Download Columbia Contrarian Core Fund

FIRST QUARTER 2017
INVESTMENT COMMENTARY
CLASS A | LCCAX
CLASS C | LCCCX
Overall Morningstar RatingTM
CLASS R | CCCRX
CLASS R4 | CORRX
CLASS R5 | COFRX
CLASS Z | SMGIX
Columbia Contrarian Core Fund
Fund performance
Class A
 Columbia Contrarian Core Fund Class A shares returned 6.75% (excluding sales
Class Z
The Morningstar rating is for the indicated share
classes only as of 03/31/17; other classes may
have different performance characteristics. The
Morningstar ratings for the overall, three-,
five- and ten-year periods for Class A shares
are 5 stars, 4 stars, 5 stars and 5 stars and
for Class Z shares are 5 stars, 4 stars, 5 stars
and 5 stars among 1248, 1248, 1113 and 822
Large Blend funds respectively, and are
based on a Morningstar Risk-Adjusted
Return measure.
charge) for the first quarter. Monthly performance is available online at
investor.columbiathreadneedleus.com.
 The fund outperformed its benchmark, the Russell 1000 Index, which returned 6.03%
for the same period.
 Stock selection was the primary driver of underperformance for the period. Strong stock
selection in the information technology, consumer discretionary and health care sectors
was the primary driver of outperformance, while stock selection in the industrials sector
was a slight offset. Sector allocation had a fairly neutral impact on performance.
Market overview
With valuations and
sentiment high, we would
not be surprised if volatility
emerges from unanticipated
events or perceived
setbacks. As these events
occur, we will continue to
use our contrarian process
to look for opportunity for
investors.
An equity market rally that began late in 2016 continued through the first quarter of 2017.
Expectations for lower income taxes, higher infrastructure spending and a looser
regulatory environment under a Republican-led administration inspired investors to bid
prices up in every industrial sector except energy. Eight straight years of equity market
gains make this the second longest bull market since World War II. The run-up in stock
prices also makes stocks expensive relative to corporate earnings growth, a potential risk
factor going forward.
Solid economic data also gave investors something to cheer about. The labor market
continued to add jobs at a steady pace. Manufacturing activity was surprisingly strong.
Both consumer and business sentiment were positive. First-quarter growth may fall short
of last year’s 2.0% advance. However, an end to seasonal detractors, including a warm
winter, sets the stage for potentially stronger growth ahead.
Against this backdrop, the S&P 500 Index returned 6.07% for the first quarter, with even
higher returns for large- and mid-cap growth stocks, as measured by their respective
Russell indices. Technology stocks led the market, while small-cap value stocks and the
Average annual total returns (%) for period ending March 31, 2017
Columbia Contrarian Core Fund
Expense ratio1
Share
class
Without waiver
(gross)
With waiver
(net)
A
1.06%
—
Z
0.81%
—
3-mon.
1-year
3-year
5-year
10-year
Class A without sales charge
6.75
15.06
9.87
13.38
9.22
Class A with 5.75% maximum sales charge
0.63
8.46
7.73
12.05
8.57
Class Z
6.80
15.32
10.14
13.66
9.49
Russell 1000 Index
6.03
17.43
9.99
13.26
7.58
Performance data shown represents past performance and is not a guarantee of future results. The
investment return and principal value of an investment will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost. Current performance may be lower or higher than
the performance data shown. Please visit investor.columbiathreadneedleus.com for performance
data current to the most recent month end. Class Z shares are sold at net asset value and have
limited eligibility. Columbia Management Investment Distributors, Inc. offers multiple share classes, not
all necessarily available through all firms, and the share class ratings may vary. Contact us for details.
Columbia Management Investment Distributors, Inc.
225 Franklin Street, Boston, MA 02110-2804
investor.columbiathreadneedleus.com
800.426.3750
1756644 (04/17)
FIRST QUARTER 2017
INVESTMENT COMMENTARY
Columbia Contrarian Core Fund
Top holdings (% of net assets)
as of March 31, 2017
Apple
4.73
Philip Morris International
3.25
Berkshire Hathaway Inc-Cl B
3.01
energy sector lost ground. The Federal Reserve’s second rate increase in three months
did not restrain the advancing equity market, even though Fed Chair Yellen made it clear
that there were additional rate increases to come later in the year.
