgage obligations (CMOs),
ABS and CMBS, which lost ground as spreads widened and liquidity dried up near the end of the reporting period. Securitized assets are not included in the benchmark.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
5 |
Manager Discussion of Fund Performance (continued)
Portfolio activity
During the 12-month period, we
increased the Fund’s allocation to short, non-agency CMOs and added slightly to the high-yield corporate sector. In an effort to increase the Fund’s yield relative to its peers and benchmark, we increased
these positions by reducing exposure to government-backed and asset-backed securities.
At period’s end
Policy makers around the world
have put a significant amount of monetary and fiscal stimulus into place. In the United States, the Fed announced programs to support the U.S. economy, most recently expanding asset class purchases of high-yield ETFs,
CLOs and CMBS securities. The Fed’s March 2020 interest rate cut appeared to be its last for the current business cycle. Against this backdrop, we continued to monitor COVID-19 cases, the sharp drop in economic
growth and unemployment claims.
At the end of the reporting period,
with the Fed presumably on hold for the time being, we targeted a duration slightly longer than that of the benchmark. We believed spread volatility would continue, but we considered current risk premiums to be very
attractive in most sectors, especially in light of the Fed’s significant support. We continued to favor short, high quality non-agency CMOs, ABS and CMBS. We also believed the corporate sector, both investment
grade and high yield, had the potential to offer returns in excess of U.S. Treasuries. At the end of the period, demand for corporate bonds and new issue supply both remained strong. The Fund remained overweight in
the communications, insurance and electric utility sectors.
Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. Mortgage- and asset-backed securities are affected by interest rates, financial health of issuers/originators, creditworthiness of entities providing credit enhancements and the value of underlying assets. Fixed-income
securities present issuer default risk. A rise in interest rates may result in a price decline of fixed-income instruments held by the Fund, negatively impacting its performance and NAV. Falling rates may result in the Fund investing in lower yielding
debt instruments, lowering the Fund’s income and yield. These risks may be heightened for longer maturity and duration securities. Prepayment and extension risk exists because the timing of payments on a loan, bond or other investment may accelerate when interest rates fall or decelerate when interest rates rise which may reduce investment
opportunities and potential returns. Investing in derivatives is a specialized activity that involves special risks, which may result in significant losses. See the Fund’s prospectus for more information on these and other risks.
The views expressed in this report
reflect the current views of the respective parties. These views are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, so actual outcomes and
results may differ significantly from the views expressed. These views are subject to change at any time based upon economic, market or other conditions and the respective parties disclaim any responsibility to update
such views. These views may not be relied on as investment advice and, because investment decisions for a Columbia fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf
of any particular Columbia fund. References to specific securities should not be construed as a recommendation or investment advice.
| 6 | Columbia Short Term Bond Fund | Annual Report 2020 |
Understanding Your Fund’s
Expenses
(Unaudited)
(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.
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 366.
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.
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Columbia Short Term Bond Fund | Annual Report 2020
|
7 |
Portfolio of Investments
March 31, 2020
March 31, 2020
(Percentages represent value of
investments compared to net assets)
Investments in securities
The accompanying Notes to Financial
Statements are an integral part of this statement.
| 8 | Columbia Short Term Bond Fund | Annual Report 2020 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
The accompanying Notes to Financial
Statements are an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
9 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
| Commercial Mortgage-Backed Securities - Non-Agency (continued) | ||||
| Issuer |
Coupon
Rate |
Principal
Amount ($) |
Value ($) | |
| Morgan Stanley Capital I Trust(a) | ||||
| Series 2019-MEAD Class D | ||||
| 11/10/2036 | 3.177% | 3,675,000 | 3,062,383 | |
| Progress Residential Trust(a) | ||||
| Series 2018-SF3 Class A | ||||
| 10/17/2035 | 3.880% | 11,892,524 | 11,467,180 | |
| Series 2020-SFR1 Class C | ||||
| 04/17/2037 | 2.183% | 1,000,000 | 873,335 | |
| Series 2020-SFR1 Class D | ||||
| 04/17/2037 | 2.383% | 2,025,000 | 1,721,683 | |
| RETL(a),(b) | ||||
| Series 2019-RVP Class A | ||||
|
1-month USD LIBOR + 1.150%
Floor 1.150% 03/15/2036 |
1.855% | 684,620 | 616,890 | |
| Wells Fargo Commercial Mortgage Trust(a),(b) | ||||
| Series 2017-SMP Class A | ||||
|
1-month USD LIBOR + 0.750%
Floor 0.750% 12/15/2034 |
1.455% | 16,055,000 | 13,635,390 | |
| Series 2020-SDAL Class D | ||||
|
1-month USD LIBOR + 2.090%
Floor 2.090% 02/15/2037 |
3.740% | 1,600,000 | 1,328,676 | |
|
Total Commercial Mortgage-Backed Securities - Non-Agency
(Cost $103,554,317) |
89,635,870 | |||
| Corporate Bonds & Notes 36.0% | ||||
| Aerospace & Defense 1.1% | ||||
| General Dynamics Corp. | ||||
| 05/11/2021 | 3.000% | 2,000,000 | 2,014,491 | |
| L3Harris Technologies, Inc.(a) | ||||
| 02/15/2021 | 4.950% | 4,000,000 | 4,086,443 | |
| Northrop Grumman Corp. | ||||
| 08/01/2023 | 3.250% | 4,000,000 | 4,090,496 | |
| TransDigm, Inc. | ||||
| 07/15/2024 | 6.500% | 434,000 | 412,696 | |
| 05/15/2025 | 6.500% | 114,000 | 108,389 | |
| Total | 10,712,515 | |||
| Automotive 0.4% | ||||
| Allison Transmission, Inc.(a) | ||||
| 10/01/2024 | 5.000% | 138,000 | 133,262 | |
| Ford Motor Credit Co. LLC | ||||
| 03/18/2024 | 5.584% | 4,000,000 | 3,788,765 | |
| KAR Auction Services, Inc.(a) | ||||
| 06/01/2025 | 5.125% | 80,000 | 77,306 | |
| Total | 3,999,333 | |||
The accompanying Notes to Financial
Statements are an integral part of this statement.
| 10 | Columbia Short Term Bond Fund | Annual Report 2020 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
The accompanying Notes to Financial
Statements are an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
11 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
The accompanying Notes to Financial
Statements are an integral part of this statement.
| 12 | Columbia Short Term Bond Fund | Annual Report 2020 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
The accompanying Notes to Financial
Statements are an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
13 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
The accompanying Notes to Financial
Statements are an integral part of this statement.
| 14 | Columbia Short Term Bond Fund | Annual Report 2020 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
The accompanying Notes to Financial
Statements are an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
15 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
The accompanying Notes to Financial
Statements are an integral part of this statement.
| 16 | Columbia Short Term Bond Fund | Annual Report 2020 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
The accompanying Notes to Financial
Statements are an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
17 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
The accompanying Notes to Financial
Statements are an integral part of this statement.
| 18 | Columbia Short Term Bond Fund | Annual Report 2020 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
| Money Market Funds 4.3% | ||
| Shares | Value ($) | |
| Columbia Short-Term Cash Fund, 0.787%(k),(l) | 40,528,114 | 40,507,850 |
|
Total Money Market Funds
(Cost $40,511,084) |
40,507,850 | |
|
Total Investments in Securities
(Cost: $1,076,107,012) |
1,022,146,351 | |
| Other Assets & Liabilities, Net | (71,688,732) | |
| Net Assets | 950,457,619 | |
The accompanying Notes to Financial
Statements are an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
19 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
At March 31, 2020, securities and/or
cash totaling $883,313 were pledged as collateral.
Investments in derivatives
| Long futures contracts | ||||||
| Description |
Number of
contracts |
Expiration
date |
Trading
currency |
Notional
amount |
Value/Unrealized
appreciation ($) |
Value/Unrealized
depreciation ($) |
| U.S. Treasury 2-Year Note | 1,125 | 06/2020 | USD | 247,930,664 | 3,002,834 | — |
| Short futures contracts | ||||||
| Description |
Number of
contracts |
Expiration
date |
Trading
currency |
Notional
amount |
Value/Unrealized
appreciation ($) |
Value/Unrealized
depreciation ($) |
| U.S. Treasury 5-Year Note | (425) | 06/2020 | USD | (53,277,734) | — | (2,076,131) |
Notes to Portfolio of
Investments
| (a) | Represents privately placed and other securities and instruments exempt from Securities and Exchange Commission registration (collectively, private placements), such as Section 4(a)(2) and Rule 144A eligible securities, which are often sold only to qualified institutional buyers. The Fund may invest in private placements determined to be liquid as well as those determined to be illiquid. Private placements may be determined to be liquid under guidelines established by the Fund’s Board of Trustees. At March 31, 2020, the total value of these securities amounted to $610,514,728, which represents 64.23% of total net assets. |
| (b) | Variable rate security. The interest rate shown was the current rate as of March 31, 2020. |
| (c) | Variable or floating rate security, the interest rate of which adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. The interest rate shown was the current rate as of March 31, 2020. |
| (d) | Represents a variable rate security with a step coupon where the rate adjusts according to a schedule for a series of periods, typically lower for an initial period and then increasing to a higher coupon rate thereafter. The interest rate shown was the current rate as of March 31, 2020. |
| (e) | Principal and interest may not be guaranteed by a governmental entity. |
| (f) | Represents fair value as determined in good faith under procedures approved by the Board of Trustees. At March 31, 2020, the total value of these securities amounted to $292,592, which represents 0.03% of total net assets. |
| (g) | Valuation based on significant unobservable inputs. |
| (h) | Represents principal only securities which have the right to receive the principal portion only on an underlying pool of mortgage loans. |
| (i) | Represents a security purchased on a when-issued basis. |
| (j) | Represents securities that have defaulted on payment of interest. The Fund has stopped accruing interest on these securities. At March 31, 2020, the total value of these securities amounted to $1, which represents less than 0.01% of total net assets. |
| (k) | The rate shown is the seven-day current annualized yield at March 31, 2020. |
| (l) | 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 March 31, 2020 are as follows: |
Abbreviation Legend
| AID | Agency for International Development |
| CMO | Collateralized Mortgage Obligation |
| CMT | Constant Maturity Treasury |
| LIBOR | London Interbank Offered Rate |
| TBA | To Be Announced |
Currency Legend
| USD | US Dollar |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 20 | Columbia Short Term Bond Fund | Annual Report 2020 |
Portfolio of Investments (continued)
March 31, 2020
March 31, 2020
Fair value measurements
The Fund categorizes its fair
value measurements according to a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by prioritizing that the most observable input be used when available.
Observable inputs are those that market participants would use in pricing an investment based on market data obtained from sources independent of the reporting entity. Unobservable inputs are those that reflect the
Fund’s assumptions about the information market participants would use in pricing an investment. An investment’s level within the fair value hierarchy is based on the lowest level of any input that is
deemed significant to the asset’s or liability’s fair value measurement. The input levels are not necessarily an indication of the risk or liquidity associated with investments at that level. For example,
certain U.S. government securities are generally high quality and liquid, however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in
the three broad levels listed below:
| ■ | Level 1 — Valuations based on quoted prices for investments in active markets that the Fund has the ability to access at the measurement date. Valuation adjustments are not applied to Level 1 investments. |
| ■ | Level 2 — Valuations based on other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risks, etc.). |
| ■ | Level 3 — Valuations based on significant unobservable inputs (including the Fund’s own assumptions and judgment in determining the fair value of investments). |
Inputs that are used in determining
fair value of an investment may include price information, credit data, volatility statistics, and other factors. These inputs can be either observable or unobservable. The availability of observable inputs can vary
between investments, and is affected by various factors such as the type of investment, and the volume and level of activity for that investment or similar investments in the marketplace. The inputs will be considered
by the Investment Manager, along with any other relevant factors in the calculation of an investment’s fair value. The Fund uses prices and inputs that are current as of the measurement date, which may include
periods of market dislocations. During these periods, the availability of prices and inputs may be reduced for many investments. This condition could cause an investment to be reclassified between the various levels
within the hierarchy.
Investments falling into the Level 3
category are primarily supported by quoted prices from brokers and dealers participating in the market for those investments. However, these may be classified as Level 3 investments due to lack of market transparency
and corroboration to support these quoted prices. Additionally, valuation models may be used as the pricing source for any remaining investments classified as Level 3. These models may rely on one or more significant
unobservable inputs and/or significant assumptions by the Investment Manager. Inputs used in valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and
estimated cash flows, and comparable company data.
Under the direction of the
Fund’s Board of Trustees (the Board), the Investment Manager’s Valuation Committee (the Committee) is responsible for overseeing the valuation procedures approved by the Board. The Committee consists of
voting and non-voting members from various groups within the Investment Manager’s organization, including operations and accounting, trading and investments, compliance, risk management and legal.
The Committee meets at least monthly
to review and approve valuation matters, which may include a description of specific valuation determinations, data regarding pricing information received from approved pricing vendors and brokers and the results of
Board-approved valuation control policies and procedures (the Policies). The Policies address, among other things, instances when market quotations are or are not readily available, including recommendations of third
party pricing vendors and a determination of appropriate pricing methodologies; events that require specific valuation determinations and assessment of fair value techniques; securities with a potential for stale
pricing, including those that are illiquid, restricted, or in default; and the effectiveness of third party pricing vendors, including periodic reviews of vendors. The Committee meets more frequently, as needed, to
discuss additional valuation matters, which may include the need to review back-testing results, review time-sensitive information or approve related valuation actions. The Committee reports to the Board, with members
of the Committee meeting with the Board at each of its regularly scheduled meetings to discuss valuation matters and actions during the period, similar to those described earlier.
The following table is a summary of
the inputs used to value the Fund’s investments at March 31, 2020:
| Level 1 ($) | Level 2 ($) | Level 3 ($) | Total ($) | |
| Investments in Securities | ||||
| Asset-Backed Securities — Non-Agency | — | 225,984,368 | — | 225,984,368 |
| Commercial Mortgage-Backed Securities - Non-Agency | — | 89,635,870 | — | 89,635,870 |
| Corporate Bonds & Notes | — | 342,575,471 | — | 342,575,471 |
| Foreign Government Obligations | — | 376,665 | 292,591 | 669,256 |
| Residential Mortgage-Backed Securities - Agency | — | 76,429,775 | — | 76,429,775 |
| Residential Mortgage-Backed Securities - Non-Agency | — | 236,506,010 | 1 | 236,506,011 |
| U.S. Treasury Obligations | 9,837,750 | — | — | 9,837,750 |
| Money Market Funds | 40,507,850 | — | — | 40,507,850 |
| Total Investments in Securities | 50,345,600 | 971,508,159 | 292,592 | 1,022,146,351 |
| Investments in Derivatives | ||||
| Asset | ||||
| Futures Contracts | 3,002,834 | — | — | 3,002,834 |
| Liability | ||||
| Futures Contracts | (2,076,131) | — | — | (2,076,131) |
| Total | 51,272,303 | 971,508,159 | 292,592 | 1,023,073,054 |
See the Portfolio of Investments for
all investment classifications not indicated in the table.
The Fund’s assets assigned to
the Level 2 input category are generally valued using the market approach, in which a security’s value is determined through reference to prices and information from market transactions for similar or identical
assets.
Derivative instruments are valued at
unrealized appreciation (depreciation).
The Fund does not hold any
significant investments (greater than one percent of net assets) categorized as Level 3.
The accompanying Notes to Financial Statements are
an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
21 |
Statement of Assets and Liabilities
March 31, 2020
March 31, 2020
| Assets | |
| Investments in securities, at value | |
| Unaffiliated issuers (cost $1,035,595,928) | $981,638,501 |
| Affiliated issuers (cost $40,511,084) | 40,507,850 |
| Cash collateral held at broker for: | |
| Other | 274,000 |
| Margin deposits on: | |
| Futures contracts | 609,313 |
| Receivable for: | |
| Investments sold | 20,685 |
| Investments sold on a delayed delivery basis | 35,323,959 |
| Capital shares sold | 2,312,574 |
| Dividends | 33,779 |
| Interest | 4,974,388 |
| Foreign tax reclaims | 27,757 |
| Variation margin for futures contracts | 19,922 |
| Expense reimbursement due from Investment Manager | 1,673 |
| Prepaid expenses | 1,984 |
| Total assets | 1,065,746,385 |
| Liabilities | |
| Payable for: | |
| Investments purchased on a delayed delivery basis | 111,381,217 |
| Capital shares purchased | 954,617 |
| Distributions to shareholders | 2,536,221 |
| Variation margin for futures contracts | 35,156 |
| Management services fees | 11,099 |
| Distribution and/or service fees | 1,996 |
| Transfer agent fees | 55,767 |
| Compensation of board members | 238,706 |
| Other expenses | 73,987 |
| Total liabilities | 115,288,766 |
| Net assets applicable to outstanding capital stock | $950,457,619 |
| Represented by | |
| Paid in capital | 1,021,507,221 |
| Total distributable earnings (loss) | (71,049,602) |
| Total - representing net assets applicable to outstanding capital stock | $950,457,619 |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 22 | Columbia Short Term Bond Fund | Annual Report 2020 |
Statement of Assets and Liabilities (continued)
March 31, 2020
March 31, 2020
| Class A | |
| Net assets | $216,266,386 |
| Shares outstanding | 23,068,964 |
| Net asset value per share | $9.37 |
| Maximum sales charge | 1.00% |
| Maximum offering price per share (calculated by dividing the net asset value per share by 1.0 minus the maximum sales charge for Class A shares) | $9.46 |
| Advisor Class | |
| Net assets | $7,103,197 |
| Shares outstanding | 758,591 |
| Net asset value per share | $9.36 |
| Class C | |
| Net assets | $21,156,908 |
| Shares outstanding | 2,262,161 |
| Net asset value per share | $9.35 |
| Institutional Class | |
| Net assets | $167,429,056 |
| Shares outstanding | 17,885,914 |
| Net asset value per share | $9.36 |
| Institutional 2 Class | |
| Net assets | $22,419,765 |
| Shares outstanding | 2,397,873 |
| Net asset value per share | $9.35 |
| Institutional 3 Class | |
| Net assets | $514,116,422 |
| Shares outstanding | 54,950,026 |
| Net asset value per share | $9.36 |
| Class R | |
| Net assets | $1,965,885 |
| Shares outstanding | 209,701 |
| Net asset value per share | $9.37 |
The accompanying Notes to Financial Statements are
an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
23 |
Statement of Operations
Year Ended March 31, 2020
Year Ended March 31, 2020
| Net investment income | |
| Income: | |
| Dividends — affiliated issuers | $597,364 |
| Interest | 38,026,176 |
| Total income | 38,623,540 |
| Expenses: | |
| Management services fees | 4,852,495 |
| Distribution and/or service fees | |
| Class A | 567,918 |
| Class C | 229,944 |
| Class R | 12,038 |
| Transfer agent fees | |
| Class A | 331,574 |
| Advisor Class | 10,593 |
| Class C | 33,730 |
| Institutional Class | 330,756 |
| Institutional 2 Class | 13,367 |
| Institutional 3 Class | 47,418 |
| Class R | 3,525 |
| Compensation of board members | 34,591 |
| Custodian fees | 26,638 |
| Printing and postage fees | 72,152 |
| Registration fees | 114,336 |
| Audit fees | 31,950 |
| Legal fees | 18,774 |
| Compensation of chief compliance officer | 231 |
| Other | 23,455 |
| Total expenses | 6,755,485 |
| Fees waived or expenses reimbursed by Investment Manager and its affiliates | (787,097) |
| Fees waived by distributor | |
| Class C | (34,429) |
| Expense reduction | (1,111) |
| Total net expenses | 5,932,848 |
| Net investment income | 32,690,692 |
| Realized and unrealized gain (loss) — net | |
| Net realized gain (loss) on: | |
| Investments — unaffiliated issuers | 4,936,609 |
| Investments — affiliated issuers | 1,614 |
| Futures contracts | (440,229) |
| Net realized gain | 4,497,994 |
| Net change in unrealized appreciation (depreciation) on: | |
| Investments — unaffiliated issuers | (60,787,218) |
| Investments — affiliated issuers | (3,234) |
| Futures contracts | 1,032,350 |
| Net change in unrealized appreciation (depreciation) | (59,758,102) |
| Net realized and unrealized loss | (55,260,108) |
| Net decrease in net assets resulting from operations | $(22,569,416) |
The accompanying Notes to
Financial Statements are an integral part of this statement.