Sector weights (%): fund vs. benchmark
as of March 31, 2017
Info tech
Financials
14.59
Health care
14.70
13.39
Facebook Inc-A
2.98
Alphabet-Cl C
2.97
JPMorgan Chase & Co
2.94
Industrials
Microsoft
2.90
Cons staples
Citigroup
2.88
Energy
Comcast Corp-Class A
2.80
Honeywell International
2.25
21.41
16.63
13.23
12.76
Cons disc
9.07
10.44
8.33
8.79
7.06
6.30
Columbia Contrarian
Core Fund
2.74
2.30
Telecom svcs
1.77
3.11
Utilities
1.63
Real Estate
Top holdings exclude short-term holdings and
cash, if applicable. Fund holdings are as of
the date given, are subject to change at any
time, and are not recommendations to buy or
sell any security.
23.36
0
Russell 1000 Index
3.68
5
10
15
20
25
Source: FactSet
Contributors and detractors
Apple
1.01
Philip Morris International
0.69
For the quarter, stock selection was the primary driver of outperformance for the period.
Strong stock selection in the information technology, consumer discretionary and health
care sectors was the primary driver of outperformance, while stock selection in the
industrials sector was a slight offset. Sector allocation had a fairly neutral impact on
performance. The portfolio benefited from an overweight to the information technology
sector and an underweight to real estate, while overweights to financials and
telecommunication services were slight detractors for the period.
Facebook Inc-A
0.60
 Philip Morris was a top performing stock in the portfolio on a relative basis for the
Broadcom Ltd
0.42
Lowe's Companies
0.38
Top five contributors - Effect on
return (%) as of March 31, 2017
Top five detractors - Effect on
return (%) as of March 31, 2017
Verizon Communications
-0.21
Exxon Mobil Corporation
-0.16
Kroger Co
-0.16
Chevron
-0.13
General Electric
-0.11
period. The cigarette manufacturer reported a significant increase in revenue from its
reduced risk products (RRPs) line, which includes e-cigarettes and other vapor and
smokeless tobacco products. The growth in the RRPs business could also mean that
the traditional tobacco business is less likely to be impacted by disruptive new entrants.
 Video game maker Activision Blizzard returned to being a top contributor in the portfolio
for the period, as it has been for many previous periods. Uncharacteristically, it had
been among top detractors during the fourth quarter of 2016, as investors began to
anticipate disappointing holiday sales of its latest Call of Duty game. Since then, the
company announced better-than-expected and record fourth-quarter and full-year 2016
results. The outperformance was primarily driven by Overwatch (which added another 5
million players to reach 25 million) and World of Warcraft.
 Apple, the top holding in the portfolio, was also a top contributor in the quarter. Apple
reported solid upside with expected revenue and earnings, driven by higher-than-
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FIRST QUARTER 2017
INVESTMENT COMMENTARY
expected iPhones sales and lower-than-expected operating expenses. More
importantly, forward guidance was relatively in line on revenue, and gross margin
guidance was better-than-feared. With a large installed base, investors are anticipating
revenue acceleration for Apple, driven by new iPhones to be launched this fall.
 The Kroger Co., which operates retail food and drug stores across the U.S., was a top
detractor for the period. Kroger reported mediocre fourth-quarter earnings, mostly
explained by grocery price deflation that has troubled the entire industry. Also, news
broke that Walmart may be kicking off a price war in the space. Investor sentiment for
Kroger should improve when food inflation accelerates.
 Noble Energy, an independent oil and natural gas exploration and production company,
was among the portfolio’s detractors, as the energy sector experienced a downturn. The
company updated its full-year 2017 guidance in mid-February, announcing plans to
increase the pace of development with execution of both onshore and offshore projects.
 Verizon Communications was also a top detractor, posting a slight earnings miss and a
decline in sales and expectations. Recently, Verizon moved to offer unlimited data to
counter similar competitor offerings and there’s some concern that it will damage
operating margins. However, Verizon’s competitors struggle to compete on speed and
coverage. By now offering unlimited data, Verizon hopes to accelerate subscriber
growth.
Performance attribution for the 3-month period ending March 31, 2017
compared to the Russell 1000 Index
Sector allocation
Stock selection
Net value added
0.50
0.40
0.20
0.10
0.00
Value Added
0.30
-0.10
-0.20
-0.30
The analysis includes portfolio management decisions regarding sector allocation and security selection within
that sector. The net value added reflects the combination of both the sector allocation and the security selection.
Effects do not reflect fees and expenses and will vary from the fund’s actual return.