| 24 | Columbia Short Term Bond Fund | Annual Report 2020 |
Statement of Changes in Net Assets
|
Year Ended
March 31, 2020 |
Year Ended
March 31, 2019 |
|
| Operations | ||
| Net investment income | $32,690,692 | $28,229,387 |
| Net realized gain (loss) | 4,497,994 | (13,523,066) |
| Net change in unrealized appreciation (depreciation) | (59,758,102) | 21,038,177 |
| Net increase (decrease) in net assets resulting from operations | (22,569,416) | 35,744,498 |
| Distributions to shareholders | ||
| Net investment income and net realized gains | ||
| Class A | (7,494,007) | (3,521,196) |
| Advisor Class | (258,397) | (135,655) |
| Class C | (624,917) | (272,329) |
| Institutional Class | (7,994,670) | (4,267,249) |
| Institutional 2 Class | (832,513) | (370,608) |
| Institutional 3 Class | (23,202,902) | (13,411,143) |
| Class R | (73,776) | (33,836) |
| Class T | — | (1,690) |
| Total distributions to shareholders | (40,481,182) | (22,013,706) |
| Decrease in net assets from capital stock activity | (289,905,816) | (1,211,387) |
| Total increase (decrease) in net assets | (352,956,414) | 12,519,405 |
| Net assets at beginning of year | 1,303,414,033 | 1,290,894,628 |
| Net assets at end of year | $950,457,619 | $1,303,414,033 |
The accompanying Notes to
Financial Statements are an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
25 |
Statement of Changes in Net Assets (continued)
| Year Ended | Year Ended | |||
| March 31, 2020 | March 31, 2019 | |||
| Shares | Dollars ($) | Shares | Dollars ($) | |
| Capital stock activity | ||||
| Class A | ||||
| Subscriptions | 6,401,753 | 63,915,902 | 5,235,517 | 51,690,279 |
| Distributions reinvested | 683,379 | 6,826,996 | 322,040 | 3,186,270 |
| Redemptions | (6,759,062) | (67,335,448) | (7,332,346) | (72,411,241) |
| Net increase (decrease) | 326,070 | 3,407,450 | (1,774,789) | (17,534,692) |
| Advisor Class | ||||
| Subscriptions | 592,990 | 5,951,398 | 368,914 | 3,631,953 |
| Distributions reinvested | 24,781 | 247,219 | 13,709 | 135,437 |
| Redemptions | (596,178) | (5,938,980) | (397,783) | (3,927,451) |
| Net increase (decrease) | 21,593 | 259,637 | (15,160) | (160,061) |
| Class C | ||||
| Subscriptions | 1,083,024 | 10,764,222 | 975,210 | 9,594,448 |
| Distributions reinvested | 48,339 | 481,967 | 20,763 | 205,067 |
| Redemptions | (1,593,293) | (15,852,511) | (2,534,146) | (24,984,118) |
| Net decrease | (461,930) | (4,606,322) | (1,538,173) | (15,184,603) |
| Institutional Class | ||||
| Subscriptions | 13,487,201 | 134,893,664 | 26,296,110 | 258,875,486 |
| Distributions reinvested | 687,956 | 6,868,636 | 391,858 | 3,872,900 |
| Redemptions | (26,744,551) | (267,363,131) | (15,929,498) | (157,138,261) |
| Net increase (decrease) | (12,569,394) | (125,600,831) | 10,758,470 | 105,610,125 |
| Institutional 2 Class | ||||
| Subscriptions | 1,457,642 | 14,573,417 | 935,586 | 9,208,999 |
| Distributions reinvested | 83,528 | 832,113 | 37,545 | 370,400 |
| Redemptions | (975,336) | (9,687,688) | (2,245,187) | (22,108,515) |
| Net increase (decrease) | 565,834 | 5,717,842 | (1,272,056) | (12,529,116) |
| Institutional 3 Class | ||||
| Subscriptions | 11,351,889 | 113,370,530 | 28,594,741 | 281,366,505 |
| Distributions reinvested | 888,502 | 8,858,938 | 430,347 | 4,253,171 |
| Redemptions | (29,387,467) | (290,861,867) | (35,211,056) | (346,804,357) |
| Net decrease | (17,147,076) | (168,632,399) | (6,185,968) | (61,184,681) |
| Class R | ||||
| Subscriptions | 74,712 | 748,326 | 54,733 | 541,104 |
| Distributions reinvested | 3,310 | 33,090 | 1,286 | 12,733 |
| Redemptions | (123,714) | (1,232,609) | (57,256) | (566,619) |
| Net decrease | (45,692) | (451,193) | (1,237) | (12,782) |
| Class T | ||||
| Distributions reinvested | — | — | 149 | 1,473 |
| Redemptions | — | — | (22,035) | (217,050) |
| Net decrease | — | — | (21,886) | (215,577) |
| Total net decrease | (29,310,595) | (289,905,816) | (50,799) | (1,211,387) |
The accompanying Notes to Financial Statements are
an integral part of this statement.
| 26 | Columbia Short Term Bond Fund | Annual Report 2020 |
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BLANK]
|
Columbia Short Term Bond Fund | Annual Report 2020
|
27 |
Financial Highlights
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 |
Total
distributions to shareholders |
|
| Class A | ||||||
| Year Ended 3/31/2020 | $9.98 | 0.26 | (0.54) | (0.28) | (0.33) | (0.33) |
| Year Ended 3/31/2019 | $9.88 | 0.20 | 0.05 | 0.25 | (0.15) | (0.15) |
| Year Ended 3/31/2018 | $9.98 | 0.11 | (0.09) | 0.02 | (0.12) | (0.12) |
| Year Ended 3/31/2017 | $9.97 | 0.08 | 0.01 | 0.09 | (0.08) | (0.08) |
| Year Ended 3/31/2016 | $9.98 | 0.06 | (0.02) | 0.04 | (0.05) | (0.05) |
| Advisor Class | ||||||
| Year Ended 3/31/2020 | $9.96 | 0.29 | (0.53) | (0.24) | (0.36) | (0.36) |
| Year Ended 3/31/2019 | $9.87 | 0.23 | 0.03 | 0.26 | (0.17) | (0.17) |
| Year Ended 3/31/2018 | $9.97 | 0.13 | (0.09) | 0.04 | (0.14) | (0.14) |
| Year Ended 3/31/2017 | $9.96 | 0.11 | 0.00(d) | 0.11 | (0.10) | (0.10) |
| Year Ended 3/31/2016 | $9.97 | 0.08 | (0.01) | 0.07 | (0.08) | (0.08) |
| Class C | ||||||
| Year Ended 3/31/2020 | $9.96 | 0.20 | (0.54) | (0.34) | (0.27) | (0.27) |
| Year Ended 3/31/2019 | $9.86 | 0.14 | 0.05 | 0.19 | (0.09) | (0.09) |
| Year Ended 3/31/2018 | $9.96 | 0.05 | (0.09) | (0.04) | (0.06) | (0.06) |
| Year Ended 3/31/2017 | $9.95 | 0.02 | 0.01 | 0.03 | (0.02) | (0.02) |
| Year Ended 3/31/2016 | $9.97 | (0.00)(d) | (0.02) | (0.02) | (0.00)(d) | (0.00)(d) |
| Institutional Class | ||||||
| Year Ended 3/31/2020 | $9.96 | 0.29 | (0.53) | (0.24) | (0.36) | (0.36) |
| Year Ended 3/31/2019 | $9.86 | 0.24 | 0.03 | 0.27 | (0.17) | (0.17) |
| Year Ended 3/31/2018 | $9.97 | 0.12 | (0.09) | 0.03 | (0.14) | (0.14) |
| Year Ended 3/31/2017 | $9.95 | 0.11 | 0.01 | 0.12 | (0.10) | (0.10) |
| Year Ended 3/31/2016 | $9.96 | 0.08 | (0.02) | 0.06 | (0.07) | (0.07) |
| Institutional 2 Class | ||||||
| Year Ended 3/31/2020 | $9.95 | 0.29 | (0.52) | (0.23) | (0.37) | (0.37) |
| Year Ended 3/31/2019 | $9.85 | 0.22 | 0.06 | 0.28 | (0.18) | (0.18) |
| Year Ended 3/31/2018 | $9.96 | 0.14 | (0.10) | 0.04 | (0.15) | (0.15) |
| Year Ended 3/31/2017 | $9.95 | 0.12 | 0.00(d) | 0.12 | (0.11) | (0.11) |
| Year Ended 3/31/2016 | $9.96 | 0.09 | (0.01) | 0.08 | (0.09) | (0.09) |
The accompanying Notes to
Financial Statements are an integral part of this statement.
| 28 | Columbia Short Term Bond Fund | Annual Report 2020 |
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 3/31/2020 | $9.37 | (2.94%) | 0.85% | 0.78%(c) | 2.61% | 169% | $216,266 |
| Year Ended 3/31/2019 | $9.98 | 2.55% | 0.86% | 0.80%(c) | 2.02% | 154% | $226,907 |
| Year Ended 3/31/2018 | $9.88 | 0.15% | 0.86% | 0.80%(c) | 1.06% | 86% | $242,170 |
| Year Ended 3/31/2017 | $9.98 | 0.90% | 0.88% | 0.80%(c) | 0.82% | 68% | $290,277 |
| Year Ended 3/31/2016 | $9.97 | 0.41% | 0.89% | 0.80%(c) | 0.58% | 73% | $371,442 |
| Advisor Class | |||||||
| Year Ended 3/31/2020 | $9.36 | (2.60%) | 0.60% | 0.53%(c) | 2.87% | 169% | $7,103 |
| Year Ended 3/31/2019 | $9.96 | 2.71% | 0.61% | 0.55%(c) | 2.30% | 154% | $7,344 |
| Year Ended 3/31/2018 | $9.87 | 0.40% | 0.60% | 0.55%(c) | 1.31% | 86% | $7,420 |
| Year Ended 3/31/2017 | $9.97 | 1.16% | 0.63% | 0.55%(c) | 1.07% | 68% | $9,760 |
| Year Ended 3/31/2016 | $9.96 | 0.66% | 0.64% | 0.55%(c) | 0.82% | 73% | $10,494 |
| Class C | |||||||
| Year Ended 3/31/2020 | $9.35 | (3.53%) | 1.60% | 1.38%(c) | 2.02% | 169% | $21,157 |
| Year Ended 3/31/2019 | $9.96 | 1.94% | 1.61% | 1.40%(c) | 1.38% | 154% | $27,118 |
| Year Ended 3/31/2018 | $9.86 | (0.45%) | 1.61% | 1.40%(c) | 0.46% | 86% | $42,010 |
| Year Ended 3/31/2017 | $9.96 | 0.33% | 1.62% | 1.40%(c) | 0.22% | 68% | $59,183 |
| Year Ended 3/31/2016 | $9.95 | (0.19%) | 1.64% | 1.40%(c) | (0.02%) | 73% | $72,602 |
| Institutional Class | |||||||
| Year Ended 3/31/2020 | $9.36 | (2.60%) | 0.60% | 0.53%(c) | 2.87% | 169% | $167,429 |
| Year Ended 3/31/2019 | $9.96 | 2.81% | 0.61% | 0.55%(c) | 2.40% | 154% | $303,373 |
| Year Ended 3/31/2018 | $9.86 | 0.29% | 0.61% | 0.55%(c) | 1.23% | 86% | $194,236 |
| Year Ended 3/31/2017 | $9.97 | 1.26% | 0.63% | 0.55%(c) | 1.07% | 68% | $985,868 |
| Year Ended 3/31/2016 | $9.95 | 0.66% | 0.64% | 0.55%(c) | 0.82% | 73% | $1,093,664 |
| Institutional 2 Class | |||||||
| Year Ended 3/31/2020 | $9.35 | (2.52%) | 0.51% | 0.44% | 2.94% | 169% | $22,420 |
| Year Ended 3/31/2019 | $9.95 | 2.91% | 0.51% | 0.46% | 2.27% | 154% | $18,228 |
| Year Ended 3/31/2018 | $9.85 | 0.39% | 0.51% | 0.46% | 1.44% | 86% | $30,580 |
| Year Ended 3/31/2017 | $9.96 | 1.25% | 0.50% | 0.45% | 1.16% | 68% | $17,167 |
| Year Ended 3/31/2016 | $9.95 | 0.76% | 0.49% | 0.44% | 0.89% | 73% | $14,242 |
The accompanying Notes to
Financial Statements are an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
29 |
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 |
Total
distributions to shareholders |
|
| Institutional 3 Class | ||||||
| Year Ended 3/31/2020 | $9.96 | 0.30 | (0.53) | (0.23) | (0.37) | (0.37) |
| Year Ended 3/31/2019 | $9.86 | 0.24 | 0.05 | 0.29 | (0.19) | (0.19) |
| Year Ended 3/31/2018 | $9.96 | 0.15 | (0.10) | 0.05 | (0.15) | (0.15) |
| Year Ended 3/31/2017 | $9.95 | 0.13 | 0.00(d) | 0.13 | (0.12) | (0.12) |
| Year Ended 3/31/2016 | $9.96 | 0.09 | (0.01) | 0.08 | (0.09) | (0.09) |
| Class R | ||||||
| Year Ended 3/31/2020 | $9.98 | 0.24 | (0.54) | (0.30) | (0.31) | (0.31) |
| Year Ended 3/31/2019 | $9.88 | 0.18 | 0.05 | 0.23 | (0.13) | (0.13) |
| Year Ended 3/31/2018 | $9.99 | 0.08 | (0.10) | (0.02) | (0.09) | (0.09) |
| Year Ended 3/31/2017 | $9.97 | 0.06 | 0.02 | 0.08 | (0.06) | (0.06) |
| Year Ended 3/31/2016 | $9.98 | 0.03 | (0.01) | 0.02 | (0.03) | (0.03) |
| 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. |
The accompanying Notes to
Financial Statements are an integral part of this statement.
| 30 | Columbia Short Term Bond Fund | Annual Report 2020 |
Financial Highlights (continued)
|
Net
asset value, end of period |
Total
return |
Total gross
expense ratio to average net assets(a) |
Total net
expense ratio to average net assets(a),(b) |
Net investment
income (loss) ratio to average net assets |
Portfolio
turnover |
Net
assets, end of period (000’s) |
|
| Institutional 3 Class | |||||||
| Year Ended 3/31/2020 | $9.36 | (2.47%) | 0.46% | 0.39% | 3.00% | 169% | $514,116 |
| Year Ended 3/31/2019 | $9.96 | 2.96% | 0.46% | 0.41% | 2.41% | 154% | $717,896 |
| Year Ended 3/31/2018 | $9.86 | 0.54% | 0.46% | 0.41% | 1.50% | 86% | $771,726 |
| Year Ended 3/31/2017 | $9.96 | 1.30% | 0.45% | 0.40% | 1.28% | 68% | $394,827 |
| Year Ended 3/31/2016 | $9.95 | 0.81% | 0.44% | 0.40% | 0.88% | 73% | $7,030 |
| Class R | |||||||
| Year Ended 3/31/2020 | $9.37 | (3.18%) | 1.10% | 1.03%(c) | 2.37% | 169% | $1,966 |
| Year Ended 3/31/2019 | $9.98 | 2.30% | 1.11% | 1.05%(c) | 1.78% | 154% | $2,549 |
| Year Ended 3/31/2018 | $9.88 | (0.20%) | 1.10% | 1.05%(c) | 0.81% | 86% | $2,535 |
| Year Ended 3/31/2017 | $9.99 | 0.75% | 1.12% | 1.05%(c) | 0.56% | 68% | $3,490 |
| Year Ended 3/31/2016 | $9.97 | 0.16% | 1.14% | 1.05%(c) | 0.32% | 73% | $3,380 |
The accompanying Notes to Financial Statements are
an integral part of this statement.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
31 |
Notes to Financial Statements
March 31, 2020
March 31, 2020
Note 1. Organization
Columbia Short Term Bond Fund
(the Fund), a series of Columbia Funds Series Trust (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 Delaware statutory 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. Class C shares automatically convert to Class A shares after 10 years. 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.