Source: FactSet
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FIRST QUARTER 2017
INVESTMENT COMMENTARY
Outlook
Consumer confidence overall is at record high levels and there is also real evidence of an improving global economy. These events bode well for future earnings
and are responsible for part of the stock market’s recent, positive performance. Tax
reform will be a very important issue this year and could give earnings another
boost. With valuations and sentiment high, we would not be surprised if volatility
emerges from unanticipated events or perceived setbacks. As these events occur,
we will continue to use our contrarian process to look for opportunity for investors.
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FIRST QUARTER 2017
INVESTMENT COMMENTARY
Investors should consider the investment objectives, risks, charges and expenses
of a mutual fund carefully before investing. For a free prospectus or a summary
prospectus, which contains this and other important information about the funds,
visit investor.columbiathreadneedleus.com. Read the prospectus carefully before
investing.
Columbia funds are 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.
The views expressed are as of the date given, may change as market or other conditions change
and may differ from views expressed by other Columbia Management Investment Advisers, LLC
(CMIA) associates or affiliates. Actual investments or investment decisions made by CMIA and its
affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views
expressed. This information is not intended to provide investment advice and does not take into
consideration individual investor circumstances. Investment decisions should always be made
based on an investor's specific financial needs, objectives, goals, time horizon and risk tolerance.
Asset classes described may not be suitable for all investors. Past performance does not guarantee
future results, and no forecast should be considered a guarantee either. Since economic and
market conditions change frequently, there can be no assurance that the trends described here will
continue or that any forecasts are accurate.
Additional performance information: All results shown assume reinvestment of distributions
and do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the
redemption of fund shares.
Investment Risks
Market risk may affect a single
issuer, sector of the economy,
industry or the market as a whole.
Foreign investments subject the
fund to risks, including political,
economic, market, social and
others within a particular country,
as well as to currency instabilities
and less stringent financial and
accounting standards generally
applicable to U.S. issuers. Growth
securities, at times, may not
perform as well as value securities
or the stock market in general and
may be out of favor with investors.
Value securities may be
unprofitable if the market fails to
recognize their intrinsic worth or the
portfolio manager misgauged that
worth. The fund may invest
significantly in issuers within a
particular sector, which may be
negatively affected by market,
economic or other conditions,
making the fund more vulnerable to
unfavorable developments in the
sector.
Performance attribution is used to help explain the impact of the manager's investment decisions
with regard to overall investment policy, asset allocation, security selection and activity. Sector
Allocation represents the contribution of the various sectors to a fund or portfolio’s return.
Stock Selection represents the contribution to return of the specific stocks within a
particular sector and the Net Value Added represents the combination of both.
1
Expense ratios are generally based on the fund's most recently completed fiscal year and
are not adjusted for current asset levels or other changes. In general, expense ratios increase as
net assets decrease. See the fund's prospectus for additional details.
Sector weightings are as of the date given, subject to change and are not recommendations to buy
or sell any security or that a particular sector(s) will be profitable.
© 2017 Morningstar, Inc. The Morningstar information contained herein: (1) is proprietary to
Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not
warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are
responsible for any damages or losses arising from any use of this information.
For each fund with at least a three-year history, Morningstar calculates a Morningstar
RatingTM used to rank the fund against other funds in the same category. It is calculated
based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a
fund's monthly excess performance, without any adjustments for loads (front-end, deferred,
or redemption fees), placing more emphasis on downward variations and rewarding
consistent performance. Exchange-traded funds and open-ended mutual funds are considered a
single population for comparative purposes. The top 10% of funds in each category receive 5 stars,
the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and
the bottom 10% receive 1 star (Each share class is counted as a fraction of one fund within this
scale and rated separately, which may cause slight variations in the distribution percentages).
The Russell 1000 Index is an unmanaged index that tracks the performance of 1,000 of the largest
U.S. companies based on market capitalization.
The Russell 2000 Index is an unmanaged index that measures the performance of the 2,000
smallest companies in the Russell 3000 Index, which represents approximately 8% of the total
market capitalization of the Russell 3000 Index.
The Russell 1000 Growth Index is an unmanaged index that consists of those stocks in the Russell
1000 Index that have higher price-to-book ratios and higher forecasted growth values.
Standard & Poor's 500 Index (S&P 500 Index) is an unmanaged list of common stocks which
includes 500 large companies.
Indices shown are unmanaged and do not reflect the impact of fees. It is not possible to invest
directly in an index.
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