Note 2. Summary of
significant accounting policies
Basis of preparation
The Fund is an investment company
that applies the accounting and reporting guidance in the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 946, Financial Services - Investment Companies (ASC 946). The financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP), which requires
management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
The following is a summary of
significant accounting policies followed by the Fund in the preparation of its financial statements.
Security valuation
Debt securities generally are
valued by pricing services approved by the Board of Trustees based upon market transactions for normal, institutional-size trading units of similar securities. The services may use various pricing techniques that take
into account, as applicable, factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as approved independent broker-dealer quotes. Debt securities for
which quotations are not readily available or not believed to be reflective of market value may also be valued based upon a bid quote from an approved independent broker-dealer. Debt securities maturing in 60 days or
less are valued primarily at amortized cost value, unless this method results in a valuation that management believes does not approximate market value.
Asset- and mortgage-backed
securities are generally valued by pricing services, which utilize pricing models that incorporate the securities’ cash flow and loan performance data. These models also take into account available market data,
including trades, market quotations, and benchmark yield curves for identical or similar securities. Factors used to identify similar securities may include, but are not limited to, issuer, collateral type, vintage,
prepayment speeds, collateral performance, credit ratings, credit enhancement and expected life. Asset-backed securities for which quotations are readily available may also be valued based upon an over-the-counter or
exchange bid quote from an approved independent broker-dealer.
Investments in open-end investment
companies, including money market funds, are valued at their latest net asset value.
Futures and options on futures
contracts are valued based upon the settlement price at the close of regular trading on their principal exchanges or, in the absence of transactions, at the mean of the latest quoted bid and ask prices.
| 32 | Columbia Short Term Bond Fund | Annual Report 2020 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
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.
Derivative instruments
The Fund invests in certain
derivative instruments, as detailed below, to meet its investment objectives. Derivatives are instruments whose values depend on, or are derived from, in whole or in part, the value of one or more securities,
currencies, commodities, indices, or other assets or instruments. Derivatives may be used to increase investment flexibility (including to maintain cash reserves while maintaining desired exposure to certain assets),
for risk management (hedging) purposes, to facilitate trading, to reduce transaction costs and to pursue higher investment returns. The Fund may also use derivative instruments to mitigate certain investment risks,
such as foreign currency exchange rate risk, interest rate risk and credit risk. Derivatives may involve various risks, including the potential inability of the counterparty to fulfill its obligations under the terms
of the contract, the potential for an illiquid secondary market (making it difficult for the Fund to sell or terminate, including at favorable prices) and the potential for market movements which may expose the Fund
to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities. The notional amounts of derivative instruments, if applicable, are not recorded in the financial statements.
A derivative instrument may suffer
a marked-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform its
obligations under the contract. The Fund’s risk of loss from counterparty credit risk on over-the-counter derivatives is generally limited to the aggregate unrealized gain netted against any collateral held by
the Fund and the amount of any variation margin held by the counterparty, plus any replacement costs or related amounts. With exchange-traded or centrally cleared derivatives, there is reduced counterparty credit risk
to the Fund since the clearinghouse or central counterparty (CCP) provides some protection in the case of clearing member default. The clearinghouse or CCP stands between the buyer and the seller of the contract;
therefore, additional counterparty credit risk is failure of the clearinghouse or CCP. However, credit risk still exists in exchange-traded or centrally cleared derivatives with respect to initial and variation margin
that is held in a broker’s customer account. While brokers are required to segregate customer margin from their own assets, in the event that a broker becomes insolvent or goes into bankruptcy and at that time
there is a shortfall in the aggregate amount of margin held by the broker for all its clients, U.S. bankruptcy laws will typically allocate that shortfall on a pro-rata basis across all the broker’s customers
(including the Fund), potentially resulting in losses to the Fund.
In order to better define its
contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (ISDA Master Agreement)
or similar agreement with its derivatives contract counterparties. An ISDA Master Agreement is an agreement between the Fund and a counterparty that governs over-the-counter derivatives and typically contains, among
other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty
certain derivative instrument’s payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment
in the event of default (close-out netting), including the bankruptcy or insolvency of the counterparty. Note, however, that bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or
prohibitions against the right of offset or netting in bankruptcy, insolvency or other events.
Collateral (margin) requirements
differ by type of derivative. Margin requirements are established by the clearinghouse or CCP for exchange-traded and centrally cleared derivatives. Brokers can ask for margin in excess of the minimum in certain
circumstances. Collateral terms are contract specific for over-the-counter derivatives. For over-the-counter derivatives traded
|
Columbia Short Term Bond Fund | Annual Report 2020
|
33 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
under an ISDA Master Agreement, the collateral
requirements are typically calculated by netting the marked-to-market amount for each transaction under such agreement and comparing that amount to the value of any variation margin currently pledged by the Fund
and/or the counterparty. Generally, the amount of collateral due from or to a party has to exceed a minimum transfer amount threshold (e.g., $250,000) before a transfer has to be made. To the extent amounts due to the
Fund from its counterparties are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty nonperformance. The Fund may also pay interest expense on cash collateral
received from the broker. Any interest expense paid by the Fund is shown on the Statement of Operations. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it
believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.
Certain ISDA Master Agreements
allow counterparties of over-the-counter derivatives transactions to terminate derivatives contracts prior to maturity in the event the Fund’s net asset value declines by a stated percentage over a specified
time period or if the Fund fails to meet certain terms of the ISDA Master Agreement, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. The Fund also has termination rights
if the counterparty fails to meet certain terms of the ISDA Master Agreement. In determining whether to exercise such termination rights, the Fund would consider, in addition to counterparty credit risk, whether
termination would result in a net liability owed from the counterparty.
For financial reporting purposes,
the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements in the Statement of Assets and Liabilities.
Futures contracts
Futures contracts are
exchange-traded and represent commitments for the future purchase or sale of an asset at a specified price on a specified date. The Fund bought and sold futures contracts to manage the duration and yield curve
exposure of the Fund versus the benchmark and to manage exposure to movements in interest rates. These instruments may be used for other purposes in future periods. Upon entering into futures contracts, the Fund bears
risks that it may not achieve the anticipated benefits of the futures contracts and may realize a loss. Additional risks include counterparty credit risk, the possibility of an illiquid market, and that a change in
the value of the contract or option may not correlate with changes in the value of the underlying asset.
Upon entering into a futures
contract, the Fund deposits cash or securities with the broker, known as a futures commission merchant (FCM), in an amount sufficient to meet the initial margin requirement. The initial margin deposit must be
maintained at an established level over the life of the contract. Cash deposited as initial margin is recorded in the Statement of Assets and Liabilities as margin deposits. Securities deposited as initial margin are
designated in the Portfolio of Investments. Subsequent payments (variation margin) are made or received by the Fund each day. The variation margin payments are equal to the daily change in the contract value and are
recorded as variation margin receivable or payable and are offset in unrealized gains or losses. The Fund recognizes a realized gain or loss when the contract is closed or expires. Futures contracts involve, to
varying degrees, risk of loss in excess of the variation margin disclosed in the Statement of Assets and Liabilities.
Effects of derivative transactions in
the financial statements
The following tables are intended
to provide additional information about the effect of derivatives on the financial statements of the Fund, including: the fair value of derivatives by risk category and the location of those fair values in the
Statement of Assets and Liabilities; and the impact of derivative transactions over the period in the Statement of Operations, including realized and unrealized gains (losses). The derivative instrument schedules
following the Portfolio of Investments present additional information regarding derivative instruments outstanding at the end of the period, if any.
The following table is a summary of
the fair value of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) at March 31, 2020:
| 34 | Columbia Short Term Bond Fund | Annual Report 2020 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
| Liability derivatives | ||
|
Risk exposure
category |
Statement
of assets and liabilities location |
Fair value ($) |
| Interest rate risk | Component of total distributable earnings (loss) — unrealized depreciation on futures contracts | 2,076,131* |
| * | Includes cumulative appreciation (depreciation) as reported in the tables following the Portfolio of Investments. Only the current day’s variation margin is reported in receivables or payables in the Statement of Assets and Liabilities. |
The following table indicates the
effect of derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in the Statement of Operations for the year ended March 31, 2020:
The following table is a summary
of the average outstanding volume by derivative instrument for the year ended March 31, 2020:
| Derivative instrument |
Average notional
amounts ($)* |
| Futures contracts — long | 261,493,047 |
| Futures contracts — short | 66,957,989 |
| * | Based on the ending quarterly outstanding amounts for the year ended March 31, 2020. |
Asset- and mortgage-backed
securities
The Fund may invest in asset-backed
and mortgage-backed securities. The maturity dates shown represent the original maturity of the underlying obligation. Actual maturity may vary based upon prepayment activity on these obligations. All, or a portion,
of the obligation may be prepaid at any time because the underlying asset may be prepaid. As a result, decreasing market interest rates could result in an increased level of prepayment. An increased prepayment rate
will have the effect of shortening the maturity of the security. Unless otherwise noted, the coupon rates presented are fixed rates.
Delayed delivery securities
The Fund may trade securities on
other than normal settlement terms, including securities purchased or sold on a “when-issued” or "forward commitment" basis. This may increase risk to the Fund since the other party to the transaction may
fail to deliver, which could cause the Fund to subsequently invest at less advantageous prices. The Fund designates cash or liquid securities in an amount equal to the delayed delivery commitment.
To be announced securities
The Fund may trade securities on a
To Be Announced (TBA) basis. As with other delayed-delivery transactions, a seller agrees to issue a TBA security at a future date. However, the seller does not specify the particular securities to be delivered.
Instead, the Fund agrees to accept any security that meets specified terms.
In some cases, Master Securities
Forward Transaction Agreements (MSFTAs) may be used to govern transactions of certain forward-settling agency mortgage-backed securities, such as delayed-delivery and TBAs, between the Fund and counterparty. The MSFTA
maintains provisions for, among other things, initiation and confirmation, payment and transfer, events of default, termination, and maintenance of collateral relating to such transactions.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
35 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
Mortgage dollar roll transactions
The Fund may enter into mortgage
“dollar rolls” in which the Fund sells securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase similar but not identical securities (same type,
coupon and maturity) on a specified future date. During the roll period, the Fund loses the right to receive principal and interest paid on the securities sold. However, the Fund will benefit because it receives
negotiated amounts in the form of reductions of the purchase price for the future purchase plus the interest earned on the cash proceeds of the securities sold until the settlement date of the forward purchase. The
Fund records the incremental difference between the forward purchase and sale of each forward roll as a realized gain or loss. Unless any realized gains exceed the income, capital appreciation, and gain or loss due to
mortgage prepayments that would have been realized on the securities sold as part of the mortgage dollar roll, the use of this technique will diminish the investment performance of the Fund compared to what the
performance would have been without the use of mortgage dollar rolls. All cash proceeds will be invested in instruments that are permissible investments for the Fund. The Fund identifies cash or liquid securities in
an amount equal to the forward purchase price.
For financial reporting and tax
purposes, the Fund treats “to be announced” mortgage dollar rolls as two separate transactions, one involving the purchase of a security and a separate transaction involving a sale. These transactions may
increase the Fund’s portfolio turnover rate. The Fund does not currently enter into mortgage dollar rolls that are accounted for as financing transactions.
Mortgage dollar rolls involve the
risk that the market value of the securities the Fund is obligated to repurchase may decline below the repurchase price, or that the counterparty may default on its obligations.
Interest only and principal only
securities
The Fund may invest in Interest
Only (IO) or Principal Only (PO) securities. IOs are stripped securities entitled to receive all of the security’s interest, but none of its principal. IOs are particularly sensitive to changes in interest rates
and therefore subject to greater fluctuations in price than typical interest bearing debt securities. IOs are also subject to credit risk because the Fund may not receive all or part of the interest payments if the
issuer, obligor, guarantor or counterparty defaults on its obligation. Payments received for IOs are included in interest income on the Statement of Operations. Because no principal will be received at the maturity of
an IO, adjustments are made to the cost of the security on a monthly basis until maturity. These adjustments are included in interest income on the Statement of Operations. POs are stripped securities entitled to
receive the principal from the underlying obligation, but not the interest. POs are particularly sensitive to changes in interest rates and therefore are subject to fluctuations in price. POs are also subject to
credit risk because the Fund may not receive all or part of its principal if the issuer, obligor, guarantor or counterparty defaults on its obligation. The Fund may also invest in IO or PO stripped mortgage-backed
securities. Payments received for POs are treated as reductions to the cost and par value of the securities.
Security transactions
Security transactions are accounted
for on the trade date. Cost is determined and gains (losses) are based upon the specific identification method for both financial statement and federal income tax purposes.
Income recognition
Interest income is recorded on an
accrual basis. Market premiums and discounts, including original issue discounts, are amortized and accreted, respectively, over the expected life of the security on all debt securities, unless otherwise noted. The
Fund classifies gains and losses realized on prepayments received on mortgage-backed securities as adjustments to interest income.
The Fund may place a debt security
on non-accrual status and reduce related interest income when it becomes probable that the interest will not be collected and the amount of uncollectible interest can be reasonably estimated. A defaulted debt security
is removed from non-accrual status when the issuer resumes interest payments or when collectibility of interest is reasonably assured.
Dividend income is recorded on the
ex-dividend date.
| 36 | Columbia Short Term Bond Fund | Annual Report 2020 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
Expenses
General expenses of the Trust are
allocated to the Fund and other funds of the Trust based upon relative net assets or other expense allocation methodologies determined by the nature of the expense. Expenses directly attributable to the Fund are
charged to the Fund. Expenses directly attributable to a specific class of shares are charged to that share class.
Determination of class net asset
value
All income, expenses (other than
class-specific expenses, which are charged to that share class, as shown in the Statement of Operations) and realized and unrealized gains (losses) are allocated to each class of the Fund on a daily basis, based on
the relative net assets of each class, for purposes of determining the net asset value of each class.
Federal income tax status
The Fund intends to qualify each
year as a regulated investment company under Subchapter M of the Internal Revenue Code, as amended, and will distribute substantially all of its investment company taxable income and net capital gain, if any, for its
tax year, and as such will not be subject to federal income taxes. In addition, the Fund intends to distribute in each calendar year substantially all of its ordinary income, capital gain net income and certain other
amounts, if any, such that the Fund should not be subject to federal excise tax. Therefore, no federal income or excise tax provision is recorded.
Foreign taxes
The Fund may be subject to foreign
taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries, as applicable, based upon its current interpretation of tax rules
and regulations that exist in the markets in which it invests.
Realized gains in certain countries
may be subject to foreign taxes at the Fund level, based on statutory rates. The Fund accrues for such foreign taxes on realized and unrealized gains at the appropriate rate for each jurisdiction, as applicable. The
amount, if any, is disclosed as a liability on the Statement of Assets and Liabilities.
Distributions to shareholders
Distributions from net investment
income, if any, are declared daily and paid monthly. Net realized capital gains, if any, are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with federal
income tax regulations, which may differ from GAAP.
Guarantees and indemnifications
Under the Trust’s
organizational documents and, in some cases, by contract, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust or its funds. In addition,
certain of the Fund’s contracts with its service providers contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims
that may be made against the Fund cannot be determined, and the Fund has no historical basis for predicting the likelihood of any such claims.
Note 3. Fees and other
transactions with affiliates
Management services fees
The Fund has entered into a
Management Agreement with Columbia Management Investment Advisers, LLC (the Investment Manager), a wholly-owned subsidiary of Ameriprise Financial, Inc. (Ameriprise Financial). Under the Management Agreement, the
Investment Manager provides the Fund with investment research and advice, as well as administrative and accounting services. The management services fee is an annual fee that is equal to a percentage of the
Fund’s daily net assets that declines from 0.43% to 0.28% as the Fund’s net assets increase. The effective management services fee rate for the year ended March 31, 2020 was 0.43% of the Fund’s
average daily net assets.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
37 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
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.
For the year ended March 31, 2020,
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 | 0.15 |
| Institutional Class | 0.15 |
| Institutional 2 Class | 0.06 |
| Institutional 3 Class | 0.01 |
| Class R | 0.15 |
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 March 31, 2020, these minimum account balance fees reduced total expenses of
the Fund by $1,111.
| 38 | Columbia Short Term Bond Fund | Annual Report 2020 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
Distribution and service fees
The Fund has entered into an
agreement with Columbia Management Investment Distributors, Inc. (the Distributor), an affiliate of the Investment Manager and a wholly-owned subsidiary of Ameriprise Financial, for distribution and shareholder
services. The Board of Trustees has approved, and the Fund has adopted, distribution and shareholder service plans (the Plans) applicable to certain share classes, which set the distribution and service fees for the
Fund. These fees are calculated daily and are intended to compensate the Distributor and/or eligible selling and/or servicing agents for selling shares of the Fund and providing services to investors.
Under the Plans, the Fund pays a
monthly combined distribution and service fee to the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class A shares of the Fund. Also under the Plans, the Fund pays
a monthly service fee to the Distributor at the maximum annual rate of 0.25% of the average daily net assets attributable to Class C shares of the Fund and a monthly distribution fee to the Distributor at the
maximum annual rates of 0.75% and 0.50% of the average daily net assets attributable to Class C and Class R shares of the Fund, respectively.
The Distributor has voluntarily
agreed to waive a portion of the distribution fee for Class C shares so that the distribution fee does not exceed 0.60% annually of the average daily net assets attributable to Class C shares. This arrangement may be
modified or terminated by the Distributor at any time.
Sales charges (unaudited)
Sales charges, including front-end
charges and contingent deferred sales charges (CDSCs), received by the Distributor for distributing Fund shares for the year ended March 31, 2020, if any, are listed below:
| Front End (%) | CDSC (%) | Amount ($) | |
| Class A | 1.00 | 0.50 - 1.00(a) | 152,460 |
| Class C | — | 1.00(b) | 1,204 |
| (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:
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,
|
Columbia Short Term Bond Fund | Annual Report 2020
|
39 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
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.
Class C distribution fees waived by the Distributor, as discussed above, are in addition to the waiver/reimbursement commitment under the agreement.
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 March 31, 2020, these
differences were primarily due to differing treatment for deferral/reversal of wash sale losses, trustees’ deferred compensation, derivative investments, tax straddles, distributions, capital loss carryforward,
and principal and/or interest of fixed income securities. To the extent these differences were permanent, reclassifications were made among the components of the Fund’s net assets. Temporary differences do not
require reclassifications.
The following reclassifications
were made:
|
Excess of distributions
over net investment income ($) |
Accumulated
net realized (loss) ($) |
Paid in
capital ($) |
| 492,560 | (492,560) | — |
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 March 31, 2020 | Year Ended March 31, 2019 | ||||
|
Ordinary
income ($) |
Long-term
capital gains ($) |
Total ($) |
Ordinary
income ($) |
Long-term
capital gains ($) |
Total ($) |
| 40,481,182 | — | 40,481,182 | 22,013,706 | — | 22,013,706 |
Short-term capital gain
distributions, if any, are considered ordinary income distributions for tax purposes.
At March 31, 2020, the components
of distributable earnings on a tax basis were as follows:
|
Undistributed
ordinary income ($) |
Undistributed
long-term capital gains ($) |
Capital loss
carryforwards ($) |
Net unrealized
(depreciation) ($) |
| 1,695,769 | — | (13,367,776) | (56,603,571) |
At March 31, 2020, the cost of all
investments for federal income tax purposes along with the aggregate gross unrealized appreciation and depreciation based on that cost was:
|
Federal
tax cost ($) |
Gross unrealized
appreciation ($) |
Gross unrealized
(depreciation) ($) |
Net unrealized
(depreciation) ($) |
| 1,079,676,625 | 3,411,171 | (60,014,742) | (56,603,571) |
Tax cost of investments and
unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
| 40 | Columbia Short Term Bond Fund | Annual Report 2020 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
The following capital loss
carryforwards, determined at March 31, 2020, 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 March 31, 2020, capital loss carryforwards utilized and expired unused, if any, were as follows:
|
No expiration
short-term ($) |
No expiration
long-term ($) |
Total ($) | Utilized ($) | Expired ($) |
| (1,169,689) | (12,198,087) | (13,367,776) | 6,339,059 | — |
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 $2,014,550,348 and $2,368,997,165, respectively, for the year ended March 31, 2020, of which $1,393,474,710
and $1,458,623,041, respectively, were U.S. government securities. The amount of purchase and sale activity impacts the portfolio turnover rate reported in the Financial Highlights.
Note 6. Affiliated money
market fund
The Fund invests in Columbia
Short-Term Cash Fund, an affiliated money market fund established for the exclusive use by the Fund and other affiliated funds (the Affiliated MMF). The income earned by the Fund from such investments is included as
Dividends - affiliated issuers in the Statement of Operations. As an investing fund, the Fund indirectly bears its proportionate share of the expenses of the Affiliated MMF. The Affiliated MMF prices its shares with a
floating net asset value. In addition, the Board of Trustees of the Affiliated MMF may impose a fee on redemptions (sometimes referred to as a liquidity fee) or temporarily suspend redemptions (sometimes referred to
as imposing a redemption gate) in the event its liquidity falls below regulatory limits.
Note 7. Interfund
lending
Pursuant to an exemptive order
granted by the Securities and Exchange Commission, the Fund participates in a program (the Interfund Program) allowing each participating Columbia Fund (each, a Participating Fund) to lend money directly to and,
except for closed-end funds and money market funds, borrow money directly from other Participating Funds for temporary purposes. The amounts eligible for borrowing and lending under the Interfund Program are subject
to certain restrictions.
Interfund loans are subject to the
risk that the borrowing fund could be unable to repay the loan when due, and a delay in repayment to the lending fund could result in lost opportunities and/or additional lending costs. The exemptive order is subject
to conditions intended to mitigate conflicts of interest arising from the Investment Manager’s relationship with each Participating Fund.
The Fund did not borrow or lend
money under the Interfund Program during the year ended March 31, 2020.
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
|
Columbia Short Term Bond Fund | Annual Report 2020
|
41 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
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 March 31, 2020.
Note 9. Significant
risks
Credit risk
Credit risk is the risk that the
value of debt instruments in the Fund’s portfolio may decline because the issuer defaults or otherwise becomes unable or unwilling, or is perceived to be unable or unwilling, to honor its financial obligations,
such as making payments to the Fund when due. Credit rating agencies assign credit ratings to certain debt instruments to indicate their credit risk. Lower rated or unrated debt instruments held by the Fund may
present increased credit risk as compared to higher-rated debt instruments.
High-yield investments risk
Securities and other debt
instruments held by the Fund that are rated below investment grade (commonly called "high-yield" or "junk" bonds) and unrated debt instruments of comparable quality expose the Fund to a greater risk of loss of
principal and income than a fund that invests solely or primarily in investment grade debt instruments. In addition, these investments have greater price fluctuations, are less liquid and are more likely to experience
a default than higher-rated debt instruments. High-yield debt instruments are considered to be predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal.
Interest rate risk
Interest rate risk is the risk of
losses attributable to changes in interest rates. In general, if prevailing interest rates rise, the values of debt securities tend to fall, and if interest rates fall, the values of debt securities tend to rise.
Actions by governments and central banking authorities can result in increases in interest rates. Increasing interest rates may negatively affect the value of debt securities held by the Fund, resulting in a negative
impact on the Fund’s performance and net asset value per share. In general, the longer the maturity or duration of a debt security, the greater its sensitivity to changes in interest rates. The Fund is subject
to the risk that the income generated by its investments may not keep pace with inflation.
Liquidity risk
Liquidity risk is the risk
associated with a lack of marketability of investments which may make it difficult to sell the investment at a desirable time or price. Changing regulatory, market or other conditions or environments (for example, the
interest rate or credit environments) may adversely affect the liquidity of the Fund’s investments. The Fund may have to accept a lower selling price for the holding, sell other investments, or forego another,
more appealing investment opportunity. Generally, the less liquid the market at the time the Fund sells a portfolio investment, the greater the risk of loss or decline of value to the Fund. A less liquid market can
lead to an increase in Fund redemptions, which may negatively impact Fund performance and net asset value per share, including, for example, if the Fund is forced to sell securities in a down market.
Market and environment risk
The Fund may incur losses due to
declines in the value of one or more securities in which it invests. These declines may be due to factors affecting a particular issuer, or the result of, among other things, political, regulatory, market, economic or
social developments affecting the relevant market(s) more generally. In addition, turbulence in financial markets and reduced liquidity in equity, credit and/or fixed income markets may negatively affect many issuers,
which could adversely affect the Fund, including causing difficulty in assigning prices to hard-to-value assets in thinly traded and closed markets, significant redemptions and operational challenges. Global economies
and financial markets are increasingly interconnected, and conditions and events in one country, region or financial market may adversely impact issuers in a different country, region or financial market. These risks
may be magnified if certain events or developments adversely interrupt the global supply chain; in these and other circumstances, such risks might affect companies worldwide. As a result, local, regional or global
events
| 42 | Columbia Short Term Bond Fund | Annual Report 2020 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
such as terrorism, war, natural disasters,
disease/virus outbreaks and epidemics or other public health issues, recessions, depressions or other events – or the potential for such events – could have a significant negative impact on global economic
and market conditions.
The coronavirus disease 2019
(COVID-19) public health crisis has become a pandemic that has resulted in, and may continue to result in, significant global economic and societal disruption and market volatility due to disruptions in market access,
resource availability, facilities operations, imposition of tariffs, export controls and supply chain disruption, among others. Such disruptions may be caused, or exacerbated by, quarantines and travel restrictions,
workforce displacement and loss in human and other resources. The uncertainty surrounding the magnitude, duration, reach, costs and effects of the global pandemic, as well as actions that have been or could be taken
by governmental authorities or other third parties, present unknowns that are yet to unfold. The impacts, as well as the uncertainty over impacts to come, of COVID-19 – and any other infectious illness
outbreaks, epidemics and pandemics that may arise in the future – could negatively affect global economies and markets in ways that cannot necessarily be foreseen. In addition, the impact of infectious illness
outbreaks and epidemics in emerging market countries may be greater due to generally less established healthcare systems, governments and financial markets. Public health crises caused by the COVID-19 outbreak may
exacerbate other pre-existing political, social and economic risks in certain countries or globally. The disruptions caused by COVID-19 could prevent the Fund from executing advantageous investment decisions in a
timely manner and negatively impact the Fund’s ability to achieve their investment objectives. Any such event(s) could have a significant adverse impact on the value and risk profile of the Fund.
The Investment Manager and its
affiliates have systematically implemented strategies to address the operating environment spurred by the COVID-19 pandemic. To promote the safety and security of our employees and to assure the continuity of our
business operations, we have implemented a work from home protocol for virtually all of our employee population, restricted business travel, and provided resources for complying with the guidance from the World Health
Organization, the U.S. Centers for Disease Control and governments. Our operations teams seek to operate without significant disruptions in service. Our pandemic strategy takes into consideration that a pandemic could
be widespread and may occur in multiple waves, affecting different communities at different times with varying levels of severity. We cannot, however, predict the impact that natural or man-made disasters, including
the COVID-19 pandemic, may have on the ability of our employees and third-party service providers to continue ordinary business operations and technology functions over near- or longer-term periods.
Mortgage- and other asset-backed
securities risk
The value of any mortgage-backed
and other asset-backed securities including collateralized debt obligations, if any, held by the Fund may be affected by, among other things, changes or perceived changes in: interest rates; factors concerning the
interests in and structure of the issuer or the originator of the mortgages or other assets; the creditworthiness of the entities that provide any supporting letters of credit, surety bonds or other credit enhancements;
or the market’s assessment of the quality of underlying assets. Payment of principal and interest on some mortgage-backed securities (but not the market value of the securities themselves) may be guaranteed by
the full faith and credit of a particular U.S. Government agency, authority, enterprise or instrumentality, and some, but not all, are also insured or guaranteed by the U.S. Government. Mortgage-backed securities
issued by non-governmental issuers (such as commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers) may entail greater risk than
obligations guaranteed by the U.S. Government. Mortgage- and other asset-backed securities are subject to liquidity risk and prepayment risk. A decline or flattening of housing values may cause delinquencies in
mortgages (especially sub-prime or non-prime mortgages) underlying mortgage-backed securities and thereby adversely affect the ability of the mortgage-backed securities issuer to make principal and/or interest
payments to mortgage-backed securities holders, including the Fund. Rising or high interest rates tend to extend the duration of mortgage- and other asset-backed securities, making their prices more volatile and more
sensitive to changes in interest rates.
Shareholder concentration risk
At March 31, 2020, one unaffiliated
shareholder of record owned 39.6% of the outstanding shares of the Fund in one or more accounts. The Fund has no knowledge about whether any portion of those shares was owned beneficially. Affiliated shareholders of
record owned 39.4% 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
|
Columbia Short Term Bond Fund | Annual Report 2020
|
43 |
Notes to Financial Statements (continued)
March 31, 2020
March 31, 2020
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.
| 44 | Columbia Short Term Bond Fund | Annual Report 2020 |
Report of Independent Registered Public
Accounting Firm
To the Board of Trustees of Columbia
Funds Series Trust and Shareholders of Columbia Short Term Bond Fund
Opinion on the Financial
Statements
We have audited the accompanying
statement of assets and liabilities, including the portfolio of investments, of Columbia Short Term Bond Fund (one of the funds constituting Columbia Funds Series Trust, referred to hereafter as the "Fund") as of
March 31, 2020, the related statement of operations for the year ended March 31, 2020, the statement of changes in net assets for each of the two years in the period ended March 31, 2020, including the related notes,
and the financial highlights for each of the five years in the period ended March 31, 2020 (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 March 31, 2020, 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
March 31, 2020 and the financial highlights for each of the five years in the period ended March 31, 2020 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 March 31, 2020 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
May 21, 2020
We have served as the auditor of
one or more investment companies within the Columbia Funds Complex since 1977.
|
Columbia Short Term Bond Fund | Annual Report 2020
|
45 |
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 | 117 | 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 | 117 | 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 |
|
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 | 117 | Trustee, New York Presbyterian Hospital Board (Executive Committee and Chair of Human Resources Committee) since 1996; Director, DR Bank (Audit Committee) since 2017; Director, Evercore Inc. (Audit Committee, Nominating and Governance Committee) since 2019 |
| 46 | Columbia Short Term Bond Fund | Annual Report 2020 |
TRUSTEES AND OFFICERS (continued)
Independent trustees (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 |
|
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 | 117 | Trustee, MA Taxpayers Foundation since 1997; Board of Governors, Innovation Institute, MA Technology Collaborative since 2010; Board of Directors, The MA Business Roundtable 2003-2019 |
|
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 | 117 | 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 |
Chair of the Board since 1/20; 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. | 117 | 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 | 117 | Trustee, Penn Mutual Life Insurance Company since March 2008; Director, Renaissance Reinsurance Ltd. since May 2008; former Director, Citigroup Inc. and Citibank, N.A., 2009-2019; former Trustee, BofA Funds Series Trust (11 funds), 2008-2011 |
|
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 | 117 | Director, BlueCross BlueShield of South Carolina since April 2008; Trustee, Hollingsworth Funds since 2016 (previously Board Chair from 2016-2019); 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 |
|
Columbia Short Term Bond Fund | Annual Report 2020
|
47 |
TRUSTEES AND OFFICERS (continued)
Independent trustees (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 |
|
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 | 115 | Director, NAPE Education Foundation since October 2016 |
Interested trustee affiliated
with Investment Manager*
| * | 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.
| 48 | Columbia Short Term Bond Fund | Annual Report 2020 |
TRUSTEES AND OFFICERS (continued)
The Board has appointed officers who are responsible for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. The following table provides basic information about the Officers of the Fund as of the printing of this report, including principal occupations during the past five years, although their specific titles may have varied over the period. In addition to Mr. Truscott, who is Senior Vice President, the Fund’s other officers are:
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, – Accounting and Tax, 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, Chief Accounting Officer (Principal Accounting Officer) (2019), and Principal Financial Officer (2020) | 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; Chief Compliance Officer, Columbia Acorn/Wanger Funds since December 2015. |
|
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. |
|
Daniel J. Beckman
225 Franklin Street Boston, MA 02110 Born 1962 |
Senior Vice President (2020) | Vice President – Head of North America Product, Columbia Management Investment Advisers, LLC (since April 2015); previously, Senior Vice President of Investment Product Management, Fidelity Financial Advisor Solutions, a division of Fidelity Investments (January 2012 – March 2015). |
|
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. |
|
Columbia Short Term Bond Fund | Annual Report 2020
|
49 |
TRUSTEES AND OFFICERS (continued)
Fund 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. |
LIQUIDITY RISK
MANAGEMENT PROGRAM
Pursuant to Rule 22e-4 under the
1940 Act, the Fund has adopted a liquidity risk management program (“Program”). The Program’s principal objectives include assessing, managing and periodically reviewing the Fund’s liquidity
risk. Liquidity risk is defined as the risk that the Fund could not meet redemption requests without significant dilution of remaining investors’ interests in the Fund.
The Board has appointed the
Investment Manager as the program administrator for the Fund’s Program. The Investment Manager has delegated oversight of the Program to its Liquidity Risk Management Committee (the “Committee”). At
a board meeting during the fiscal period, the Committee provided the Board with a report addressing the operations of the program and assessing its adequacy and effectiveness of implementation for the period December
1, 2018, through December 31, 2019, including:
| • | the Fund had sufficient liquidity to both meet redemptions and operate effectively on behalf of shareholders; |
| • | there were no material changes to the Program during the period; |
| • | the implementation of the Program was effective to manage the Fund’s liquidity risk; and |
| • | the Program operated adequately during the period. |
There can be no assurance that the
Program will achieve its objectives in the future. Please refer to the Fund’s prospectus for more information regarding the Fund’s exposure to liquidity risk and other principal risks to which an
investment in the Fund may be subject.
| 50 | Columbia Short Term Bond Fund | Annual Report 2020 |
[THIS PAGE INTENTIONALLY LEFT
BLANK]
Columbia Short Term Bond 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.
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.
© 2020 Columbia Management Investment
Advisers, LLC.
columbiathreadneedleus.com/investor/
ANN222_03_K01_(05/20)
Item 2. Code of Ethics.
(a)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.
(b)During the period covered by this report, there were not any amendments to a provision of the code of ethics that applies to the 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.
(c)During the period covered by this report, there were no waivers, including any implicit waivers, from a provision of the code of ethics to the 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.
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 one series of the registrant whose reports to stockholders are included in this annual filing.
(a)Audit Fees. Aggregate Audit Fees billed by the principal accountant for professional services rendered during the fiscal years ended March 31, 2020 and March 31, 2019 are approximately as follows:
20202019
$35,000 $37,500
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 March 31, 2020 and March 31, 2019 are approximately as follows:
|
2020 |
2019 |
|
$0 |
$0 |
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 March 31, 2020 and March 31, 2019, 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 March 31, 2020 and March 31, 2019 are approximately as follows:
|
2020 |
2019 |
|
$0 |
$3,800 |
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.
During the fiscal years ended March 31, 2020 and March 31, 2019, 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 March 31, 2020 and March 31, 2019 are approximately as follows:
|
2020 |
2019 |
|
$0 |
$0 |
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 March 31, 2020 and March 31, 2019 are approximately as follows:
20202019
$225,000 $225,000
In fiscal years 2020 and 2019, 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.
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.
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 2020 and 2019 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 March 31, 2020 and March 31, 2019 are approximately as follows:
20202019
$225,000 $228,800
(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)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.
(b)Not applicable.
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.
(a)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.
(b)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.
Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies
Not applicable.
Item 13. Exhibits.
(a)(3) Not applicable.
